PNN English

PATENTING MEDICINES IS CRUEL - V. C. Nanda

2007-11-01T05:57:00.000-07:00

I start off by mentioning some of a very large number of recent disappointments with the current mode of functioning of the Pharmaceutical industry.
Indian Med. Assoc. Bull. of Sept. 14, 04 carried the story of a suit filed by David Franklin (an insider) against Pfizer on the charge of suppression of a 1998 study of results regarding the drug Gabapentin. It had shown that the drug did not work for the advertised Bipolar Disorder. This was sought to be done by lavishing perks on doctors, giving generous fees to thought leaders, using ghostwriters, and planting people to ask favourable questions. The study report had also mentioned that a 16 year old committed suicide while taking this drug. The company paid $ 240 million as criminal fine and another 152 million as fine to State & Federal Healthcare.
The Tribune of Chandigarh reported on Aug. 21, 05 that a Vioxx widow in USA received $ 253.4 million from Merck. It also mentioned that 4200 more cases were pending. The drug was taken by 20 million people before it was ordered to be withdrawn.
The New York Times of June 13, 07 reported that Eli Lilly paid $750 million to settle a lawsuit alleging that Zyprexa caused Diabetes.
The seemingly big fines are like a gambler's risk. The winnings being the astronomical profits the company hopes to go on making. The same NYT report also mentioned that the official financing for continuing medical education had gone up from $ 302 million in 1998 to 1.92 billion last year and that half of this came from the trade. The story contains examples of how courses are used for advertisement, and how expression of doubt about efficacy or safety results in discontinuation of the course. The issue of June 28 contains another facet. This is about Astra Zenca invited doctors to a weekend training session to learn to promote its drug Symbicort. The participants' expenses on car, plane and stay at Hyatt Regency, and also $ 2700 per head were paid by the company. The current estimate of advertising by US companies is $ 12 billion.
The San Diego Union Tribune July 5, reminded readers that The US Food & Drug Administration (FDA) had modified its regulation procedure 15 years back in the form of Drug Users Fee Act to speed up approval with payment of extra fee. In a way this amounts to bribing the Authority, because FDA hopes to collect $ 393 million next year, up 87 million over the current year, and more than half of these funds will be spent on staff salaries. The rest is for post-market surveillance. One example of the effect of this procedure (NYT, June 7&12,07) is the uncertainty regarding GlaxoSmithKline's Avandia. Its potential to cause heart disease continues to haunt countless millions including 7 million in USA. The drug has been around for 8 years even after Dr. John B. Buse, a famous medical researcher formally criticized it at a medical meeting. Dr. Buse recently informed a House hearing that he had received veiled threats from a high-ranking company executive. The report goes on to allege 'FDA having cozy relationship with the manufacturers'. The issue of June 13 contains far more disturbing reports about the side effects.
The report under reference also says that the law is now sought to be modified and made more 'company friendly’. It proposes to increase fees, hire more people and further lessen approval time. Already, from 1993 to 2003, the average approval time has gone down from 22 months to 14 months. The advantage touted being: the saving of processing time results in doing good that much sooner. My comment: this would also speed up possible hazardous consequences. David Carpenter, a government Professor at Harvard medical school found that drugs approved before deadlines were 3 to 5 times more likely to be taken off as those approved after. An example is the story of the antibiotic Ketek (Sanofi Aventis). It was withdrawn as hastily as approved after it caused liver failures (New England J. Med., April 19, 07)
The 15-year period in the above paragraph more or less coincides with globalization of Trade Related Intellectual Property Rights, whereby a patent granted in one country is valid in all WTO member states. The speedier approval leads to economic gains for the manufacturer as well as the country in which patented. This, in turn, pressurizes the national regulatory authority to join in the gamble. This is a danger to mankind. It would require a credible international regulatory mechanism. The experience with continuing Doha round deadlock over less critical trade matters shows that this is impossible in foreseeable future. As it is the withdrawal of a failed drug in one country does not lead to automatic withdrawal everywhere. I give two examples: co proxamol withdrawn in UK continues in India (Tribune Chandigarh Feb. 7, 05); Phenylpropalinine (PPA) withdrawn in USA, but continues to sell in India (Times of India, March, 05).
We have, obviously, to examine the basic ideas. The idea of patenting is based on the hypothesis that Science progresses more rapidly with greater monetary incentive. For hundreds of years peer appreciation has been incentive enough for some of the greatest inventions. Dishonesty in Science is a contemporary phenomenon, thanks to the big money generated by patents. This money is also a threat to the noble medical profession. Of all the patents those that make money from fighting disease and hunger seem the most immoral. Just look at the lack of interest among manufacturers for innovative work towards fighting diseases that affect people from whom they cannot hope to make much money from. Moreover, the trade does not wish to manufacture simple and inexpensive drugs like Dichloroacetate .

Patenting medicines should be discontinued forthwith.
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(The author is a retired Director, UGC Centre for Advanced Study in Mathematics, Punjab University, Chandigarh. He currently works for Azadi Bachao Andolan)

The Impact of Globalisation on Indian Economic Development By Amit Bhaduri

2007-10-31T20:47:00.000-07:00

(Dr. John Matthai Lecture, 2006: Calicut University)
I am deeply honoured to have been invited to deliver a lecture in the Frontier Lecture series on this occasion. I share with you the privilege to celebrate the memory of one of the most talented and distinguished economists who shaped to a considerable extent the economic thinking of India immediately after independence. Dr. John Matthai did it in many capacities, as a finance minister, as chairman of independent commission, and as a writer and as a life long teacher. What is more, he did it all with rare dedication, to the sole purpose of India's progress. Nothing stood in the way of his determined dedication. He was as happy to take up the responsibility as a finance minister as to give it up when he differed. The office did not interest him, only the bigger cause did. It appears we no longer have many persons of such integrity in public life. So while I am privileged to celebrate with you the memory of this exceptional intellectual, I must admit, I do it with a tinge of sorrow. Why do not we have many more such men and women among us today in public life? That is why, if my lecture carries a sense of desperate urgency which goes a little beyond our usual academic style of discourse, I hope you would understand and forgive me for being direct in my views.
A dilemma faces the developing countries today as they find themselves in an awkward corner. The policy space left for the nation state is shrinking gradually in the current phase of globalization, while that space is being occupied increasingly by the
emerging rules of globalization. And yet, the global rules of the game are flawed, as they are biased strongly in favors of the richer countries, especially the Untied States. The dilemma arises because the developing countries tend to feel on the one hand that there is no alternative to accepting globalization in its present form, the so-called TINA syndrome in a uni-polar world dominated by the U.S. On the other hand, they know that they can rely hardly on the current rules of globalization to further their developmental objectives. In many cases the dilemma is acute irrespective of how the government decides to present the case to the public. As a result, developmental problems are seldom faced from the standpoint of the developing countries,; instead solutions tend to be imposed on them in the name of globalization
Let a couple of well-known examples illustrate the point. The issue of a fairer global trade in agricultural commodities, without subsidy to the farmers in richer countries, is required not merely for a freer trade regime; it affects also the poorest one billion people in the world. as most of them are connected directly or indirectly with agricultural activities in the rural areas of developing countries. There is hardly any other trade-related example with greater compatibility between a more efficient international price mechanism operating through freer trade, and greater global equality. And yet, international negotiations governed by immediate and narrow national interests of the richer nations reduced global rule making recently to a "tit-for-tat" strategy that led to breakdown in negotiations, and the tendency to impose solutions by the richer and more powerful nations.
In a parallel vein, one could think of other examples of imposed rather than negotiated solutions. Both the Bretton Woods institutions, namely the IMF and the World Bank, make policy recommendations to the developing countries in financial difficulties through their standard pro-market 'conditionalities'. The voting systems in these institutions are heavily biased in favour of the richer countries especially the United States, because of their higher economic contributions to these institutions. The market principle of the rich have- more votes- than-the- poor because of their greater purchasing power hold blatantly in the voting system. As a justification of imposing pro-market conditionalities on developing countries, both these institutions often place a great deal of emphasis on the principle of accountability to the market.
However, it is ironical that they themselves remain totally unaccountable for their performances and recommendations, no matter whether an economic collapse occurs in Argentina under their guidance, or an acute financial crisis erupts in east Asia (the only country to escape largely its adverse consequences was Malaysia, which went openly against the IMF prescriptions), or years of stagnation continues despite their recommended large scale IMF-World Bank sponsored liberalization in sub- Saharan Africa.
These are mere illustrations of the power the rich nations have over the poor nations. It arises to a large extent from some structural asymmetries inherent in the current process of globalization. Until we identify them clearly, it would appear that this process of globalization led by the interests of the rich is a natural phenomenon like an earthquake of a drought. The consequences have to be simply accepted because they cannot be controlled. The analogy is misleading. As we begin to know more about the workings of nature, we start to exert control to varying extent over the fall out of natural phenomena. Similarly, we would be in a position to able to integrate strategically with the global economy to our advantage, instead of meekly submitting to the process of globalization, only if we understand better some of these asymmetries that are also the source of asymmetric global power relations.
First, and perhaps the most fundamental asymmetry in the world economy arises today from the freedom of movement of capital, especially financial capital on one hand, and the restrictions placed on the other, on the movement of labors, especially unskilled labors from developing countries. Despite vast improvements in travel and communications technology, available estimates suggest that labors migration as a proportion of the total world population has been lower in the current phase (approximately 1973-to date) compared to the earlier phase of globalization (approximately, 1870-]9]3).On a rough reckoning, about one in six persons crossed national borders for employment or livelihood between] 860 and 1900. They went as indentured labors from China and India or as colonial settlers from Europe to North, Central and South America and to Australia. Over a comparable period of nearly five decades of the current phase of globalization for which we have estimates suggesting that not more than one in eight persons has migrated despite vast improvements in transport and communication, Contrast this relatively sluggish movement of labors during the current phase of globalization with the movements of capital, especially financial capital. Rough estimates available from the Bank of International Settlements suggest that the daily volume of private trade in foreign exchange is over 1.2 trillion (1012) U. S dollars. Of this, less than 2 per cent is accounted for by trade in goods and services and even if one adds all direct foreign investment it would still be well below 4 percent. A few days of hostile private trade in the foreign exchange market can wipe out the entire foreign reserve of all the central banks in the world. The defining characteristic of the current phase of globalization has become this overwhelming supremacy of private financial capital. The world has not seen anything like this before.
The rise to ascendancy of international finance started with successive waves of liberalization of the major capital markets of the advanced capitalist countries starting from about the mid-1970s. It assumed irresistible momentum by early 1980s ushering in the current phase of economic globalization dominated by international finance. Although little explicit note is taken of its implications in public discussions and government pronouncements, its imprint on the pace and pattern on Indian development too has been unmistakable. Economic policies are increasingly formulated by the government as never before with a view to the sentiments of the financial markets. The English language media, especially the electronic media that shape Indian middle class opinion, behave as if the daily fluctuation of the stock market is an accurate barometer of the health of the real economy. However, underlying this is an uncomfortable fact that is overlooked willingly or unwillingly. The Indian stock market is pathetically small in relation to the vast size of global private trade in foreign exchange mentioned earlier. The rupee and Indian Slacks can easily be set into an uncontrollable downward spiral by a few large international players speculating against some Indian stocks or the rupee. This is no at all fanciful. Recall how the Dalal Street nose-dived immediately after the 2004 genera! elections results, because a few large, mostly foreign institutional investors began to withdraw from the Indian capital market under the fear that a coalition government supported by the Left will be unfriendly towards private businesses. However, as Soon as the United Progressive Alliance government named its top economic team, a trio of the prime minister, the finance minister and the deputy chairman of the planning
commission, all known for their extreme pro-market and corporate friendly outlook, the stock markets began to stabilize in no time. Nothing had changed about ground realities of the Indian economy in those few weeks, except international finance capital needed assuring political signals. In the process, the future course of economic policies for the country got set.
This story would remain incomplete for India (and for many other developing countries) without mentioning the critical role of the IMF and the World Bank Since those two institutions are in a pivotal position to influence the perception of private foreign investors like multinational corporations, banks and other financial institutions about a country's investment climate, their role becomes critical. They shape to a significant extent at least in the short run the sentiments of the financial markets. If the economic policies of a government are favourable to the corporations, it generally gets a favourable signal from the pro-market IMF and the World Bank, with the result capital tends to flow in to stabilize or even stimulate the stock market. On the other hand, with an unfavourable signal from the same institutions, the government runs the risk of destabilizing capital flights. This is the core game under globalization in so far as these two institutions are concerned, wile academic research on themes like poverty and macroeconomic policies are mere sideshows. This has been part the unwritten script of financial globalization in so far as developing countries are concerned.
The major players in the financial markets as well as the IMF and the Bank with their pro-market, and pro- corporate philosophy are generally against the expansion of the economic role of the government. So we have in India a Fiscal Responsibility and Budget Management Act (FRBM), which prevents the government from spending additionally in areas like elementary education or expanding employment guarantee or strengthening decentralization of the panchayat system through adequate fiscal autonomy. Tribals and peasants are evicted from lands with little compensation from to improve the 'investment climate' for the corporations. If we have the eyes to see, it becomes increasingly apparent that. in the name of development we are typically pursuing policies that might deliver high growth, but it is growth without a democratic content It does not reach the poorest citizens of India who need to benefit most urgently from the process of growth. However~ this sort of pro-market reforms and high growth led by the corporations, might make the IMF, World Bank and some in government happy. It may even be accompanied by a rising trend in the stock market to create the illusion of a healthy state of economic affairs, but all this will remain merely irrelevant statistics for the poor majority in this country. This is why each and every government that has been following this sort of policy gets showered with the approval of the corporate sector, of the IMF and the World Bank, and even of the upper middle class, but loses the general election. The Congress government under the then prime minister Narasimha Rao with Dr. Manmohan Singh as its finance minister spearheading economic reforms lost the general election. Dr. Singh himself personally failed to win a seat. The pattern got repeated. The BJP-led coalition crashed in the elections with its 'shining India' slogan; and, it did especially badly in Andhra which was said to have been shining under the glow of IT industries. There is no reason to believe that things would be any different next time, unless remedial interventions like employment guarantee and fair price and subsidies to farmers despite WTO become sufficiently strong counter-acting forces. However, this would require going against the hidden script of globalization by upsetting the alliance between large multinational corporations and banks including the IMF and the WB, and a pliable domestic government.
Let me turn now to the second important asymmetry in the current phase of globalization. It arises from the increasingly freer flow of trade in goods and services on the one hand, and the growing restriction on the transfer of knowledge and technology embodied in the production of those goods and services on the other. In the emerging regime of trade-related intellectual property rights (TRIPS), all developing countries including India find it increasingly difficult to learn and adopt the production technology involved in the goods and services they import. The asymmetry of the emerging trade regime has been characterized by freer trade in goods and services coupled with greater restrictions on the flow of productive knowledge. Thus, in the more liberalized trade regime of the World Trade Organization, India come under increasing pressure to import goods and services rather than produce them at home, while it is conveniently forgotten that international trade has been the vehicle for learning the technology embodied in the traded goods and new products throughout industrial history. This learning process involved through international trade may well be the most important dynamic gains from freer trade, far outweighing the static gains of existing comparative advantage. By treating knowledge more and more as simply a privately tradable commodity, the current trade regime shows its bias towards corporations as the generator of knowledge who should be handsomely rewarded, but forgets the importance of other sources of knowledge. It has tended to underplay traditional community based knowledge to the detriment of many indigenous communities. Submitting blindly to such an asymmetric trade regime in the name of globalization would serve the interests of the rich and powerful nations, but would leave the most vulnerable sections of our population especially in agriculture in even greater distress. The suicides of farmers in Maharastra, Andhra, Kerala and Punjab, adding to over 10 thousand in a year, foretell the kind of disaster that the commercialization of agriculture under WTO regime might bring.
Ii is in this context that the inevitable consequence of globalization in terms of the increased relative importance of the external vis-à-vis the internal or domestic market needs to be examined. It has influenced thinking on macroeconomic policy in a way, which is seldom highlighted. It emphasizes the importance of reducing the costs of production through more efficient supply side policies for increasing the international competitiveness of the national economy; but ignores the problem of creating adequate purchasing power and aggregate demand in the domestic market.
The shift in focus from the demand to the cost or supply side has had serious consequences. The most apparent consequence of this shift concerns labour market 'flexibility', i.e. some form of wage restraint. Lower wages tend to depress the unit cost of production, but also the consumption demand from wage income. Consequently, unless either higher investment or increased export surplus makes up for that reduction in consumption demand in a regime of investment-or export-led growth, insufficient aggregate demand at home would be a drag on development.
Similarly, the emphasis on increasing output (value added) per worker or labour productivity to reduce labour cost of business, and use this as a too] for enhancing international competitiveness has a downside. Exclusive attention on productivity separates it from its consequences on total GDP, and the employment in the economy. For instance, total output would decrease despite an increase in productivity, if the percentage decrease in the level of employment exceeds the increase in labour productivity. Consequently, the corporate strategy of 'down-sizing' the labour force to create a "lean and efficient corporation" for increasing market share, might turn out to be good for a particular corporation, but macro-economically counter-productive if either total supply, or the size of the domestic market shrinks.
Policies of reducing unit cost in search of greater efficiency, through down-sizing the labour force and restraining wages are encouraged under globalization by the predominance of external market considerations. However, in many cases, these policies often turn out to be a macro-economically flawed. Because while they are efficient on the microeconomic scale of a single corporation or enterprise, such policies can also become counter-productive on the macroeconomic scale due to their effect of depressing demand.
The underlying problem is more general. The blurring of the distinction between micro- and macro- efficiency has become a generic problem with many currently pursued economic policies. It stems from the influences 'methodological individualism' in economics and, from 'neo-liberalism' in politics. It gives rise to many 'fallacies of composition' in macro- economic policy by assuming that the individual micro-economic 'parts' have the same properties as the 'whole' macro-economic system. To illustrate the point, an individual corporation restraining wage or shedding labour to raise productivity might raise the efficiency and profit of that corporation. But if many corporations follow this policy at the same time, total demand and employment in the economy will shrink, and even the profit of all corporations might be reduced. Similarly, one country might increase its export more than its imports, but all cannot achieve it; because, one country's export surplus has to be matched by some other country's import surplus. It is a zero sum global game in which all cannot be winners at the same time. And, it would be foolish to rely entirely on the external market if only for this reason.
In the current phase of globalization a third asymmetry arises from the role assigned to the state in monitoring and regulating economic activities. The market-oriented philosophy intends to curb the role of the state as an economic actor. This often gives rise to an almost schizophrenic view of the capabilities of the state. It is usually claimed that the state cannot be trusted with expansionary monetary and fiscal policies (e.g. FRBM Act mentioned earlier) because the state has an in-built tendency to be financially irresponsible. At the same time however, the same state is relied upon to undertake far more complex financial tasks like extending the scope of the market though privatization, regulating the stock exchange etc. This schizophrenic view about the capabilities of the state is rooted in denying the state it’s developmental and welfare role, but using it to promote the reach of the multinational corporations through measures like privatization. The result often is greater corruption and lack of transparency in governance.
Finally, in India the most fundamental asymmetry is to be found in the uneasy relation between our political democracy and the market mechanism. The two have come to be treated as mutually reinforcing concepts in neo-liberal philosophy because both the free market and democracy extend the scope of individual choice And yet, the relationship between the two types of freedom granted by the market economy and, by political democracy often tends to be in conflict in developing countries. The democratic principle of 'one-adult-one-vote' coexists rather uneasily with the free market philosophy that the rich, with greater purchasing power, would have more 'votes' than the poor in the market place. This asymmetry becomes even more acute, the greater is the inequality in the distribution of income, and the larger is the proportion of the poor with political voting rights, but economically without a 'voice' in the market. In these circumstances, the democratic form of government comes under increasing strain if too much freedom is granted to the market. And yet, the forces unleashed by the process of globalization tend to drive relentlessly towards a situation in which governments have little control over the free play of the global market forces.
As a matter of fact the history of the relation between economic development and democracy has been far more complex than the currently fashionable 'political correctness' would have us believe. Historically, the per capita income of the western countries had to reach some minimum of US dollars 2000 per capita per year. This was a high level compared to India's $200-250 around the time of our first general election in 1952 (measured in 1999 PPP calculation). It is an unparalleled achievement in the recorded political history that political democracy in India could be sustained at that level of poverty despite the tremendous diversity of the country. However, this should not blind us to the fact that democracy historically co-evolved with development without necessarily being either its cause or consequence. The challenge posed to our democratic form of government is different today. It must control the excesses of globalization and domination by corporations of the economy. Our democracy has to ensure that the process of growth is not corporate driven, but is decentralized and employment driven to allow for the widest participation of our citizens. Only then will the wealth created by growth be fairly shared, and growth itself will assume a democratic content. It will be wealth created by the people, for the people. The nature of globalization must fit into this objective. This is the compulsion of our time.

Amit Bhaduri, University of Pavia, Italy, and Council for Social Development, New Delhi, India.
REFERENCES.
Bank of International Settlement (BIS).2001 Central Bank Survey of Foreign Exchange and Derivatives Market Activity in April, 2001; Global Data, Press Release.
Barro, R and Sala-I-Martin, X. 1995.Economic Growth, New York, McGrew Hill. Bhaduri, A. 2002. 'Nationalism and economic policy in the era of globalization, in D.Nayyar (edited), Governing Globalisation: Issues and Institutions, Oxford, Oxford University Press.
Bhaduri, A and Marglin, S. 1990. 'Unemployment and the real wage: the economic basis of contesting political ideologies', Cambridge Journal of Economics (14): 37593.
Chang, H-J.2002.Kicking Away the Ladder: Development Strategies in Historical Perspective, London, and Anthem Press.

WORLD BANK GOES UNDER SCANNER AT PEOPLE'S TRIBUNAL

2007-10-15T10:28:00.000-07:00

World Bank's Shameful Interventions

The Independent Peoples Tribunal on the World Bank Group is held in India got underway at New Delhi from september 22-24 at Jawaharlal Nehru University (JNU). The 4 day event is being organised by a coalition of over 60 groups in collaboration with the JNU Students Union and Teachers Association. Activists, academicians, policy analysts and project affected communities presented their analysis on the World Bank in over 26 sectors to an expert jury. The tribunal run from 22 to 24 September. The opening jury members included eminent historian Romila Thapar, Former Supreme Court Justice P B Sawant, Former Maharastra High Court Justice Suresh, Former Planning Commission member S P Shukla, Scientist Meher Engineer, Former Water Secretary Ramaswamy Iyer, Economist Amit Bhaduri and Mexican Economist Alejandro Nadal.

World Bank officials, including the Banks India Country Director Isabel Guerrero, and Government of India representatives were also invited to the tribunal and were given time to respond to the depositions. World Bank representatives were expected to present their point of view on the closing day (24 September) but they did not turn up.
Questioning the supposed Bank developmental mandate of ‘eradicating poverty’, activist Smitu Kothari of Intercultural Resources argued that the Bank in fact functioned more like a commercial bank serving corporate interests. Kothari said, ‘The Bank is the world’s largest multilateral source of equity and loan financing to private enterprises and its loans to the private sector through the International Finance Corporation (IFC) in 2006 amounted to a massive US$ 8.3 billion. ‘The Bank claims that it is an apolitical institution but even a cursory look at its Governance conditionalities such as public sector reform, creating legislation to facilitate the private sector shows that it plays a profoundly political role in the country’, he added.

Professor Arun Kumar from JNU said that due to World Bank and IMF structural adjustment conditionalities India had to undergo a complete policy overhaul after 1991. As evidence, he presented several national legislations that were overhauled after the structural adjustment programmes of the Bank; such as the RBI Act, introduction of Value Added Tax (VAT) in Andhra Pradesh and the revision of the Coal Nationalization Act. As further evidence of the influence of the Bank on domestic policy he showed how an executive summary of a World Bank document in 1990 mentioned the need for a 22% devaluation of the Indian rupee. ‘In 1991 the then Finance Minister Manmohan Singh effected exactly a 22% devaluation of the rupee.

In his deposition to the jury Supreme Court Advocate Prashant Bhushan presented evidence on how, since 1991, most of the key influential economic policy makers in India, including members of the planning commission, secretaries of the Finance Ministry and Economic Advisors to the Government have been people who have had stints at the World Bank. ‘They have moved seamlessly between the World Bank and the Government of India as if the latter were just a division of the former’, he said. Bhushan singled out the case of the current czar of economic policy Montek Singh Ahluwalia who spent the first 11 years of his career at the World Bank. Since then he has been Commerce Secretary, Finance Secretary and now Deputy Chairman of the Planning Commission. ‘There are several dozen such instances and it should be of little surprise that the Bank has been able to easily impose its ideology and policies in India’, added Bhushan.

Shripad Dharamadhikari, Coordinator of Manthan Adhyayan Kendra spoke about how the Bank was looking at being a ‘politically realistic knowledge provider’ in India. This was being done through thematic and sectoral studies called AAA – Analytical and Advisory Activities – in which it is funding studies on Land, Water and Agriculture which were being used as reference documents to push its policies.

In a written deposition Professor Michael Goldman of the University of Minnesota posed the question of whose interests the Bank served. Goldman said that Northern firms continue to win a majority of the foreign procurement contracts awarded. ‘In 2003 a startlingly high 45 percent was channeled to firms in the big five countries ( USA, UK, Japan, Germany and France)’, said Goldman.

Professor Anil Sadgopal traced the policy framework for education in the country and showed how the target for universalisation of elementary education was constantly shifted following the intervention of the World Bank. ‘The demarcation of certain districts in Madhya Pradesh as exclusively World Bank districts for the implementation of its DPEP programme was a gross violation of the sovereignty of the state’, he said.
The days next sessions of the tribunal covered the Banks interventions in Water, Health and its impacts on Human Rights.

A Letter To Justice Iyer

2007-10-15T10:18:00.000-07:00

{Eminent jurist Justice VR Krishna Aiyer, issued a statement on Septmeber 3, 2007 which was published by The Hindu of September 4 with the title "Krishna Aiyer Welcomes Reliance Promis". The Content of the news item appeared to us as favouring Relinace Fresh. So we wrote a letter to Justice Aiyer. The letter and the reply given by Justice Aiyer are being published here. Editor}

Respected Justice V. R. Krishna Iyer Ji,

We have been your staunch admirer and met you in several meetings and shared the plateform in several meeting of NAPM. We have felt honoured in publishing your articles and press statements in our journal Nai Azadi Udghosh. We were extremely happy when you chaired ‘People’s Commission an GATT’ and brought out an excellent report in which it was pointed out that by GATT (now WTO) how our sovereignty would be jeopardised. You have been a powerful spokesman against globalisation and multinationalisation. We are also glad to know that you will be a member of the International Tribunal on World Bank (which is spearheading globalisation and multinationalisation through out the world) to be held his month in JNU, New Dehi.

We are shocked to read a news item published in the Hindu, Tuesday, September 4, 2007 (Delhi edition) on page 11 with the title ‘Krishna Iyer welcomes Reliance promise.’ The item says that in a letter to a senior officer of Reliance Retail you rightly recall that India is a Socialist Republic and mega corporations like Reliance in such a republic is a contradiction. How can this contradiction be addressed by Reliance’s promise of encouraging organic farming and not displacing retailers ? We should not forget the motives and the history of Reliance and its promoters. Corporations like Reliance are avantgaurd of Wal-Mart who claims that it will bring farmers and producers nearer to consumers. This whole philosophy of Wal-Mart is based on profit and is anti-people and that is why it is being opposed even in United States.

Let’s not forget that entry of big corporations in agriculture and retail sector is part of WTO (and GATT) agenda. Our field experience shows that wherever big corporations have entered they have replaced workers, labourers, farmers and sustainable agriculture. About 65 crores poor Indians depend upon agriculture and retail market. Allowing domestic and foreign MNCs in these fields even if they promise good intention, will displace them as has been done in other countries like the US and France. Even with all good intention if you appreciate their operations in Kerala you are encouraging Wal-Martisation of our agriculture and retail. We are also perturbed by an interpretation of Socialism by eminent persons, Budhadeo Bhattacharya of West Bengal is one of them. Deeply perturbed by the shameful happenings in Nandigram and Singur, we got some solace when we read the Kerala Govt. has come out openly against the entry of foreign and domestic MNCs in agriculture and retail. If what is reported in the news paper is true (we hope it should not be) it will send a very wrong massage to those who are fighting against corporations.
We would like to be excused if we have hurt your feelings.
With best regards.
Yours sicnerely
(Prof. BanwariLal Sharma)
National convener

Justice Iyer's Reply

I have received your letter expressing surprise at my statement on Reliance. Although the caption is a half-truth, the contents in the Hindu make my point in favour of retailers and customers. Perhaps, I was indiscreet in replying to the Reliance Officer who met me with a reliable firiend. I had issued a press statement although the media may or may not publish it. How about the anti-swadeshi policy of a Union Government liberally allowing import by foreign big corporations? I am shocked, probably you too are!

Yours sincerely
VR Krishna Iyer

National Assets are for Sale ! By Dr. Krishna Swaroop Anandi

2007-10-15T09:50:00.000-07:00

There is a consensus among the ruling elite; think-tanks funded and promoted by foreign donor agencies and multinational corporations; and policy-making government bodies and institutions dominated by giant corporate interests and powers that selling the national assets of crucial importance at throwaway prices to overseas majors is the only option before them with a view to rejuvenate the country’s moribund economy. Though they are accountable to the people, the nation and the Constitution, yet they are not serving the real masters whom they are suppose to represent, on whose behalf they are working and with whose money at their disposal they are living like princes, kings and Maharajas. They have virtually become puppets in the hands of corporate colonialism.

Public sector enterprises, once termed as ‘Modern Temples of India’ by Jawahar Lal Nehru, are now putting up their surplus (?) land for sale. This is being done in order to ameliorate them from chronic sickness. The following is the list of a few public sector enterprises which are readying themselves for the sale of their commercial land properties at prime locations in the country in order to revive themselves–
The government has already sold some of the commercial land properties of public sector undertakings like National Textile Corporation (NTC), Hindustan Antibiotics, HMT and Praga Tools Limited. It is now in the process of further sale of the surplus (?) commercial land properties of these companies. Out of the 26 public sector enterprises for which the government has approved the revival package, more than 15 enterprises have surplus real estates including commercial land properties, buildings,office spaces, hospitals, schools, etc.

More than 10 states and the UnionTerritory of Chandigarh have earmarked commercial land sites at prime locations for setting up modern terminal markets for trading in fruits, vegetables and other farm produce. State governments and the Administration of the Union Territory of Chandigarh are planning to handover vast tracts of commercial land properties to large Indian and multinational corporate houses/groups for establishing and operating agricultural mandis, which will be like hubs linked to a number of collection centres, constituting the spokes. This model will not only oust a host of wholesalers, small shop-keepers, vandors; and footpath /street /corner /neighbourhood sellers of fruits and vegetables from the scheme, but also pave the way for contract farming, a precurs or to farming by agribusiness corporations. Thus, it will displace small trackers/retailers as well as peasants from their occupations. For the consolidation of corporate colonialism, the government is selling not only land properties under its possession to companies but also acquiring huge tracts of farmland for them.

Industrial Areas on a Decline

2007-10-15T09:37:00.000-07:00

Ludhiana loosing its Industrial Sheen

Industrial belts of the country are on a decline due to the dumping of cheaper imports in the domestic market. The suicidal process of de-industrialisation has been set into motion, leading to large-scale unemployment, displacement and destitution. Entrepreneurs, manufacturers, technicians, crafts persons, workers, etc., in large numbers are being thrown out of jobs, as production units of almost all industrial complexes or towns are facing extinction or dwindling fast. De-industrialisation is endemically spreading through the length and breadth of the country. Industrial areas are witnessing one-by-one closure of manufacturing units.

Indigenous production units scattered throughout the country are loosing out huge domestic market share to foreign goods, as there are no quantitative restrictions on their imports. They are at a major disadvantage on the exports front also, as compared to their better placed counterparts based in competitor countries.
The bicycle industry of Ludhiana is passing through critical times. If it is ruined, the entire bicycle industry of the country will face extinction.

The Chinese bicycle industry has been successful in cornering 25 per cent share in the fancy bicycle market of the country. Indian bicycles are about 30 per cent costlier than the Chinese one, as prices of raw materials or inputs such as MS round, CRCA sheet and tube hover around Rs. 29,000; Rs. 36,000; and Rs. 43,000 per tonne respectively in our country while in China they stand at Rs. 14,400; Rs. 21,000 and Rs. 25,000 per tonne respectively. K. K. Seth, senior vice-president of the Ludhiana based Indian Bicycles’ Manufacturers’ Association (IBMA) and owner of the Neelam Cycles said, “Last year (in 2006), we exported bicycles worth Rs. 760 crore and this year it will come down to Rs. 650 crore because of increasing presence of Chinese bicycles in export market.”
The Ludhiana bicycle industry is more than 60 years old. It exports bicycles and cycle parts across the globe. Thanks to the Ludhiana bicycle industry, India is the second largest bicycle manufacturer in the world, next only to China. There are almost 3000 industrial units in Ludhiana, that manufacture either cycle parts or bicycles.

Cycle parts in China are mostly produced on automated machines. They are dirt cheap as compared to cycle parts produced in our country. The Ludhiana’s Dhandhari dry port receives each month at least 100 containers of cycle parts made in China. Ludhiana is likely to lose out upto 50 per cent domestic market share and Rs. 100 crore worth exports to Chinese bicycles and cycle parts this year. More than 10 large industrial houses such as Hero Groups, Eastman, Safari Cycles, Sadem Cycles and many more have recently set up their offices in China to source cheap cycle components for exports to developing countries’ market.
Sewing Machine Industries
Like the bicycle industry, Ludhiana has been home to the sewing machine industry for more than 100 years. It has more than 75 per cent of the total sewing machine units of the country. It is the leading and the largest producer of sewing machines units in the country. It is losing ground for Chinese sewing machines and spare parts which are 40 to 60 per cent cheaper than their Indian-made counterparts. Imported machines like Jaguar, Julsi, Pegasus, etc., find place in most big garment manufacturing units that once used sewing machines made in Ludhiana. The embroidery machines segment has also lost almost 60 per cent of the business to China-made machines. According to Varinder Rakheja, president, Sewing Machine Dealers’ and Assemblers’ Association, “China’s share in the Indian market is increasing rapidly as 9.5 per cent of the needles used in the machines are being imported from China and the same is the case with other spares such as needle plate, bobbins and bobbin case, etc. The main reason for this is the price difference.”

There is a sharp difference between the input prices in the two countries. The cost of sheet metal (an important raw material used in sewing machines) has increased from Rs. 26,000 to Rs. 36,000 a tonne, while Nickel witnessed a price rise of 40 per cent during the last six months. The price is reflected in the cost of a needle as wall. A Japanese needle costs Rs. 2.50, the Indian-made Rs. 1.50 and the Chinese is available at Paise 25 only.
Some 120 years ago, a few dynamic and innovative entrepreneurs of Ludhiana started manufacturing different types of sewing machines for the region spreading up to Lahore. Now a days, this glorious industry of Ludhiana is on a decline due to the Taiwanese, Japanese and Chinese machines.

Chinese manufacturers are resorting to all sorts of unfair and foul trade practices with a view to uproot our sewing machine industry. “I was shocked to see my brand name V. Ratna and Company on Chinese machines during my trip to China as a part of a 30 member delegation”, said a Ludhiana based sewing machines manufacturer.
The above write up is entirely based on the reports entitled Indian bicycle industry to lose huge market shares to China and Sewing machines unable to beat Chinese prices written by Puneet Pal Singh Gill. These reports appeared on July 30 and August 2, 2007 in the Lucknow edition of Business Standard. The contents therein have been freely used in this article.
{Presentation : Dr. Krishna Swaroop Anandi}

Where Corporations put their money? By Peter Gillepsie

2007-10-14T21:05:00.000-07:00

OFCs levy little or no tax on property, and provide minimal rules related to licensing and incorporation. Financial institutions and corporations can conduct their business without having a physical presence in these jurisdictions. Most importantly, OFCs guarantee anonymity so that their clients are beyond the scrutiny of tax authorities and regulators in their countries of residence.
These characteristics have attracted corporations and wealthy individuals to move their assets offshore. In the early 1990s, the Bank for International Settlements estimated that total offshore cash holdings were five times the sum available to the world’s central banks. In its 1998 World Wealth Report, Merrill Lynch estimated that one-third of the wealth of the world’s richest individuals, or US $11 trillion, was held offshore. Between 50% and 60% of all global trade is conducted through OFCs, and half the global monetary stock is estimated to pass through OFCs at somepoint.
Profit Laundering
For multinational corporations, OFCs provide opportunities for “profit laundering”, carrying out transactions that assign profits and losses on paper according to where taxes can be minimised. Profit laundering is frequently done through offshore shell companies that have no function other than holding corporate assets.

To conceal profits a company might transfer the ownership of patents, copyrights or other intangibles to offshore shell companies and collect royalties in a low-tax jurisdiction. Earlier this year, the pharmaceutical company Merck was assessed $2.3 billion in US back taxes for transferring its drug patents to a Bermuda shell company and then deducting from its taxes the royalties it paid itself. High technology companies such as Microsoft are engaged in similar strategies.
Shell companies can also be used to hide debt liabilities from regulators and shareholders. Before being exposed as a spectacular fraud, Enron had established a network of 3,500 shell companies, 600 of which were registered in the Cayman Islands.

One of the most common methods of concealing corporate income and profits is through falsified transfer pricing. Today, half of all global trade is conducted within multinational companies, among affiliates of the same parent company. Much of the trade between parent companies and affiliates is falsely priced so that companies can allocate profits and losses at will.
A company might, for example, sell an export item to an offshore affiliate at a sharply reduced price, the affiliate then sells the item at market price, with the profits remaining offshore. Alternatively, the offshore affiliate might import an item at the real market price, but sell it to the parent company at a grossly inflated price so the company has a huge cost to deduct. Among the falsely priced export items uncovered in a recent US study were bulldozers priced at $527.94 each and forklift trucks priced at $384.14 each. Falsely priced import items included flashlights from Japan at $5,000 each and toothbrushes from Britain at $5,655 each. The study concluded that falsified pricing resulted in tax losses to the US treasury of $53.1 billion in 2001 alone.

A US expert on tax evasion calculates that the percentage of US tax revenues from corporations has declined since the 1960 from around 30% to 8%, largely due to shifting income to offshore havens. In a recent study of the 250 largest US corporations, a third paid no income tax between 2001 and 2003 despite reporting overall pre-tax profits of $1.1 trillion to their shareholders in the same period. Raymond Baker, author of Capitalism’s Achilles Heel, estimates that multinational companies account for a global tax loss of at least $ 200 billion a year through the use of shell companies and falsified transfer pricing.

Wealthy individuals are also escaping their tax obligations by holding their assets offshore. Financial institutions based in OFCs have aggressively pursued ‘high net worth individuals”, encouraging them to move their assets to offshore accounts and trusts. A 2006 US Senate subcommitee report concluded that wealthy Americans avoid $40 to $70 billion in taxes each year by holding their assets offshore. The Tax Justice Network in the United Kingdom calculated that if the returns on $11 trillion of individual assets now placed in OFCs were taxed at 30%, it would generate $255 billion in tax revenues globally.
Illegal capital flight
If these issues are cause for concern in Northern countries, the situation facing transition economies and developing countries is even more serious. OFCs have enabled massive illicit capital flight out of transition economies such as Russia and China as well as from developing countries. Raymond Baker estimates that falsified pricing alone shifts at least $280 billion out of transition and developing economies every year.

Russia appears to have suffered the greatest theft of resources in the shortest period of time, an amount estimated to be between $200 and $500 billion in the period 1989 to 2004. Stephen Cohen described the disintegration of post-Communist Russia as the “unprecedented de-modernization of a twentieth-century country”. As state-owned enterprises were privatized, the orgy of looting was supported by western corporations and financial institutions and the plunder flowed into western banks. Indeed, Russian flight capital finances a substantial portion of the US balance of payments deficit.

The International Monetary Fund (IMF) estimated that illegal outflows from China were $127 billion between 1992 and 2001, a figure that is likely understimated by half. Raymond Baker notes that as much as half of all foreign direct investment (FDI) in China is actually Chinese money that came out of the country illegally, disguised itself as a foreign company and returned to China as a joint venture with a foreign partner. Almost 45% of FDI in China originates from shell companies based in the Cayman Islands, Hong Kong and the British Virgin Islands, ensuring that royalties, fees and dividends flow offshore.
Developing countries often have weak tax administration systems and lack the capacity to track the complex financial manoeuvres of multinational companies. In a June 2000 report,Oxfam (UK) estimated that OFCs contributed to tax losses in developing countries of about $50 billion a year, roughly equivalent to annual aid flows. This figure is likely to be conservative as it did not take into account outright tax evasion, falsified transfer pricing or under-reporting of corporate profits.

The African Union reported that at least $148 billion illegally leaves the continent every year, most ending up in offshore accounts. Falsified transfer pricing by multinationals is reportedly costing Africa $10 to $11 billion annually. Some estimates suggest that Africa’s political elites hold between $700 and $800 billion in offshore accounts outside the continent.

Corrupt political leaders of some developing countries have embezzled vast amounts of wealth from their national treasuries. The Indonesian dictator Suharto looted his country for years and up to $35 billion found its way to the Cayman Islands, Panama, the Bahamas, Cook Islands, Vanuatu and West Samoa. Citibank helped Raul Salinas, brother of Mexico’s former president, establish anonymous offshore trusts, international business companies and secret accounts to hide his stolen wealth. Riggs Bank of Washington set up offshore dummy corporations and anonymous accounts for Augusto Pinochet, the murderous former dictator of Chile. In the required “Know your Customer” documentation, Rigges described Pinochet as “a retired professional who achieved much success in his career and accumulated wealth during his lifetime for retirement in an orderly way.”

Some of Africa’s poorest countries have also been plundered. Sani Abacha, the dictator of Nigeria between 1993 and 1998, looted the country’s treasury and sent billions to secret accounts in Switzerland, Luxembourg, Liechtenstein and London. Mobutu Sese Seko of Zaire and Emperor Bokassa of the Central African Republic plundered their countries to the point of starvation.
{Courtsey : Third World Economics Issue No. 407, 16-31 August, 2007}

Developing nations sidelined for IMF top job By Emad Mekay

2007-10-14T20:54:00.000-07:00

{Developing country members of the International Monetary Fund (IMF) have reiterated the call for openness and transparency in deciding on the next Fund chief, as concerns persist that the selection process is skewed in favour of the European candidate}
A coalition of developing countries at the International Monetary Fund issued a tacit warning on 23 July that the highly political process of selecting the next IMF chief may be intimidating non-European countries from putting forth candidates, and further discrediting the institution.

The statement by the Group of 24 (G24), which operates as an association of minority shareholders in the IMF and the World Bank and which has previously complained about the lack of democracy at the IMF, was also seen as one of the clearest signals of distrust in how the IMF is being run. It came as sources at the IMF tell IPS that highly qualified candidates from developing nations are hesitating to apply for the managing director position because they see the process as skewed in favour of the European candidate, Dominique Strauss-Kahn. They say that the near-unanimous agreement among European finance ministers to back Strauss-Kahn makes the successful outcome of his nomination a done deal.

A source inside the Fund, who wished to remain anonymous, says that South African Finance Minister Trevor Manuel is a favourite of some countries, even though he has not publicly expressed interest. They have confided that they do not want to put his name forward before receiving guarantees that transparency and democracy pledges by rich nations will be honoured. Sources say that Manuel would be a highly competitive candidate given his long-term tenure as chairman of the Joint Development Committee which coordinates activities of the IMF and the World Bank, and his credibility in dealing with many of the issues facing poor nations.

The 24 member Board of Executive Directors that helps run the day-to-day affairs of the Washington based IMF recently asserted that the selection of the next managing director would be transparent and democratic and that all 185 members of the Fund were free to nominate candidates. The board vowed that this time around, it would be a merit-based process with clear criteria, no geographic preference, and the objective of selecting the managing director by consensus rather than by a simple majority of votes. But on 10 July, the European nations, who together have the largest bloc of votes on the board, quickly rallied behind the French candidate, former finance minister Strauss-Kahn, effectively declaring that they will not even consider others.

“A strong commitment to an open, transparent and multilateral selection process will greatly enhance the legitimacy and effectiveness of the next Managing Director and of the institution at a time when the IMF is confronted with fundamental challenges to its relevance and viability,” said the statement.
Under an unwritten agreement with the United States, European countries choose the head of the IMF in return for Washington naming the president of the Fund’s sister institution, the World Bank. The G24 has consistently called for a change of this practice.

Civil society groups, think-tanks, some economists and developing nations have long urged a followup of recommendations made in April 2001 by a joint World Bank-IMF working group on how to choose the managing director. The recommendations called for opening up the process. But although the two institutions’ executive boards adopted the recommendations as guidance for the future, they were never implemented.

The growing abuse of transfer pricing by MNCs By Kavaljit Singh

2007-10-14T20:42:00.000-07:00

{‘Transfer pricing’, a financial accounting device used by multinational corporations (MNCs) to rake huge financial benefits, has long been a major problem facing host countries. Kavaljit Singh discusses this phenomenon in the wake of the recent disclosure of resort to this practice by the pharmaceutical giant, Glaxo Smith Kline. }
The large-scale tax avoidance practices resorted to by multinational corporations (MNCs) came to public notice recently when the giant drug MNC, Glaxo Smith Kline, agreed to pay the US government $3.4 billion to settle a long-running dispute over the tax dealings between the UK parent company and its American subsidiary. This was the largest settlement of a tax dispute in the US. The investigations carried out by the Internal Revenue Services (IRS) found that the American subsidiary of Glaxo Smith Kline overpaid its UK parent company for drug supplies, mainly its block-buster drug.Zantac, during the period 1989-2005. These over payments were meant to reduce the company’s profit in the US and thereby its tax bill. The IRS charged Europe’s largest drug company with engaging in manipulative ‘transfer pricing’.

Transfer pricing relates to the price charged by one associate of a corporation to another associate of the same corporation. When one subsidiary of a corporation in one country sells goods, services or know-how to another subsidiary in an other country, the price charged for these goods or services is called the transfer price. All kinds of transactions within corporations are subject to transfer pricing including those involving raw material, finished products and payments such as management fees, intellectual property royalties, loans, interest on loans, payments for technical assistance and know how and other transactions. The rules on transfer pricing require MNCs to conduct business between their affiliates and subsidiaries on an ‘arm’s length’ basis, which means that any transaction between two entities of the same MNC should be priced as if the transaction was conducted between two unrelated parties.
Manipulating the accounts
Transfer pricing, a very controversial and complex issue, requires closure scrutiny not only by the critics of MNCs but also by the tax authorities in the developing world. Transfer pricing is a strategy frequently used by MNCs to obtain huge profits through illegal means. The transfer price could be purely arbitrary or fictitious, therefore different from the price that unrelated firms would have had to pay. By manipulating a few entries in the account books, MNCs are able to reap obscene profits with no actual change in the physical capital. For instance, a Korean firm manufacturers an MP3 player for $100, but its US subsidiary buys it for $199, and then sells it for $200. By doing this, the firm’s bottom line does not change but the taxable profit in the US is drastically reduced. At a 30% tax rate, the firm’s tax liability in the US would be just 30 cents instead of $30.

MNCs derive several benefits from transfer pricing. Since each country has different tax rates, they can increase their profits with the help of transfer pricing. By lowering prices in countries where tax rates are high and raising them in countries with a lower tax rate. MNCs can reduce their overall tax burden, thereby boosting their overall profits. That is why one often finds that corporations located in high-tax countries hardly pay any corporate taxes.

A study conducted by Simon J Pak of Pennsylvania State University and John S.Zdanowiczn of Florida State University found that US corporations used manipualtive pricing schemes to avoid over $53 billion in taxes in 2001. Based on US import and export data, the authors found several examples of abnormally priced transactions such as tooth-brushes imported from the UK into the US at a price of $5,655 each, flashlight imported from Japan for $5,000 each, cotton dish towels imported from Pakistan for $153 each, briefs and panties imported from Hungary for $739 a dozen, car seats exported to Belgium for $1.66 each, and missile and rocket launchers exported to Israel for just $52 each.
With the removal of restrictions on capital flows, manipulative transfer pricing has increased manifold
With the removal of restrictions on capital flows, manipulative transfer pricing has increased manifold. According to the United Nations Conference on Trade and Development (UNCTAD)’s World Investment Report 1996, one-third of world trade is basically intra-firm trade. Because of mergers and acquisitions, intra-firm trade, in both number and value terms, has increased considerably in recent years. Given that there are over 77,000 parent MNCs with over 770,000 foreign affiliates, the number of transactions taking place within these entitles is unimaginable. Hence, it becomes extremely difficult for tax authorities to monitor and control each and every transaction taking place within a particular MNC. The rapid expansion of Internet-based trading (e-commerce) has further complicated the task of national tax authorities.

Not only do MNCs reap higher profits by manipulating transfer pricing: there is also a substantial loss of tax revenue to countries, particularly developing ones, that rely more on corporate income tax to finance their development programmes. Besides, governments are already under pressume to lower taxes as a means of attracting investment or retaining a corporation’s operations in their country. This leads to a heavier tax burden on ordinary citizens for financing social and developmental programmes. Although several instances of fictitious transfer pricing have come to public notice in recent years, there are no reliable estimates of the loss of tax revenue globally. The Indian tax authorities are expecting to garner an additional US$111 million each year from MNCs with the help of new regulations on transfer pricing introduced in 2001.

In addition, fictitious transfer pricing creates a substantial loss of foreign exchange and engenders economic distortions through fictious entries of profits and losses. In countries where there are government regulations preventing companies from setting product retail prices above a certain percentage of prices of imported goods or the cost of production, MNCs can inflate import costs from their subsidiaries and then charge higher retail prices. Additionally, MNCs can use over priced imports or underpriced exports to circumvent governmental ceilings on profit repatriation, thereby causing a drain of foreign exchange. For instance, if a parent MNC has a profitable subsidiary in a country where the parent does not wish to reinvest the profits, it can remit them by overpricing imports into that country. During the 1970s, investigations revealed that average overpricing by parent firms on imports by their Latin American subsidiaries in the pharmaceutical industry was as high as 155%, while imports of dyestuff raw materials by MNC affiliates in India were overpriced in the range of 124 to 147%.

Given the magnitude of manipulative transfer pricing, the Organisation for Economic Co-operation and Development (OECD) has issued detailed guidelines. Transfer pricing regulations are extremely stringent in developed countries such as the US, the UK and Australia. In the US, for instance, regulations related to transfer pricing cover almost 300 pages, which dents the myth that the US espouses ‘free market’ policies.
However, developing countries are lagging behind in enacting regulations to check the abuse of transfer pricing. India framed regulations related to transfer pricing as late as 2001. However, in many countries including Bangladesh, Pakistan and Nepal, tax authorities have yet to enact regulations curbing the abuse of transfer pricing mechanisms. Such abuse could be drastically curbed if there is enhanced international coordination among national tax authorities.

Where Corporations put their money? By Peter Gillepsie

2007-10-14T09:43:00.000-07:00

Offshore tax havens - now known by the more polite term “offshore financial centres” or OFCs–are today a deeply entrenched part of the global financial system. There are more than 70 OFCs in places such as the Cayman Islands, the Bahamas, Barbados, Jersey, the Isle of Man, Manaco, Cyprus, Luxembourg, Macao and a number of South Pacific Islands. Most but not all are small island states. Some of the banking facilities based in these tax havens are little more than a computer in a closet, but most are subsidiaries of mainstream banks headquartered in London,Zurich, New York and Toronto.
OFCs levy little or no tax on property, and provide minimal rules related to licensing and incorporation. Financial institutions and corporations can conduct their business without having a physical presence in these jurisdictions. Most importantly, OFCs guarantee anonymity so that their clients are beyond the scrutiny of tax authorities and regulators in their countries of residence.
These characteristics have attracted corporations and wealthy individuals to move their assets offshore. In the early 1990s, the Bank for International Settlements estimated that total offshore cash holdings were five times the sum available to the world’s central banks. In its 1998 World Wealth Report, Merrill Lynch estimated that one-third of the wealth of the world’s richest individuals, or US $11 trillion, was held offshore. Between 50% and 60% of all global trade is conducted through OFCs, and half the global monetary stock is estimated to pass through OFCs at somepoint.
Profit Laundering
For multinational corporations, OFCs provide opportunities for “profit laundering”, carrying out transactions that assign profits and losses on paper according to where taxes can be minimised. Profit laundering is frequently done through offshore shell companies that have no function other than holding corporate assets.
To conceal profits a company might transfer the ownership of patents, copyrights or other intangibles to offshore shell companies and collect royalties in a low-tax jurisdiction. Earlier this year, the pharmaceutical company Merck was assessed $2.3 billion in US back taxes for transferring its drug patents to a Bermuda shell company and then deducting from its taxes the royalties it paid itself. High technology companies such as Microsoft are engaged in similar strategies.
Shell companies can also be used to hide debt liabilities from regulators and shareholders. Before being exposed as a spectacular fraud, Enron had established a network of 3,500 shell companies, 600 of which were registered in the Cayman Islands.
One of the most common methods of concealing corporate income and profits is through falsified transfer pricing. Today, half of all global trade is conducted within multinational companies, among affiliates of the same parent company. Much of the trade between parent companies and affiliates is falsely priced so that companies can allocate profits and losses at will.
A company might, for example, sell an export item to an offshore affiliate at a sharply reduced price, the affiliate then sells the item at market price, with the profits remaining offshore. Alternatively, the offshore affiliate might import an item at the real market price, but sell it to the parent company at a grossly inflated price so the company has a huge cost to deduct. Among the falsely priced export items uncovered in a recent US study were bulldozers priced at $527.94 each and forklift trucks priced at $384.14 each. Falsely priced import items included flashlights from Japan at $5,000 each and toothbrushes from Britain at $5,655 each. The study concluded that falsified pricing resulted in tax losses to the US treasury of $53.1 billion in 2001 alone.
A US expert on tax evasion calculates that the percentage of US tax revenues from corporations has declined since the 1960 from around 30% to 8%, largely due to shifting income to offshore havens. In a recent study of the 250 largest US corporations, a third paid no income tax between 2001 and 2003 despite reporting overall pre-tax profits of $1.1 trillion to their shareholders in the same period. Raymond Baker, author of Capitalism’s Achilles Heel, estimates that multinational companies account for a global tax loss of at least $ 200 billion a year through the use of shell companies and falsified transfer pricing.
Wealthy individuals are also escaping their tax obligations by holding their assets offshore. Financial institutions based in OFCs have aggressively pursued ‘high net worth individuals”, encouraging them to move their assets to offshore accounts and trusts. A 2006 US Senate subcommitee report concluded that wealthy Americans avoid $40 to $70 billion in taxes each year by holding their assets offshore. The Tax Justice Network in the United Kingdom calculated that if the returns on $11 trillion of individual assets now placed in OFCs were taxed at 30%, it would generate $255 billion in tax revenues globally.
Illegal capital flight
If these issues are cause for concern in Northern countries, the situation facing transition economies and developing countries is even more serious. OFCs have enabled massive illicit capital flight out of transition economies such as Russia and China as well as from developing countries. Raymond Baker estimates that falsified pricing alone shifts at least $280 billion out of transition and developing economies every year.
Russia appears to have suffered the greatest theft of resources in the shortest period of time, an amount estimated to be between $200 and $500 billion in the period 1989 to 2004. Stephen Cohen described the disintegration of post-Communist Russia as the “unprecedented de-modernization of a twentieth-century country”. As state-owned enterprises were privatized, the orgy of looting was supported by western corporations and financial institutions and the plunder flowed into western banks. Indeed, Russian flight capital finances a substantial portion of the US balance of payments deficit.
The International Monetary Fund (IMF) estimated that illegal outflows from China were $127 billion between 1992 and 2001, a figure that is likely understimated by half. Raymond Baker notes that as much as half of all foreign direct investment (FDI) in China is actually Chinese money that came out of the country illegally, disguised itself as a foreign company and returned to China as a joint venture with a foreign partner. Almost 45% of FDI in China originates from shell companies based in the Cayman Islands, Hong Kong and the British Virgin Islands, ensuring that royalties, fees and dividends flow offshore.
Developing countries often have weak tax administration systems and lack the capacity to track the complex financial manoeuvres of multinational companies. In a June 2000 report,Oxfam (UK) estimated that OFCs contributed to tax losses in developing countries of about $50 billion a year, roughly equivalent to annual aid flows. This figure is likely to be conservative as it did not take into account outright tax evasion, falsified transfer pricing or under-reporting of corporate profits.
The African Union reported that at least $148 billion illegally leaves the continent every year, most ending up in offshore accounts. Falsified transfer pricing by multinationals is reportedly costing Africa $10 to $11 billion annually. Some estimates suggest that Africa’s political elites hold between $700 and $800 billion in offshore accounts outside the continent.
Corrupt political leaders of some developing countries have embezzled vast amounts of wealth from their national treasuries. The Indonesian dictator Suharto looted his country for years and up to $35 billion found its way to the Cayman Islands, Panama, the Bahamas, Cook Islands, Vanuatu and West Samoa. Citibank helped Raul Salinas, brother of Mexico’s former president, establish anonymous offshore trusts, international business companies and secret accounts to hide his stolen wealth. Riggs Bank of Washington set up offshore dummy corporations and anonymous accounts for Augusto Pinochet, the murderous former dictator of Chile. In the required “Know your Customer” documentation, Rigges described Pinochet as “a retired professional who achieved much success in his career and accumulated wealth during his lifetime for retirement in an orderly way.”
Some of Africa’s poorest countries have also been plundered. Sani Abacha, the dictator of Nigeria between 1993 and 1998, looted the country’s treasury and sent billions to secret accounts in Switzerland, Luxembourg, Liechtenstein and London. Mobutu Sese Seko of Zaire and Emperor Bokassa of the Central African Republic plundered their countries to the point of starvation.
{Courtsey : Third World Economics Issue No. 407, 16-31 August, 2007}

“Doha is dead”, time to rethink a new model of trade BY Kanaga Raja

2007-10-14T09:26:00.000-07:00

On 17 July, the day the modalities texts were issued, more than 90 civil society groups from developed and developing countries urged trade ministers to “declare the Doha Round... dead” and pave the way for a new, development and environment-centred global trade regime.
Over 90 civil society organisations from all over the world have sent a letter to their trade ministers calling on them to acknowledge the failure of the Doha Round and to institute a two-year moratorium to provide the time and space necessary to rethink the model and process of global trade negotiations.
The call by the civil society groups came just as the chairs of the agriculture and non-agricultural market access (NAMA) negotiations at theWTO issued their revised draft modalities texts on 17 July.
“We believe that the time has come to officially declare the Doha Round of the WTO negotiations dead and to provide the necessary space to rethink the kind of multilateral trade rules that are needed to create employment and achieve sustainable development,” said the civil society groups in their letter to the trade ministers.
A copy of the letter was also sent to WTO Director-General Pascal Lamy, who is also the chair of the Trade negotiations Committee that oversees the Doha Round negotiations, as well as the chair of the agriculture negotiations, Ambassador Crawford Falconer of New Zealand, and the chair of the NAMA negotiations, Ambassador Don Stephenson of Canada.
Among the civil society groups that signed the letter were Action Aid International; Asian Indigenous Women’s Network; ATTAC (includes branches in Austria, Hungary, Japan, Norway and Sweden); Consumers Association of Penang (Malaysia); Corporate Europe Observatory; Council of Canadians; Focus on the Global South (Thailand, India, Philippines; Friends of the Earth; IBON Foundation, Inc (Philippines); Institute for Agriculture and Trade Policy (IATP); Public Citizen; Public Services International (PSI); Sierra Club; Tebtebba (Philippines); The Berne Declaration; and Transnational Institute (TNI).
Serving corporate interests
In their letter to the trade ministers, the civil society groups noted that it is now almost six years since the Doha Round was launched in November 2001.
What has followed since then is a litany of setbacks and/or failures the collapse of the Cancun Ministerial Conference in 2003, followed by the “July framework” cobbled together in 2004, then the desperate moves of the 2005 Hong Kong Ministerial Conference to breathe new life into the Doha Round agenda, which led to the suspension of the negotiations in 2006 and now the recent breakdown of the G4 (Brazil, India, EU and US) talks in Potsdam.
“Doha was supposed to be the ‘development’ round. But what has transpired over the intervening six years has been quite the opposite,” said the letter to the trade ministers.
“Instead of coming up with a set of multilateral trade rules designed to increase the capacities of developing countries to create new jobs, eliminate poverty and build sustainable economies, the Doha Agenda has been manipulated to primarily serve the interests of the northern industrialized powers to expand market access for their transnational corporations.”
The civil society groups said that all the studies that have come out since 2005–from the World Bank, the United Nations Conference on Trade and Development (UNCTAD), the UN Food and Agriculture Organization (FAO), the Carnegie Endowment for International Peace, Tufts University and the Research and Information System for Developing Countries (RIS)–demonstrate that the current proposals for the Doha Round make developing countries and particularly the poorest countries, the biggest losers.
Millions of people all over the world, including farmers, fisherfolk, workers and trade unionists, environmentalists, faith-based groups and other civil society organizations, have been denouncing the Doha Round talks as promoting a “corporate-driven” model of trade that pays little attention to people’s rights and needs.
“Now, more than ever, world leaders must face up to the fact that the global trade regime has marginalized a vast array of communities and interests who have finally united to stop any further expension of the system, “said the letter.
The Doha agenda and model have failed to increase the trust of the WTO’s membership, let alone the public it is supposed to serve, the civil society groups said, adding that around the world, people have informed themselves and popular opinion has changed to the point where the WTO is suffocating from a crisis of legitimacy, And, no effort by free trade champions to”better educate” the public or adopt “quick fixes” can revenue this reality.
“Declaring the death of Doha does not mean the end of [the] world trading system,” the letter stressed, pointing out that another multilateralism is possible, but not one that prioritizes the rights of corporations over the rights of people and the planet while reducing the power to self-govern.
The civil society groups urged the trade ministers to acknowledge the failure of the Doha Round now and called on them to institute a two-year moratorium to provide the time and space necessary to rethink the model and process of global trade negotiations.
“It’s time to go back home, and start a process of reflection and consultation with your peoples that can pave the way for a new and different model of multilateral trade.”
“The only credible option now is to stimulate public discussion and debate with governments and civil society and social movements about creating alternative trade regimes that are people, development, and environment centred,” said the letter.
{Courtesy: Suns 6296}

Country–specific centres to act as FDI magnets

2007-10-14T08:56:00.000-07:00

The government plans to float a joint venture company with private sector to set up country specific investment promotion centres in India and abroad. The move aims at involving industry in attracting FDI. As per a proposal prepared by the Department of Industrial Policy and Promotion (DIPP), apex industry chambers would be asked to set up a society / trust or a company in collaboration with the Centre. This would then set up separate offices in the country and abroad where all information pertaining to investment in the country would be provided. Various clearances would be handled by such windows to facilitate faster FDI clearances.
Under the new scheme, 10 country-specific windows focussing on investment promotion from the US, Japan, Taiwan, UK, Germany, Singapore, France, South Korea, Switzerland and Italy would be set up. Industry chambers would also be associated in the functioning of these windows before actually becoming stakeholders at a later stage. The new scheme would merge the existing two schemes–Undertaking Investment Promotion Activities and International Co-operation; and Joint Venture Asia Enterprise.
{Subhash Narayan, The Economic Times, 5 July, 2007, Lucknow}
Cadbury to cut 7,500 jobs
Cadbury Schweppes, the world’s largest confectionery group plans to cut 7,500 jobs and close around 10 plants as it seeks to catch up with the profitability of its US rivals after the sale of its drinks arm. The British group said on June 19 it will trim its current 50,000 confectionery workforce and 70 factories by 15%. The cuts will be spread across the world over the next four years. The London–based company is the maker of Dairy Milk chocolate, Trident gum and Trebor mints.
{The Economic Times : 20 June, 2007, Lucknow}
Foreign Country–dedicated Industrial Zones in Rajasthan
The Rajasthan government’s move to attract Japanese investment into the state by promoting an exclusive industrial park at Neemnowa to house Japanese companies has elicited enquiries from two more countries South Korea and Germany for setting up similar dedicated parks for companies from their reigons.
In July, 2006 the Rajasthan Industrial and Investment Corporation (RIICO) signed a memorandum of understanding (MoU) with the Japanese External Trade Organisation and reserved an industrial park at Neemrana exclusively for Japanese investments. The state has earmarked 1,000 acres for the Japanese Park Over 50 small and medium Japanese companies are expected to put up facilities here. Rajasthan is, perhaps, the first state to gain for this type of country dedicated industrial zone.
According to RIICO officials, country specific parks would provide investors from the country concerned a certain amount of comfort. Further, it would also help them feel quite at home.
{K. T. Jagannathan, The Hindu : July 3, 2007, New Delhi}
World Bank loans to India climb 170%
It is the biggest in the history of India
The World Bank approved a record $ 3.8 billion in lending to India, including $ 2.3 billion in approved till June 30, included $ 600 million (€-440 million, £ -300 million) for rural credit co-operatives, $ 280 million for vocational training and $ 225 million for irrigation programmes in Orissa, as well as increased money for an anti-tuberculosis programme and health care for women and childre. “This is the largest delivery we have ever done”, says Praful Patel, vice-president, South Asia, World Bank. “It is the biggest in the history of India.” He says the bank is largely supporting India-led initiatives. “We are not designing programmes. We are putting money into well-designed programmes.”
Yet not everyone is happy with the ramping up of bank operations, with local NGOs, people’s movements and organisations, social activists and independent thinkers remaining suspicious. “Many of us feel it is clearly promoting a new-liberal agenda both politically and economically,” says Amitabh Behar, Director, National Centre for Advocacy Studies, Pune. Some economists, meanwhile, question the World Bank’s role in providing finance to a country that has access to global capital markets. “India has, like China, a huge capital influx and is accumulating foreign exchange reserves so it really doesn’t need any World Bank assistance, says Allan Meltxer of Carnegie, Ken Rozgoff, a professor at Harvard, says, “Bank credibility, bank technical assistance, bank support - these things are potentially important. But loans are, if anything, counter-productive.”
{Krishna Guha & Amy Yee, Business Standard : 7-8 July, 2007, Lucknow}
Farmers oppose setting up of SEZ near Hosur
Small and marginal farmers of Bairamangalam, Akondapalli, M. Agraharam, Korukondapalli and Sanamau panchayats are up in arms against the government move to establish a special economic zone (SEZ) in Krishnagiri district near Hosur. According to them the government has identified 3,230 acres of land in four panchayats of Bairamangalam, Sanaman, Akondapalli and kundamaranapalli. More than 5,000 families are dependant on it for their livelihood.
Further, the agricultural land identified for the proposed project is highly fertile. It is being used for cultivation of vegetables and other crops, which are sent across the state and to neighbouring Karnataka and Andhra Pradesh. The Department of Agriculture had already certified the land as fertile.
The agitating farmers are demanding that the government should set up the SEZ on an alternative site for the benefit of small and marginal farmer. They have even suggested that instead of taking possession of agricultural land, it can acquire 7,500 acres of porombak land, which was located nearby for setting up the proposed SEZ.
{The Hindu : August 31, 2007, New Delhi}

SEZs to empower corporations and pauperise millions and millions By Dr. Devendra Prasad Pandey

2007-10-14T08:02:00.000-07:00

There is an India that shines with its fancy apartments and houses in rich neighbourhoods, corporate houses of breath taking size, glittering shopping malls. And then there is other India. The India of helpless peasants committing suicides, tribals dispossessed of their forest land and livelihood. Globalization is the context in which growth is taking place, the accompanying process of economic liberalization and privatization are tilting the balance in favour of the market against the nation state. Nineteenth century capitalism developed through a complex process of conflict and cooperation between the state and market. The state furthered the interest of the market, but at times also regulated it.
Noam Chomsky in his work. “The Prosperous Few and the Restless Many” noted that the economic structure in the US was slowly evolving towards the model of Third World, where most of money lies in the hands of a few individuals, the vast majority of the population consists of the working poor and the governments invariably support the interests of the upper classes. He pointed out how the US and State governments routinely granted subsidies to business effectively instituting welfare of corporations. A similar undercurrent of partiality of shared interest gets reflected in the current SEZ policy being adopted in India. More than 200,000 hactares of land will be required for upcoming SEZ projects causing huge displacement of local people.
The mass protest against SEZs gains momentum as the list of SEZs gets longer. The menace of huge displacement and the government’s pathetic record on rehabilitation imparts urgency to the situation. Faced with stiff resistance mounted by the local populations, farmers, agricultural labourers and villagers, some people have started saying that fertile cropland should not be divested for industrialisation and whenever possible, SEZs should come up on wasteland and not on very good farmland. Land is a state subject and the state governments are acquiring huge tracts of agricultural land from the farmers under the pretext of ‘public interest’, using the colonial Land Acquisition Act, 1894.
India has 55.2 million ha of wasteland (Down to Earth, Nov. 15, 2006). Acquiring wasteland for SEZs has been touted as an acceptable compromise, but several questions need to be answered because wastelands seem to be in high demand. As per the Planning Commission report 11 million ha is needed for Jatropha plantation. As per the Confederation of Indian Industry estimates 36 million ha is needed for the paper and pulp industry.
According to the 54th round of the National Statistical Survey Organization survey, about 15 per cent of India’s geographical area is common property resource (CPR), including community pastures and grazing grounds, village forests and cultivable wastelands. 61 percent of CPR land falls into the category of barren or wasteland. The survey added that 20 percent of households with livestock depend on CPR land for grazing and 13 per cent collected fodder from it. So where is the waste land for SEZs or industries? It is just being used as an excused for forced land acqusition.
Dr. Devendra Prasad Pandey
Lecturer, Rural Management
Mahatma Gandhi Chitrakoot
Gramodaya Vishwavidyalaya,
Chitrakoot (M.P.)

NUCLEAR DEAL – LESS DISCUSSED CONCERNS By V.C. NANDA

2007-10-14T07:51:00.000-07:00

The nation’s leaders have evaded democratic sanction for the deal by first keeping back the details and then drowning a limited debate on an essentially economic issue in political noise. This has divided the nation into political groupings, without proper understanding of the issues. In this, rather delayed essay, an attempt has been made to draw attention to certain non-political aspects of this non-political issue.
The world is well aware of the risks inherent in reactor accidents. This is why nowhere, with the exception of France have any new reactors been set up in the last thirty years. Any possible rethinking must have been hastily put at rest by the disaster at Chernobyl, located in Russia – a developed nuclear technology country. The accident in the three mile island also in ‘developed’ U.S.A. appears to have been forgotten, as the place was uninhabited. But a public sector nuclear weapon plant near Denver in USA was closed in 1989 on orders of Environment Protection Agency (EPA) after discovery of radioactive leak. Thousands of workers are fighting the government for compensation and health care reimbursement. With the government taking advantage of cleverly worded legislation only some of them have thus for received help. A report in New York Times of June 13, 2007, mentioning that 67 of them have so far died has revived unpleasant memories. No wonder USA prefers gas based energy production to new nuclear reactors. Switzerland through a referendum has decided against nuclear reactors.

In India, there have been accidents at three of its nuclear reactors. I like to specifically mention the one at Narora, where a prior warning of mechanical defect was ignored. The leak at Uranium mine in Jharkhand is another example of casual approach to safety concerns. With no automatic warning system in place, the matter was brought to the notice of authorities by a passerby, several hours after he had noticed it. Another shameful aspect of this episode is that the world came to know of it through the Feb. 28 issue of the fortnightly ‘Down to Earth’, while the accident had taken place in Dec. 2006. Let us look at what others do. Reacting to a slight delay in informing the public about an effluent leak following a recent earthquake affecting the reactor site at Niiga, the Japanese government has for the time being ordered closure of the plant. In another incident at a privately owned nuclear weapons factory near New York, the warning siren system was found out of order by the EPA. The result was a fine of one lakh thirty thousand dollars. We have seen two examples how EPA works. By contrast, we have an Atomic Energy Regulatory Board. It is a toothless body answerable to the Atomic Energy Commission, which in turn, in headed by the Chief of the government department of Atomic Energy.

Natural disastrous can upset the best managed plans. That is why Japan a ‘resource poor’ country, in currently reconsidering the reactor route to energy generation. In our country however, the worst disaster in industrial history at Bhopal – the accident as well as the aftermath, has taught us nothing. 22 years have gone by without a single guilty person being punished and without those affected being compensated and looked after appropriately. This perpetuates our traditional careless approach to safety concern. The safety norms continue to be flouted at the Koondakulam reactor being set up now. Installing new reactors without rectifying the Bhopal wrong would be suicidal.
The quantum of power needed by the country today and in the near future is definitely less than the potential generating capacity of our existing installations. In other words, the need can be met simply by improving efficiency. This anyhow is absolutely necessary because the wrong has to be righted; but also because the generation from the newly proposed reactors will start many years from now. The small additional amount realistically expected from those reactors is anyhow less than what we can save by avoiding waste and doing the only right thing a poor country must do, namely avoiding a part of the luxurious spending by officialdom and the stinking rich. For the distant future, anyhow the reactors cannot match the need. The quantum of Uranium imports now proposed is a foolishly large addition to our already unmanageable trade imbalance. There are several safer and abundant alternatives being pursued by all nations of the world. The newest idea of geothermal power generation currently being pursued in Switzerland too could be followed. These will at once save the globe from warming as also from horrors of radioactivity.

Nuclear power generation is expensive in every country. But by handing over thousands of acres of land to reactors, we will also have to spend more on food imports and a lot more on rehabilitation related problems of displaced populations. It is not clear if the deal will bring us technology that we do not already possess. It certainly will not bring us the technology that France and Japan possess, which is said to be superior. Also a large number of countries are keen to get rid of their dangerous to store surplus and expensive Uranium. It is not clear that we have made the effort to obtain the cheapest bargain. It is also not clear that the deal ensures timely supplies. The boast about having persuaded USA to let us do our own Uranium enrichment appears to be a trick. The US government stopped enrichment in 1990 and the private sector industry USEC engaged in this trade in running at a loss, and that country imports most of its needed enriched Uranium.
The deal has gone past several stages and has still to go past two international bodies and the US Houses of Parliament. Interestingly, an independent democratic India is told it has been okayed by all of us, without anyone even having had a look at the draft. Also that there is no provision for a second look.
Fortunately this less strong country still involved in the deal has a weapon, which no individual or organization mentioned hitherto has had. That weapon is with the common man, who if he thinks what all is happening is not right, can refuse land for location of a reactor in his neighbourhood. The politicians have a face saving opportuny by associating with the common man.

( The author is a former Director of UGC Centre for Advanced Study in Mathematics at Panjab University, Chandigarh, and is currently associated with Azadi Bachao Andolan, Allahabad.)

Gandhi, Religion and Indian Nationalism By Ram Puniyani

2007-10-14T07:28:00.000-07:00

The Gandhi anniversary this year has been very special (2007). With UN declaring 2nd October as the International Day for Non-Violence, with the renewed interest in Gandhi all over the globe one needs to revisit the Father of Indian Nation and his yeomen contribution in the articulation of the concepts of non-violence and nationalism in Indian context. At another level his own unique definitions and practice of religion and definition of God as truth and non-violence have their own matchless place in the history of human thought. Even before coming to India, the Mahatma had sharpened his philosophy and political methods. When he returned from South Africa, India wasin the grip of religiosity and broad masses were part of the churning process due to the on going social changes. Broadly they were not yet major part of freedom movement. Gandhi on one hand had the exposure to liberal British political system and on the other had experienced therepressive South African regime, which was practicing apartheid. In India the social changes were slow to come by. The elite through different political formations dominated political process at that point of time. We had Indian National Congress, mainly espousing Indian nationalism, where the elite were the main participants. In Muslim League and Hindu Mahasabha, the landlords and princes were the core participants, later they were joined in by those few who came from the background of modern education. They were not from the landedgentry but they did develop political ideologies suiting the interests of feudal classes. Gandhi's decision, to launch non-cooperation movement, and to involve broad layers of society, alienated some ofelites from within Congress. Those from communal organizations werenot concerned about freedom movement anyway. Some from the Congress left in due course of time to join the communal formations. Gandhi was firm on the involvement of whole nation in the process of national movement.This ensured that our freedom movement would emerge as the biggest mass movement not only of India but any time in the World. This had the participation of people of all the religions, castes and of both the genders. This movement was also to define the contours of Indian constitution while laying the path to freedom from British colonialism. His major opponents were in Muslim League and Hindu Mahasabha, which later were joined in by the RSS. These formations were reflecting the interests of landed gentry and upheld the birth based caste and gender hierarchies. He faced the tough task of taking all the sections of society along to the path of Independence of the nation. In this, those on the side of secularism and democracy hadsome differences with him, but their common point of acceptance was the values of democracy and secularism His differences with Ambedkar and Bhagatsingh are highlighted by sections of society to the limit of exaggeration. They deliberately overlook that the grounds of agreementon major fields of political terrain did exist and were and arecrucial in understanding the diverse paths towards modern India. The Poona Pact with Ambedkar did deprive the dalits them separate electorate, but it also kept them in the fold of emerging India. The separate electorate to Muslims did in a way led to the foundation of Pakistan.He did not make efforts to save the life of Bhagat Singh who was given the death penalty by the colonial powers. Here he was sticking to his principles of non-violence, which for him was the central credo of value system.His differences with Muslim League, Hindu Mahasabha and RSS were more on the fundamental issues. These political formations were for Religion based nationalism, Muslim and Hindu. Subtly they were also upholders of birth based caste and gender hierarchy. These were the differences, which were used by the British to partition India. His central place in the freedom movement and his espousing the cause of all did get hostile reaction from Muslim communalism and Hindu Communalism both. These formations projected him to be against their religion, while his opposition was not to religions but to the politics in the name of religion. Nothing could be more contradictory in the approach to religion, than the approach of communalists and Gandhi. The communalists, both Muslim and Hindu, used the religious identity of their religion, by-passing the issues related to values and social reform. They used it to exclude the 'other', while Gandhion the other hand saw religion mainly as a moral force, a set of values, which should guide the individual in her/his life. He hardly talked of identity and his religion was innovatively inclusive of the other.While Muslim League talked of Islamic Nation, Pakistan, and Hindu Mahasbha/RSS talked of Hindu nation, Gandhi talked of secular India, articulating the aspirations of majority of the country. He wanted religion to be a private matter for the individual, "In India, forwhose fashioning I have worked all my life, every man enjoys equality of status, whatever his religion is. The state is bound to be wholly secular", and, "religion is not the test of nationality but is a personal matter between man and God, and," religion is a personalaffair of each individual, it must not be mixed up with politics or nationalaffairs". It is clear that while communalists saw religion as the dividing institution, Gandhi in his unique way, more in continuation with Bhakti and Sufi traditions saw religion as the ground which united people, "I consider myself as good a Muslim as I am a Hindu andfor that matter, I regard myself as equally good a Christian or aParsi" This quote of his has to be seen along with his two other more often cited quotes," For me, politics bereft of religion is absolute dirt, ever to be shunned", and "politics divorced from religion is like a corpse, fit only to be burnt." (all quotes from Gandhi andCommunal Problems, CSSS, 1994 pg 6). This again is so exceptional inits innovation in understanding. Here by religion he meant its morality aspects not just the ones related to external identity.While he had differences from Ambedkar, he took up the cause of untouchables in his own way. Ambedkar hammered his point in an uncompromising way and Gandhi did his all to take the eradication of untouchably far and wide. As secularization process had not gone far in the country which was/is in the grip of religiosity, he realized that policies and values laced in the language of religion will reach the people in an effective way. His contribution in the eradication of this evil of untouchability cannot be underestimated. His use of the word Harijan for the untouchables was again in tune with his language,which he devised to communicate with the masses. It was not that he wanted to humiliate them by using a separate derogatory term for them. It was to lift them up in the popular perception.At the same time Ambedkar correctly rebelled against the rigid chains of prevalent Brahminic Hinduism, Gandhi wanted to take along themajority of social sections towards the process of reform. At this point the Hindu communalists were talking of values of Manusmiriti, were already having the best of social laws in this book, they claimed.There are also incidents when people like Savarkar also worked for temple entry for untouchables, but such moves are mere exceptions. Hisimpact on the process to improve the condition of women reached allover, at a time when the communalists were putting all obstacles for women coming out for education and to participate in social life. It is no surprise that we do not see women's participation in the communal organization while National movement led by Gandhi has huge participation by women, and there are illustrious women who led by example in the fold of national movement.The divide between Gandhi and communalists, both Hindu and Muslim, was not merely for the political goals; it ran deeper, to the way of looking at society. It was about the approach to the social and human values. A section of Hindu communalists perceived Gandhi as the"biggest enemy of Hindu". Nathuram Godse symbolized this section. He killed the father of nation. He began his career as the trained pracharak of RSS and was later to become the Secretary of Pune Branch of Hindu Mahasabha. The paper he edited had the title, Agrani and was subtitled as Hindu Rashtra. Even today while Hindu right pays lip service to the Mahtama, they do not regard him as the father of the Nation, and look down upon his principles of non violence as being emasculating to Hindus and so should be forgotten. Their discomfortduring the present revival of interest in Gandhi's values is palpable through their reaction as seen in number of list serves and web sitesrun by them, and through other expressions of theirs'.Today sixty years down the line, the world has come far. The increase in violence all over the world, the politics wearing the clothes of religion has intensified the 'Hate other' ideology. Can we look up to Gandhi to confront the misuse of religion for political agenda of themighty at global as well as local level? Can we pick up some of the values from him rather than just bypass him or merely pay lip service to his ideals?

ARE GENETICALLY ENGINEERED CROPS THE ANSWER TO INDIA’S AGRARIAN CRISIS By Suman Sahai

2007-10-14T06:05:00.000-07:00

Talk of India’s agrarian crisis is everywhere. Its most tragic face is the growing number of farmer suicides, not just in the hotspot areas of Andhra Pradesh and Vidharbha but in the allegedly prosperous agricultural zones of Punjab and Karnataka as well. It would have shaken Sri Sharad Pawar ,the Agriculture Minister, to hear of the suicides of farmers in the showcase Baramati region, his pocket borough which boasts of biotechnology colleges and info-tech connectivity. Acknowledging the overall regression in agriculture, the Prime Minister has said that to achieve the targeted 9% growth during the Eleventh Plan period , it was necessary for the farm sector to grow by 4% annually, from its current 1.7%.
A number of studies have been conducted in the regions worst affected by the agrarian crisis and a fair understanding has been developed about the reasons for the rural distress. The Tata Institute of Social Studies (TISS) in Mumbai conducted an investigation into the Vidarbha agrarian crisis and farmer suicides at the behest of the Bombay High Court. Their key findings were the following:
The reasons for the crisis leading to farmer suicides were repeated crop failure, inability to meet the rising cost of cultivation, and indebtedness. The suicide victims were predominantly farmers with small to medium land holdings.
The study found that seventy per cent of the total number of suicide victims grew cotton as their primary cash crop. This figure is reflected in the district records of the region which say that seventy per cent of the farmers who killed themselves were cultivating Bt cotton.

The principal reasons for farmer indebtedness were identified as the growing cost of cultivation owing to higher input prices and higher cost for labor which increased the requirement for cash in the farm families. On the other hand, prices for agriculture products were plummeting. The combination of high cost of production, low market price and non availability of easy credit to meet the cash requirements of the farm family led to an astronomic debt burden that the farmers could not cope with. In addition to the agriculture loans, the farmers’ debt burden became heavier because of personal loans taken for social needs like marriages and education.
The study found that the crisis becomes acute when the farmers have exhausted their credit with banks (when such were available), and have turned to the private money lenders who charge usurious rates of up to 60 per cent per annum. These cannot be repaid given the adverse economics of production costs. Heavy rural indebtedness is the result of diminishing investment in agriculture which has reduced credit availability to cultivators. Allocation to agriculture and allied sectors from the total outlay for the Five-Year Plans has fallen from 14.9% during the First Plan to 5.2% during the Tenth Plan.

Apart from the crisis of available credit, crop failures have risen, especially in the last four to five years during which period farmers had moved increasingly to cash crops. This happened even when the monsoons were good. The crop failures were found correlated with heavy outlay on agrichemical inputs , use of hybrid seeds and genetically engineered cotton. According to the TISS report, the crisis in Vidarbha was more pronounced in the rainfed areas than in the irrigated areas, indicating the limiting role that the availability of water is beginning to play in agricultural productivity in all parts of India.
The crisis that has engulfed Punjab agriculture, which along with Haryana and Western Uttar Pradesh was considered the grain bowl of India is being attributed to a factors similar to what are being seen in other parts of the country. The wheat-paddy yields, the mainstay of the agriculture of Punjab so far, are stagnating and becoming unsustainable partly because the intensive agriculture cycle which has been mining soil nutrients relentlessly has led to the collapse of soil health. The excessive use of agrochemicals has also destroyed soil quality and eventually its productivity and additional expenditure on restoring degraded soils is adding to the already inflated costs of production. The total cost of production of wheat and paddy has gone up by Rs 65 per ton for wheat and Rs 190 per ton for rice.
Agriculture is becoming so unprofitable in the grain basket of India that entire villages are being put up for sale. Thousands of acres of prime agricultural land in regions like Sangrur are being offered at throw away prices partly because the head of the family has either committed suicide or migrated to seek work. In fact as hundreds of indebted farmers have committed suicide, in village after village once prosperous but now impoverished and old grandparents are struggling to take care of the children that have been left behind.

According to scientists at the Punjab Agricultural University, the emergency in agriculture has developed because of the rising cost of agriculture production which is not offset by either the Minimum Support Price offered by government or prices available on the market. In addition , the water table is falling, a situation made worse by the irrational , wasteful use of water thanks to the reckless political expediency practiced by politicians who have announced free electricity and free water for irrigation. The solution, the university proposes is policy changes that will rationalize water use by stopping the free electricity given to farmers and instituting water pricing, as well as diversification of agriculture to move away from the paddy-rice rotation and introducing new crop varieties.
From Rajasthan too, reports suggest that the chief reason for the now acute farm crisis is the crisis of water. Rains, always scarce in this desert belt are becoming scant and infrequent. In many districts it has not rained for five years in a row. Exacerbating the water scarcity is the cheap populism of the political class which has announced free or heavily discounted water for farmers. The result of this is reckless extraction of groundwater to the extent that aquifers are running dry. Farmers and the new class of ‘water vendors’ that provide underground water to government schemes are pumping up groundwater without any restraint, knowing that it is running out. With no rains or water harvesting structures to harvest what little rain is received to charge the underground aquifers, groundwater is expected to finish in about another ten to fifteen years.

The story of Maharashtra, Punjab and Rajasthan can be told for many other states. The crisis of agriculture today is predominantly the crisis of water. Groundwater depletion affects not just Rajasthan where eighty percent of the groundwater blocks are in danger of running out but also states like Punjab, Haryana, Andhra Pradesh and Tamil Nadu. In Punjab eighty per cent of the groundwater blocks are considered overexploited, In Haryana the figure is sixty percent and in Tamil Nadu , forty six percent. Of the total 5723 geographic blocks into which the country is divided, over 1000 are considered to be critically overexploited with respect to the groundwater available. Unless water is priced and the political concessions of free electricity granted to farmers by vote seeking politicians is withdrawn, the water in many regions in India will simply run out, putting an end to agriculture production in large parts of the country. This will spell the end of India’s dreams and considerable success in achieving self reliance in food security.
The National Commission on Farmers (NCF) which has been working these past two years to understand the reasons for the crisis in agriculture, has recommended in its report that agricultural renewal be undertaken on a war footing incorporating a comprehensive action plan that should include completing the unfinished agenda on land reforms, restoring soil health, rationalizing the use of water and mandatory rainwater harvesting to recharge aquifers, investment in science and technology ,conserving agricultural diversity in the form of plant varieties, livestock and fisheries, providing insurance and credit to farm families, assured and remunerative farmer centered marketing and pro farmer policies.

In the backdrop of this understanding of the agrarian crisis, the Department of Biotechnology and the Biotechnology industry have taken the position at several policy forums that raising agricultural growth from the current 1.7% to the desired 4% could be achieved by promoting genetically engineered crops. US led programs like the secretly concluded and controversial Indo-US deal on agriculture and the ABSP I and ABSP II ( Agriculture Biotechnology Support Project) funded by the USAID and led by Cornell University and implemented in India through the Department of Biotechnology, are invoked by the government and the science administration as enabling programs to achieve the goal of uplifting Indian agriculture. Apart from the desirability of such direct US intervention in India’s program on GE crops and foods, is the ridiculously simplistic approach of suggesting that one single technology could address the many factors for decline in our agriculture.
Will genetically engineered crops contribute anything to alleviating the current crisis? To understand this, the reality ( as against the myth) of genetically engineered crops needs to be examined. What is actually available in terms of crops and their genetically engineered properties and to what extent are these relevant to Indian agriculture and the needs of small farmers. Do GE crops have the potential to carry debt ridden farmers over the threshold of despair and make their agriculture profitable, produce more food more cheaply and abolish hunger and rural distress?

Genetically engineered crops have been developed essentially for the large land holding, mechanised agriculture of industrialised countries. There is little available in the repertoire of genetic engineering today that is geared to address the problems of developing country agriculture. At present GE technology offers only four major crops, Soybean, ,Corn, Cotton and Canola which is a kind of mustard that is cultivated in temperate areas. Apart from a few virus resistant GE varieties, herbicide tolerance and insect resistance (the Bt trait) are the two traits that dominate the field of genetically engineered crops. According to the data for 2005 , of all GE crops planted in the world, 82 percent carried the herbicide tolerance trait , the remaining 18 percent carried the Bt trait. The Biotechnology industry, which owns both these traits, is therefore very keen to promote them as much as possible. Herbicide tolerant crops contain a gene that makes them resistant to the herbicide that is sprayed to kill herbs and weeds. The company that owns the herbicide tolerant crops (in this case Monsanto) is also the company that owns the herbicide that that particular crop variety will tolerate. Hence the company promoting herbicide tolerant crops makes a double killing, one on the sale of the herbicide itself, and two, on the sale of the crop varieties which are tolerant to that proprietary herbicide.
Herbicide tolerance was developed for industrial agriculture with its large farms and labor starved conditions, where weed control was possible only by using chemicals like herbicides. In developing countries like India weeds are controlled manually.Weeding is an income source in rural areas, especially for women. Sometimes it is their only source of wages. Farm operations like sowing, weeding, harvesting and winnowing are the key sources of rural employment. Agricultural labour constitutes the largest section of the labour force in developing countries; in India and other South Asian countries, the agricultural labour force is growing at the rate of six to seven percent per annum. The herbicide tolerance trait is essentially a labour saving and hence a labour displacing trait. Its introduction will take work away from agriculture labour and destroy income opportunities in rural India. Hence introducing these kind of genetically engineered crops is economically damaging and totally against the interest of rural people.
Weeds are considered a nuisance in the monoculture agricultural systems of industrial nations but not so here. In India and other developing countries, the fields are surrounded by local flora, the so called weeds, which have several useful functions critical to the well being of rural communities. What is collected by those doing the weeding in an agricultural field, fulfils two important nutritional roles. The plants that constitute weeds are largely nutritious leafy greens like chaulai and bathua saag , which are a valued source of nutrition in the family’s diet. A typical wheat field in India or Bangladesh would yield at least twenty types of leafy greens over the cropping season. These greens provide nutrition in a fresh and easily available form, at no cost. This has to be seen in the context of rural poverty where many farm families would not be able to buy too many vegetables from the market but they are able to access it for free from fields and field boundaries. This access to free nutrition is one of the reasons why nutritional status is better among the rural poor than among the urban poor who have to buy all their food.

The plants collected during weeding that are not consumed by the family, serve as fodder for the livestock that rural families maintain as an additional income sources. India has a very large livestock population; it has the largest cattle population in the world. India is also a fodder starved country and increasing fodder availability is one of the key concerns of the agricultural research system. For rural families the livestock they can keep is critical for extra income either through milk or the sale of the animals for meat. The fodder that is collected during weeding is fodder that is obtained for free. If rural families had to buy all the fodder that was needed to maintain their cows, goats or pigs, many would not be able to afford keeping animals and would have to forego the extra income.

Apart from this, using herbicide tolerant crops would make it impossible to plant crops on the field bunds, as is done in many parts of Asia both for additional food and for increasing farm incomes. Typically, farmers will grow crops like yams, ginger or vegetables on the bunds surrounding rice fields. Thus two or three kinds of produce are available from the field in the same season. This advantage would be lost if the package of herbicide tolerant crop varieties and herbicide use would be implemented. In addition, the practice of intercropping and mixed farming would suffer a setback. Traditionally farmers plant more than one crop in the field. Sugar cane for instance is interspersed with lentils or mustard and it is not uncommon to find farmers planting mustard along with wheat, to be harvested one after the other or linseed together with lentils. Mixed cropping is widely practiced, with differing combinations of crops depending on the region.

So called weeds are also the medicinal plants that rural families depend on for the health and veterinary care needs of themselves and their animals. The introduction of herbicide tolerant crops with accompanying herbicide use would kill the surrounding vegetation and deprive rural communities of the medicinal plants which form the basis of indigenous healing traditions. . It is well known that about 80% of rural communities across the world are dependent on medicinal plants and indigenous systems of medicine. Destroying the vegetation around crop fields would deprive village communities of crucial health care opportunities especially in a situation where the formal system does not adequately address their health and veterinary requirements.

Bt technology is the second category of genetically engineered crops like Bt cotton which is the only GE crop being cultivated in India at present, although many others are in the pipeline. In Bt crops, a toxin producing gene from the soil bacterium Bacillus thuringiensis (Bt) is put into plants. These GE plants which produce the Bt toxin are in essence producing their own insecticide. Pests that feed on the plant are supposed to die on eating the poison.. They do up to a point but then like all pests, they too will develop resistance. This has begun to happen. Reports are coming in about the collapse of the Bt cotton technology from China and from the state of Arkansas in the cotton belt of the US. Cotton scientists in India are warning that with the way that legal and illegal Bt cotton is spreading everywhere, without farmers following the recommended crop management practices, it is only a matter of time before the pests become resistant to the toxin and the technology collapses here as well.
In India, the Bt strategy for disease resistance is likely to collapse earlier than predicted since in the absence of any coherent policy, the Department of Biotechnology has sanctioned such a large number of Bt crops that today, about 42 percent of all the research on GE crops in India, is based on the Bt gene. Ranging from cotton to potato, rice, brinjal, tomato, cauliflower, cabbage, even tobacco, to maize, the Bt gene is everywhere.

Assuming that the crops that are being researched are targeted to reach the fields one day, we are facing a situation when a wide range of crops growing in both the Rabi and Kharif season will contain the Bt gene. So throughout the year, there will be standing crops containing Bt endotoxin. Not only that, in the same season, there will be a number of different Bt crops growing next to each other in small fields specially in regions where farmers grow a variety of vegetables. When the bollworm is exposed to the endotoxin, constantly, year for year, in every season, resistance to the Bt toxin will surface very quickly in the pest.

We saw this happen with DDT which was used in such profusion everywhere that the mosquitoes quickly acquired resistance to it and DDT became ineffective in controlling mosquito populations. The same thing happened with the use of synthetic pyrethroids as pesticides in agriculture. Single point interventions in pest control have never worked for any length of time , whether it is through chemical pesticides or through a genetically engineered route using Bt toxins. The reason is simple. Every pest, in its effort to survive , will ultimately develop a resistance to the poison that is aimed to kill it. That is why a constantly evolving Integrated Pest Management (IPM) approach, using a variety of strategies, is the only approach that can work over the long term to control plant pests and diseases. That is the reason that the very expensive Bt technology will not work for Indian agriculture.

On top of all this, the high cost of Bt technology makes its cultivation economics adverse for small farmers. Bt cotton seeds cost several times the price of successful, local non Bt seeds. So exorbitant has the pricing been, that the Government of Andhra Pradesh has filed a case against the owner of the Bt technology, the Monsanto company.
Gene Campaign which presented the first scientific data from the first harvest of Bt cultivation in Maharashtra and Andhra Pradesh, showed that net profit from Bt cotton was lower per acre compared to non-Bt cotton in all types of soils and that because of the high investment costs and poor performance of Bt cotton , sixty percent of the farmers cultivating Bt cotton were not even able to recover their investment and incurred losses averaging Rs. 79 per acre (Table 1)
Table 1: Comparative income from Bt. and non-Bt. Cotton ( Andhra Pradesh & Vidharbha)

This then is the scenario with regard to the currently available genetically engineered crops that the promoters of agricultural biotechnology present as the answer to India's problems in agriculture. It is possible that one day genetically engineered crops may contribute to solving one of the other problem in agriculture but that day is not here yet. At present GE crops are being generated by the private sector which is investing in traits and technologies that benefit farming in advanced industrialized countries and are profitable enough to guarantee adequate returns on investment in research. There are unresolved issues about the environmental impact of such crops and their safety as food. There should be greater clarity on safety issues before GE crops are considered as a viable option. It needs to be kept in mind that genetic engineering is a technology owned predominantly by six multinational corporations. These are Monsanto , Syngenta, Dow, Du Pont , Bayer and BASF . Every aspect of the technology is shackled in patents and access to it is possible only through licensing. Is it realistic to assume that in their current form, genetically engineered crops have anything to contribute to alleviating rural distress in India?
Suman Sahai is the director of Gene Campaign, a research and advocacy organization working on food and livelihood security, farmers’ and community rights. She can be reached at genecamp@vsnl.com and http://www.genecampaign.org/

TRIPS and Bio Diversity: A gender perspective by Suman Sahai

2007-10-14T05:50:00.000-07:00

Gene Campaign is a movement involving organisations across Asia, working towards food and livelihood security for rural and tribal communities. It is deeply concerned about the negative impacts of privatisation on genetic resources through patenting and intellectual property rights. Biological resources are the mainstay of the livelihoods and local economies of communities in developing countries. Ensuring access to these resources is key to their being able to engage in self-reliant growth. Women who are closely involved with the maintenance of biological resources are also its most sophisticated users for purposes, which feed and look after their families. The privatisation of these resources would hit at the ability of women to care for their families and seriously jeopardise the health and security of rural and tribal populations.

Traditionally women have played an important role in managing the genetic diversity in their ecosystems, harvesting carefully, and allowing regeneration so that the resource base is sustained over generations. In many Asian societies, field operations like ploughing and marketing are done by men, and the selection and storage of seed, planting and weeding in fields, by women. Women generally use their knowledge of natural and biological resources to satisfy multiple household needs. They breed well-adapted varieties and develop sophisticated farming systems using a range of crop varieties, to ensure food and nutrition for the family. Their access to and use of genetic resources is unhindered and they succeed in making effective use of them for food, fodder, medicine and other essential products .

The transformation of agriculture to meet the needs of a globalising market economy is contributing to the steady erosion of the biological resources and knowledge systems controlled by women. The trend towards monocultures and cash crops in a high input, intensive agriculture system, to produce crops on contract or for urban and export markets, is impacting negatively on women’s role in domestic and local arenas .

Women and the conservation of bio diversity

Communities often have well-defined gender roles in plant and seed selection and storage. Traditionally women in Asia often use a variety of indigenous plants, trees and animals, and they have a direct stake in conservation. The Neem tree, for example, is used as a bactericidal agent in agriculture, in the household for storing food and to prevent infections. Women tend to take a lead role in preserving and conserving croplands, forests and other natural resources for perpetual use. Men are more likely to be involved in converting these resources into cash. Women are also often the traditional caretakers of genetic and species diversity in agriculture. Their knowledge of growing conditions and nutritional characteristics of various species skills them in seed selection and plant breeding. In many societies, it is women who are mainly responsible for this, as well as for seed exchange and preservation of local bio diversity, often gathering fruits and medicinal plants from forests for immediate use or for sale at local markets.

The ‘Convention of Biological Diversity’ (CBD), which affirms the sovereign rights of nations over their bio resources, calls for conservation of bio diversity, sustainable use of its components, and fair and equitable sharing of benefits arising from the utilisation of genetic resources. It makes reference to the central role of women in conserving bio diversity and knowledge of plant properties, recognising “…the vital role that women play in the conservation and sustainable use of bio diversity,” and affirms “the need for full participation of women at all levels of policy-making and implementation of biological diversity conservation”(Women and the Environment, 2002insert page ref). ‘Agenda 21’, adopted at the Earth Summit in Rio de Janeiro in 1992, also stresses the need to strengthen women’s involvement in national ecosystem management and control of environmental degradation.

Other international plans of action have highlighted the critical role of gender in genetic resources conservation and sustainable utilisation. The Food and Agriculture Organisation (FAO) publication, ‘Gender – Key to Sustainability and Food Security’, states: “Rural women in developing countries hold the key to many of the planet’s agriculture systems for food production, seed selection, and protection of agro-bio diversity. Women using diverse wild and indigenous species often use home gardens as experimental plots.

The participants at a meeting convened by the International Plant Genetic Resources Institute (IPGRI) and FAO in Rome in October 1996 also concluded, “An understanding of men and women farmers’ differential roles and responsibilities in PGR conservation and management, as well as the intrinsic value of their knowledge, is crucial to sustainable, effective and equitable PGR conservation and utilisation”

The Commercialisation of bio resources

In the last decades there has been a distinct shift in the way biological resources are viewed. What was a ‘natural’ resource, accessible to all, has now become an ‘economic’ resource, to be privatised. In this process, public property jointly held and nurtured by communities is converted to a private property owned by a few and withheld increasingly from the local communities.

This shift can be seen in recent international and national developments. Two major international agreements, the Agreement on Trade-Related Intellectual Property Rights (TRIPS) of the WTO and the United Nations Convention on Biological Diversity (CBD), with mutually conflicting approaches, are now shaping the domestic regimes of member states with respect to biological resources and associated indigenous knowledge. The Agreement on TRIPS engenders privatisation of biological resources by allowing patents to be granted on biological materials and associated indigenous knowledge, whilst the CBD acknowledges that local communities have rights over bio resources and indigenous knowledge

Article 27.3(b) of TRIPS has brought biological resources under the purview of intellectual property rights, hence providing for private ownership over bio resources with exclusive commercial rights.

Biological diversity has become the sought after raw material of the life sciences industry. Whilst corporations in the developed world have mastered the techniques of recombinant DNA technology, the raw matter is located principally in the tropical and semi-tropical countries of the developing South. Not only the resources, but the associated knowledge of their properties are located within indigenous communities.

In order to gain access to biological resources, the life science corporations, through their governments, have extended the scope of intellectual property rights to biological materials at the global level. This development took place in the ‘Uruguay GATT Round’ that began in 1986 and concluded in Marrakech in 1994. During this round, life forms and genetic resources were brought into the ambit of one system for intellectual property rights.

TRIPS covers, amongst other things, copyright and related rights, trademarks such as the protection allowed to Champagne wine and Scotch whisky, industrial designs, patents and plant variety protection, layout-designs of integrated circuits used in electronics, protection of undisclosed information and trade secret and unfair competition.

Intellectual property rights over biological materials

The key element of the TRIPS Agreements related to agriculture and food security is the requirement for WTO Members to make patents available for any inventions, whether products or processes, in all fields of technology without discrimination. One reason for greater interest in patents is the rapid development of biotechnology in agriculture.

There are four options within Article 27.3 (b). Firstly, to allow patents on everything. This would include all materials and all forms of technology. Secondly, to exclude plants, animals and biological processes, but not plant varieties. This means that whereas naturally found plants, animals and the natural biological process by which they are created, could be excluded from patents, crop varieties could not. The third option is to exclude plants, animals and biological processes from patenting and to introduce a special sui generis for the protection of plant varieties. A sui generis system allows the country to create a system of their choice that would enable the minimum protection agreed to in the WTO. The final option is to exclude plants, animals and biological processes from patenting but not plant varieties, and to provide a sui generis right. This last would mean that plant varieties could be patented or protected by an independently created sui generis system .

Most developing countries have chosen option 3. A sui generis system of protection is one adapted to particular subject matter, and allows countries to make their own rules for protection of new plant varieties. One possible sui generis system likely to be recognised is the International Union for the Protection of New Varieties of Plants (UPOV) system. This was initially developed in Europe and has now been adopted by the industrialised countries. The UPOV system has undergone several changes after its formulation in 1961, but these have resulted in almost no concessions for farmers and breeders in the South .

Article 27.3(b) of TRIPs is perhaps the most controversial clause of the entire WTO agreement .It requires members to provide for the patenting of "non-biological and microbiological processes", and WTO members are now in the process of defining their positions regarding the future of the provisions. There are indications that a few members like the US, would like the sui generis option to be eliminated altogether, while most developing countries are preparing national legislation to implement it. There are proposals to treat UPOV as the only sui generis option for plant varieties. The problem is that UPOV is not in the interest of developing countries since it does not contain any rights for farmers. There is only one right, that granted to the breeder, which in today’s context is increasingly ‘the company’. Patents on seeds would severely restrict the farmers’ access to them, since they would have to buy fresh seed for every sowing. Women would be particularly disadvantaged under UPOV since their current access to their own seeds ensures that they can contribute to food, health and nutrition for the household.

There are potential conflicts between TRIPs patenting regime and the Convention on Biological Diversity (CBD), as well as the International Treaty on Plant Genetic Resources (ITPGR) of the FAO. These conflicts are widely seen as more political than legal in nature, and the US government has made early implementation of TRIPs a top priority of its foreign policy. These matters are likely to emerge as matters of dispute under the WTO's dispute settlement system in the coming years.

UPOV 1991 conditions will significantly diminish the farming community's capacity to be self sufficient in seed and self-reliant as agricultural producers .UPOV requires plant varieties to be "distinct" from other varieties, produce genetically "uniform" progeny, and remain genetically "stable" over generations. After the 1991 UPOV amendment, a new quality- "novelty"- has been added to the minimal characteristics required. The uniformity requirement has potential to contribute to genetic erosion. In addition, the cost of maintaining UPOV certification is beyond the means of most farmer-breeders. Although peasant farmers have also cultivated plant varieties expressing desirable traits over time, their varieties rarely meet the UPOV requirements list.

These conditions for a ‘Plant Breeders’ Right certificate’ under UPOV go contrary to the goal of enhancing genetic diversity. Furthermore, the kind of protection it grants is an exclusive monopoly right. This contrasts sharply with the broader goals of collective remuneration and benefit sharing expressed in a number of other global agreements.

UPOV conflicts with self-reliant agriculture and livelihood security

Most developing countries are contemplating the sui generis route to comply with TRIPS, instead of patenting. A number of influential bodies, including the WTO itself, are pushing for a narrowing of the sui generis option to one legislative model provided by the UPOV. Independent legal and economic experts have reiterated that UPOV should not be accepted as an effective sui generis system for TRIPS and that there is ample scope for manoeuvre, flexibility and national discretion in interpreting the sui generis option .

The UPOV system promotes commercially bred plant varieties for industrial agricultural systems. Plants are bred to grow successfully with their chemical inputs or with their patented genes at the expense of more sustainable bio diverse systems. Since ‘Plant Breeders’ Rights’ (PBRs) are only given for a variety that is genetically uniform they limit both what kind of seeds can be marketed and who can market them. UPOV automatically discourages genetically diverse and locally adapted seeds from the market and from the field.

The impact of UPOV type regimes will be highly detrimental to developing countries. Firstly, farmers who have contributed the varieties on which plant breeders base their new varieties would have no rights. Secondly, the UPOV conditions are for industrial economies where only 2 to 5% of the population practices agriculture and there are no small and marginal farmers. UPOV laws advantage countries where agriculture is largely a commercial activity. For the majority of farmers in Asia, Africa and Latin America however, it is a livelihood.

Applying the TRIPS framework to bio resources is against the interests of indigenous and farming women and men. Women are the most skilled in the use of bio resources for food, medicine and other uses, and use these resources to improve the health and nutrition status of their families, as well as to earn some income. The TRIPS Agreement does not recognise that local communities have any rights over bio resources and associated knowledge. It fails to acknowledge or protect farmers’ rights, explicitly recognised in the CBD and ITPGR. In addition, the TRIPS Agreement, unlike CBD or ITPGR, does not acknowledge the essential role of women in rural communities in conserving bio diversity. It does not make any provision to ensure benefit sharing from technology and innovation, or require any prior informed consent of the people (primarily women) whose knowledge is tapped for technological innovation.

Responses from civil society and Southern governments

Sustained civil society pressure from is being applied by developing countries like India, Brazil, China, Cuba, Dominican Republic, Ecuador, Pakistan, Thailand, Venezuela, Zambia, and Zimbabwe on the TRIPS Council to include additional clauses to the TRIPS Agreement. These are to ensure that an applicant for a patent relating to biological materials or indigenous knowledge, shall provide disclosure of the source and country of origin of the biological resources and of the indigenous knowledge used in the invention. The applicant would also have to provide evidence of prior informed consent and of fair and equitable benefit sharing under the relevant national regimes.

These countries are also pressing for an international regime, which grants protection to indigenous knowledge. Due to opposition from developed countries, particularly the US, no action has been taken on these proposals. On the contrary, developed countries are advocating a ‘TRIPS-plus’ approach. The US and EU have been putting pressure on weaker countries to get them to accept IPR regimes even in excess of what the WTO demands. There are a number of bilateral or regional treaties between developed and developing countries that have more stringent rules than that provided under TRIPS.

The TRIPS Agreement does not specify what constitutes an ‘effective’ sui generis system. Taking account of this flexibility, a few countries have developed their own laws reflecting the combined obligations of the CBD and TRIPS. The ‘Protection of Plant Varieties and Farmers’ Rights Act of India’ is one such example. It balances farmers’ and breeders’ rights, recognises farmer varieties and provides for monetary compensation for their use by breeders. The ‘Model Law for the Protection of the Rights of Local Communities, Farmers and Breeders, and for Regulation of Access to Biological Resources’, developed by the Organisation of African Unity (OAU) is a law which recognises the contribution made by farming communities to developing and maintaining bio resources. However, the developed countries are discouraging these efforts. TRIPS does not require countries to adopt UPOV as their sui generis system, yet there are bilateral pressures by developed countries on poor countries to join UPOV. For instance, the ‘EU-Bangladesh Trade and Aid agreement of 1999’ requires Bangladesh to “make every effort” to join UPOV.

Impact on biodiversity, gender relations and communities

Bio diversity is the basis of food and livelihood as well as human & animal health security for poor and marginalised communities. To alter the dynamics of control and usage of bio diversity through IPR rules will further impoverish and marginalise local communities, and women will be disadvantaged both in terms of their economic and decision making roles.

The case of the Canadian farmer Percy Schmeiser and his run in with Monsanto, over an alleged violation of IPR shows the way IPR regimes are being implemented by corporations to establish monopolies. Monsanto sued Schmeiser for huge damages for violating its patent on ‘Roundup Ready’ canola after specimens of the proprietary canola were found on Schmeiser’s property. Canola, is a cross pollinating crop so the likely source of the offending canola was pollen from a nearby Roundup ready field but the case demonstrates the extent to which MNCs will go to establish monopolies on bio resources. Such actions would have grave consequences in developing country situations since denying rights over vital resources would ultimately affect the community’s ability to survive.

Commercial interests that target bio resources on a large scale for the market will threaten the resource base, and with it, the knowledge base developed around the bio resources. The impact on women and through them, families, will be immediate. There is a steady depletion of rare medicinal flora from the hill regions because of collections being conducted by pharmaceutical companies. A sub-species of Taxus baccata, the Himalayan Yew tree in the Himalayan region is facing near extinction thanks to over exploitation for its the cancer curing properties. Large areas of the Kumaon and Garhwal Himalayas in India have been stripped of medicinal plants by head loaders collecting for foreign and Indian companies. This devastation of flora means that women lose the resources they need for use in home remedies to treat their families and their livestock.

Patents on seeds would snatch away women’s ability to breed new, locally adapted varieties for food, healing and rituals. This would strike at food and nutritional security of families and also at the socio-cultural identity of communities. Women have bred varieties for special uses integral to local food habits and cultural and religious practices.

When patents are permitted, there is currently no requirement for disclosing the source of the plant material, nor the key information lead for the claimed ‘invention’, that is the indigenous knowledge of the characteristics, say of the particular medicinal plant. Bio piracy is a misappropriation of the intellectual property of local communities. In the case of the patent on turmeric, or neem, the knowledge of the wound healing property or the bactericidal property of the respective plants was the basis of the ‘invention’ that was granted a patent by the US Patent and Trademark Office. The consequences could be twofold. Exercise of the patent in India could lead to corporate control over wound healing or antiseptic products derived from turmeric and neem. On the other hand if such products had export potential to the US, such an opportunity could be denied because the existing US patent could be used to block any imports.

Whether in the field of medicinal plants or in agriculture, it seems clear that women will be excluded from the decision making process. They will have less say in what will be planted in the field because seed availability will increasingly shift to crops with a single dominant trait. Women are likely to have fewer options and less flexibility to use bio resources for multiple uses. Since participation in the cash economy to make up the loss in these sectors will either not be possible for women or place additional burdens on them, it is more likely that the ensuing deprivations will become permanent.

The Way Ahead

The only way to fully ensure a fair deal for communities in developing countries is to remove bio diversity from TRIPS altogether. Since achieving this ambitious goal may take more time than the mandated review period allows, one way might be to secure a five-year suspension of the implementation of Article 27.3(b) so that developing countries may sort out their strategies. In any case, developing countries must at least ensure that there is no strengthening of the TRIPS Agreement, as some developed countries are trying to do through bilateral treaties.

It is important to develop alternatives to UPOV. This direction must be strengthened in order to secure the interests of small farmers, women and rural communities.

A non-UPOV treaty on IPR regimes for seeds should seek to:

· Provide reliable, good quality seeds to the small and large farmer

· Maintain genetic diversity in the field

· Provide for breeders of new varieties to have protection for their varieties in the market, without prejudice to public interest
· Acknowledge the enormous contribution of rural and tribal women to the identification, maintenance and refinement of germplasm

· Acknowledge the role of farm men and women as creators of land races and traditional varieties which form the foundation of food and livelihood security
· Emphasise that the countries of the tropics are germplasm owning countries and the primary source of agricultural varieties
· Develop a system wherein farmers and breeders have recognition and rights accruing from their respective contribution to the creation of new varieties

The other approach could be to negotiate at the international level for establishing the primacy of CBD over TRIPS. Article 22 of the CBD says ‘The provisions of this Convention shall not affect the rights and obligations of any Contracting Party deriving from any existing international agreement, except where the exercise of those rights and obligations would cause a serious damage or threat to biological diversity ‘.

It is clear that the implementation of TRIPs is detrimental to the health of biological diversity and therefore its implementation must be made subservient to the conditions of the CBD.

There is a large body of opinion held by academia, politicians, and civil society groups all over the world, that IPRs should not be regulated under the WTO at all. Refining the jurisdiction of TRIPS would be part of a more fundamental reassessment of whether trade policy instruments governing market access should determine national intellectual property regimes.

Dr. Suman Sahai is the Convenor of Gene Campaign, and is based in New Delhi. She has published extensively in science and policy issues related to food security. She is a member of several national policy forums on research and education, international trade, bio diversity and environment, rural development, biotechnology and bio ethics and intellectual property rights.

Email - mail@genecampaign.org /genecamp@vsnl.com
Web - http://www.genecampaign.org

US Farm Bill 2007: Cat among pigeons By Devinder Sharma

2007-10-05T05:47:00.000-07:00

As a child I had always wondered as to why pigeons shut its eyes when it sees a cat. After all, how naïve or stupid depending on how you perceive the act, can the pigeons be to think that a visible threat to its life, which is as sure as death, can be simply warded-off by keeping eyes wide shut.

I gave up as I grew. But now I realise that the educated elite, especially if they happen to be macro-economists or trade negotiators are a step ahead of pigeons. The only difference being that while pigeons meet a gory end, whereas the trade negotiators and economists are clever enough to escape by ensuring that the axe falls on the poor and marginalized.

No wonder, as the trade negotiators from 150 member countries of World Trade Organisation (WTO) assemble at Geneva to resume negotiations, I am told the 'mood' seems to be upbeat and 'just right'. There are enough indications that developing country negotiators will brush aside all threats to agriculture and industrial sector and instead join the rich and industrialised countries to sing paeans of virtues in favour of what is known to be an unequal and unjust multilateral trade regime.

It sure is an unequal world. Giving a damn to the outcome of the ongoing multilateral negotiations, the United States has thrown yet another protective ring around its heavily fortified agriculture. Knowing that the developing country negotiators are weak-kneed and lack the courage to even raise their voice, the House of Representatives has passed the US Farm Bill 2007. This prompted the House Agriculture Chair Colin Peterson to say: "I want to write a Farm Bill that's good for (American) agriculture. If somebody wants to sue us (at the WTO), we've got a lot of lawyers in Washington."

Although the notorious Bill awaits clearance from the US Senate, it means that over the next five years the American farmers will receive a federal support of US $ 286 billion. Irrespective of the volatility of the global markets, and the advantages of 'free market' economy that the macro-economists in the developing world never feel tired of reiterating, the US farmers have preferred to rely on government support. While the US is forcing the developing world to turn its agriculture 'competitive' by removing all safety nets for farmers, it does exactly the opposite at home.

Let me make it clear. The 'comparative advantage' in agriculture that the US flaunts about is actually because of subsidies. Remove the subsidies and American agriculture falls flat. It is because of these heavy subsidies that farmers in the suicide-belt of Vidharba in Maharashtra or cotton farmers in western Africa are priced out. And despite the outrage against monumental cotton subsidies, for instance, the US has made no effort to make even a nominal cut under the proposed Farm Bill 2007.

Traditionally, the US farmers have survived all these years on government support. Under the Farm Bill 2002 (which expires on Sept 30, 2007), the US government had till March 2007 spent US $ 271 billion. Which means that in just 10 years - between 2002 and 2012 - US agriculture will receive approximately US $ 557 billion. This is more than the total gain of US $ 539 billion that was anticipated for the 110 developing country members from full trade liberalisation in agriculture at the beginning of the WTO negotiations. It is however another matter that the total gain for developing country agriculture is now estimated at a paltry US $ 6.7 billion.

It is not as if the US farmers were dependent upon free trade earlier. Since 1993, Farm Programmes have been in place. It was, however, the US Farm Bill 1996 that was expected to bring about a structural change. It actually required most farm subsidies to be phased out by 2001. By bringing in the concept of 'decoupled' farm payments, which meant that farm payments were de-linked from production, the expectation was to rectify a historical mistake. "Decoupling" however resulted in price collapse thereby bringing in "emergency" payments. Call it 'counter-cyclic' payments it has now become a permanent feature of the farm policy.

And that reminds me what a former World Bank Chief Economist Nicholas Stern, while travelling through India, denounced subsidies paid by rich countries to their farmers as "sin ...on a very big scale" but warned India against any attempts to resist opening its markets. "Developing countries must remove their trade barriers regardless of what is happening in the developed countries."

Much of the government support is for six primary commodities: corn, wheat, soybeans, cotton, rice and grain sorghum. In addition, the 2007 Farm Bill provides US $ 1.1 billion for vegetables. For biofuels, the subsidy support will heighten investment by 600 per cent. To give a boost to organic cultivation, the Bill provides US $ 5 million as cost-sharing component with 17 states to bring in organic certification. It will help defray the cost of certification for farmers to the tune of 75 per cent, to a maximum of $ 750. Subsidy provisions also exist under the conservation programmes for not growing anything.

And yet, the real beneficiaries of the US government support are not the family farms. Much of the support goes to increase the profits of agribusiness majors like ConAgra, Cargill, ADM and Tyson. Among the beneficiaries are big landowners farmers, including Ted Turner and David Rockefeller. It is primarily the agribusiness corporations that have gained the maximum since the US Farm Bill 1996. The Farm Bill results in over-production of the six major crops resulting in price slumps, which makes it easier for the food corporations to dump the commodities in world markets.

The Institute for Agricultural Trade and Policy has estimated that dumping of wheat has increased from an average of 27 per cent per year before Farm Bill 1996 to 37 per cent after that; soybean from 2 to 11.8 per cent; maize from 6.8 to 19.2 per cent; cotton from 29.4 to 48.4 per cent and rice from 13.5 to 19.2 per cent in the consecutive period. Cheaper imports in developing countries pushes small farmers out of production thereby accentuating unemployment and hunger.

WITHER JUDICIAL ACCOUNTABILITY? THE CASE OF JUSTICE SABHARWAL: DISQUIETING FACTS, DISTURBING IMPLICATIONS

2007-10-05T03:22:00.000-07:00

Minakshi
PNN: 3, Aug. The issue of accountability of the higher judiciary has long been troubling all sections of society so at a press conference held in Press Club of India the former Law minister Shanti Bhushan and sr. advocate Supreme court Prashant Bhushan among others highlighted a grave case of judicial misconduct at the Apex of Indian Judiciary on behalf of campaign for Judicial Accountability and Reforms.

Prashant Bhushan exposed that on 16'" February 2006, the then Chief Justice of India, Y.K. Sabharwal passed a detailed order setting into motion the process of sealing of properties in designated residential areas of Delhi, being used for commercial purposes, forcing to buy or rent premises in shopping malls and commercial complexes..

The Court's orders were ostensibly made to implement the rule of law as embodied by the Delhi Master Plan 2001, which had designated the land use of those areas as residential. Despite the new master 2021 the court ordered the sealing to continue, despite the fact that the new master plan permitted the owners to use their premises for commercial purposes.

He further added the prices of shops and offices in the shopping malls and commercial complexes doubled and tripled almost overnight making many people question whether the sealing drive was being undertaken for the benefit of the Mall and Commercial complex developers. De facto these orders were being made by Justice Sabharwal, his two sons, Chetan and Nitin who until then had small export import businesses, had entered into partnerships with big Mall and Commercial complex developers Kabul Chawla of the BPTP group and , Purshottam Bagheria and had become big Commercial complex developers themselves.

Till 2004, the Sabharwals owned 3 companies ostensibly doing small time export import business, Pawan Impex, Sabs exports and Sug exports. their officially settled at the Sabharwals' family home at 3/81 Punjabi Bagh. In January 2004 they were shifted to Justice Sabharwal's official residence at 6 Moti Lal Nehru Marg and on 7 May 2004, Justice Sabharwal had ordered the sealing of properties where industries had been running in residential areas? but his official residence could hardly be sealed.

Just after the order of sealing his sons were well on their way to entering the business of Malls and commercial complexes in a big way, having sewn up partnerships with two of the biggest Commercial estate developers in Delhi business of the Sabharwals really took off thereafter. On 22/8/06, Pawan Impex was given a loan of 28 Crores by the Union Bank of lndia, Connaught Place on the security of imaginary plant, machinery and other assets" lying at plot Nos A 3, 4, &, 5 in Sector 125, Noida, nothing in actual, only a huge 1.T. park (5 lac Sq Ft, worth hundreds of crores. Interestingly, these 3 huge plots of 12,000 Sq. Metres in a prime sector of Noida were allotted to Pawan Impex on 29 Dec 2004 by the Mulayam Singh/Amar Singh government of U.P. at a rate of only Rs. 3,700/sq Metre, another huge commercial plot of 12,000 sq metres (plot 12A, in Sector 68, which appears to have been carved out later as an afterthought) on 10 November 2006, at a price of 4000 Rs/sq metre, 3 plots (C1033, lO4 and 105) of 800 Sq M each in Sector 63 at a rate of Rs. 2, I 00 each, other in Sector 8 Noida, the CBI investigation into the allotments ordered by the Allahabad High Court was immediately stayed by Justice B.P. Singh of the Supreme Court moreover the publication of the infamous Amar Singh tapes, was stayed by Justice Sabharwal himself on the matter being merely mentioned before him.

Thus, the Sabharwals in just two years time, got into the business of developing Commercial complexes and appear to be rolling in money during the time when Justice Sabharwal was a senior judge and then Chief Justice, dealing with the sealing cases and passing orders.

Former law minister Shanti Bhushan also said that the conduct of Justice Sabharwal and his sons appear to involve offences and misdemeanors beyond the Income Tax Act. His orders are against the principles of natural justice, which say that no judge can hear a case in which he is personally interested. It is in fact arguable that his dealing with this case in such circumstances involves an offence under the Prevention of Corruption Act.

He and other senior Judges and advocates demanded the need to be thoroughly probed, particularly to see how and to what extent they funded the activities and acquistion of assets of the Sabharwals. whether their acquisition can be legitimately explained.

A call was made to the society to pressurize the Parliament and the government to bring a suitable Constitutional Amendment Bill for this purpose.

JUSTICE SABHARWAL’S DEFENCE BECOMES MURKIER: STIFLING PUBLIC EXPOSURE BY USING CONTEMPT POWERS

2007-10-05T02:52:00.000-07:00

Justice Sabharwal finally broke his silence in a signed piece in the Times of India. His defence proceeds by ignoring and sidestepping the inconvenient and emphasizing the irrelevant if it can evoke sympathy. To examine the adequacy of his defence, we need to see his defence against the gravamen of each charge against him.

Charge No. 1. That his son’s companies had shifted their registered offices to his official residence.

Justice Sabharwal’s response: That as soon as he came to know he ordered his son’s to shift it back.

Our Rejoinder: This is False. In April 2007, in a recorded interview with the Midday reporter M.K. Tayal he feigned total ignorance of the shifting of the offices to his official residence. Copy of the CD containing the said conversation is attached hereto as Annexure I. In fact, the registered offices were shifted back from his official residence to his Punjabi Bagh residence exactly on the day that the BPTP mall developers became his sons partners, making it very risky to continue at his official residence. Copies of the document showing the date of induction of Kabul Chawla, the promoter and owner of BPTP in Pawan Impex Pvt. Ltd., one of the companies of Jutstice Sabharwal’s sons, and Form no. 18 showing the shifting of the registered office from the official residence of Justice Sabharwal to his family residence on 23rd October 2004 are attached hereto as Annexure II (Colly).

Charge No. 2: That he called for and dealt with the sealing of commercial property case in March 2005, though it was not assigned to him. It is only the Chief Justice who can assign pending cases to various judges. He was not the CJI at that time. Copy of the order dated 17th March 2005 is attached hereto as Annexure III.

Justice Sabharwal’s response: Justice Sabharwal does not answer this charge.

Charge No. 3. That he did this exactly around the time that his sons got into partnerships with Mall and commercial complex developers, who stood to benefit from his sealing orders. The chain of events is as follows:
On 23rd October 2004, Kabul Chawla, the promoter of one of the biggest developers of shopping malls and commercial complexes, was inducted in Pawan Impex as a 50% shareholder and Director. On 12.02.2005, Kabul Chawla’s wife, Anjali Chawla was also inducted as Director of Pawan Impex. On 17th March 2005, Justice Sabharwal ordered that the case dealing with the sealing of commercial establishments should also be heard along with the writ of M.C. Mehta which was being heard by him. On 8th April 2005, Chetan Sabharwal and Nitin Sabharwal, two sons of Justice Sabharwal, set up another company, Harpawan Constructors, with the object of constructing Commercial complexes. On 25th October 2005, Purshottam Bagheria, one of the big builders on shopping malls and commercial complexes of Delhi was inducted as a partner in Harpwan Construtors. On 16th Februrary 2006, Justice Y. K. Sabharwal, who by that time had become the Chief Justice of India, passed a detailed order in the aforementioned case setting into motion the demolition and sealing in Delhi.

Justice Sabharwal’s response: That they were his sons friends. That Harpawan Constructors which was set up by his sons with the Mall developer Purshottam Bagheria did not do any business. In fact the courts under him got Bagheria’s 1 MG road mall demolished. That his sons are not developing shopping malls but only an IT Park.

Our Rejoinder: If so many Mall and commercial complex developers were his sons’ close friends, then he should not have dealt with the case anyway since that creates an immediate conflict of interest. Moreover, why should they go into partnership with these developers who stood to benefit from Justice Sabharwal’s orders, and that too exactly at the time when he seizes control of the sealing of commercial property case and starts dealing with it. He says that the company set up by his sons in partnership with Bagheria has not done any business. If so, why was this new company set up for developing commercial complexes in partnership with this builder? In an interview with ZNews Justice Sabhawal claims credit for the judiciary under him ordering the demolition of the illegal 1 MG road mall owned by Bagheria. But then why do his sons enter into partnerships with such an illegal builder whose buildings have had to be demolished by the Judiciary? And immediately after this partnership with the Sabharwals, Bagheria went on to announce the construction of “Square 1 mall” in Saket as the most fashionable mall in India. And all the fashion designers who had their shops and outlets at 1 MG road went on to buy space in the Square I mall. What is important to note here is that Bagheria and his partners at 1 MG road had already parted with all the space on 1 MG road. The demolition thus hurt the designers and others who had bought shops there, but did not hurt Bagheria who may have in fact benefited from it by clearing the land of his tenants and getting them to buy space at his new malls at Saket and elsewhere.
An IT park is also a commercial complex like any other. Many commercial establishments sealed were IT centres and BPOs which were forced to buy space in IT parks like that being constructed by his sons and their partners.

Charge No. 4. That the Union Bank of India gave a loan of 28 crores to his sons’ company Pavan Impex on a collateral of plant and machinery and other moveables at the site of their proposed IT Park, which were non-existent.

Justice Sabharwal’s response: That his sons’ had a credit facility of 75 crores.

Our Rejoinder: If that were the case, what was the need for mortgaging non-existent assets for obtaining this loan? Moreover, the Banks’ senior manager is on record saying that the loan was given on the basis of projected sales to prospective customers. The conversation with the Bank Manager is in the CD attached hereto as Annexure I.

Charge No. 5. That because of the obvious conflict of interest, he could not have dealt with this case.

Justice Sabharwal’s response: That his orders have never benefited his sons.

Our Rejoinder: His orders of sealing lakhs of commercial properties clearly forced those establishments to buy or rent space in commercial complexes like those that his sons’ company were constructing; and shopping malls etc that their friends and partners were constructing. There was a clear conflict of interest and his orders have clearly benefited his sons and their partners.

Charge No. 6. That a large number of industrial and commercial plots were allotted in Noida by the UP government to his sons’ companies, at prices far below the market price. In particular several huge plots were allotted between December 2004 and November 2006 by the Mulayam Singh/Amar Singh government, while he was dealing with Amar Singh’s tapes case, and had stayed the publication of those tapes on the behest of Amar Singh.

Justice Sabharwal’s response: That some of the plots were allotted by earlier different governments. That the prices were not far below the market price. That the allotments were made in the normal course to his sons who were entrepreneurs and were providing employment to hundreds of people in Noida.

Our Rejoinder: Even if one were to look at only the last two allotments of 12,000 metres each made in December 2004 and November 2006, made by the Mulayam Singh/Amar Singh governments, it is obvious that the allotments are definitely not in the normal course. Consider the allotment to Pawan Impex. The company has Nil turnover and Nil business (as declared in their application) on the date of application on 30/12/04. The very next day they receive a letter from Noida Authority asking them to come for an interview within 4 days on 5/11/04. On that day the authority notes that they want 12,000 sq. M in Sector 125 or Sector 132. The minutes note that because the work of development of Sector 125 is not complete and because in sector 132 the plot size available is only upto 11,000 sq metres, the matter is deferred for the next meeting. In the next meeting on 13/12/04, though Sector 125 is still not developed, a decision is taken to allot them a 12,000 Sq. metre plot in Sector 125 for a BPO. All this without a word about how and why a company with nil business is worthy of being allotted one of the largest plots of 12,000 sq. meters. The previous application of M/s Softedge Solutions Pvt. Ltd for an IT park is rejected on the ground that they could not satisfactorily answer questions about their previous experience in IT and their technical tie up. But Pawan Impex represented by Chetan Sabharwal with Nil business, no previous track record in IT and no technical tie up sails through with no questions asked. All in the normal course, of course! Copies of the profit and loss accounts of Pawan Impex Pvt. Ltd. for the year ended 31.03.2003 and 31.03.2004 showing its income nil are attached hereto as Annexure IV (Colly). Justice Sabharwal says that the allotment price of Rs. 3,700/sq M was not below the market price. The current circle rate in Sector 125 is Rs. 11,000/sq metre and the market price is over Rs. 30,000/sq meter there.
Similarly, the huge plot of 3 acres, No. 12 A in Sector 68 alloted to Sabs Exports in November 2006 at a throw away price of Rs. 4000 per square meter is also not in the normal course and was similarly made within days of application and a bogus interview, without any other system. Today, within 10 months of allotment, even the circle rate of plots in Sector 68 is Rs. 8,000 per sq. meter and the market rate is Rs. 20-22,000 per sq. meter. Moreover this allotment has been made at a time when he was dealing with Amar Singh’s tapes case and had stayed the publication of the tapes.

Charge No. 7. That his sons have purchased a 1150 square meter house in Maharani bagh, New Delhi in March 2007 for a consideration of 15.46 crores. The source of money for this is unexplained and in the sale deed they seek to conceal their relationship with Justice Sabharwal by writing his name as Yogesh Kumar and giving their factory address instead of the residential address.

Justice Sabharwal’s response: That 90 percent of the money for the purchase of this house was from four banks; that his sons concealed his full name in the sale deed in order to avoid taking advantage of their association with him.

Our Rejoinder: Banks do not normally advance loans of 90% of the value of a property on its security. Otherwise they would end up holding inadequate security if the property prices fall by even 15%. If they have done so in this case, it is either because of an undue favour as in the case of the loan of 28 Crores to Pawan Impex, or they valued the property higher than the declared purchase price. His explanation for concealing his name in the sale deed is hilarious and unbelievable since his sons did not hesitate to use his official residence as the registered office of their companies. Moreover, this was in a registered sale deed with a private party, where there was no occasion for taking any advantage by using his name.

It is therefore clear that Justice Sabharwal is guilty of serious judicial misconduct and appears to be prima facie guilty of offences under the prevention of Corruption Act which need to be investigated. It is also significant that highly respected former Judges of Supreme Court of India like Justice V. R. Krishna Iyer, Justice P. B. Sawant, Justice J.S. Verma etc. have all called for a thorough investigation into this matter. This is imperative and could be done by a panel of retired Judges and other eminent members of civil society. We call upon the Chief Justice of India to constitute such an inquiry panel and request Justice Sabharwal to co-operate with it.

SILENCING EXPOSURE OF JUDICIAL CORRUPTION BY CONTEMPT
Meanwhile the Delhi High Court has held the staff of Mid-day guilty of contempt of Court for publishing some of the above allegations in their newspaper in May this year. This is despite the fact that they had pleaded that the allegations were all true and based on unimpeachable, authentic and verifiable documents obtained essentially from the website of the Department of Company Affairs. However, without examining Mid-day’s defence of truth, the High Court held them guilty on the basis that “The nature of the revelations and the context in which they appear, though purporting to single out former Chief Justice of India, tarnishes the image of the Supreme Court. It tends to erode the confidence of the general public in the institution itself. The Supreme Court sits in divisions and every order is of a Bench. By imputing motive to its presiding member automatically sends a signal that the other members were dummies or were party to fulfill the ulterior design.” It may be noted that Midday’s allegations were only against Justice Sabharwal and they had not even mentioned any other judge in their reports.

We regard this view of the Court as highly pernicious which would mean that even truthful exposure of corruption in the judiciary would not be permitted. This view will make a mockery of the basic principles of our democratic republic which is founded on the premise that the people are the real masters and all public servants including the judiciary are working on their behalf and are accountable to them. It would also render irrelevant the amendment in the Contempt of Courts Act by which truth was made a valid defence. A statement signed by several eminent persons in this regard is being issued today and the Campaign for Judicial Accountability and Reforms also fully endorses that Statement.

..................................................................................................................................

Campaign for Judicial Accountability and Judicial Reforms

14, Tower 2, Supreme Enclave, Mayur Vihar Phase- I New Delhi- 110 091

Tel: 9811137421, 9811818730;

E-mail:judicialreforms@gmail.com Website: judicialreforms.org

World Bank Prescriptions and Structural Changes in Higher Education in India By Dr. Madhu Prasad

2007-10-05T02:39:00.000-07:00

The crisis in higher education is endemic. Higher education requires to be greatly expanded – currently only about 10% of the relevant age group is engaged in higher studies. From 1950-51 to 2004-05, the number of universities increased from 28 to 348, colleges from 578 to 17,625. Although enrolment in higher education has registered a steep hike from 0.17 million to 10.48 million, in comparison the Chinese higher education system caters to nearly 23 million students. It is estimated that India needs at least 3,000 more post secondary institutions with an enrolment capacity of not less than 10,000 students to meet the increasing demand for higher learning. [Bhargava, P. (2006) `Knowledge and National Developement’, paper presented at the National Seminar on the Education Commission organized by NUEPA. New Delhi Dec. 2006]

In particular, the need to provide access to a wider section of the country's population, means that such expansion cannot be expected from, or left to, private agencies. The necessary rate of expansion would therefore only be possible with adequate public funding and regulation. Yet public funding is being withdrawn from this sector and the pressure is on to facilitate the entry of private players both local and foreign. In 1990-91, public expenditure, as percentage of GNP and Budgetary expenditure, on higher and technical education respectively, was 0.46 and 0.15 (% of GNP) and 1.58 and 0.51 (% of BE). By 2002-03 it was down to 0.40 and 0.13 (% of GNP) and 1.31 and 0.42 (% of BE). This represented a cumulative decline in budgetary expenditure from 2.09% to 1.72%, which by 2004-05 was further reduced to 1.60%. In higher education alone, the decline as a percentage of GNP is down to 0.34% (2004-05) from 0.46% (1990-01). [Source: GOI. Analysis of Budgeted Expenditure, various years.]

The impetus for the present strategy owes much to policy prescriptions from the World Bank and other international donor agencies that argued against the use of public funding for an expansion of higher education: “it is arguable that higher education should not have the highest priority claim on incremental public resources available for education in many developing countries, especially those that have not achieved adequate access, equity and quality at the primary and secondary levels. This is because of the priority these countries attach to achieving universal literacy; because the social rates of return in investments in primary and secondary education usually exceed the rates of return in higher education. . . .” [Higher Education: The Lessons of Experience. 1994. p3]. The WB report argues that primary education should be the priority for developing countries. Higher education is termed a private or quasi-private good as it allows the student-consumer to command a better market-value for her skills. Hence it was claimed that governments are justified in leaving development of this sector in private, i.e. commercial hands, as students will be paying for benefits that only they will enjoy. WB and other international donor agencies and consequently, national governments, treated higher education as a low priority `private good’ so that public investment in universities and colleges was asserted to be magnifying income inequality as only the elite sections dominated higher education. By 1997, the Finance Ministry, GOI, was aggressively advocating cuts in the `subsidies’ expended in this sector as higher education was termed a “non-merit good”. Although it revised this categorization in 2004 to a “merit 2 good” which could be provided subsidies but at a lower level, it must be noted that this was only the final blow. Higher education in India, as in much of the developing world, was crisis-ridden because it was chronically under-funded even as it faced escalating demand. “Resources are at the heart of the higher education dilemma. While student numbers have increased at a rate of more than 9 per cent per year for close to half a century, government expenditures increased by 2 per cent per annum and expenditures per student have actually declined by 2.9 per cent when measured against inflation.” [Dalip Swamy & Badri Raina. 1984]

Following WB recommendations, GOI focused its diminishing education expenditure on primary education, neglecting secondary and higher education (as luxury merit goods). Yet about 50% of those enrolled drop-out at the primary level itself and recent census data shows that 43.5% children between ages of 5 to 9 are not in school. The failure to halt or reverse this trend through the late-80’s and the 90’s can be placed at the door-step of several World Bank inspired interventions at the primary and elementary levels, (the DPEP, a variety of multi-track alternate and Non-formal schemes, multi-grade teaching and the use of poorly paid and ill-trained para-teachers), which radically altered policy and derailed the post-independence goal of a national system of quality education for all children, including the common neighbourhood school, as defined in the Kothari Commission in 1966.

The WB’s approach undermines the social necessity of an integrated system of adequate, quality education right from the elementary level to that of higher education. The capacity for critical, independent thought is both intellectually and democratically significant for a dynamic, independent and modern nation. It has to be the essential quality of the entire system of education. The claim that primary education has an absolute priority over the secondary and higher levels is practically so short-sighted that it is astounding: where would the trained personnel required for the success of the programme of universalizing elementary and then secondary education come from if not from a system of quality higher education? What is the purpose of providing elementary education if universal secondary education and the choice to enter higher education are not real possibilities?

The WB approach is exposed as one which is aimed at creating ‘alternate' educational `streams’ instead of an independent national system of quality education as was envisaged during the freedom struggle and promoted by policy makers in the first three decades or so after independence.

As a result of the WB’s influence, governmental policy in developing countries tended to view expenditure on higher education as a drain on the public purse, rather than an investment: “Many developing countries have showed apathy towards higher education, . . .reduced public investments in it, allowed laissez-faireism, and even adopted policies towards marketisation of higher education.” [J. B. G. Tilak “Are We Marching Towards Laissez-Faireism in Higher education development?” paper presented at IAU Sao Paulo Conference. July 2004]. “There is a concerted effort in many countries to reduce the reliance on state-funding and move towards market-friendly reforms.” [N.V.Varghese “Incentives and Institutional Changes in Higher Education”, Journal of the Programme on Institutional management in Higher education. Vol.16 No.1. OECD 2004].
“There is a widely-held view that the days of public-funding of higher education are over. . . .Institutions like the World Bank make no secret of their view that the best way to fund (higher) education is to put the whole cost on students. . . .they concede that the likelihood of such a policy being implemented is `very distant’. However, the prevalence of such views at a time when public finances are under strain could condemn state-funded education to death by a thousand cuts under the guise of promoting `alternative funding sources’.” [Conclusions of the first World Conference on Higher Education, Education International (incorporating the European Trade Union Committee for Education). March 1997]

With the intrusion of values of the marketplace into the higher education sector, it seems justified that users should pay for this `service’ as they would for any other. The pursuit of knowledge becomes a commercial transaction, and universities and other postsecondary institutions are expected to think less like educational institutions and more like businesses in order to generate their own funding. In Asian countries, and the campaign has intensified in India over the past fifteen years, the basic thrust has been that governments can no longer be relied upon to solely or even substantially finance this sector because the demand for its expansion exerts an unviable pressure on budgetary resources. Hence, the argument that institutions of higher education require to become `autonomous’, i.e. financially independent of public funding, and increasingly, of state regulation. In India, both the number of private educational institutions and enrolment in these institutions has shown a sharp increase since 2000-01. Unaided private institutions constituted 42.6% of total post-secondary institutions with an enrolment share of 32.89%. By 2005-06, this had shot up to 63.21% and 51.53% respectively. [Source: Anandakrishnan (2006)]
The WB approach that student-users should pay for educational services delivered to them, effectively denies access to properly regulated higher education of standard except for the very rich. With 17% of world’s population, India accounts for less than 1.7% of the world’s income. Its per capita GNP was $530 [US nearly $38,000; South Korea over $12,000]. Its `Purchasing Power Parity’ per capita income ranks 84th in the world. [WB figures, 2003]. The weakest sections, with the greatest financial strains and indebtedness, can access only the poorest quality higher or technical education. According to NSS data the government’s share in overall education expenditure has been declining steadily from 80% in 1983 to 67% in 1999. While private expenditure on education has risen 10.8 times in these sixteen years, that for the poor rose even faster, by 12.4%. Many students formally enrolled in publicly funded colleges and universities, pay considerable sums to the burgeoning private sector vocational IT training schools. The decline accelerated after this period. Public expenditure per student in higher education is nearly 30% less in the 2000’s than what it was in 1990-91. The proportion of scholarships in the public expenditure of states on higher education declined from 0.62% in 1990-91 to 0.24% in 2004-05. The decline for technical education for the same period was from 0.45% to 0.20%.

In 2000, the WB shifted its focus and “concluded that without more and better higher education, developing countries will find it increasingly difficult to benefit from the global knowledge-based economy.” [Peril and Promise: Higher Education in Developing Countries. Summary of Findings by the Task Force on Higher Education and Society. 1 March, 2000.] The Task Force claimed that “narrow. . .and misleading economic analysis” had led to the faulty conclusion that public investment in the sector brought meager returns. It no longer targeted higher education as “a luxury, it is essential to survival”. It pressed for “urgent action to expand the quantity and improve the quality of higher education” as “specialized skills” are “increasingly in demand in all sectors of the world economy”.

However, the report warned that the promise “will not be delivered if diversification continues to be chaotic and unplanned. Players new and old will thrive only in systems of higher education that develop core qualities. These include: sufficient autonomy with governments providing clear supervision, but not day-to-day management, explicit stratification, allowing institutions to play to their strengths and serve different needs, while competing for funding, faculty and students cooperation as well as competition. . .knowledge and ideas, profitably shared within the system (`learning commons’)”.

The significance of the report’s advocacy of the role of governments as effective supervisors lies in the recognition that “on its own, the market will certainly not devise this kind of system. Markets require profit and this can crowd out important educational duties and opportunities. Basic sciences and humanities. . . .are likely to be underprovided, unless actively encouraged by leaders in education who have the resources to realize their vision.” The responsibility of the state is to “concentrate on establishing the parameters within which success can be achieved”. The funding model is mixed – consistent and productive public funding mechanisms, and a maximization of the “financial input of the private sector, philanthropic individuals and institutions, and students.” It is not surprising that the private sector boom in higher education, referred to above, took off within a year and that private-public partnership became the new mantra of all official statements and committee recommendations.
The Ambani-Birla Report [A Policy Framework for Reforms in Education. Prime Minister’s Council on Trade and Industry. New Delhi 2000] explicitly gave expression to the role reserved for privitazation/ commercialization as the instrument for reform in higher education, which was inherent in the changing education policy initiatives. It argued that higher education should be left to private sector for an investment of 11,000 crores to double the number of institutions by 2015. It wanted the `user-pays’ principle in operation, with loans and grants for the needy. With the companion Model Act for Universities 2003, prepared by the UGC, it was intended to restructure higher education on the model of market-oriented enterprises promoting corporate values. The attempt was shelved because of strong opposition from academicians and teachers unions, but it is important to recognize that their opposition was well-founded:

· The character of higher education, which is directed towards the long-term goals of a knowledge based society, needs autonomy not only from governmental-bureaucratic institutions but also from market pressures;
· Higher education is the site for innovative foundational research and growth of knowledge. If it is reduced to mere transmission of operational technologies, the national society will remain at the mercy of external `providers’; A growing, autonomous higher education system is an indication of a mature society. At present, India has amongst the lowest percentage, even among developing countries, of the relevant age group studying in its universities. State funding is essential to ensure that adequate talent from all sections can gain access. The attempt to privatize higher education on the present narrow educational base would not present a viable alternative.
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The next stage in the prescriptions for reform of the higher education sector, and the identification of new structures for regulation and co-operation between the disparate `players’ in the private sector and public/government was heralded with the launch of a WB study, entitled “India and the Knowledge Economy: Leveraging Strengths and Opportunities”. [Carl Dahlman & Anuja Utz. Finance and Private Sector Development Unit of WB’s South Asian Region & The WB Institute. 28th June 2005.]

Micheal Carter, WB Country Director for India, states that the report is “an important Bank input into the domestic consultation and reforms process which will move India further into the global knowledge economy.” The report specifies its goals: “To create a sustained cadre of `knowledge workers’, India needs to make its education more demand driven” by `relaxing bureaucratic hurdles’ to allow the private sector to meet the burgeoning demand for higher education; by putting in place accreditation systems for private providers; by increasing industry-university partnerships in research and application including use of learning technologies for providing distance education across the board and for lifelong training and upgradation of skills.”

The Indian government is not advised to fulfill its commitment to invest at least 1.5% of GDP for higher education out a total of 6% for education as a whole. Instead it is directed to alter “its relatively closed economy” and “increasingly tap into the rapidly growing stock of global knowledge through channels such as foreign direct investment, technology licensing”. To spread the “explosive growth of ICTs” (concentrated mainly in urban centers, and covering 0.25% of the work force) the Government should promote the application of ICTs throughout the economy (access to telephones, mobiles, computers and connectivity, and enhancing ICT literacy and skills among the population). It states that knowledge economy does not “mean only high-technology industries or information and communication technologies. . . .In India, great potential exists for increasing productivity by shifting labor from low productivity and subsistence activities in agriculture, informal industry and informal service activities to more productive modern sectors, as well as to new knowledge-based activities”. The report places India “at the top of the bottom third of the global distribution” in the knowledge economy, [i.e. below Indonesia but above Kenya, Ghana, Nigeria, and Pakistan, with a slight improvement over the decade1995-2005 in the KE Index]. Its future growth would depend on its ability to leverage its strengths [skilled workers in diversified science and technology sector with knowledge of English, impressive Diaspora with influence on both sides, one of world’s largest domestic market, institutions of free market economy with developed financial sector] and opportunities [creation of profitable niches in the IT sector, global provider of software application and testing services]. For this “it needs to undertake significant reforms and investments in building education and skills, strengthening its innovation system, and further bolstering its information infrastructure.” In particular this requires providing “effective economic incentives and institutions that promote and facilitate the redeployment of resources from less efficient to more efficient uses”.
The report calls for a “national `knowledge’ champion” to advance this agenda and identifies the Prime Minister’s office (PMO) as most “appropriate champion to coordinate and orchestrate the necessary knowledge-economy related actions across the various domains.” It lauds the National Knowledge Commission initiative to make timely recommendations for implementation.
India based and concerned `think tanks’ saw the timing of the report as “very opportune” for discussion among stakeholders. Sam Pitroda, Chairman, National Knowledge Commission, promised to “take into consideration the analysis and recommendations of the report as we design our strategy. We look forward to co-operating with the WB and other multilateral agencies as well as with think tanks and universities in India and abroad. . . .”

The companion Knowledge for Development Workshop held in November in New Delhi was aimed at moving from analysis to “identification of concrete key areas for action by different stakeholders”. The Workshop’s “endorsement” of the knowledge economy as a “critical element in the reforms agenda” calls for major reform and improvement across the board in the area of higher education and training. This was essential and urgent if the system of higher education was to become “more responsive to market needs” with “expanded access to education. . .for all, not just the elite”. [Press Release]
The urgency for increasing the pool of skilled IT and backroom specialists was one that was created in the highly profitable BPO sector, of which India accounts for over 80%. An Economic Times Survey of 200 large private companies in India in 2005 showed that the total wage bill for these companies had gone up by 23.50% in the second half of fiscal 2005-06 over the previous year. The wage bill rise was not offset by productivity gains. In the IT sector the impact was even more apparent. For 11 large software companies, the wage bill shot up by 42.5%, and the share of wages in sales was up from 37.9% to over 42%. Unless India increased its trained manpower strength by almost two-thirds and kept wages down, it would soon lose its competitive edge. [Economic Times. 8th November 2005] In fact the alarm continues to be sounded that BPO centers may close down as higher attrition rates and even higher wages become an increasingly pressing problem. The need to keep down competition from other Asian and African countries by maintaining a sustained supply of low-wage skilled workers is presented as a manifestation of the shortage of skilled manpower in India. The solution to the problem is therefore said to lie in sweeping reforms in the higher education system in India to integrate it fully as part of the global knowledge economy. The potential it is argued is immense if we can remain competitive, i.e. cheaper. It is anticipated that over the next few years over $356 billion worth of global financial services will shift to India, producing a cost saving of $130 billion for the top 100 financial service firms. The fact that the largest multi-nationals are now shifting their R & D centers to India is also related to the cost advantage. An Indian chip-designer costs at least one-fifth less than an American one.

The question to ask is whether an integration of higher education to the requirements of the global knowledge economy under these conditions would function as a short cut to establishing a knowledge society? BPO and software services to foreign, primarily US, firms have seen a decade of break-neck growth, although the sector accounts for only 0.25% of the workforce. It is argued that the promise of a rosy future will remain unfulfilled if growth remains chaotic and unplanned, as it must be accompanied by appropriate structural reforms.

It is impossible to ignore the fact that the software and IT-enabled sector are dovetailed to research, patents, and requirements of the developed world, mainly the US. On a visit to the US, the PM himself conceded that “American investments in India, especially in new technology areas, will help American companies to reduce costs and become more competitive globally. . . .The information technology revolution is built primarily on US computer-related technology and hardware.”(20/07/05). Indians are not competing on skills or superior education per se, but derive benefits because of low wages and the colonial heritage of the dominance of English. In the case of ITES workers, frequently referred to as “cyber-coolies”, the work is so repetitive and mechanical it is in danger of being eliminated. India may be producing more IT engineers than the US but it is less creative jobs like bug-fixing, updating antiquated code, and routine programming that are outsourced and fall to the lot of the Indian “foot soldiers” in the information economy. Body shopping is still a significant contribution of Indian firms to US companies. Even the small but rapidly increasing amount of higher value work (animation & web design, legal services, R & D, sophisticated financial services such as administering speculative funds) being outsourced is competitive because of lower wage costs.

Expansion of higher education by opening up the education market for domestic and foreign private institutions with the goal of integrating with the global knowledge economy, as recommended by the WB, need not therefore contribute to the founding of a knowledge society, although it would provide a sustained cadre of workers so that the low-wage advantages attracting MNC’s would be protected.

The WB’s 2005 report forms the background against which the procedure adopted by the National Knowledge Commission (NKC) becomes comprehensible and the nature of the recommendations, contained in its recently released document “Report to the Nation 2006”, can be analysed. The recommendations do not form part of an articulated structure and are haphazardly presented in the document. Crucial areas are not dealt with, while issues that would ordinarily be considered to follow from decisions in these areas, are dealt with in some detail. Interestingly, in spite of this hasty, `cut-and-paste’ quality, the recommendations are sweeping in their range and would introduce radical changes in the system of education currently prevailing in the country. This should not be seen as an inadequacy in the report but as essential to the exercise undertaken by the NKC - that of providing a series of recommendatory communications for implementation to the Prime Minister but with no final, consolidated report of its deliberations.

The NKC report aptly begins by stating that “only an inclusive society. . .can provide the foundations for a knowledge society” and regrets that “large segments of our society just do not have access to higher education.” because about 50% of children of the relevant age group either don’t enter or drop out at the primary school level itself. Those who clear secondary school with some learning constitute less than 30% of the relevant age group. As a consequence less than 10% of the relevant age group enter post secondary institutions. However, instead of concentrating on this “crucial area”, which is left for “a later date”, to be considered “in due course”, the NKC’s immediate recommendations focus on the expansion and far-reaching reform of higher education where it is stated “it is important to act here and now”. We see the impact of WB’s perspective in the tendency to conceive of far-reaching reforms at the level of higher education without reference to the goals and requirements of the system of education as a whole.

NKC has recommended major changes in the structure of regulation of higher education. A single Independent Regulatory Authority for Higher Education (IRAHE) to be set up by Act of Parliament, “would apply exactly the same norms [for setting criteria and deciding on entry, ending the regulatory functions of AICTE, MCI and BCI; authorizing degree-granting power; monitoring standards and settling disputes; licensing accreditation agencies to public and private institutions. . .to domestic and international institutions.” It is assumed that `opening up’ of higher education through this mechanism would facilitate the leap from 367 to 1500 universities by 2015, so that intake can be doubled to reach 15% of appropriate age group. The UGC would only disburse grants, and maintain public institutions of higher education.
Kept at arms length from the Govt., ministries (i.e. executive structures that are eventually answerable to the Parliament) and `other stakeholders’, the IRAHE sounds more like a `single-window access’ facilitating the entry of domestic and international capital, so favoured by the neo-liberal regime, rather than an adequate regulator for a system of education that is immensely varied historically, regionally and from the disciplinary point of view. But is even this likely to attract investment in a cash-strapped higher education system? Traders in educational services baulk at investment. Domestically this is evident in the phenomenal growth of private professional institutions. Of doubtful quality, these high-fee-charging institutions constitute a hugely profitable commercial sector. Foreign players, particularly those from the developed countries who are entering the sector in developing countries, appear to be no better in spite of their international reputations. Indeed by attracting wealthier or scholarship assisted students offshore and charging high fees, they can be seen as a significant part of the problem, opening new channels to the brain drain, expropriating profits and foreign exchange, besides dominating the local culture and opening it to a uniform `globalisation’, often better referred to as `MacDonaldization’.

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NKC recommends setting up of 10 exemplar national universities within 3 years, and 50 in the long-term. These could be established by government, private societies, charitable trusts or Section 25 companies. Significant founding grants from public funds, substantial allocation of public land in excess of spatial requirements as an assured source of further income generation, and raising student fee levels to a recommended 20% of total resources, are identified as revenue sources for such institutions. There is talk of `needs-blind’ admissions with financial support for every meritorious candidate, but absolutely no recommendation as to how or where the huge sums this would require is to be generated within 3 years. A proposed National Scholarship Scheme does not appear to have remembered the resource crunch that was offered as the major motivation behind the NKC recommendations facilitating entry of the private sector in higher education.
Corpus funds take time to build, and alumni contributions, philanthropic endowments, are obviously only secondary sources. [It is necessary to distinguish these private sources from the private `for-profit’ institutions that are rapidly transforming the provision of higher education into a highly competitive and profitable commercial enterprise]. Land, and feeding the impending realty boom, in which the Indian corporate sector and foreign financial institutions have an overriding interest, appears to be the major recommendation of NKC. Public funds and assets are to be transferred therefore to private investors through a policy aimed at creating “special educational zones”, with further incentives being indicated to attract foreign institutions.

These “centers of excellence” would, (besides undertaking revision of courses, introducing internal assessment, credit system, establishing a better teaching/ research component, and ensuring an adequate upgradation of academic support systems), effect a changed balance between salaries and pensions on the one hand and maintenance, development, and innovation on the other. This would result from an altered `market’ approach towards “resource allocation, reward system and mindset”. Better working conditions, differential salaries across and within universities, and other financial incentives (to compensate for `loss’ of positions in developed countries) are recommended as the primary means to attract and keep `better’ faculty. Finally, after having provided for a “level playing field” with exactly the same norms for both domestic and international institutions, the NKC recommends that appropriate policies would have to be formulated to attract foreign institutions and their faculty to India.

NKC recommends that existing under-graduate colleges be de-linked entirely from the universities. While some prestigious ones, individually or in clusters, would become autonomous, the rest would be brought under central and state boards of under-graduate education. Although the mode of association between under-graduate and post-graduate institutions certainly calls for creative reform, it appears a little extreme to cut all links between the two. Affiliation, based only on recognition and examination, which NKC is opposed to, is not the only form of association. At any rate, affiliation through franchisee or twining relationships between foreign and domestic private players remain permissible within NKC’s recommendations. A federated university with constituent colleges like the Delhi University has proved its strength, even in the present crisis situation in higher education, in adequately feeding both instruction and research at the university level.

A system of education requires linkages between its different components. Only such a system would be able to recognize and encourage excellence wherever it exists. The challenge posed by this approach has to be taken up if an inclusive system of education as the foundation of a knowledge society is to be established. The alternate strategy outlined above of concentrating `excellence’ in pampered enclaves contributes, on the one hand, to creating mediocrity in neglected institutions outside the circle of excellence, and on the other, produces intellectuals who are distanced from the conditions and problems of a developing society. The experience of already existing “centres of excellence”, the majority of whose alumni live and work in developed countries, has to be taken seriously. The so-called reverse brain drain being talked about now only lures individuals back by promising differential benefits and working conditions in a new neo-liberal India.

NKC’s recommendations relating to the democratization of structures of governance of higher education are disturbing. The size and composition of university courts, senates, academic and executive councils, “which slow down decision making processes and sometimes constitute an impediment to change” are to be altered on a priority basis. Democratic norms, responsible for both composition and size, are certainly `slower’ than authoritarian impositions, but what should be the priority in an independent higher education?
A `deprivation-index’ as the recommended form of `affirmative action’ is conceptually problematic and practically susceptible to subversion through manipulation. It is also a barely concealed attempt at undermining the Lok Sabha’s unanimous acceptance reservation policy. This raises questions of the political motivations behind NKC’s recommendation.

NKC’s recommendations regarding the language policy that should guide higher education are simplistic and even alarming. Language is significant, the report states, not only as a medium of instruction, but, especially in the case of English, as “an important determination of access to higher education, employment possibilities, and social opportunities”. A feature marking the accommodation of the Indian elite to colonial rule and administration is readily seen by NKC as a necessary step towards a wider accommodation to the global knowledge economy today. The report states that “. . .the time has come for us to teach our people – ordinary people – English as a language in schools”, and recommends that from Class I (i.e. at 5 years of age) children should learn English and it could even be the medium of instruction for some subjects from Class III onwards. NKC’s focus for “teacher training, language pedagogy and resource support” is on the English language. While this reflects WB’s projection of the colonial heritage of English as a major advantage in integrating into the global economy, it is surprising that NKC appeared not to have considered how this would impact Indian languages and cultures, already disadvantaged by 150 years of the colonial dominance of English, and how it would diminish the ability of `our people’ to develop an independent, self-confident sensibility and knowledge.

In response to the first major set of recommendations made to the PM in Report 2006, one can conclude that NKC believes that far-reaching changes are urgently required to bring higher education in India in line with the needs of the global knowledge economy. Its recommendations are neither creative nor enthusing, but merely accommodative to a given global economic system.
It is unfortunate that NKC did not consider how different its recommendations would have been, if it had kept before itself the vision of an inclusive system of education, and the urgency of devising ways of implementing that goal, so that India could have begun to emerge as an equal partner in a truly global knowledge society. As it stands, NKC’s Report to the Nation represents one more lost opportunity.

Two Bills relating to radical changes in the higher education sector require to be considered to see the impact of WB’s thinking on the reforms process. Although they have been held in abeyance due to stiff opposition from different sides of the `stakeholder’ divide, they provide a good indication of government’s intentions and the impact of the earlier trends. The Foreign Educational Institutions Bill (2007) claims to regulate the entry and operations of foreign educational institutions to protect students, ensure quality education and stem commercialization. However, its features encourage fee hikes; offer loopholes in institutional partnership conditions like twinning arrangements that leave open the door to substandard courses; and give the government arbitrary powers to exempt institutions from the regulations, and even to partially subsidize these FEI’s through generous development grants!

A Private University Bill was introduced in 1995 to provide for the establishment of self-financing institutions. This followed the Supreme Court’s judgements banning capitation fees in private colleges (1992), but allowing for high fees in the name of self-financing courses (1993). The Bill provides for a private university to have a permanent endowment of Rs. 30 crores, because government earlier had had to bail out institutions, and to provide 30% full scholarships to students. In 2005, the uncontrolled growth of the self-financing sector resulted in the Private Professional Education Institutions (Regulation of Admission and fixation of fee) Bill. It stipulates the conditions to be met before an institution can charge fees and seeks to restrict the term `foreign institutions’ only to those institutions which are duly accredited as `foreign education providers’.

The impact of WB strategies has directed the reforms process of higher education away from its national problems, conditions and environment, to the requirements of the global economy. India is not a knowledge economy. A recent study showed that 77% of the population lives on Rs. 20 or less per day. India has the largest number of illiterates in the world. Its primary and secondary school education is totally inadequate. While even a minimal public health service is beyond the reach of most people, Indian doctors man national health services in the UK, Canada and other developed countries. India ranks 127th among 175 countries on the UN Human Development Index. One out of every eleven children dies before age five; ¾ of rural and ½ of urban population do not get even the recommended minimum calorie intake [National Sample Survey, 2000]. “Over 350 million people are below the average food energy intake of sub-Saharan Africa countries.” [Utsa Patnaik. “It is time for Kumbakaran to wake up.” Hindu. 05/08/05].

Yet finding solutions to these national problems finds no reflection in the process of reforms being advocated for the development and improvement which will dovetail Indian educational and other systems to the needs of the global knowledge economy. The WB’s report (2005) completely ignores the question of unemployment. The number of jobless in India grew by more than 3 times in ten years [13.8 million in 1991 to 44.5 million in 2001]. Of the 36.7 million literate unemployed, 4.8 million were graduates. Nor is integration in the global knowledge economy likely to alter this trend. Internationally in 2003 an estimated 186 million persons were “without work and looking for work”, with the youth unemployment rate at 14.4% being more than twice as high as unemployment overall at 6.2%. [D. C. Misra. “India well positioned to take advantage of the knowledge revolution says a new World bank report”. Digital Divide Network]

Our unique selling point, it is argued following the WB’s vision, is our pool of skilled manpower, which we need to continue to grow to maintain our competitive edge. Hence the exclusive focus on expanding and improving the quality of higher education; freeing it from any democratic national controls and regulation; putting it in the hands of domestic and foreign private players who can profit from creating the required skilled knowledge workers; and finally offering up this trained cadre, constituting only a small percentage of the work force, to international corporations so that their profit margins may be protected in a fiercely competitive knowledge economy market.

The WB perspective dovetails smoothly with the perspective underlying the WTO-enforced General Agreement on Trade in Services (GATS), which converts knowledge into a tradeable commodity. The increasingly competitive sphere of a globalized system of higher education is dominated by the industrialised developed countries. Norms, values, language, concerns and scientific innovations at this centre crowd out other ideas and research practices. These countries not only have the dominant institutions but are also home to the multinational corporations that are becoming so powerful in the new global knowledge system based on marketing intellectual ‘products'. In a world clearly divided into `centres' and `peripheries', with pronounced inequalities, the developing countries must be prepared to see that self-reliance and sovereignty would obviously be adversely affected.

Higher education institutions in developing countries have a special role to play in the strengthening of civil society and national development. If subjected to WB and WTO perspectives and strictures, they would not only be unable to perform this function, but the very idea that universities serve a broad public good would be undermined.

Dr. Madhu Prasad
Reader, Dept of Philosophy
Zakir Husain College
University of Delhi

Founder Member
People’s Campaign for Common School System

Residential Address:
D-12 Gitanjali Enclave
New Delhi – 110017.
e-mail: madhuchopra@hotmail.com

World Bank Officials Refuse to be Held Accountable

2007-10-05T02:28:00.000-07:00

‘TRIBUNAL CHARGES BANK WITH SERIOUS VIOLATIONS OF DEMOCRACY, HUMAN RIGHTS AND SOVEREIGNTY’

New Delhi: The four day Independent Peoples Tribunal (IPT) on the World Bank in India concluded here today hearing numerous depositions indicting the Bank’s policy and project interventions in India. Over six hundred people from communities, social movements, research institutes, NGOs and universities attended the proceedings. The Tribunal, supported by the Jawaharlal University’s Teachers Association and Students’ Union was held in the university premises.

The IPT invited the World Bank two weeks ago and while they did agree to make a presentation responding to some of the evidence, they failed to show up despite provision of adequate space and time by the organisers. They stated on their website that they had taken this decision because they are not accountable to the Tribunal process. We must record our shock at their blatant disregard of any need to be accountable to civil society and to a Jury comprising retired justices of the Supreme and High Courts as well as leading writers, academics, religious leaders and activists.

In its preliminary findings, the IPT observed the Bank had an undue and disturbingly negative influence in shaping India’s national policies disproportionate to its contribution, financial or otherwise.

While India is the world’s largest single cumulative recipient of World Bank assistance, with lending totaling about $60 billion (Rs. 2,40,000 crores) since 1944, current annual borrowing amounts to less than 1% of the country’s GDP. The loans, however, have been used as leverage to bring about important policy changes and impose conditionalities in areas such as governance reform, health, education, electricity, water and environment- many of these with obvious political and social consequences. The loans also legitimize substantial additional funding from a diversity of bilateral and multilateral donors such as the Asian Development Bank and Department for International Development (DFID-UK). The Bank’s loans have caused extensive social and environmental harm from mass displacement in the Narmada valley to loss of livelihoods of traditional fishworkers in places such as Barwani.

It was noted that such overbearing influence on India’s policy making was in violation of the World Bank’s own Rules of Association, which mandate it to be an apolitical institution that should not interfere in political processes of any member country. Further, the IPT depositions stated that the presence of former Bank officials in senior government positions was unacceptable and involved conflicts of interest.

UNDERMINING DEMOCRACY:
Vice Chairman of the Kerala State Planning Board Professor Prabhat Patnaik in his deposition cited the example of the Jawaharlal Nehru National Urban Renewal Mission (NURM), which is a World Bank designed project. In the Kerala NURM project, the state government, he said, was being forced to accept a conditionality to reduce stamp duties to 5% from the earlier 15-17%. To avail a loan of about 1000 crores, Kerala would lose up to Rs.7000 crores of government revenue.

Vinay Baindur of the Bangalore based Collaborative for the Advancement of Studies in Urbanism (CASUMM) showed evidence of how the Karnataka Economic Restructuring Loan (KERL) resulted in the conversion of a state government and its economy into a corporatised entity meant to generate funds for “private sector and enterprise development”. ‘The $250 million loan resulted in far reaching changes; the closure/privatisation of the public sector, nearly two lakh permanent employees were forced to take Voluntary Retirement Scheme (VRS) payments.

Further, the restructuring process led to a steep rise in farmer suicides; many of those who committed suicide did so because they were unable to pay the arrears in power costs that were suddenly slapped on them on account of power tariff hikes. “The withdrawal of subsidies for agriculture led to a sharp rise in the costs of cultivation”, argued Baindur in his deposition.

Jury member and scientist Meher Engineer said that he found the depositions on how the Bank forced inappropriate technology on India such as incinerators especially damning. ‘Given the well researched evidence that I have heard it is hard to imagine any role for the World Bank in the environment sector, he said. ‘The Bank is pro-rich, pro-urban and anti-environment’, he concluded.

The IPT was organized by an inclusive platform consisting of over 60 national and local groups (see list below). Activists, academicians, policy analysts and project affected communities presented evidence against the World Bank in over 26 sectors from 21-24 September. Jury members included historian Romila Thapar, writer Arundhati Roy, activist Aruna Roy, former Supreme Court Justice P B Sawant, former Finance Secretary S P Shukla, former Water Secretary Ramaswamy Iyer, scientist Meher Engineer, economist Amit Bhaduri, Thai spiritual leader Sulak Sivaraksa and Mexican economist Alejandro Nadal amongst others.

WORLD BANK AND GOVERNMENT OF INDIA MISSING IN ACTION:
But in response to the depositions the Bank posted a Q&A document on its India home page. In the document, the Bank makes the outrageous claim that, “The World Bank definitely has not recommended the privatization of water supply services in India”. It is particularly worrisome that the Bank has to repeat a series of untruths and not own responsibility for the extensive harms they have caused.

In a sign of convergence with the Bank, the Government of India also failed to send even a single representative to the event, despite personal invitations, emails and faxes being sent 2 weeks in advance to several Government officials at all ministries that borrow money from the World Bank.

PUSHING FOR ELECTRICITY PRIVATISATION:
In the 1990s, 20-30% of World Bank loans in India went to the energy sector. Orissa had the dubious distinction of being the first state to receive World Bank loans for restructuring the sector. Sreekumar N, from the Pune based Prayas Energy Group argued that based on World Bank advice, Orissa spent upto Rs.306 crores for foreign consultants, ignoring local expertise. The consultants recommended the privatisation of distribution and the American firm AES that took over distribution in the central zone behaved in a high handed manner and ultimately exited the state in 2001.

BANKS TOXIC COLONIALISM:
Nityanand Jayaraman of the Chennai based Corporate Accountability Desk in his desposition before the jury said, ‘The Bank is perpetrating toxic colonialism by funding discredited and polluting technology interventions’. As evidence he presented cases where the Bank has promoted the setting up of more than 88 Common Effluent Treatment Plants, more than 90 percent of which were shown to have failed to meet environmental norms by the Central Pollution Control Board.

JUST THE BEGINNING:
Wilfred D’ Costa, General Secretary of the Indian Social Action Forum(INSAF) one of the convening groups of the IPT said, ‘The tribunal has been useful since it has seen a convergence of social movements, unions, academicians, researchers and struggle groups from across the country. Our next steps would be to use this platform to create a broad based political struggle against neo-liberalism and work towards an India without institutions such as the World Bank and the Asian Development Bank’.

For more information contact the IPT secretariat at secretariat@worldbanktribunal.org and +09820039557

CONVENORS and ADVISORS
All India Bank Employees Association o All India Trade Union Congress o Alternatives o Alternative Law Forum o Prof. Arun Kumar o Arunachal Citizen's Rights o Asia Pacific Movement for Debt & Development o Banwari Lal Sharma o Biraj Patnaik o C Rammanohar Reddy o Centre for Education and Communication o Chhotanagpur Adivasi Seva Samiti o Collaborative for the Advancement of Studies in Urbanism through Mixed Media o Corporate Accountability Desk o DICE o Prof. Deepak Nayyar o E.A.S Sharma o Equations o Food First Information and Action Network [FIAN] o Focus on the Global South o Forum for Biotechnology and Food Security o Human Rights Law Network o Indian Social Action Forum[INSAF] o Intercultural Resources o Jawed Naqvi o Jan Swasthya Abhiyan o Jharkhand Mines Area Co-ordination Committee o Jubilee South o K.G. Kannabiran o Kalpana Kannabiran o Kalpavriksh Environment Action Group o Kalyani Menon Sen o Karen Coelho o Kavaljit Singh o Kavita Srivastava o Kisan Sangarsh Samiti o Leo Saldanha o Lokayan o Lok Shakti Abhiyan o Lok Sangharsh Morcha o M Vijayabhaskar o Manthan Adhyayan Kendra o Michael Goldman o Mihir Desai o Dr. N Raghuram o Narasimha Reddy o Narmada Bachao Andolan o National Alliance of People's Movements o National Campaign for Dalit Human Rights o National Campaign for People's Right to Information o National Committee for the Protection of Natural Resources o National Conference of Dalit Organisations o National Confederation of Officers Association o National Hawkers' Federation o Neil Tangri o PEACE o Parivartan o People's Campaign for a Common School System o Plachimada Solidarity Committee o Praful Bidwaio Prashant Bhushan o Prayas o Sanjay Parikho Sathi-CEHAT o Satya Sagar o Shalmali Guttal o Shetkari Sangathana o South Asian Network on Dams, Rivers and People o Subrata o Sudhir Patnaik o Urban Research Centre o Vikas Adhyayan Kendra o Vijay Paranjype o Vinay Baindur

In Collaboration With Jawaharlal Nehru University Teacher's Association [JNUTA] and Jawaharlal Nehru University Student's Union [JNUSU]

Preliminary Findings

2007-10-05T02:20:00.000-07:00

Preliminary Findings by the Jury

of the Independent People’s Tribunal on the World Bank Group in India

We, the twelve jury members, have listened to four days of testimony and depositions from affected people, experts and academics from some 60 grass roots, civil society groups and communities from all over India. The presentations covered 26 different sectors of economic and social development, ranging in scope from the macro-economic impact of wide ranging economic policies to testimony from representatives of communities said to have been harmed and impoverished by specific World Bank financed projects. Our members include former justices of the Indian Supreme Court and High Courts, lawyers, writers, scientists, economists, religious leaders, and former Indian government officials. We note that the World Bank Delhi office received an invitation to attend the Tribunal two weeks in advance, but did not wish to participate in the proceedings.

First and foremost, the evidence and depositions we have witnessed presents a disturbing and shocking picture of increased and needless human suffering since 1991 among hundreds of millions of India’s poorest and most disadvantaged in rural areas and in the cities. It is clear to us that a significant number of Indian government policies and projects financed and influenced by the World Bank have contributed directly and/or indirectly to this increased impoverishment and suffering. All this has taken place while a minority of India’s population that constitutes the middle class and rich has enjoyed the fruits of an economic boom.

The most disturbing leading indicator for this suffering is the alarming increase in farmer suicides since the 1990s. From 2001 to 2007 alone, according to the Indian Minister of Agriculture, 137,000 poor farmers have killed themselves. These deaths are not random events; the evidence we heard points to increasing financial pressures on farmers all over India as a result of some or all of the following policies, such as: reduced subsidies from the Center and states, higher prices for poor farmers for irrigation water, electric power, and seeds; reduced subsidies for agricultural inputs, reduced access to low interest loans for the poor, and opening up of the Indian economy to an uneven playing field in international trade in agricultural commodities. India’s farmers must now compete with imports from the heavily subsidized farms of the European Union and North America, at the same time when even the most meager state assistance for the poorest farmers is reduced. India was once self-sufficient in food production; its food security is now dependent on imports. It is clear to us that major World Bank Economic Restructuring, Structural Adjustment, and Sector Loans have directly promoted and helped to finance these economic policy changes which are a disaster for much of India’s more than 700 million rural inhabitants, and most disastrous of all for poor farmers.

Other World Bank loans have promoted the institution of user fees in the health and education sectors, as well as partial privatization in these sectors. Whatever the justification for these policies, we heard how in practice, they have further disadvantaged the poor. The Bank is promoting legal and regulatory changes the main focus of which appears to lessen the social and environmental compliance burdens for industry and investors, rather than protect the vulnerable livelihoods and environments of India’s poor majority. The net effect of many Bank prescribed policy “reforms” appears to be the reorientation of the Indian State priorities from striving to secure a safety net for the poor and vulnerable to providing a safety net for large domestic and international corporations and investors.

We heard witnesses from the poorest Dalit and Adivasi communities describe the deterioration for their communities from poverty to destitution because of forced displacement caused by World Bank financed projects. A number of these projects are notorious and communities have sought redress for years: the Bank’s massive loans for thermal power development in Singrauli in the 1980s displaced many tens of thousands of poor, who have sought economic rehabilitation and improvement of toxic environmental conditions, with no redress from the Bank or its Indian government borrower, NTPC. We heard of the plight of hundreds of families impoverished by displacement in the Bank financed Coal Sector Rehabilitation Project, despite the claims of a separate Bank Coal Sector Environmental and Social Mitigation Project. Although the Bank’s own Independent Inspection Panel found in 2002 that Bank management violated its own environmental and resettlement policies on 37 counts, Bank management has taken no effective measures to ameliorate the condition of these families. These examples are only a small sample of a massive pattern of forcible displacement of India’s poorest and most vulnerable populations for large scale natural resources extraction, infrastructure and urban projects, a number of which have been directly financed by the Bank. The Bank has announced its intention to increase its financing of large scale projects while at the same time there is disturbing evidence of its widespread failure to implement its environmental and social safeguards, as well as indications of intentions to even dilute the effective rigor of these safeguards.

One of the disturbing impressions we gathered from the presentations is that the bank seems to have developed the art of making policies whose safeguards are only on paper. It has devopled a language game in which words like empowerment actually mean disempowerment, sustainable means unsustainable, public-private partnesrship means using the public to promote the interests of the private.

It is impossible to do justice in our short preliminary statement to the volume, scope and intensity of the scores of depositions, expert presentations, and eye witness accounts we have heard over the past four days. The Tribunal will be publishing more detailed accounts, and we will submit a more detailed set of findings and recommendations in future weeks. What emerges is a picture of an institution whose influence on the economic and social policies of the Indian government is much greater than the amount of its lending might indicate. The Indian Government, of course, shares at the very least equal responsibility for all of the abuses we have witnessed, indeed a significant number of officials in key ministries such as finance and planning have either worked at the Bank or IMF, or share their assumptions and biases. Together all bear considerable responsibility for wide reaching policies and specific investments which in the name of growth and development have had the cruelest impact on the most vulnerable groups in our society.

We hold the Indian government accountable and call for changes in these policies. India and the international community must join to hold the World Bank accountable for policies and projects that in practice directly contradict its mandate of alleviating poverty for the poorest.

The IMF, The World Bank, and Structural Adjustment

2007-10-05T01:59:00.000-07:00

What are the IMF and World Bank?
The IMF and World Bank are controlled by the wealthy governments of the world, led by the U.S., the U.K., Japan, Germany, France, Canada, and Italy – the "Group of 7," which holds over 40% of the votes on their boards. Their function is to impose economic austerity policies in the countries of the so-called “Third World” or “global South” and the “transition economies” of the former Soviet bloc.

Once countries build up large external debts, as most of those in Africa, Asia, Latin America, and the Caribbean have, they cannot get credit or cash anywhere else and are forced to go to these international institutions and accept whatever conditions are demanded of them. None of the countries has emerged from their debt problems; indeed most countries now have much higher levels of debt than when they first accepted IMF/World Bank “assistance.”

Structural Adjustment Programs (SAPs)
IMF/World Bank conditions, known as “structural adjustment programs” (though the institutions are trying to escape that term’s negative reputation by changing the name to “poverty reduction and growth programs”!) force countries to promote sweatshops, exports to rich countries, and high-return cash investment. The increase in international commerce – corporate globalization that followed the widespread imposition of SAPs in the 1980s – led to demands by corporations and investors for ways to lock in their privileges and protection against the perceived danger of governments seizing assets or imposing new regulations. The WTO, established in 1995, was the answer to those demands, an institution whose secret tribunals can overrule national laws if they are found to violate the rights of corporations.

The World Bank is best known for financing big projects like dams, roads, and power plants, supposedly designed to assist in economic development, but which have often been associated with monumental environmental devastation and social dislocation. In recent years, about half of its lending has gone to programs indistinguishable from the IMF’s: austerity plans that “reform” economic policies by suffocating the poor and inviting corporate exploitation.

Although the IMF finally got some of the criticism due it with the East Asian financial crisis (where it imposed austerity programs on South Korea, Indonesia, and Thailand) and the massive default in Argentina, the two institutions continue to be the chosen tools of the political and business elites for ruling the global economy, and run, to one degree or another, about 90 countries’ economies.

These countries are forced to adopt policies even more committed to deregulation and withdrawal of government from insuring public welfare than those in the U.S. Considering how impoverished many of these countries were to start with, the effects of these policies have been predictably devastating. The “emerging market success stories” we sometimes read about generate wealth which goes to very small segments of the populations, and much of it ends up in the North. The great majority of the people of the South are enduring increased poverty, decreased access to basic services, and decreased control over their own economies.

SAPS Work for Corporations and Elites; Impoverish the Rest
How – and why – do the structural adjustment programs that the IMF & World Bank impose create conditions that multinational corporations desire and that devastate most people in the Southern countries? A look at the most common SAP conditions show how economic “advice” is used to maintain the interests of the wealthy at the expense of continued suffering for the bulk of the people.

So Why Do Countries Agree to SAPs?
SAPs are anti-democratic in more than one way. The institutions are correct in saying that the plans are agreed to by the governments. But the government officials involved are usually limited to the Finance Ministry and the Central Bank, usually among the most conservative, Northern-educated, and wealthy members of the government -- in other words, those most likely to agree with IMF economics and benefit from the policies. Whatever the perspective of the officials signing the papers, there is a large element of coercion involved. The power equation is simple: if indebted governments don’t agree to the structural adjustment plan, it will be cut out of the global economy – denied credit, aid, and loans – because other lenders follow the lead of the IMF and World Bank.

The slogan “short-term pain for long-term gain” sounds hollow when people have heard it for a whole generation. With such unpopular policies, it is the rare government that can “sell” structural adjustment to its people, especially with a 25-year track record that demonstrates the “short-term pain” never ends, and the gains never begin. SAPs encourage instability in democratic countries by forcing elected governments to institute measures which make them illegitimate among their people. It has been argued that the IMF prefers dictatorships to democratic governments, because dictators can more successfully impose SAPs. And once the rules are in place, the WTO extends the attack on democracy by overruling any regulations that corporations claim interfere with their right to profits.

The fact that institutions based in Washington and largely controlled by the U.S. Treasury Department have been starving peoples around the world for two decades is a scandal. That people in the U.S. are barely aware of the fact is a disgrace. The system works well for those who benefit from it, and it does so because the powerful can count on the people of countries like the United States to disregard systems that seem too “complicated” or “distant” to care about.

The work of the 50 Years Is Enough Network is to educate people in the United States and elsewhere about how the system works. Together, raising our voices against its obscene injustices, we can transform the system that makes the rich richer, and devastates and kills the already-impoverished.

THE REVOLVING DOOR OF THE WORLD BANK By Prashant Bhushan

2007-10-05T01:45:00.000-07:00

Suborning policy and decision makers by its pocketbook

Joseph Stiglitz, the Nobel laureate and former Chief Economist of the World Bank in his frank critique of the World Bank and IMF, “Globalisation and its discontents”, notes that “The institutions are dominated not just by the wealthiest industrial countries but also by commercial and financial interests in those countries, and the policies of the institutions naturally reflect this”. This, he says, happens because the World Bank and other Multi-lateral financial institutions are controlled by the wealthy countries. For the WB/IMF, these countries are represented by their Finance Ministers and Central Bank Governors. He goes on to say, “The Finance Ministers and Central Bank governors typically have close ties with the financial community; they come from financial firms, and after their period in government service, that is where they return. These individuals naturally see the world through the eyes of the financial community. The decisions of any institution naturally reflect the perspectives and interests of those who make the decisions; not surprisingly, the policies of the international financial institutions are all too often closely aligned with the commercial and financial interests of those in the advanced industrial countries.”

Though an insider with impeccable credentials and credibility like Stiglitz has laid bare this fact which was known by most people much earlier, yet it is obvious that the government of India’s policies regarding the revolving door between the government and the World Bank/IMF are totally oblivious to this. How else would one explain the fact that for much of the last 20 years, and particularly since 1991, many if not most of the top economic policy makers including members of the planning commission, secretaries of the Finance Ministry and Governors of the Reserve Bank have been staffers of the World Bank/IMF. They have moved smoothly and seamlessly between the World Bank/IMF and the government of India, as if the government of India were just a division of the World Bank/IMF.

Since the mid 80s it has become common to find World Bank staffers occupying key policy making positions in the Government of India. Starting with Montek Singh Ahluwalia, and Bimal Jalan, the vast majority of the key officials of the Finance Ministry and the Reserve Bank have moved seamlessly back and forth between the World Bank/IMF and the Government of India. They include such influential policy makers and Finance Secretaries such as Shankar Acharya, who like Montek started with the World Bank in the 70s and then again like him joined the government as Economic advisor in 1985. In 1990 he was back at the World Bank as Chief of the Public Economic Division till 1993, when he was appointed Chief Economic Advisor to the Government of India. He was thereafter appointed to the Board of SEBI, the EXIM Bank and various other policy making bodies.

We then have Rakesh Mohan who also initially worked with the World Bank (1976-80, 1983-86) and later became Economic Advisor to the Ministry of Industry, Government of India. He then served in top positions of many policy making bodies of the government including Deputy governor of the Reserve Bank, Secretary of the Department of Economic affairs etc.

We have Parthasarthy Shome who worked at the IMF for most of the time between 1983 and 2004. In between he was called in as Chairman, Advisory group on Taxation for the 9th 5 year plan, then as Chairman of the Advisory group on Tax policy, and most recently as Special advisor to the Finance Minister (2004-2007).

We also have other persons like Ashok Lahiri, who worked for many years in the IMF before being brought in to the government as Chief Economic Advisor and then sent to the ADB as Executive Director in 2007. These are only some examples of persons who started their careers with the Bank/IMF and were brought into influential policy making positions of the Government, then allowed to move back and forth between the bank and the government as if the Government of India were just a division of the Bank/IMF). Such examples could be multiplied endlessly.

This revolving door with the Bank/IMF and the filling of most economic policy making positions of the government by these Bank staffers has allowed the bank to impose its ideology and policies on India. It has not only ensured that these policy makers are schooled in the World Bank school of economics, by allowing them to move back and forth but also ensured that the Bank/IMF retains a complete stronghold on these persons wherein they step out of line only at the cost of losing their lucrative jobs/assignments with the Bank/IMF.

In fact, key officials of the Finance Ministry and other important Ministries dealing with World Bank proposals and projects have been freely allowed to negotiate and take up jobs at the World Bank while in service and immediately after retirement. Many of them are deputed by the Government of India. These deputations also work through the network of Old boys of the World Bank occupying key positions in the government of India. Apart from deputations, there are hosts of other jobs, consultancies, assignments, even travel grants and huge honoraria paid for attending meetings of the World Bank and associated agencies. Thus, R.A. Mashelkar as DG CSIR went on at least 50 trips abroad during his tenure which were paid for by the Bank or the World Intellectual Property Organisation. For most of these trips, he was paid an honorarium of around 500 British pounds a day. As a result of this, he got more as honoraria for these trips than he got as salary from the Government of India. As DG CSIR, he presided over several policy-making committees and advised the government to (for example) amend the Patents Act in line with the needs of multinational corporations of the West. He says that he honestly believes that it is in the best interest of India as well. But, when one knows that juicy junkets, honoraria and assignments depend on whether he falls in line with the Bank and similar agencies, it is easy to convince yourself of the righteousness of the course that is likely to land you with these juicy assignments.

The officials are selected eventually by the Bank and their salaries and honoraria are decided by them, depending on their level and “utility” to the Bank. However, in all cases they are several times, usually ten times or more than, the salaries they get in India. This creates an enormous incentive for the Officials to seek World Bank jobs, assignments, consultancies and even travel grants. Since it is obvious that one is more likely to get these if one toes the World Bank line, it creates an enormous incentive for Officials to fall in line. This is particularly so for “honest” officials who see these jobs and assignments as the only legitimate way of doubling or trebling their savings in a very short while.

The Foreign Contribution Regulation Act which makes it an offence for a government official to accept any material contribution from a foreign agency also exempts the World Bank and other “United Nations agencies”. This has further smoothened the path of those seeking World Bank/IMF/ADB jobs, assignments and travel grants.

This is why there is no critical evaluation of World Bank policies and projects at the government level and they are all virtually accepted uncritically and pushed through. All this has had an enormously deforming effect on policy making, particularly economic policy making in the Government of India. It would not be incorrect to say that it is the World Bank which runs the Reserve Bank, the Finance Ministry and other economic policy making bodies of this country.

World Bank on trial

2007-10-04T11:48:00.001-07:00

On September 21, 2007, hundreds of people will assemble in New Delhi to put the World Bank Group on trial. In four days of parallel sessions in front of more than a dozen judges, people from all walks of life will air their grievances against one of the world's most powerful institutions. In convening an Independent People's Tribunal on the World Bank Group in India, they are attempting to do more than simply chalk up another protest against injustice. The People's Tribunal is also a shrewd political strategy, aimed at renewing a silenced debate over neo-liberalism and economic policy. But most profoundly, it is a direct assault on one of the Bank's (and the elites') most powerful tools: the monopoly of knowledge. By bringing into the limelight the testimony and personal experiences of the poor, adivasis, Dalits, women, and other marginalised people, it is in direct conflict with the World Bank's own means of understanding economic and social policy. That challenge is not one the World Bank can afford to ignore.

World Bank in India
Since 1949, India has been one of the World Bank's favourite clients. Historically, it has borrowed more money from the World Bank than any other country. Currently, it ranks in the top four, along with China, Russia, and Indonesia. Unlike many borrowing countries, India has also been faithful in paying off its loans -- thus providing the World Bank with an assured, steady return of funds. Without a few reliable clients such as India, the World Bank would be hard pressed to continue its operations.

In its early decades, the World Bank emphasised infrastructure projects. It lent money for Dams, canals, railways, highways and other large construction projects. These generally required foreign expertise, so the loan money was largely used to hire foreign multinational firms to build infrastructure. In India, the most infamous of these projects are the Sardar Sarovar dams on the Narmada; these eventually became such a political liability that the World Bank jettisoned them. However, it continues to finance infrastructure -- in fact, it has recently recommitted itself to 'high risk, high reward' projects in the vein of Narmada. But in recent years, a far greater share of its lending goes towards policy change.

For decades, the World Bank and its sister institution, the International Monetary Fund (IMF), have pressured borrowing countries to adopt policies that they believed would foster economic growth. These neo-liberal policies were a standard package that varied little from country to country; they are also known as the 'liberalisation, privatisation, and globalisation' approach. In essence, they push countries to privatise public assets, reduce regulation and state controls on multinational corporations, re-orient their economies away from self-sufficiency and towards exports; weaken labour and environmental standards, and do away with other barriers to concentrations of wealth.
While India accepted large quantities of money for projects, it generally avoided large-scale policy changes until the 1990s. By then, it was heavily dependent on oil imports, when the first Gulf War caused oil prices to spike, India found itself short of foreign reserves to continue importing oil. It turned to the IMF for help, and got it — but with strings attached. Bowing to external pressure as well as a restive, upwardly mobile, middle class, India began adopting wholesale neo-liberal policies.

The World Bank has approved this wholeheartedly. India's once-meagre foreign exchange reserves are now second only to China's. Economic growth rates are around 8 or 9 per cent per year. The stock exchange is booming, and Indian corporations are becoming global players. For the World Bank, it is the long-awaited vindication of their neo-liberal faith (Latin America, Africa, Eastern Europe, Russia and Southeast Asia having all produced spectacular failures with the same policies).
Invisible Debate
There is another set of facts that present a less rosy picture. The availability of foodgrains has fallen to its lowest level since 1973, malnutrition is correspondingly on the increase. Pollution of industrial areas is growing steadily worse. Slum clearance and urban renewal projects are displacing tens of thousands of the poorest urban dwellers. Personal indebtedness is skyrocketing -- farmer suicides being the most obvious symptom. Landlessness, always a problem, is growing. The new economy's voracious appetite for natural resources has set it on an increasingly violent collision course with Adivasis and other rural peoples; increasing numbers are joining the Naxalites or other armed resistance movements. While neo-liberalism has generally done well for the wealthy and the urban middle classes, it has also entailed huge costs. But those costs are generally borne by the marginalised and the disenfranchised, particularly the poor, and so they quite simply are not recognised.

When India embarked on its neo-liberalisation project in the 1990s, it occasioned a good deal of furious debate: in the press, in Parliament, in academia and in chai shops. The pros and cons, the winners and losers, were toted up, argued back and forth. Now, that debate has fallen silent. It is as if the debate were settled, no longer worth arguing; or even as if neo-liberalism were simply a historical inevitability. Indeed, this is exactly what Margaret Thatcher claimed when she coined her infamous acronym, TINA: There Is No Alternative. It was a transparent attempt to close off debate about this most controversial set of economic policies. At the same time, in the US, Reagan's advisers attempted to do the same thing more subtly by claiming that neo-liberal policies were not 'political' issues; they were simply 'good management.' Nothing to debate here, move along, move along.

The World Bank has all along had its own means of closing off debate: it has attempted to monopolise the conversation about how poor countries should develop. Its staff and consultants publish hundreds of articles and reports annually, it funds even more studies by outside researchers. It has a well-oiled public relations machine, it runs a mini-university, the Economic Development Institute, and it encourages staff exchanges to spread its gospel to other institutions. Perhaps most importantly, it employs some 10,000-development experts —by far the largest, best-paid and most-prestigious positions in the field of development economics. But unlike a university, the World Bank does not tolerate diversity of opinion within its ranks. Its publications are not peer-reviewed, it suffers no external audits. In recent years, it has attempted to formalise this dominance of the debate by enthroning itself as 'the Knowledge Bank' -- the single source for all information, knowledge, and theory on developing countries' economies.

What this means in practice is that alternatives to the Bank's neo-liberal agenda are not merely rejected. They are never even considered. When New Delhi took a World Bank loan to design improvements in its municipal water supply system, there was no debate about what the priorities should be or which of the various models should be employed. The entire design of the project was handed over to PriceWaterhouseCoopers, an international consulting firm and one of the World Bank's pet contractors. PWC, unsurprisingly, returned a blueprint for privatisation, without any mention of alternatives. Not content to dominate the consulting firms and borrowing governments, the knowledge bank is reaching further upstream, into universities, to ensure that its ideology is taught as fact throughout the field of economics.

What you won't find anywhere in the Knowledge Bank are the voices of India's poor and marginalised. You will have to come to New Delhi to hear them. They will tell you of World Bank policies that have robbed them of farmlands, forests, and homes; emptied their savings, ruined their health, broken up their families; stripped them of their access to clean drinking water, health care, and education; and brought them into conflict with the local moneylender or multinational corporations. Their stories, individually and collectively, are another reality, in direct conflict with the sunny assessments that the World Bank likes to tout. In New Delhi, the spotlight will be on them: the poor, in whose name all this development happens. They will raise their voice against World Bank-led growth model that has been taking its toll upon poor.

(To find out more about the Independent People's Tribunal on World Bank in India, visit: http://www.worldbanktribunal.org and http://worldbankout.blogspot.com/)

Institutionalisation of Communal Biases - Ram Puniyani

2007-10-04T11:24:00.000-07:00

A Tale of Two Reports
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In the wake of the punishments being mated out to the culprits of Mumbai blasts of 1993, the logical demand of punishing the guilty of 92-93 Mumbai carnage came up from different sections of society. Many a delegations met the political leadership to urge for implementation of Shrikrishna Commission report. This report impeccably pointed out the role of different leaders, from Shiv Sena-BJP and even some from Congress in the Mumbai riots. Their crimes of commission and omission are there for all to see in this report. The present government, Congress-NCP, had come to power on the promise that they will implement the report. Despite long years of being in power; they cleverly sat pretty, giving some flimsy answers about the actions which they seem to have taken. One sampler will do, for the crime which calls for few years of imprisonment, they transferred some one from one to the other department, bravo! Now with the revival of the pressure from the victims and concerned citizens, again some white wash is being peddled out with the promise to take action.
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At the same time, those involved in the riots threatened against the implementation of this report. Same political formations had earlier rejected the report as being anti Hindu, and challenging that if the report is implemented, it will be the political death of those who will do so. An argument is being rehashed as to why should the wounds of the riots be reopened, unmindful of the fact that wounds of the victims may heal only and only if the culprits are given the punishment. A subtle threat has been given that its implementation will bring in more violence. It's clear that those who are the victims try to call for justice and those who are the patrons of criminals or criminals themselves peddle these arguments to avoid their own punishment and to protect their political interests.
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The second report which is under attack is the one related to the socio-economic condition of the Muslim minority. This report, like the previous report on the same issue, Gopal Singh Commission, pointed out the abysmal condition of the Muslims, their low levels of incomes, social deprivation, economic destitution, their being side tracked from the jobs, welfare schemes and other ladders for progress. As the present UPA government is trying to take this seriously, is accepting the idea of forming of Equal Opportunities Commission in principle, some political elements have termed this affirmative action of the government being like throwing 'an Atom bomb at Hindu community'. It is warning that it will take to the streets to oppose this 'appeasement of Muslims'.
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There are lots of parallels in the attitude to both the reports. As such these two reports genuinely reflect the twin aspects of the problem of the minorities, the socio-economic aspects and the physical security. Both have a strong impact on each other and also on the existence of the community as a whole. One infers from Sachar committee report that as a community, Muslims are the only one's whose economic and social situation has slumped down in last sixty years. And Shrikrishna report delineates the anatomy of a riot, the expression of depth to which communalism has sunk in our society. It demonstrates as to how one type of political leadership, the one like BJP-Shiv Sena instigates and launches the attack, getting its legitimization in advance from the propaganda that the minorities are a threat, are attacking, so we have to retaliate to protect 'ourselves'.
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The other type of leadership sits back and lets these elements do their communal polarization, and also does accommodate some elements from these parties for the sake of power. Congress which claims to be secular easily slips when principled actions are to be taken. During the Mumbai pogrom Congress Chief Minister Sudhakarrao naik was sitting pretty paralyzed by inaction and silently supporting the attack led by Bal Thackeray. When a delegation of industrialists led by Tata called upon him to stop the mayhem, he told them to meet Thackeray to request him whatever they want. The same party later admitted into its fold the likes of Narayan Rane and Sanjay Nirupam, who were loyal sainiks of Thackeray. The third player in the game, the state machinery, the police and bureaucracy and partly judiciary is infected by the institutional biases against the minorities and aids and abets the anti minority carnage in different ways, that's how you see so many of police officers blundering and participating in the violence and getting a pat from their political masters.
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Sachar Committee shows that condition of Muslims is worsening. No democracy worth its pluralism and equality can ignore a chunk of its society and ignore the affirmative action for weaker sections of society. Here it seems so far the democratic values have been put on hold as far as weaker sections are concerned. Here one type of leadership, the right wing is dead opposed to any affirmative action, equating it to nuclear attack on the Hindus. The other leadership, which so far slept over the issue, is hopefully trying to wake up to it. The third major player the bureaucracy is by now too communalized to be bothered to let the affirmative action take place. The tragedy is that on one hand there is no effective affirmative action for minorities and on the other even the token talk on this issue ispresented as a threat to Hindu community.
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Can we let this denigration of minorities go on? One recalls that our earlier caste system had totally marginalized the low castes. Today in the communal scenario another chunk of population is being relegated to secondary position. Are we creating new type of exclusionary social system? Sprawling ghettoes like Mumbra, Bhendi Bazar on one hand their absence in the social sphere on the other, totally violates the spirit of national community.
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Golwalkar, the second supremo of RSS, the most important ideologue of RSS-BJP and affiliated organizations which are leading the anti minority tirade, wrote "…non Hindu people in Hindustan must either adopt Hindu culture…they must cease to be foreigners or may stay in the country wholly subordinated to the Hindu nation claiming nothing, deserving no privileges, far less any preferential treatment, not even citizens rights.". One may add to that they will also be subjected to differential legal system! Are we heading towards this terrifying vision of the patron saint of RSS-BJP?
.(Writer is Secretary of All India Secular Forum)