Thursday, May 22, 2008

Debating the idea of Federal Police Agency
*Saumitra Mohan

The perceived failure of our police machinery to deal with various cases of law and order satisfactorily has often led to demands for CBI inquiry in those cases. This, inter alia, points to the lack of popular confidence in our police and frequent calls to CBI for causing inquiries in matters as may strictly relate to matters in the state domain. This has not only dented the morale of the provincial police, but has also resulted in the central agency being overly burdened to do justice to its original briefs.

It is in this light that there has been mooted a proposal for a Federal Police Agency (FPA) to deal with such issues in state domain which go beyond the normal law and order or which require more specialised attention and investigation. The same shall also have positive pay-offs for our internal security.

The blame game between the Centre and many state governments as seen recently in the wake of critical law and order failures or terrorist bomb blasts is also supposed to be laid to rest by institution of such an agency. After the recent serial bomb blasts in Uttar Pradesh, while the Centre said that law and order being a state subject, it is the responsibility of the state government to be more vigilant, the state government blamed the centre for having not provided it with adequate intelligence inputs to this effect.

However, the Central Administrative Reforms Committee headed by Veerappa Moily has also recommended such an independent Crime Investigation Agency. The performance of this agency is proposed to be monitored by a ‘high powered collegium’ comprising the Chief Minister, Speaker of the Assembly, Chief Justice of the High Court and Leader of the Opposition.

The committee, inter alia, suggested a State Police Performance and Accountability Commission with the Chief Minister as the head, but also with many members from the civil society to review and evaluate the police performance. The Citizens’ Committee has also recommended specific measures for proper supervision of the police force.

The idea of a Federal Police Agency has been on board for a long time and now the Government of India is also learnt to be toying with such an idea. But before we go about this, there are many issues which need to be discussed and sorted out.

When we go about setting up such an agency, we should see to it that the jurisdictions of the state police and that of agencies like CBI and FPA remain clearly demarcated to avoid any duplication or overlapping of functions and duties, as far as possible. It needs to be ensured that inquiries and investigations as entrusted to these agencies become more automatic and systematic than be reactive entrustments to pre-empt any negative reflection on performance of the local police.

It has been noticed in recent past that the state governments or high courts have entrusted enquiries in high profile cases only after there has been a popular outcry demanding the same. The same was seen in Nandigram and Rizwanur Rahman cases where ongoing state police inquiries were discontinued or nixed in favour of inquiries by the central agency. Such an approach often has dampening impact on police morale.
We should also ensure that even while create such a central agency, we should not ignore and forget that there is no substitute to an efficient and effective police force as that still remains the most primary level where the State-citizens interface usually takes place. Hence, the provincial police needs to be spruced up further rather than marginalising it by whittling down its authority or overshadowing it by creation of parallel authorities.

Ergo, increased attention should continue to be paid to improve the efficiency and effectiveness of the state police to restore the popular confidence therein. The state police needs to be made more professional and effective than it has been found to be so far. And to ensure this, the police must be allowed to function more independently and autonomously than it has been able to.

It is realising this that the Dharamvira Commission recommended complete police autonomy long back in the 1970s, but till date no serious thought has been given to this recommendation for the simple reason that it suits the interests of our political class. The cosmetic changes effected in police organisation recently consequent to the Supreme Court judgement have not made any substantive and qualitative difference to their service delivery. Proposal of the FPA also points to the dilettantism which informs the police reforms.

It remains a fact that since law and order is a state subject, frequent calls to CBI also results in erosion of the state authority and, thereby, of our federal structure. Even though our founding fathers never meant India to be a true federation as is obvious in the Constitutional appellation ‘Union of States’, centralisation of powers beyond a point is not advisable notwithstanding the centralising tendencies seen in federal countries across the world.

After all, Nandigram has brought to the fore a sinister side of the reality which needs to be addressed urgently for the better management of law and order situation with serious implications for our internal security. Most importantly, we need to realise that we can allow the institution of police to languish only at the peril of our system.

So, even while we go about creating FPA, it should be ensured that police functions remain unencumbered by interference from any quarters including insidious influence by the politicians and political parties. The police force not only needs to be made more professional, but it also needs be better trained and better motivated to deal with various demands and challenges of policing in an anomic society.
Strengthening Indo-Bangla Relations
*Saumitra Mohan

Notwithstanding India’s attempts to further improve and consolidate bilateral relations with Bangladesh, the latter continues to indulge in hostile acts which actually compromise India’s territorial security and integrity. The unprovoked firing by Bangladesh Rifles (BDR) from time to time resulting in loss of human and animal lives only confirms this.

Notwithstanding the assertions of India’s Border Security Force (BSF), backed by concrete evidence, Bangladesh is not willing to accept the fact that it is playing host to the militants having inimical designs on India. Bangladesh just does not see any such militant camps being run on its territory. But the fact remains that as many as 172 training camps of different insurgent groups including those from Tripura have been operational in Bangladesh for a very long time.

The BSF has been submitting lists of such camps at annual border meetings with its counterparts namely the Bangladesh Rifles (BDR) since the late 1990s only to be rebuffed every time by the latter. However, BDR did assure in 2006 to ‘look into the matter and find out’ but did nothing beyond that.

As per the 1996 accord between the two, both the countries were expected not to allow such bases on their sides of the border, but Bangladesh never kept its word as is obvious from the experience to the contrary. In spite of the initial promise, the present interim government in Bangladesh is no different from its predecessors. It is obvious by now that Dhaka deliberately winks at the disruptive activities of Pakistan’s Inter Services Intelligence (ISI). The latter is out to destabilise India’s North-East as part of its long-cherished desire to bleed India through thousand cuts, dismembering her eventually.

A TV channel’s footage recently of some rebels belonging to the secessionists National Democratic Front of Bodoland (NDFB) undergoing training in Bangladesh should leave Dhaka red-faced. Only recently, a Guwahati-based website quoted NDFB commander Ranjan Daimary welcoming and exhorting trained cadets in Bangladesh telling them about their real task starting with the end of their training.

Known as the Bodo Security Force during the height of the Bodo agitation, NDFB took in present avatar in 1995. It teamed up with six smaller ethnic outfits to form an umbrella organisation called the Self-Defence United Front of the South East Himalaya Region. It has links with ULFA and NSCN (IM). Two years after Bhutan busted the NDFB camps, the outfit signed a truce with the Centre in 2005, but it would appear this was merely a ploy to buy some time to be able to consolidate.

Though the Bodos are now masters of their own destiny, the NDFB does not recognise the Bodo Territorial Council under the Sixth Schedule signed by its rival, the Bodo Liberation Tigers. The Centre can not ignore the NDFB’s potential for mischief and must redefine the truce. In all this, Bangladesh’s friendly gestures can go a long way in India’s efforts at fighting such forces as was done by Bhutan a few years back.

Bangladesh’s cooperation on this count would definitely help in tackling the long festering problem of illegal immigrants from Bangladesh. The fact remains that today millions of illegal Bangladeshi citizens are residing and working in India and it is well nigh difficult for the latter to identify and deport them all for different practical reasons. That is why, there has been a suggestion of completely opening the borders with Bangladesh as is the case with Nepal and Bhutan.

This one measure would not only help in effective monitoring of the inter-border movements of citizens by means of valid work permits for citizens on both sides, but shall also go a long way in improving the bilateral trade between the two countries which is heavily skewed in favour of India presently for the obvious reasons.

And if functionalist theory of international relations is to be believed, then such a bold decision would also pave the way for better political relations owing to the positive spin-offs of the better and improved economic ties. After all, it is a well-known fact that better economic ties have always shown potential to spill over into domain of politics as has shown the experience of the European Community. The same may also help the cause of economic development of India’s North-East.

Though, sceptics may points out that such an act would have its own adverse implications including endangering India’s security and integrity by way of changing the democratic profile of the bordering Indian states. It is believed that India’s stronger pull factor would actually make this inter-border movement one-way, with Bangladeshi citizens encroaching on India’s economic resources including developmental benefits of the Indian citizens.

It may actually make the situation very tense than easing it as is being touted. The bird flue outbreak in West Bengal is also attributed to ineffective border surveillance between the two countries and it is believed that had it been completely open, bird flue situation would have been much more dangerous than has been the case so far.

Doubting Thomases notwithstanding, Indo-Bangla trade ties have only been growing for the better. The very fact that the recently launched bus and train services between the two countries have been taken very well by the two countries and have been functioning very well than the one with Pakistan.

One just hopes that better sense would prevail upon Bangladesh and she would see reason and benefits that better ties with India may fetch her. In fact, the same would have positive implications for the wider regional cooperation as well, making SAARC realise the objectives that have so far eluded the over two decade old organisation.
A New Gorkhaland State: How Justified is the Demand?
Saumitra Mohan

The famed and famous honeymoon haunt of Darjeeling is again in the news, this time for a wrong reason. The Gorkha Jan Mukti Morcha (GJMM) almost barred the District Magistrate and the Superintendent of Police from entering Darjeeling recently thereby forcing both the DM and SP to cool their heels in Siliguri for almost five days before they were finally allowed in. GJMM’s decision followed skirmishes between the police and its supporters in Siliguri where the latter were demonstrating to press their demand for a new Gorkhaland state.

During the said skirmish, many policemen and GJMM supporters including ex-servicemen were badly injured. The government wisely decided against advising DM and SP to force their way into the district so as not to precipitate things further. The wisdom somewhere also emanated from the way things turned out in recent past in such far flung places as Singur, Nandigram, Cochbehar and Dinhata in West Bengal.

However, GJMM’s decision to bar DM and SP from entering the district has been roundly denounced by all and sundry. One of their key allies in the ongoing movement, CPI (ML) has castigated the GJMM’s barring of DM and SP out of the district. Referring to GJMM’s recent ban on the entry of DM and SP to Darjeeling, Mr. Kanu Sanyal, the General Secretary of CPI (ML) said, ‘This is an entirely irresponsible act’, further adding that such irresponsible moves can actually spoil the statehood movement.

GJMM as a political organisation rose to prominence since its success with an agitation launched in the wake of a Radio Jockey’s indiscretion against Prashant Tamang, the Indian Idol winner. Since then, it has been trying hard to find some issues for its political survival. Another shot in its arm was the dissolution of Darjeeling Gorkha Hill Council (DGHC) following its successful movement for the same, forcing the redoubtable Subhash Ghishing to step down as head of the Council.

Encouraged by these successes, GJMM led by Bimal Gurung has decided to keep its flock mobilised on one cause or the other to press the Government into accepting its demand for a separate Gorkhaland state. Bimal Gurung, a trusted confidant of Subhash Ghishing at one time fell out with him when the latter demanded and almost succeeded in getting the Sixth Schedule status for Darjeeling.

Bimal Gurung, reading the mood of the people correctly, not only led a successful coup against Ghishing thereby getting the leadership mantle for Darjeeling, but also decided to rake up the long pigeon-holed issue of a separate Gorkhaland state instead of settling just for the Sixth Schedule status for Darjeeling, something which was strongly advocated by Ghishing. In its bid to do so, GJMM has found support from such other disparate outfits as Kamtapur People’s Party (KPP) and Greater Cochbehar Democratic Party (GCDP). They together have found a convenient ground to hog media attention for their long-forgotten causes, more so in an election year. Be it noted that West Bengal is supposed to have its panchayat election in the month of May to be followed by parliamentary election very soon.

But many feel that the present bonhomie among GJMM, KPP and GCDP is not likely to last long because of their conflicting interests. After all, the proposed Gorkhaland, Kamtapur and Greater Cochbehar states for which these parties have been agitating have overlapping areas and in case of the last two, almost the same area. So, the friends today may turn foes tomorrow and may not share the same platform in future as things stand on date unless they agree to redefine and restructure their respective movements.

The electoral factors coupled with incidents in Nandigram, Singur and Cochbehar over the last one year have restrained the government to go for the ‘Big Bang’ approach while tackling the instant Darjeeling crisis. Because of the turbulence and disturbances seen in the last few days owing to the ongoing GJMM agitation in Darjeeling, the developmental work in the DGHC area has been negatively affected, resulting in great loss to the local people for whom the said movement has been launched. The experiment of DGHC would have been better able to provide all that the local people wanted, but if it failed the reasons therefor can be attributed simply to those who had been at the helm of its affairs all these past years.

The fact that Gorkha Jan Mukti Morcha has raised a new demand by asking for inclusion of Siliguri and Dooars in the proposed Gorkhaland state has also raised many hackles. Referring to this demand of GJMM, Mr. Kanu Sanyal said that ‘a demand must be based on logic and not merely on emotions’. The CPI (ML), hence supports the inclusion of only adjacent and contiguous areas in the proposed Gorkhaland state. Many believe that such a demand is meant to create a divide between the hills and the plains on ethnic lines which is a dangerous trend. Many observers believe that the demand for a separate Gorkhaland state comprising the three sub-divisions of Darjeeling, Kurseong and Kalimpong may have some justification, but that of inclusion of Dooars and Siliguri is not supported by history.

The fact remains that Darjeeling Hills did not have notable Nepalese population until 1865. The Lepchas, a distinct ethnic tribe, dominated the hills in terms of population. In 1865, when the tea estates came into being, ethnic Nepalese began pouring in in large numbers from Nepal in search of jobs in the upcoming tea estates. The number further grew with the introduction of Darjeeling Himalayan Railways in 1880. As far as Siliguri and Dooars are concerned, ethnic Nepalese were negligible in numbers until 1950 when Indo-Nepal Friendship Treaty was signed between the two countries. Even now the ethnic Nepali population is not more than 60,000 in Siliguri out of the total estimated population of 70 million.

One does not know as to how much merit is there in such demands for statehood from different quarters, but one thing can be definitely said that there does exist a case for a second State Reorganisation Commission. Instead of a populist and political approach to such demands for statehood, it is advisable that the entire issue of state reorganisation be considered afresh on such grounds as to ensure a holistic economic development and a compact, self-contained geographical entity. The merit of such demands for statehood as Telangana, Vidharbha, Mithilanchal, Purvanchal, Harit Prades, Gorkhaland and Kamtapur should all be considered on objective criteria rather than being subject to such demands pressed through the media of militant movements.

Also, the experiments in our own country with regards to formation of such new states tell a mixed story. While many big states are quite better governed, there are many small ones who continue to languish despite becoming a separate state. One believes that the issue here definitely is not the formation of a separate state, often the desire of the local elite than being rooted in popular demand. What should be important is the fact as to how well the state is administered and how viable can such a new entity be, economically and geographically. In West Bengal, the successful panchayat system did guarrantee the popular participation in the process of governance, still DGHC was created. But as DGHC remained a one-man show devoid of any real popular participation, the experiment naturally failed. So, one has to really tread very cautiously before even toying with the idea of a separate state.
Caste-based Reservation: Reflection of Systemic Maladies
*Saumitra Mohan

The Frankenstein’s monster of caste-based reservation in government and non-government jobs and academic institutions keeps rising from the ashes like the proverbial Phoenix. The issue which needs discussion and reflection is that as to whether we really need such a thing called reservation. Caste-based reservation should have been discontinued within ten years of the proclamation of the Indian Constitution. But if we still have to contend with the reservation demon, the reason lies in our failure to ensure an equitable and egalitarian process of value allocations thereby necessitating the continued existence of the caste-based system.
The truth is that something as obnoxious as caste-based reservation should not have been there at all in the first instance, but as they say a la Aristotle and many others that ‘equals should be treated equally and unequals unequally’. And in a society wracked by myriad societal divisions including those of caste some remedial measures were required for sure to restore the societal balance before each citizen is able to have an equal opportunity for one’s personal growth.
After all, you can not expect those discriminated against for thousands of years to be treated equally with those sections of the society who have dominated the societal pecking order for aeons. If some of us proffer the argument of merit and competence and say that all the sections of the society should be treated equally, the same emanates from the prejudices inherited by us as member of an ossified social hierarchy to which we belong. We may not even be aware of such prejudices, but still we pronounce and advance them convincingly simply because they suit our own vested interests. After all, there is a world of difference between the societal stratum at the top and bottom of the society in terms of competence, social confidence, cultural capital, social surroundings, appreciation of varied societal realities and opportunities, understanding of their own self interests, and even genetic make-up.
So, reservation in the garb of ‘affirmative discrimination’ was needed in the first instance is something beyond doubt, if at all, to facilitate and prepare a level playing field to all sections of the society. But then, its continued existence can be explained only in terms of competitive and populist politics coupled with an innate inability of our political parties to find better issues for mass mobilisation. Had we succeeded in providing the weaker and marginalised sections of our society with all the bare minimum necessities of human existence, the same people would have revolted against such a system or, at least, the issue of reservation would have ceased to matter in Indian politics.
But the fact remains that even today we have not been able to provide the quality education and health services to all, particularly those on the margins of the society. It has created a status gulf in terms of competence and abilities between the privileged and not-so-privileged sections of the Indian society. The weaker section of the society is naturally disadvantaged vis-a-vis the socially dominant not only because of a long historical discrimination, but also because of the systemic biases and prejudices heaped against them. Since we could not ensure quality education and health services to them all these sixty years of our independence whereby they could have competed on equal footing with the historically privileged sections of the society, hence the reservation genie keeps popping out of the bottle.
We know it very well that in a democracy it is the numbers which count. When the weak and underprivileged in an underdeveloped democratic society are left to fend for themselves, they quite naturally fall back on the strength of their numbers. The social demography then starts dictating politics and numbers start doubling up as a resource to be capitalised on for the purpose of improving one’s societal status. That is what has been happening in India for quite some time, seeing the rise of many caste-based political parties and interest groups.
If we take a look at the turn of recent political developments, we would find that political parties have become more specialised, representing more or less their caste constituents and the latter also somehow gives credence to such parties in the hope of getting a better deal. So, democratic expression and representation have taken a grotesque turn in Indian society in the form of caste-based reservation and politics. That is why, India being a plural society of different societal groups is today governed by a coalition government whose constituents are invariably the representatives of different societal groups. Such groups have been feeding and fattening on identity politics which has been on ascendance in recent times.
These are all the signs of a backward and retrograde society. But such parochial thinking shall continue to dominate our political culture until and unless we succeed in promising and ensuring a real level playing field for all sections of the society. Investment in one’s human resources is the first condition for the healthy growth of any society. Recognising this fact, John Stuart Mill had remarked long back, ‘You cannot think of becoming a great country with small men with small capacities, small thinking and dubious character.’
Caste-based reservation, however, also has had a functional role in our social system, negative though it may appear prima facie. Be it noted that many of India’s time twins in Asia, Africa, Latin America and the Caribbean have fallen by the wayside in their developmental march. But if India has been growing from strength to strength, the reason somewhere also lies in the way India has tried to balance the different societal forces through a consociational system whereby societal values have been judiciously allocated amongst different sections and strata of the Indian society. So, while many of these societies saw bloody revolution resulting either in their break-up or their getting reduced to the status of ‘a failed society’, India has been experiencing a ‘passive revolution’ where positive changes have come gradually, through different pulls and pressures, almost to the satisfaction of all.
The recent Supreme Court judgement to exclude the creamy layer from the benefits of reservation should be welcomed, but the exclusion should also be extended to the Scheduled Castes and Scheduled Tribes, because what is sauce for the goose ought to be the sauce for the gander. The argument which applies to OBCs for exclusion of its creamy layer from the reservation benefits also applies mutatis mutandis to the creamy layer from SCs/STs. However, the concept and criteria of the creamy layer itself suffers from many anomalies and it is advisable to revise and rationalise the same realistically and judiciously.
The Supreme Court observation that graduates be excluded from the reservation benefits does not hold valid given the way graduates in this country are churned out. One would again say that the quality of our education system leaves much to be desired. Recruitment of teachers at the lower and higher levels of our education system is still subject to lots of pulls and pressures, not to speak of the rampant politics which informs our education system. The politicised academic atmosphere often results in the quality of education being severely compromised. Various kinds of interference, pulls and pressures and literally insidious politics have led our education system where we find it today, though there are many exceptions as well. But exceptions are after all exceptions and it is in these exceptional institutions that we need to find out the way to salvation for our pedagogical administration.
Even though caste-based reservation is an anachronism today, but it is part of our social reality and is likely to continue till we can actually claim to have guarranteed the underprivileged and marginalised sections of our society the bare minimum of civic facilities and necessities including quality education and health services. A system of equal opportunities coupled with a reasonably egalitarian and equitable society is what is required before we can hope to hammer the last nail in the coffin of the politics of caste-based reservation.
The Great Indian Growth Story: Recession in the US might not affect us
*Saumitra Mohan

The recent sub-prime crisis in the United States stemming from the problem of failing home loans and municipal bonds has cast a grim shadow on the economic growth around the world. Stock markets all over the world have taken a beating, following foreign institutional investors’ (FIIs) selling spree due to fear of slowing growth rates. With stock markets nose-diving, hydro-carbon prices sky rocketing and prices of basic commodities including that of food going northward, the fear of an economic recession in the global economy is looming large. Even though it is threatening only the United States for the moment, it is really a moot point today as to what does a country like India need to do if the crisis really deepens further as the same has serious implications for the domestic economy, which so far seems to be doing reasonably well.

As we know very well by now, the global economy is prone to go through cyclical boom and bust. Hence, there is nothing extra-ordinary about the impending recession or stagflation threat. However, the global economic situation is not the same today as was during the 1930s forcing the Roosevelt Administration to come with the famous ‘New Deal’ proposals. These proposals were predicated on Keynesian prescriptions of increasing public expenditures to cope with the raging recession in the US economy. The situation is also quite different from the crisis of 1971 when the fixed exchange rate system collapsed, precipitating the ushering of the extant system (a judicious mix of both fixed and floating exchange rates).

Before we really get down to the brass-tacks, trying to manage recession and its implications, one has to appreciate that the situation is definitely not the same today as it has earlier been. With the deepening and thickening of the process of globalisation, the inter-dependence among the countries of the world has become more complex. The gradual shift of economic balance of power has changed the global realities.

There was a time when the US or the Europe would lead the world economy by their sheer weight and the latter was greatly affected by the negative or positive vibes emanating from either of the two. The global dependence on these blocks through cascading trading ties made it impossible for the world to avoid any development in those countries.

This monopoly situation also made these leading economies quite imperious vis-a-vis the developing/underdeveloped countries often forcing the latter to toe their lines. But the processes of globalisation and liberalisation have afforded a semblance of independence for some of the weaker economies. The emerging complex interdependence of economies has facilitated a diversification of trading ties to the advantage of some of the developing countries. These developing countries, today, have been bandwagoning with each other to better secure their economic interests vis-a-vis the developed world.

That is why the threat of recession to such countries including India and China is not as real as it is made to appear. They are reasonably insulated from the ill effects of the US recession for the simple reason that they are not as overly dependent upon the US as some of the countries are. It is the latter countries, who have skewed economic ties with the United States, are feeling the pinch more. So, countries like Japan or South Korea or some countries in Europe which have deeper economic ties with the United States and don’t have diversified trade profile, should really have genuine reasons to worry. The US recession can really dampen the pace of growth in these countries by way of reduced exports and inflow of foreign exchange.

The countries like India and China should not get panicky as their trading ties are much more diversified. Both these countries, accounting for almost half the world population, have only a small portion of their trade linked to the United States. Of their total exports, not more than 20 per cent go to the United States. Besides, these two countries’ growth has been more or less dependent on a sound foundation of strong domestic consumer market. The middle class in these countries has been growing handsomely to provide a broad-based consumer base with substantive purchasing power capacity. It is the consumption behaviour of this growing middle class that has become the latest target of the United States for the snowballing food crisis in the world.

If these two countries have managed to survive the negative impact of the US recession, the reason lies in the fact that the high economic growth rate of both these countries are propped by a strong domestic consumer base. So, while you had the US or the Europe leading and influencing the world economic growth at one time or even now, the situation may be different very soon with these two countries leading the global growth by the sheer weight of the size of their economies. By being less dependent on the US, now reeling under a mild recession, these economies are better insulated and secure than any other country.

This fact is well realised by everyone else and that is why when the US has been experiencing a recession, countries like India and China have been trusted with more and more investment in the form of increasing FDI, FII, NRI remittances and deposits thereby increasing demand for the Indian rupees. This has resulted in building an upward pressure on the rupee, making it further dearer after appreciation of its exchange rate vis-a-vis dollar and other leading currencies.

The US economy is experiencing recession also because of its inability to cut the production costs. The developing countries with their cheap labour and skilled manpower provide better investment options to industries thereby motivating many of them to relocate and outsource their operations. This has not only resulted in reduced employment opportunities for the Americans, but has also reduced their purchasing power, thereby affecting demand and inducing recession. The fact also remains that so far Americans have been living off borrowed money (parked in the form of US treasury bonds by the developing countries including India and China), made available to them at increasingly cheaper interest rates thereby creating an unsustainable bubble which seems to be bursting now in the wake of the raging sub-prime crisis there.

So arguably, these two countries should have less reason to worry about the US recession as their growth is self-induced than dependent completely on exports. However, such a recession should definitely be seized as an opportunity to further strengthen and streamline their macro-economic financial structure and thereby put their own house in order.

So, at a time when the US Fed has been trying to prime pump its economy by way of reducing the interest rates substantively, countries like India need to be more careful where its central bank has been following a ‘dear money’ policy for quite some time in its bid to contain the ‘inflation demon’. But as we know that it was Keynesian economics of welfarism which saw the US economy out of recession in the thirties meaning thereby that we need to spur public expenditure more than contain it. That is why, a moderate inflation is always said to be healthy for any economy as that is the sign of a growing economy backed by a growing demand.

If inflation has been rising in this country, the reasons for the same have to be found and fixed. If the huge demand for cement and steel for infrastructure strengthening in China for the upcoming Olympic is a reason for growing prices of these commodities, then we need to make policy and administrative interventions to contain their prices including increasing the production. However, applying brakes on cement and steel exports is definitely not advisable. If rising oil prices has had an impact on our economy and inflation, then also we need to find ways to tackle the problem at appropriate level. But raising interest rates and cash reserve ratio (CRR) is definitely not a right approach. Such moves will not only have a dampening impact on the entrepreneurship, but will also discourage investment and further growth. The same would not only result in blocking huge amount of idle money from being utilised for productive purposes, but would also increase the state debt by enhancing the financial burden for servicing those savings by higher interest rates.

This would also make government’s own borrowing dearer thereby further straining the resources available for public expenditure. It would also negatively affect the fiscal situation by bloating our fiscal deficits. Inflation has been rising also because of the growing food prices. It is felt that the tendency to siphon out fertile land for industries or for bio-fuels or decreasing investment in agriculture has led to reduced productivity and production thereby directly fuelling the inflation. One feels that there is an urgent need for a second ‘Green Revolution’ and more public investment in agriculture. One just hopes that the recently launched National Agricultural Development Scheme shall be able to address this problem better.

Last but not the least, the very fact that inflation has not yet resulted in wide scale public discontent and outrage and still continues to be a debating issue confined only to the political class is because of the fact that rising prices have been accompanied with increasing purchasing power capacity of the public. With more demand chasing fewer supplies, it is at the level of supplies that we need to intervene. The government needs to ensure that more investment, both private and public, are suitably made to further produce the basic goods and products for availability to the common public at an affordable price and that itself would take care of the inflation problem. More broad-based investment would not only result in more demand creation, but would also put in place adequate supplies to cater to those demand, thereby spurring economic growth further. Such a step would also keep the dreaded recession at bay.