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35OCTOBER 15, 2012

ALSO AVAILABLEON iPad

JAYANTHINATARAJAN

JAIRAMRAMESH

RISE OFTHE SAFFRON SATRAPS

GREEN TERROROutdated environmental laws and inflexible

ministers strangle India's economy

From the editor-in-chief

India Inc could not possibly have imagined that there would be anythingworse than the red tape which strangled business in the dreaded licenceraj era that lasted until 1991. But 21 years after liberalisation, Indian in-

dustry finds itself locked in a losing battle with something as arbitrary and vi-cious as red tape. And that is the ‘green tape’ let loose by the Union Ministryof Environment and Forests, which now hangs like a noose around theprospect of rapid economic growth. Manmohan Singh’s reforms of 1991 ridIndian businesses of the requirement to get several licences and permissionsbefore they could embark on a project. The one set of laws left untouchedwere the environment and forest laws.

To be fair, the laws, archaic as they are, did not become hurdles to growthuntil 2009, when at the start of UPA 2’s tenure in office, the newly appointedenvironment minister Jairam Ramesh began to apply the laws in an overzeal-ous fashion, reminiscent of, for those of us who remember quite clearly, the pre-1991 era. Ramesh won plaudits from activists but his actions hurt theeconomy. He was replaced as environment minister two years later, but hissuccessor Jayanthi Natarajan has failed to signal a radical change indirection. If it continues with business-as-usual, New Delhi’s ParyavaranBhawan, which houses the leviathan Ministry of Environment and Forests,could potentially bring to nought the recent reformmeasures announced by the Government.

The worst affected sector by some distance ismining. Ramesh’s demarcation of go/no-go areas formining put hundreds of potential sites out of boundsfor miners. The policy was dismantled after Rameshleft, but only in theory. It continues in another name.The consequence is an acute shortage of coal—Indiaproduces around 550 million tonnes but needs 100million tonnes more. India’s power sector is heavilydependent on coal. With such a huge shortage, it is notsurprising that even built-up power plants are lying idle. The country’s busi-nesses and ordinary citizens suffer power cuts.

The reality is that any large project, particularly in infrastructure (likepower, roads, airports, ports) will have an adverse impact on the environ-ment. But at India’s level of development—we are still a terribly poor countrywith a per capita income of only $1,500 (Rs 83,000), which ranks us a lowly140 out of 183 nations—the country needs much more infrastructure togenerate the growth that will lift people out of poverty. India cannot afford theenvironment standards of Western nations, something activists may want, atits level of income. The West already has the basic infrastructure in place.India needs to achieve a reasonable balance between industrialisation and the environment, something the ministry seems unwilling to do.

Our cover story, written by Senior Editors Devesh Kumar and PrachiBhuchar, reveals how the Ministry of Environment and Forests has become alaw unto itself, openly defying other wings of the Government, including thePrime Minister’s Office. The story highlights several instances of arbitrary ap-plication of the laws to certain big-ticket projects, whether Posco, Vedanta orLavasa. Such actions cause uncertainty and dampen investor sentiment. Indiacannot hope to invest $1 trillion in infrastructure between 2012 and 2017 ifthe environment ministry acts as a hurdle.

It will be a great tragedy if the intransigence of two ministers, who belongto the Congress, destroys the Prime Minister’s best efforts to raise growth to ahigher plane. India Inc will be choked by green tape instead of red tape.

OCTOBER 15, 2012 ◆ INDIA TODAY 10

(Aroon Purie)

Editor-in-Chief: Aroon PurieChief Executive Officer: Ashish Bagga

Editorial Director: M.J. Akbar

Editor: Kaveree Bamzai

Managing Editor: S. Prasannarajan

Deputy Editors: Damayanti Datta, Dhiraj Nayyar,Sandeep Unnithan

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Principal Correspondent: Nishat Bari

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Senior Correspondent: Shravya Jain Copy Desk: Archana Pande, Bodhisattwa Maity (Copy Editors)Photo Department: Reuben Singh (Deputy Photo Editor),

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Volume XXXVII Number 42; For the week October 9-15, 2012, released on October 8

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www.indiatoday.in

02 INDIA TODAY ◆ OCTOBER 15, 2012

Inside

Rise of theSaffron Satraps

T H E B I G STO RYBJP

Rebel groups in the North-eastfreely brandish arms, run parallelgovernments and fuel conflictelsewhere in the country even asthe Centre engages them in talks.

For three years, the Jairam-Jayanthiregime has jinxed development with an obstructionist approach in the environment ministry. Green hurdlesmust go if Manmohan’s born-again reformist zeal has to make any headway.

18 Green Terror

COV E R STO RYENVIRONMENT MINISTRY

Narendra Modi may still be frontrunner as BJP’sprime minister candidate, but don’t write off theparty’s regional heavyweights with grassrootsappeal and a performance record to match.

Armed andDangerous in CeasefireCountry26

S P EC I A L R E P O RTTHE NORTH-EAST

7 B Y W O R D

10 U P F R O N T

12 G L A S S H O U S E

62 G L O S S A R Y

DMKRebuff Delays CabinetReshuffle

With its largest ally not interested, any Governmentrevamp will be a Congressgame of musical chairs.

40

N AT I O NGOVERNMENT

Nitish RallyLoses Steam

Teachers turn Chief Minister’sambitious campaign into aplatform of protest against administration.

41

N AT I O NBIHAR

Boogie Nightsin Small Town India

Celeb DJ nights. Bollywoodspecials. Pool parties. Move overmetros, the weekend action hascome to small towns.

50

SO C I E T YNIGHTLIFE

Cover concept by: DEV KABIR MALIKCover photo by: YASHBANT NEGI and SHEKHAR YADAV

36

The story is funny, but not that much fun. On the firstFriday, rage was free. The Pakistan government,mixing business with pleasure, declared a holiday so

that young men could vent their anger against a virulent andscandalous film on the Prophet of Islam, made by anobscure American crook, who has now been re-arrested forbreaking the terms of his probation after a bank fraudconviction. The collateral violence on symbols of sin, likecinema halls in Karachi and Peshawar, not to mention a fewvehicles along the way, elicited little more than a shrug. Boyswill be boys. To be fair, one of the theatres, in Peshawar, didhave a reputation for showing porn to the starving hun-dreds. Its owner was a minister, who immediately didpenance by announcing an award of a substantial amountfor the head of the filmmaker.

American embassy and consulate officials were moreapprehensive about the subsequent Friday, September 29,for the police tend to relax during a repeat performance.The turnout was not as high after Friday prayers, but theydid turn out to shout slogans promising death to variouseternal enemies. And then, suddenly, instead of frenzy, as ifin response to some unseen signal, everyone in the crowdbegan to melt away. A puzzled journalist asked why. The an-swer cleared a great fog. They were all heading home towatch television, for Pakistan was playing in the T20 WorldCup tournament that afternoon.

So, can celebrations begin? ‘Cricketdefeats God’ is a pretty neat headline aswell. Perhaps we can hold the glee. Thisneat story obscures a larger picture.

There should be no illusions. A signi-ficant length of the Muslim street acrossthe globe has bought the narrative thatAmerica and its European allies are de-termined to dominate the Muslim worldin an agenda that resonates back tofaith-based crusades a millennium ago.American and Nato military boots onMuslim ground are a visible fact. Thesoft, NGO face of western intervention isdismissed as duplicity.

Critics gleefully note that NGOs spend80 to 90 per cent of their funds on them-selves, which is largely true.

But whether in Libya or Egypt orPakistan, there is a parallel messagebeing conveyed by the aggressivecrowds to their own government: Theywill be in charge of the national agenda,and they will calibrate the response toprovocation as well as determine theshape of the country’s politics and polity.This is part of the internal debate for

power, not just a voice raised against “Christian imperial-ism”. Media will amplify the slogans. The subaltern debatewill command the attention of history.

A nation state evolves through process. Change does not sprout instantly into a full-grown tree. Even democracyas we understand it today took at least two centuries ofchange to reach where it has, even if we brush aside theBritish assertion that it all started with the Magna Carta inthe 13th century (the Great Charter that whittled down the absolute power of kings and gave barons some rights).When India decided to adopt adult franchise, in Gandhi’sCongress Scheme for a future country written in 1931,French women could not vote.

Democracy is much more than a chance to vote everyfour or five years. It is a set of freedoms built aroundequality, individual and collective, as in the exercise of any faith, or it is nothing at all.

The Arab Spring could not institute overnight: It mustmature into the full four seasons to achieve stability. Muchof the Arab region slipped from Ottoman imperialism toBritish neocolonisation, where princes elevated from oasisto throne were given absolute power as reward for a strate-gic alliance with the West. This pattern was partially broken in the 1950s, but the military officers who promisedsocialism only led their nations into dynastic tyranny. The

glimmer of change is visible, but thereis some way to go.

Pakistan was created from a differ-ent dynamic, and remains a work inprogress—or, as it often seems, a jour-ney in regress. It is still grappling overthe meaning of an Islamic state. Wheredo you draw the boundaries as extrem-ists push excess in the name of Islaminto all aspects of governance and allcorners of society? The ulema’s searchfor a “pure” (Pak) state has only endedup creating a sub-set of minorities:Barelvi, Deobandi, Shia, Qadiani,Memon and heaven knows how manyother sects who are as loyal to their ownbrand as they are to the common faith.

The questions of a post-colonial agewill not be easily resolved. Turmoil willoften camouflage itself in more rationalheadwear. Theocrats, with a mass baseand popular institutions, will promotethemselves in the guise of idealism,even as a dwindling band of liberalssquabble and compromise in the com-plexities of the short game. But this isnot a fast T20; it is life-and-death Testthat will span the coming decade. ■

THE TEMPTATIONS OF REGRESS

OCTOBER 15, 2012 ◆ INDIA TODAY 70

M.J.AKBARBYWORD

The questions of a post-colonial age will not

be easily resolved.Turmoilwill often camouflage itself in more rational headwear.

Theocrats, with a mass baseand popular institutions, willpromote themselves in the

guise of idealism.

SAURABH SINGH/www.indiatodayimages.com

10 INDIA TODAY ◆ OCTOBER 15, 2012

The recently announced reforms allowing 51 per centforeign direct investment (FDI) in multi-brand retail,permitting up to 49 per cent foreign ownership of

Indian air carriers and raising the cap to 74 per cent on FDI

in broadcasting were fairly bold and much needed. Thereform process that started in the early 1990s had, in thelast few years, first slowed down considerably and then vir-tually stalled. Coupled with the recent slowing down ofeconomic growth, this policy paralysis was leading to con-siderable pessimism about India’s prospects and, in turn, adecline in investor confidence.

Rapid growth in the capital stock located in India isneeded to sustain the 8-10 per cent growth that Indianshave recently become used to. The new round of reformswill go a long way towards that end. These reforms will alsosignal India’s seriousness about further economic reformsand instil investor confidence.

A basic argument that has been put forward by the op-position is that FDI in multi-brand retail will throw smallstores (‘kirana’ stores) out of business and lead to greaterunemployment. Any policy change, at least in the short run,creates both winners and losers.And the desirability of a policychange does not just depend onwhether or not it creates any los-ers. The gains to the winners haveto be evaluated against the lossesto the losers. In a democracy, italso becomes essential to seewhether the winners outnumberthe losers. In a welfare state it be-comes essential also to comparethe changing economic status ofthe winners relative to the losers.

FDI is associated with growth,and the last two decades of re-form-induced growth andpoverty reduction show thatgrowth does trickle down. Goingto specifics, there seems to be noevidence suggesting that foreignsupermarkets are going to dis-place the small neighbourhoodgrocery stores. The lack of spacein houses in most big Indian cities(where foreign retail stores willlocate) coupled with refrigerationproblems (due to the small size ofrefrigerators and frequent powercuts) constrains bulk purchases.Additionally, the current state ofpublic transport along withextreme traffic congestion pre-

vents most people from travelling even a few kilometres for their groceries. Besides, small local stores providepersonalised services along with home delivery, whichsupermarkets just cannot do. A very insightful study byRajeev Kohli and Jagdish Bhagwati at Columbia Universitymakes these points in considerable detail. My view is thatmost of the local ‘kirana’ stores will survive. At the margin,there might be some exit. However, losses from such exitsare expected to be negligible compared to the benefits from foreign multi-brand retail.

The operation of foreign multi-brand stores can employ hundreds of thousands, if not millions, of people. InChina, Walmart alone employs more than a hundredthousand people. At the same time, cities like Shanghai and Beijing have a large number of local stores doing very well. Even in the US, the small mom-and-pop stores do quite well in big cities.

In India, farmers get squeezed by middlemen and a sig-nificant proportion of their produce perishes before reach-ing the final consumer. Foreign supermarket chains, byeliminating these middlemen, can split the resulting surplus

between themselves, the farmersand the consumers, i.e., farmerswill receive a higher price andconsumers will pay a lower price.Getting rid of middlemen will bein the interest of foreign super-market chains. If they don’t ex-pect to cut these middlemen out,they won’t enter. If, upon entry,they cannot do without the mid-dlemen, they will exit. Thesechains rely on their own invest-ments in huge networks of coldstorage, transportation and dis-tribution, the viability of which isnot compatible with operatingthrough middlemen. Clearlythen, FDI in multi-brand retail isgoing to benefit farmers in ruralareas and urban consumers.

That said, the current labourregulations have constrained theexpansion of India’s labour-in-tensive manufacturing. For sus-taining an 8-10 per cent growth,it is absolutely essential to reformthese regulations.

Devashish Mitra is professor ofeconomics at the Maxwell School of

Citizenship and Public Affairs atSyracuse University

FDI IN RETAIL MEANS MORE JOBSDEVASHISH MITRAUP FRONT

SAURABH SINGH/www.indiatodayimages.com

In India, farmers get squeezed by middle-men and a significant proportion of their

produce perishes before reaching thefinal consumer. Foreign supermarket

chains, by eliminating these middlemen,can split the resulting surplus between

themselves, the farmers and consumers.

SEARCH FOR A SAFE SEAT

Former Congressman NatwarSingh had an hour-long

meeting with Sonia Gandhi at 10 Janpath recently. According to a source, “They had a verygood conversation.” The usuallyloquacious Singh iskeeping his cardsclose to the chest,fuelling speculationof a return toCongress.

Arun Jaitley is said to be scouting for a seat to make his Lok Sabha debut. He has realised

that he is the only one of GenNext with primeministerial ambitions who doesn’t have a LokSabha win up his sleeve. Even Nitin Gadkari hasannounced that he will be contesting the nextGeneral Elections. One option for Jaitley is NewDelhi, as he has a home in the area. However, thisseat is currently held by Ajay Maken, and may notbe easy to win. Another option is Chandigarhwhere he has a strong chance of impressing thesizeable Punjabi community. Jaitley could alsofight from Lucknow, a smart move, given that it isAtal Bihari Vajpayee’s former seat.

12 INDIA TODAY ◆ OCTOBER 15, 2012

WHY IS THIS MAN SMILING?

Brajesh Mishra’s death on September 28 was mournedmore by the Congress than BJP. Mishra was national

security adviser as well as principal secretary in Atal BihariVajpayee’s government. Manmohan Singh was among thefirst to condole his death. It took BJP 72 hours to draft anofficial message. Even the cremation had a stronger UPA

presence with Sonia Gandhi, Digvijaya Singh, NationalSecurity Adviser Shivshankar Menon, and adviser to the PMTKA Nair in attendance. Only a handful of BJP leaders suchas Arun Jaitley, Ravi Shankar Prasad and Arun Shourieshowed up. L.K.Advani visited Mishra’s family at home.

Assam Chief Minister TarunGogoi has got ringside tickets

to a turf war between two rivals.Assam Forest Minister RockybulHussain recently shot off a tersenote to one-time friend, AssamAccord Implementation MinisterHimanta Biswa Sarma. Hussainpulled up Sarma for not takingaction against Bangladeshi infil-trators. He also sent a copy toSonia Gandhi. Hussain wasmiffed with a series of reports byNews Live, a TV channel ownedby Sarma’s wife, suggestingHussain had turned a blind eye toencroachers in Kaziranga. Gogoitold the media, “This is one feud Iam going to have fun watching.”

THE RETURN OFNATWAR SINGH

PAGE-TURNERO F T H E W E E K

When Jaswant Singh wrote a bookon Jinnah, BJP ostracised him. Buthis new book, The Audacity ofOpinion, has his party turning thepages to read an essay on Sexand Public Life. How audacious.

GOGOI

MISHRA

MORE CONGRESS THAN BJP

GLASS HOUSE by PRIYA SAHGAL

THREE CHAIRS FOR MR ADVANIThere was a flutter among Congressmen when L.K. Advani walked

into Rashtrapati Bhavan for the swearing-in of Chief Justice AltamasKabir on September 29 and found there were no empty seats for him inthe front row. This had happened twice before and he had made hisdispleasure known. Congress Cabinet ministers Ghulam Nabi Azad and V. Narayanasamy jumped to their feet and between them, dragged threechairs for Advani, who remarked, “Now I have a problem of plenty.”That’s a problem every politician would love to have.

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