Locked in combat

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					MARCH 23, 2007
                                                                                      Uttar Pradesh

Locked in combat
           Mulayam Singh Yadav is now battling on two fronts: in court in a wealth case and
           outside it in a high-stakes election. B Y V E N K I T E S H R A M A K R I S H N A N

                                                                    the CBI as an impartial investigating agency. This
The Supreme Court orders that the                                   expansion of the terms of reference of the debate has
                                                                    brought into it new players and the potential to
CBI conduct a preliminary inquiry                                   amplify the intensity of the political battles.
                                                                        The Public Interest Litigation (PIL) petition was
into the allegations against the Chief                              filed by Vishwanath Chaturvedi’s lawyer Dinesh Ku-
                                                                    mar Garg in December 2005. The principal argu-
Minister and his family and submit                                  ment in it was that Mulayam Singh Yadav and his
                                                                    family members had amassed wealth disproportion-
the report to the Centre for further                                ate to their known sources of income. According to
                                                                    the petition, the family owned property worth more
action. Legal experts say this violates                             than Rs.10,000 crore. It even enclosed copies of the
                                                                    sale deeds of the properties acquired by Mulayam,
the agency’s autonomy.                                              his two sons and daughter-in-law over the years. The
                MANY facets of the disproportionate assets case PIL petition also pointed out that Mulayam declared
           against Uttar Pradesh Chief Minister and Samaj- a taxable income of only Rs.79,000 in 1977.
           wadi Party (S.P.) leader Mulayam Singh Yadav may             The list of properties runs into nine pages and the
           be unclear and confusing, but one thing is certain – it documents relating to them take up approximately
           is fodder for a bitter and protracted campaigning for 1,000 pages. The petition stated that all these assets
           the coming Assembly elections in the State, more so were accumulated by corrupt means and urged the
           after the Supreme Court, on March I, ordered the court to direct the CBI to prosecute Mulayam and his
           Central Bureau of Investigation (CBI) to conduct a family members under the Prevention of Corruption
           preliminary inquiry into the charges against the Act and the Indian Penal Code.
           Chief Minister. The apex court                                                     In the hearings on the ad-
           order came in response to a writ                                              missibility of the petition, the
           petition filed by Vishwanath                                                   lawyers of the S.P. chief had ar-
           Chaturvedi, a former Congress                                                 gued that a number of proper-
           candidate for the Assembly and                                                ties mentioned in the PIL were
           a trade union activist, alleging                                              bought using earnings from
           that Mulayam Singh Yadav and                                                  agriculture and agricultural
           his family members had                                                        produce over a period of two and
           amassed millions of rupees by                                                 a half decades. In 2004, Mu-
           corrupt means.                                                                layam had stated before the
                Until the Supreme Court or-                                              Election Commission that he
           der, the principal questions de-                                              owned 14 acres of land in is
           bated in relation to the case were                                            hometown, Saifai, a plot in
           the alleged amassment of                                                      Friends Colony in Etawah, fixed
           wealth by Mulayam and his                                                     deposits for Rs.25 lakh in banks,
           family members, the petitioner’s                                              and shares worth Rs.20 lakh in
                                                                                       SHANKER CHAKRAVARTY

           credentials and the maintaina-                                                ‘other properties’. On February
           bility of the public interest pet-                                            27, 2007, the Chief Minister
           ition. Since the March I order,                                               presented, in a written submis-
           questions have been asked                                                     sion to the Supreme Court, a
           about the timing of the verdict,                                              point-by-point response on the
           the legal and factual contradic- M U LA Y A M S I N G H YAD AV is fighting properties listed in the petition.
           tions in it, and the credibility of the Congress, the BJP and the BSP.             Mulayam’s submission, as

                                                  F R O N T L I N E   2 5
                                                                                                                                       V. SUDERSHAN
M U L A YA M A N D S A M A J W A D I   Party general secretary Amar Singh addressing the media after meeting
President A.P.J. Abdul Kalam.
well as the arguments articulated by            layam’s lawyers pointed out that the
                                                                                                                  MARCH 23, 2007
                                                                                           ing positions in the Samiti.
his lawyers during hearings, ques-              property was bought for the official             Mulayam’s lawyers questioned
tioned the veracity of a number of alle-        purposes of the party and the purchase     Vishwanath Chaturvedi’s credentials
gations made in the PIL. One                    reflected in the party’s balance sheet.     as a bona fide public interest petition-
allegation was that Mulayam and his             Of course, Mulayam executed the sale       er. They pointed out that he had obvi-
family members owned four plots in              deed in his capacity as the president of   ous political links with the Congress
Gomti Nagar in Etawah, worth several            the S.P.                                   party, as he was its candidate in the
lakhs of rupees. In his submission Mu-              Another allegation was that the        Haidergarh constituency against Raj-
layam stated that the plots belonged to         Chaudhary Charan Singh Post Gradu-         nath Singh, the present national presi-
Pesu Bhojwani, Jitendra Bhojwani,               ate College in Etawah, worth approxi-      dent of the Bharatiya Janata Party, in
Rajesh Bhojwani and Kamal Bhojwani              mately Rs.100 crore and managed by a       the 2002 Assembly elections in the
and that he had no relations with the           society called Siksha Prasar Samiti,       State. Vishwanath Chaturvedi had
Bhojwanis. Vishwanath Chaturvedi al-            was controlled by Mulayam’s brother        himself admitted that he was an activ-
leged that the Bhojwanis were Mu-               Shivpal Yadav, a State Minister, and       ist of the Indian National Trade Union
layam’s business partners.                      son Akilesh Singh Yadav, a Lok Sabha       Congress (INTUC), the trade union
    The submission pointed out that             member. The Chief Minister’s submis-       wing of the Congress. Still, his affidavit
even properties bought by the S.P. us-          sion states that Siksha Prasar Samiti      before the Supreme Court insisted that
ing party funds had been shown in the           has been getting government grants         “being a person of very ordinary
petition as Mulayam’s property. It              and aid since 1994 and this includes a     means” he “was not interested at all in
made a specific reference to a plot in           grant of Rs.103.44 crore for the con-      entering into politics” but “somehow
the Ramana Dilkhusha mohalla of                 struction of the college. Significantly,    he was adopted by the Congress party
Lucknow, which was purchased on                 the submission claimed that he and his     in the last Assembly elections”. He
June 8, 2005, for Rs.1.65 crore. Mu-            family members did not have controll-      maintained that “apart from this ven-

                                                          2 6   F R O N T L I N E
MARCH 23, 2007

ture”, “he has no contact or connection      credibility of the CBI as a neutral in-       the judgment would, “in the minds of
with Congress party”.                        vestigating agency. The track record of       politicians, influence the election re-
    Throughout the hearings in the           the country’s premier investigating           sult”. The jurist was also of the view
case the S.P. leadership believed that       agency, especially its shortcomings in        that “in a country governed by the rule
the petition would be thrown out             moving with alacrity to ensure the ex-        of law, reasonable people ought never
merely on the grounds that Chaturvedi        tradition of Ottavio Quattrochi, an ac-       to be left under the impression that
had clear political interests. For, in Au-   cused in the Bofors scam, has been            they are trying to play politics”.
gust 2006 a Supreme Court Bench,             highlighted as part of this campaign.             There is also a stream of legal opin-
consisting of Justices K.G. Balakrish-            At the political level, it has           ion that the judgment’s direction to the
nan, A.R. Lakshmanan and S.H. Ka-            launched an initiative accusing the           CBI to submit the report of the prelim-
padia, dismissed a petition against          Congress of trying to use the CBI to          inary inquiry on Mulayam to the Cen-
Railway Minister and Rashtriya Jana-         settle political scores. In the process, it   tral government violates the autonomy
ta Dal (RJD) president Lalu Prasad on        has also submitted a compact disc             conferred on the country’s premier in-
the grounds that it was filed by his          (CD) of a sting operation on Vishwa-          vestigating agency. The judgment also
political opponents, namely, Sushil          nath Chaturvedi to President A.P.J.           said that “on receipt” of the CBI report,
Kumar Modi of the Bharatiya Janata           Abdul Kalam, Vice-President Bhairon           the “Centre may take further steps de-
Party (BJP) and Rajeev Ranjan Singh          Singh Shekhawat and Lok Sabha                 pending on the outcome of the prelim-
of the Janata Dal (United). The court        Speaker Somnath Chatterjee. Vishwa-           inary enquiry”.
stated that the petitioners were waging      nath Chaturvedi’s conversation in the             The apex court itself had held in
a political battle against Lalu Prasad in    CD implies that he knew what the ver-         the Jain hawala case 10 years ago that
the courtroom.                               dict of the Supreme Court would be in         the investigating agency’s powers vest
    However, on March 1, the Bench           the case against Mulayam. The S.P.            it with the discretion to decide on its
comprising Justices A.R. Lakshmanan          campaign maintains that this “fore-           own whether a preliminary inquiry
and Altamas Kabir ruled that the ver-        cast” is contempt of court.                   should be followed by a regular case.
dict in the case against Lalu Prasad              As for the opposition in Uttar Pra-      Here that power seems to have been
would not apply to Vishwanath Cha-           desh, the court ruling gave an impetus        accorded to the Central government,
turvedi’s petition. The Bench pointed        to its demand that Mulayam be ousted          particularly the Union Home Minis-
out that “the said decision [in the case     from office. “He has no moral ground           try. S.P. general secretary Amar Singh
against Lalu Prasad] has no applica-         to continue in office and must step            has questioned this formulation point-
tion to the facts of this case” because      down,” said State Congress Legislature        edly. According to him, the CBI is not
that “pertained to a pending criminal        Party leader Pramod Tiwari. BJP State         under the jurisdiction of the Home
case and PIL is totally foreign to pend-     president Kesarinath Tripathi had no          Ministry, but under the Ministry of
ing criminal proceedings”. It added          doubts that this would be a major po-         Personnel handled directly by the
that “the case on hand does not relate       litical plank for the party in the cam-       Prime Minister.
to any pending criminal proceedings”.        paign for the Assembly elections.                 On its part, the CBI has been quick
    The Bench further stated: “In the        Interestingly, Mayawati, chief of the         off the blocks in implementing the
absence of concrete proof that the pet-      Bahujan Samaj Party (BSP), did not            court order. Following the March 1 or-
itioner belongs to the Congress party,       respond to the court verdict. Cases re-       der, it registered a preliminary inquiry
his writ petition cannot be thrown out       lating to corruption while in office as        against Mulayam, Akhilesh Singh and
on the question of maintainability.” It      well as amassment of assets dispropor-        family members on March 5. A day
emphasised that a preliminary inquiry        tionate to known sources of income are        later, it sent notices seeking docu-
by the CBI was in Mulayam Singh Ya-          pending against her, too, in the Su-          ments, including details of wealth and
dav’s own interest because the Chief         preme Court.                                  income tax paid by Mulayam and his
Minister of a large State like Uttar Pra-                                                  family members.
desh could not function under a cloud        LEGAL EXPERTS’ CRITICISM                          Amar Singh points out that this
where his integrity had been ques-           While these political reactions were,         speed is directly in contrast with the
tioned. The Bench said “if the CBI           by and large, predictable, the criticism      sluggishness displayed by the agency
finds there are justifications for regis-      of the judgment from legal circles was        in filing extradition papers in the
tering an FIR [first information re-          exceptional. Noted jurist and Rajya           Quattrochi case or in pursuing the
port] after the preliminary inquiry, it      Sabha member Fali. S. Nariman ques-           long-pending corruption cases against
could be so in accordance with law.”         tioned the timing of the judgment. Ac-        Mayawati. “This,” he says, “clearly
    The S.P.’s response to the verdict       cording to him, the verdict was               shows that the CBI has become Con-
has developed on three fronts. At the        “singularly ill-timed” as the Uttar Pra-      gress Bureau of Investigation.”
legal level, the party maintained that it    desh elections were announced hardly              There is little doubt that rhetoric
would file a review petition. It has also     10 days before the order was pro-             like this will, time and again, mark the
launched a campaign questioning the          nounced. Nariman pointed out that             developments in the case.

                                                       F R O N T L I N E   2 7
Union Budget                                                                                            MARCH 23, 2007

Neoliberal bias
       The effects of a neoliberal reform scheme pervade P. Chidambaram’s
       Budget for 2007-08. B Y C . P . C H A N D R A S E K H A R

It fails to use additional revenues to                              incomes of net purchasers of these commodities. It
                                                                    implies, therefore, that imbalances in the distribu-
support the peasantry experiencing a                                tion of the benefits of growth are not merely sectoral
                                                                    but also visible in the distribution of incomes across
crisis, compensate citizens for the                                 different sections of the population.
                                                                        Given these circumstances, both the rhetoric of
ravages of inflation, and spend on                                   inclusive growth and the results of recent elections
                                                                    required that the Finance Minister make an effort to
rural employment and social sectors                                 correct these imbalances through both his tax and
                                                                    expenditure proposals. What is striking from the
such as education and health.                                       “report card”, which serves as the preamble to the
                                                                    Budget speech, is that while the Finance Minister
           BEING an instrument that serves to manage the            seemed to be conscious of these elements of his
       pace of growth and the distribution of its benefits,          context, he was in a mode of partial denial. In his
       the annual Budget of the Union government is influ-           view, these were not challenges to confront but fac-
       enced more by the ideological inclinations of those in       tors that he had already addressed in his past Bud-
       power than by current circumstances. Those inclina-          gets. To quote the Finance Minister, while growth
       tions are obviously significant. By changing both the         had rendered revenues buoyant, he had “put to good
       tax-cum-subsidy regime and the level and pattern of          use these revenues to promote inclusive growth, eq-
       expenditures, budgets can be crucial determinants of         uity and social justice”. Therefore if the task is al-
       incremental outcomes in terms of growth and                  ready under way, doing more of same should serve
       distribution.                                                his purpose. Not surprisingly, the Budget stays with
           When Finance Minister P. Chidambaram rose to             what he has done. A wrong reading, influenced more
       present his Budget this year, a number of features of        by inclination than fact, has meant that the Finance
       the current economic situation are likely to have            Minister has left unexploited what was a moment of
       influenced his thinking. The first of these is that he,        opportunity.
       along with Prime Minister Manmohan Singh, is seen                In fact, the combination of high growth and in-
       as being one of the architects of India’s liberalisation     flation offered the Finance Minister an unusual op-
       and reform drive. This is an image he wanted to              portunity. If growth is accompanied by inflation,
       retain, as reflected in his statement that “the UPA           revenues are bound to be unduly buoyant. Inflation,
       [United Progressive Alliance] government has re-             as noted earlier, increases profits even while it
       mained committed to economic reform, fiscal pru-              squeezes the revenues of the ordinary citizen, a fact
       dence and monetary stability.” But given the                 reflected in the balance sheets of the corporations.
       prevailing circumstances this was not the commit-            This provides an opportunity to skim off a part of the
       ment that mattered.                                          surplus delivered by growth and inflation to the
           A second feature of the current scene is the ex-         more well-to-do in the population. This opportunity
       treme imbalance in growth. While the overall gross           offered by growth and inflation was visible in the
       domestic product (GDP) growth has been high and is           ability of the Finance Minister to realise the rather
       accelerating, for some years now Indian agriculture          optimistic projections he had made in his Budget for
       has been in a severe crisis and the peasantry across         2006-07. That Budget assumed a high level of buoy-
       the country is distressed. Finally, while growth in the      ancy in tax revenues, and seemed optimistic at the
       Indian economy is high, there are clear signs that it is     time. However, gross tax revenues rose (with some
       threatened by an inflationary crisis affecting, among         help from the collection of past arrears) by 27 per
       other commodities, food articles. Inflation, by trans-        cent in 2006-07 relative to 2005-06. Revenues ex-
       ferring incomes to producers of the commodities              ceeded budget estimates in every area of taxation
       concerned, increases profits at the expense of the real       except excise duties, with the increase being most

                                               3 0   F R O N T L I N E
                                                                                                                           KAMAL NARANG
FINA NC E M I N I S T E R P. C H I D A M B A RA M   addresses captains of industry at a post-Budget meeting in
New Delhi on February 28.
MARCH 23, 2007
marked in the case of corporation and           speech, however, it was clear that the       come if implemented, are not going to
service taxes, the two areas that benefit        Finance Minister did not plan either to      provide immediate relief to a farming
most from the current pattern of                garner additional revenues or to spend       community in distress. That requires
growth.                                         them in ways that justified his rhetoric.     restoring the viability of farming by
    If the Finance Minister had decid-              It hardly bears stating that a big       ensuring that prices received by farm-
ed to build on this success and tax away        push of the kind required in the cur-        ers are higher than their costs of pro-
a part of the increase in surpluses, rev-       rent context would imply that govern-        duction. One way of doing this would
enues next year should rise even more           ment expenditure would rise relative         have been to strengthen and extend
than they did in 2006-07. Since the             to GDP. This is the first area where the      price support to farmers. However, no
government believes that non-agricul-           Budget proves a disappointment. To-          effort has been made to provide such
tural growth would more or less take            tal expenditure is budgeted to rise by       support. On the contrary, as part of the
care of itself (fuelled by the high level       17 per cent in 2007-08. While this is        import liberalisation thrust, customs
of corporate savings and investment),           higher than the 15 per cent recorded in      duties on a range of agricultural goods
these additional revenues could have            2006-07, it is not very much more            have been reduced and this will further
been used to support the peasantry ex-          than the likely 16 per cent increase in      depress agricultural prices and farm-
periencing a crisis, to compensate the          nominal GDP, assuming a growth rate          ers’ incomes. The reduction in customs
ordinary citizen for the ravages of in-         of 9 per cent and inflation of around 7       duties is being defended as a measure
flation, to spend more on generating             per cent.                                    that will help moderate inflation. In
rural employment and to outlay more                 Moreover, the claim that the focus       sum, the Finance Minister is choosing
on social sectors such as education and         of this Budget is on the agricultural        to combat inflation by adversely affect-
health.                                         sector, which is in the midst of a crisis,   ing the livelihoods and incomes of the
    Part A of the Finance Minister’s            is clearly not justified. The Central         farming community.
speech seemed to suggest that this was          Plan outlay on agriculture has hardly             While livelihoods will indeed be af-
what he was going to do. The focus of           increased as a proportion of GDP.            fected, inflation is unlikely to be
the Budget, he said, was agriculture;           Even to the extent that agriculture is       curbed by these means. Dealing with
rural employment was to be strength-            being supported, it is through mea-          inflation and moderating its adverse
ened by extending the National Rural            sures that are expected to increase pro-     effects on real incomes require curbing
Employment Guarantee Scheme                     ductivity. One such is irrigation. But       speculation, strengthening the public
(NREGS) to 330 districts from 200               medium- to long-term measures such           distribution system (PDS) and in-
districts; inflation was to be contained;        as investments in irrigation, strength-      creasing food subsidies. In this con-
and the social sectors were to be em-           ening of extension services and more         nection, the decision to ban forward
phasised. By the end of Part B of the           research and development, while wel-         trading in foodgrains is indeed wel-

                                                           F R O N T L I N E   3 1
                                                                                                                MARCH 23, 2007

come, but it is unclear whether this         ICDS has been increased by only             proving returns from its investment.
alone will do the job. On the other          Rs.674 crore to Rs.4,761 crore.             To that end the Budget recommends
hand, there is no mention of strength-            This divergence between alloca-        that IIFCL be allowed to set up two
ening the PDS and the budgeted out-          tions and rhetoric is inevitable, given     overseas subsidiaries that would be
lays on food subsidies for 2007-08           the Finance Minister’s unwillingness        provided with foreign exchange credit
reflect an increase of just 6.2 per cent –    to garner additional resources except       by the RBI. Loans to one of these sub-
lower than the increase in the consum-       for implementing a modified Mini-            sidiaries would be guaranteed by the
er price index and much lower than the       mum Alternate Tax that would touch          government, which absorbs the risk.
increase in food prices.                     firms in areas such as the booming IT        The resources borrowed from the RBI
    With food remaining expensive, a         and IT-enabled Services sectors. In the     would then be on lent by the subsidiary
source of succour to the poor would          event, as noted earlier, gross tax reve-    to infrastructure projects in the coun-
have been enhanced employment that           nues are not expected to rise much          try. In the case of the second subsidi-
puts purchasing power in their hands.        faster than GDP. When this failure to       ary, the money borrowed from the RBI
An important means of delivering this        mobilise much by way of additional          would be invested in highly rated secu-
is extending and strengthening the na-       resources is combined with the Minis-       rities, which would then be offered
tional rural employment scheme. The          ter’s desire as a “reformer” to meet the    (presumably for a fee) as the collateral
Finance Minister does promise to en-         Fiscal Responsibility and Budget            for borrowing by infrastructure pro-
sure this by, among other things, ex-        Management Act (FRBMA) targets,             jects in the country from international
tending the NREGS from 200 to 330            expenditure increases have to be cur-       markets.
districts. But the budget papers do not      tailed. This implies that very little can        In sum, the risk associated with
provide evidence of anywhere near ad-        be done to address the imbalances ac-       lending to infrastructure projects
equate allocation of resources for this.     companying high growth in the               would be absorbed by the government
Spending on the NREGS is to rise from        country.                                    or IIFCL. Since the borrowing in for-
Rs.11,300 crore in 2006-07 to just                In fact, there are signs that these    eign exchange is meant for financing
Rs.12,000 crore. The total expenditure       imbalances could worsen. One area           capital expenditures in areas that
on rural employment is budgeted to           where this could happen is the devel-       would produce infrastructure services,
rise by just 3.5 per cent. Even the ag-      opment of the poorer States. The Fi-        the risk of using up foreign exchange
gregate expenditure on the three flag-        nance Minister has made much of his         reserves that can in principle flow out
ship schemes – NREGS, Sampoorna              decision to increase the Central Plan       of the country at short notice would of
Grameen Rozgar Yojana (SGRY) and             outlay, which is projected to increase      course be borne by the nation. In this
Swaranjayanti Gram Swarojgar Yoja-           by 22.5 per cent. But this he has done      era of emphasis on private investment
na (SGSY) – is to rise by just 7 per cent,   without supporting the States. Central      and public-private partnerships, it
which amounts to stagnation in real          Assistance to State Plans is expected to    may be presumed that these invest-
terms.                                       rise by just 8 per cent. Even in terms of   ments in infrastructure are likely to be
    For those looking for any real evi-      their shares in Central taxes and loans     undertaken by the private sector. That
dence of a commitment to “inclusive          and grants from the Centre to the           is, to ease borrowing to finance private
growth”, what remains are social sec-        States, the States’ receipts are expected   sector investments in infrastructure,
tor expenditures. On this front too the      to rise only by 16.7 and 13.1 per cent      the risk is to be transferred either to
Budget disappoints. The expenditure          respectively, which is less than the pro-   the government or to the nation.
on higher education is budgeted to rise      jected increase in nominal GDP.                  Brinkmanship of this kind is not
significantly to accommodate the ex-               These are not the only ways in         surprising from a Budget that also
pansion in seats needed to implement         which the effects of a neoliberal reform    seeks to push ahead with capital ac-
enhanced reservation for backward            agenda pervade the Budget. In a mea-        count convertibility, by allowing resi-
classes. However, elementary educa-          sure ostensibly aimed at using India’s      dent individuals to invest in overseas
tion is to receive little support. The       foreign exchange reserves, estimated        securities through mutual funds.
allocation for the National Rural            at $180 billion, to finance infrastruc-      While the details of these schemes are
Health Mission (less than Rs.10,000          ture projects, the Budget proposes to       yet to be clarified, they are bound to
crore) is grossly inadequate. The total      use funds flowing into finance (vola-         increase the fragility generated by the
expenditure on health has indeed in-         tile) portfolio investments in the coun-    unsustainable boom in India’s stock
creased by Rs.3,925 crore, which is          try for infrastructure projects. To         markets consequent to increased for-
well below what is required to meet the      realise this the India Infrastructure Fi-   eign institutional investment. Unfor-
National Common Minimum Pro-                 nance Company Limited (IIFCL) is to         tunately, similar courage is not in sight
gramme (NCMP) commitments. And               be allowed to borrow foreign exchange       when it comes to providing some relief
despite the Supreme Court direction to       funds from the Reserve Bank of India        to the poor or redressing the glaring
universalise the Integrated Child De-        (RBI) in ways that are seen as not put-     imbalances that characterise India’s
velopment Services, the allocation for       ting the Central bank at risk while im-     recent high-growth performance.

                                                       3 2   F R O N T L I N E
MARCH 23, 2007

Little to cheer
              Budget-making in India is hostage to a neoliberal view of
              the world, where the poor are at best a political nuisance,
              and government expenditure a necessary evil.

             NY analysis or commentary of the Union Budget        mum Programme (NCMP) of the United Progressive Alli-
             must begin with the recognition that the Budget      ance (UPA) government in areas such as health and
             is only one, albeit a major one, of several eco-     education. The inflationary situation that has emerged is
             nomic policy instruments available with the          characterised by a particularly sharp rise in the prices of
             government. Further, the policy framework of         essential commodities, including food articles (which has
the government is constrained and conditioned significant-         benefited not the farmers, but speculative trade), implying a
ly by the overall structure of the country’s political economy    squeeze on the working people and a bonanza for business.
in terms of the distribution of productive assets and wealth      Yet, the Budget makes neither a serious attempt to tackle
and of the political influence that is closely associated with     inflation in essential commodities nor any effort to tax the
this. In the current milieu of globalisation, the implications    inflation-induced windfall gains for the surplus receivers in
of the state of the international economy and the nature of       the economy.
integration of our economy with it also need to be factored           The direct tax proposals in the Budget are expected by
in. Finally, the current economic situation, as perceived by      the Finance Minister to yield Rs.3,000 crore by way of
the government, plays an important part in determining            additional resources. The indirect tax proposals, the cen-
budgetary policy. In an economy like ours, characterised by       trepiece of which is an enhancement of the across-the-
extreme inequality in the distribution of productive assets       board education cess by 1 percentage point, are expected to
and political power, it would appear that, after all these        be revenue-neutral. In other words, there is practically no
considerations are weighed in, there is little room for the       additional resource mobilisation through the Budget, and
hopes and aspirations of the people, as reflected in electoral     tax revenues are merely expected to rise pari passu with the
verdicts, in the Budget.                                          growth of the gross domestic product (GDP). It turns out,
    The Economic Survey 2006-07 celebrates three years of         for example, that even after taking into account the small
“high growth”. It identifies the economic policy agenda as
consisting of “two issues” – maintaining high growth with
moderate levels of inflation and the inclusive nature of           The Budget makes no
growth – and sets out “three priorities”: maintaining and
managing high growth, bolstering fiscal prudence and high          effort worth mentioning
investment, and improving the effectiveness of government
intervention in critical areas such as education, health and      to mop up even a
support for the needy. The implicit argument here is that
high growth is necessarily inflationary and fiscal rectitude is     modest portion of the
the key to sustaining high growth. This neoliberal mindset
permeates the Union Budget as well.                               considerable surpluses
    The Budget makes no effort worth mentioning to mop
up even a modest portion of the considerable surpluses            accruing to business
accruing to business from high growth, so as to mobilise
resources to meet the goals of the National Common Mini-          from high growth.
                                                     F R O N T L I N E   3 3
editorial                                                                                                        MARCH 23, 2007

enhancement in the rate of the dividend distribution tax             tegrated Child Development Services (ICDS) programme
and bringing IT sector profits into the minimum alternative           from Rs.4,087 crore to Rs.4,761 crore is far too meagre
tax net, revenue from corporate taxes will grow at more or           when viewed against the Supreme Court directive that the
less the same rate as nominal GDP. It is not just that the           ICDS must be made universal, with quality and equity. This
rates of direct taxation have remained untouched. One                would require, at the very minimum, a doubling of the
must note that the oft-repeated rhetoric of rationalising            number of ICDS centres in the country and more than
taxes and doing away with tax exemptions of all sorts finds           doubling expenditure.
little echo in the Budget proposals. An opportunity to cap-              The Finance Minister has made the point that he devot-
italise on three years of booming surpluses in the hands of          ed a sizable portion of his budget speech to agriculture.
the rich and the super-rich, for the purpose of promoting            Unfortunately, the same cannot be said of the outlay he has
inclusive growth through productive investment by govern-            provided for agriculture, although his response could be
ment, has been missed.                                               that agriculture is, after all, a State subject. Agriculture
                                                                     received a lot of announcements and a modest increase in
The Finance Minister                                                 allocation from Rs.7,391 crore to Rs.8,558 crore. The overall
                                                                     Central Plan outlay was Rs.254,041 crore in last year’s
devoted a sizable portion                                            budget estimate, but the actual spending was only Rs.244,
                                                                     229 crore. The Central Plan outlay for this year has been
of his Budget speech                                                 enhanced substantially to Rs.319,992 crore. But, while the
                                                                     budgetary support to the Central Plan has been enhanced
to agriculture.                                                      by 22.5 per cent, that for the States has been increased only
                                                                     by 8.5 per cent.
Unfortunately, the same                                                  The National Rural Employment Guarantee Act was
                                                                     won after a long struggle as a limited expression of the right
cannot be said of the                                                to work. But the commitment of the government to imple-
                                                                     menting it has been lukewarm in contrast to the alacrity
outlay he has provided.                                              with which the Fiscal Responsibility and Budget Manage-
                                                                     ment Act (FRBMA) was notified. In this year’s Budget,
    When we come to the expenditure proposals of the                 though the National Rural Employment Guarantee Scheme
Budget, it would appear at first sight that the Finance               has been extended to 130 more districts, the increase in
Minister is indeed delivering on NCMP promises with re-              outlay is disproportionately small. Of equal concern is the
gard to education and health. Thus, compared to 2006-07,             fact that, even as food security has been greatly endangered
the Budget for 2007-08 provides for increases of 31.6 per            by rising food prices and stagnant foodgrain output, the
cent in allocation for Bharat Nirman, the flagship pro-               outlay for the public distribution system has been enhanced
gramme for rural infrastructure; 34.2 per cent for educa-            only by 6.2 per cent, implying a decline in real terms.
tion; and 21.9 per cent for health and family welfare. These             The Budget has not only passed up an opportunity to
appear to be very impressive increases, but the catch is that        eliminate loopholes in the tax system. There is no attempt in
the base levels from which the increases are being reckoned          the Budget to recover what the Finance Minister himself
are, to say the least, very modest. As the Economic Survey           referred to in an earlier budget speech as undisputed tax
2007-08 tells us, the combined expenditure of the Central            arrears. Going by the answer provided in Parliament to a
and State governments on education as share of GDP has               starred question put by Tapan Sen, the Communist Party of
been 2.74 per cent, 2.88 per cent and 2.87 per cent respec-          India (Marxist) Member of Parliament, the direct tax ar-
tively for the financial years 2004-05, 2005-06 and 2006-             rears stood at Rs.96,000 crore and the indirect tax arrears
07. The corresponding figures for health and family welfare           at Rs.25,000 crore. Surely, the Finance Minister owes the
are 1.25 per cent, 1.41 per cent and 1.39 per cent. This is a far    country an explanation as to what the government is doing
cry from the NCMP promise of 6 per cent of GDP for                   about obtaining these resources for productive use by the
education and 2-3 per cent of GDP for health. In a context           country.
where the real GDP growth rate is estimated at over 9 per                Overall, one is constrained to observe, and not for the
cent and the inflation rate at about 7-8 per cent, a nominal          first time, that budget-making in India is hostage to a
increase of 17 per cent would leave the share of the outlay as       neoliberal view of the world, where the working poor are at
percentage of GDP practically unchanged.                             best a political nuisance, and government expenditure a
    While the increase in education outlay is indeed twice           necessary evil. Electoral verdicts, seeking government com-
this figure, and thus very welcome, there is a decrease in            mitment to provision of basic needs in areas such as educa-
allocation for the Sarva Shiksha Abhiyan or ‘Education for           tion and health, and the viability of key occupations such as
All’ programme. While the percentage increase in alloca-             agriculture and small production, are not respected by neo-
tion for health is marginally greater than the nominal               liberalism. The Budget, unfortunately, has not been able to
growth rate of GDP, the increase in allocation for the In-           transcend the neoliberal barrier.

                                                        3 4   F R O N T L I N E
MARCH 23, 2007
                                                                                       Union Budget

Restating the faith
           Economic Survey 2006-2007, which ascribes the high growth to economic reform
           measures, emphasises the neoliberal agenda. B Y V E N K A T E S H A T H R E Y A

The thrust is that fiscal rectitude is                              economics. The statistical material in the ES, though
                                                                   not all of its text, should also be both intelligible and
the key to sustaining high growth,                                 of interest to the interested lay reader.
                                                                       The ES typically begins with a general review of
and inclusive growth is not about                                  the economy. It then covers, in successive chapters,
                                                                   public finance, monetary and banking sector devel-
expanding outlays for the poor but                                 opments, capital and commodity markets, prices
                                                                   and food management, external sector, industry,
about improving the effectiveness                                  agriculture, infrastructure and social sector. It must
                                                                   be noted that while the ES presents the viewpoint of
of government spending.                                            the Ministry of Finance, its discussions, analysis and
                                                                   conclusions are far from representing any kind of
               AS most readers of Frontline are no doubt aware, professional consensus. The current ES, namely Ec-
           the Economic Division of the Ministry of Finance of onomic Survey 2006- 07, is no exception. While it
           the Government of India brings out every year a provides, as its predecessors did, a great deal of
           publication called the Economic Survey (ES). It is useful data, its interpretation of the data and its
           placed in Parliament during the budget session prior observations – which are not necessarily based on a
           to the presentation of the Union Budget. The ES careful analysis of the data – are highly contentious.
           provides a detailed description of the performance of       The current ES begins by highlighting the high
           the economy during the financial year and presents rates of growth of the gross domestic product (GDP)
           the viewpoint of the Finance                                                    of the Indian economy for four
           Ministry (and presumably, the                                                   years in a row, beginning with
           government, although it is not                                                  2004-05. It attributes this
           entirely uncommon, the princi-                                                  growth performance, without
           ple of collective Cabinet respon-                                               providing any analytical argu-
           sibility notwithstanding, for                                                   ment to back up such attribu-
           different departments/Minis-                                                    tion, to the pursuit of reforms
           tries to speak in different voices,                                             and fiscal prudence. It sees the
           by design or default) on key is-                                                Fiscal Responsibility and Bud-
           sues of economic policy. It also                                                get       Management          Act
           sets out the Ministry’s views on                                                (FRBMA), enacted in 2003 un-
           the outlook for the economy and                                                 der the NDA government and
           its various facets for the near-                                                notified by the UPA govern-
           term. While all this is in the text                                             ment’s Finance Minister on Ju-
           of the ES, the ES also provides,                                                ly 5, 2004, three days before he
           both in the tables contained in                                                 presented his government’s first
           the body of the text, and much                                                  Budget on July 8, as the key to
           more elaborately in the Appen-                                                  fiscal success and high growth.
           dix of statistical tables, a great                                                  After claiming that “[t]he
                                                                                        R.V. MOORTHY

           deal of valuable information                                                    economy appears to have decid-
           about the economy. This infor-                                                  edly ‘taken off’ and moved from
           mation includes data for the                                                    a phase of moderate growth to a
           current period and time-series P . C H I D A M B AR A M AFTE R TA BLI N G new phase of high growth”, the
           data. It should be required read- Economic Survey 2006-07 in                    ES goes on to pose what it calls
           ing for all graduate students of Parliament on March 27.                        “two issues and three priori-

                                                  F R O N T L I N E   3 5
                                                                                                               MARCH 23, 2007

ties”. The two issues it poses are “sus-    [gross budgetary support to the Plan]       situation of less than full employment
tainability of high growth with moder-      in the short run.”                          of resources, government deficits
ate inflation” and “the inclusive nature         The ES ascribes the high growth to      could in fact enhance output and con-
of such high growth”. The three pri-        economic reforms, and sees it, in clas-     tribute to economic growth. But the ES
orities, according to the ES, are: rising   sically pre-Keynesian manner, as now        accepts and peddles the pre-Keyne-
to the challenge of maintaining and         driven by high savings (deriving, in        sian fiscal fundamentalism that un-
managing high growth; bolstering the        significant part, from the decline in the    derlies the FRBMA.
twin pillars of growth, namely fiscal        dependency ratio, and the assumed                Even granting for the sake of argu-
prudence and high investment; and           ‘demographic dividend’) leading to          ment that fiscal or revenue deficits are
improving the effectiveness of govern-      high investment. Its argument that fis-      to be held below specified limits, it
ment intervention in critical areas         cal rectitude is the key to high growth     need not follow that increasing public
such as education, health and support       rates can be stood on its head.             investment implies ‘fiscal profligacy’.
for the needy.                                  It is indeed far more plausible to      After all, deficits can be limited by in-
    The thrust of the argument of the       argue that increase in investment –         creasing revenue rather than only cur-
ES is that fiscal rectitude is the key to    spurred, among other things, by global      tailing expenditure. Given India’s
sustaining high growth and that the         demand in particular sectors where          abysmally low tax-to-GDP ratio, there
issue on inclusive growth is not one of     India currently has a huge wage ad-         is surely room for greater taxation of
expanding outlays for the poor, but         vantage in respect of skilled workers       wealth and high incomes. But this
primarily one of improving the effec-       and employees, and helped along by          route is anathema to the neoliberal
tiveness of government spending.            numerous tax concessions and ‘incen-        view to which the ES subscribes.
While there can be no disagreement on       tives’ – has led to growth of output and         In a thinly veiled attack on sub-
the need to improve the effectiveness       to rising tax revenues of the govern-       sidies, the ES laments: “The NCMP
of spending, it by no means follows         ment, even while tax rates have re-         [National Common Minimum Pro-
that this is the main issue. The tone       mained the same or fallen. This has         gramme] mandate of targeting all sub-
and tenor of the arguments in the ES is     had the effect of improving fiscal and       sidies sharply at the poor and the truly
that government spending is at best a       revenue deficit figures. But, more fun-       needy like small and marginal farmers,
necessary evil. Thus, it argues that the    damentally, the obsession with reduc-       farm labour and urban poor, remains
“potential contradiction” in the short-     ing the fiscal deficit, which underlies       to be implemented.”
run between remunerative prices for         the FRBMA, has no basis in theory,               The validity of this reading of the
farmers and fair prices for consumers       and is a modern-day variant of what         NCMP by the ES apart, one wonders
should not be reconciled through “an        Professor Joan Robinson once de-            how the ES regards the abolition of tax
expensive compromise of fiscal recti-        scribed as the ‘humbug of finance’.          on long-term capital gains and halving
tude”. The ES lauds the FRBMA and                                                       of the tax on short-term capital gains
asserts: “The experience of the past few    HUMBUG OF FINANCE                           from stock market activity in this con-
years has clearly demonstrated the          The fiscal deficit is the difference be-      text. After all, removing or reducing a
benefit of fiscal prudence along the          tween the total (current plus capital)      tax is, in terms of revenue implications,
FRBMA lines.” The ES goes on to say         expenditure of government and its           no different from providing a subsidy.
that “it is important to resist the temp-   ‘non-debt’ receipts. Essentially, it re-    In fact, the ES may have unwittingly
tation of fiscal profligacy in the anxiety    fuses to reckon as receipts the borrow-     stumbled upon an uncomfortable
to enhance public investment.” It hails     ings of government, on the grounds          truth, rather different from what it
the conditionalities imposed on State       that these constitute liabilities for the   thinks it is saying.
governments by the Twelfth Finance          future. This amounts to delegitimising           Recalling that the FRBMA stipu-
Commission’s policy of tying Central        government borrowing in a system            lates that public expenditure must be
assistance to adoption of neoliberal        where private entities are allowed to       reoriented to the creation of produc-
policies.                                   borrow freely from (often publicly          tive assets, the ES argues that plan and
    The ES takes a dig at the Planning      owned) financial institutions. There is      capital expenditures constitute the
Commission. After quoting the Plan-         no automatic implication in theory          nearest approximation to productive
ning Commission’s observations, in          that a government deficit is inflation-       expenditure. It also argues that “the
the context of outlays in the Eleventh      ary, nor can there be some magic value      distinction between revenue and cap-
Plan, on the constraints posed to an        of the fiscal or revenue deficit as a per-    ital expenditures is… an essential in-
increase in plan spending by the re-        centage of GDP that is somehow ‘opti-       gredient for policy formulation and
quirements of the FRBMA, the ES             mal’. The implicit assumption behind        efficient resource allocation.” While
states: “It is necessary to take a more     the argument in favour of minimising        this may appear to becommon sense, it
long-term view of the implications of       the fiscal deficit is that the economy is     also needs to be remembered that the
the FRBMA than a myopic one of how          already at full employment.                 classification of an item of expenditure
it constrains liabilities and hence GBS         Keynes showed long ago that, in a       as revenue or capital is not always un-

                                                      3 6   F R O N T L I N E
MARCH 23, 2007

                                                                                                                   organised manufacturing sector. We
                                                                                                                   learn from the ES that between 1987-
                                                                                                                   88 and 2003-04, while the share of
                                                                                                                   profits in value-added rose from 11.6
                                                                                                                   per cent to 45.5 per cent, the share of
                                                                                                                   wages came down from 56.4 per cent
                                                                                                                   to 35.7 per cent. It is also worth noting
                                                                                                                   from this table that between 1996-97
                                                                                                                   and 2003-04 the output of organised
                                                                                                                   manufacturing rose by 75 per cent
                                                                                                                   while employment actually declined
                                                                                                                   by nearly 20 per cent from 95.36 lakh
                                                                                                                   to 78.70 lakh. The ES also notes from
                                                                                                                   National Sample Survey data that un-
                                                                                                                   employment rates have risen between
                                                                                                                   1993-94 and 2004-05. However, it
                                                                                                                   takes comfort in the fact of an appar-
                                                                                                                   ently faster growth of employment be-
                                                                                                                   tween 1999-2000 and 2004-05, in
                                                                                                                   contrast to the sharp slowing down of
                                                                                                                   employment growth between 1993-94
                                                                                                                   and 1999-2000. Here and there in the
                                                                                                                   ES, reality thus breaks though the
                                                                                      CHRISTOPHE ARCHAMBAULT/AFP
                                                                                                                   heavy fog of neoliberalism.
                                                                                                                       The rates of GDP growth may have
                                                                                                                   been high over the last three or four
                                                                                                                   years, but it is too early to assert that
                                                                                                                   we are on a new and higher growth
                                                                                                                   path. Agriculture and the rural econo-
                                                                                                                   my remain steeped in a crisis, and un-
A T A VE GE T A B L E market in New Delhi on February 28. The ES has an                                            employment remains a huge issue.
equally superficial analysis of inflation. It has a particularly uncritical box on                                   Large-scale labour migration, another
commodity futures markets and sees these as “providing an opportunity for                                          vital issue with significant implica-
farmers, traders and consumers to obtain a reasonable price".                                                      tions of mass deprivation, is invisible
                                                                                                                   in the ES. Our human development
ambiguous. For instance, expenditure        the enormous efforts of the National                                   indicators are abysmal. Poverty re-
on education and health is being in-        Commission on Farmers with the                                         mains widespread, and is very inade-
creasingly recognised as productive,        comment that “there are several pro-                                   quately reflected in the official
even though much of this will be reck-      grammes already under implementa-                                      numbers that the ES presents
oned as revenue expenditure.                tion by the Department of Agriculture                                  uncritically.
    The ES notes that the NCMP has          and Cooperation on the lines recom-                                        On one count, one can agree with
pledged to raise the expenditure on         mended by the Commission”.                                             the ES. In the final chapter on the
education to 6 per cent of GDP and              It has an equally superficial analy-                                social sector, the ES says: “Account-
that on health to 2-3 per cent of GDP.      sis of inflation. It has a particularly                                 ability and transparency, especially
Yet, its own figures (Table 10.3) show       uncritical box (Box 4.5) on commodity                                  through the PRIs, need to be empha-
that, during 2004-07, years of high         futures markets, and sees the latter as                                sised to ensure good governance and
growth and buoyant tax revenues, the        “providing an opportunity for farmers,                                 delivery of quality services through
combined expenditure of the Central         traders and consumers to obtain a rea-                                 public action for most social sector
and State governments on education          sonable price”.                                                        programmes.” The only remark one
has remained below 3 per cent of GDP,           In the chapter on industry, the ES                                 would like to make is: Why are ac-
while that on health has varied be-         is forced to admit that the perform-                                   countability and transparency being
tween 1.26 per cent and 1.41per cent of     ance of the manufacturing sector in                                    invoked only in the context of PRIs
GDP. The data in the ES show that           terms of employment generation has                                     and social sector programmes? Is pri-
agriculture has done poorly. But the        been poor. It notes that between 1987-                                 vate, large capital, domestic and for-
ES has an exceedingly superficial anal-      88 and 2003-04 there was a decline in                                  eign, beyond accountability and
ysis of the agrarian crisis. It dismisses   the number of persons engaged in the                                   transparency?

                                                     F R O N T L I N E   3 7
Railway Budget                                                                                         MARCH 23, 2007

Feel-good train
       Railway Budget 2007-08 draws all-round cheer, but the claim of a turnaround
       appears too good to be true. B Y V . S R I D H A R
                                                                      Even on a post-dividend basis the performance
A combination of innovative                                       appears truly impressive; the cash surplus has in-
                                                                  creased by a whopping 65 per cent over what he
accounting practices on the one                                   expected when he presented the budget for 2006-07
                                                                  last year. However, in the din of applause Lalu Pra-
hand and some changes in key                                      sad’s projection that the cash surplus would increase
                                                                  by only 7.55 per cent in 2007-08 was lost. In fact, the
commercial practices on the other                                 net surplus – after payment of dividend – that is
                                                                  available to the Railways will actually decline in
are at the root of the dramatic                                   2007-08. Even as critics poured over the numbers
                                                                  behind the turnaround, Lalu Prasad’s charm offen-
increase shown in the cash surplus.                               sive had won the day.
                                                                      Although Lalu Prasad attributed this remarkable
           NO politician has undergone such a dramatic            turnaround to the improved efficiency of the Rail-
       image makeover as Lalu Prasad, Union Railway               ways, it is evident that simply “better management”
       Minister. Castigated for his ways and ridiculed by the     cannot explain the dramatic increase in surpluses.
       media for many years, he has suddenly been trans-          On closer examination of the numbers in the budget
       formed into a management guru under whose lead-            papers it turns out that a combination of innovative
       ership the Indian Railways have undergone a                accounting practices on the one hand and some
       remarkable “turnaround”.                                   changes in key commercial practices on the other,
           During the last six months preceding this year’s       have enabled Lalu Prasad to ride the feel-good train
       Railway Budget, he claimed that the Railways’ prof-        as no other Railway Minister has in recent times.
       its by the end of the financial year 2006-07 were               Lalu Prasad has chosen to focus on the surplus
       likely to exceed the projections he made during his        because it provides a ready measure of “perform-
       last budget presentation. And, when he presented           ance”. He realises that if surpluses can be shown to
       his budget on February 26, he drew all-round ap-           have increased dramatically, then the rest hardly
       plause by announcing that the Railways were likely         matters. Starting with the revised estimates for
       to end 2006-07 with a cash surplus of Rs.20,063            2005-06, the Railways’ accounting system made
       crore (before payment of dividend).                        some changes that removed the allocations for the
                                                                  Depreciation Reserve Fund (DRF) from its classifi-
                                                                  cation of working expenses. This had the effect of
                                                                  inflating the “cash surplus” projected in the Railway
                                                                  Budget. Although allocations towards the DRF were
                                                                  deducted from the cash surplus to arrive at the “net
                                                                  surplus”, the Minister’s projection of higher cash
                                                                  surpluses sounded much better to those not familiar
                                                                  with the Railway Budget. Moreover, other changes
                                                                  in the classification of expenses enabled the Minister
                                                                  to reduce the “expenditure side” of his budget, which
                                                                  had the effect of exaggerating the surplus.
                                                                      For instance, the new format shows only the
                                                                  interest portion of the lease charges paid by the
                                                                  Railways for rolling stock such as wagons, which it
                                                                  leases – for instance, from the Indian Railway Fi-
                                                                  nance Corporation – as part of expenses. Repay-
                                                                  ments of principal figured under a different head in

                                             3 8   F R O N T L I N E
MARCH 23, 2007

                                                                                            Earnings from freight carriage are
                                                                                        expected to increase by only 10.98 per
                                                                                        cent in 2007-08, which is more than 5
                                                                                        percentage points below what the rail-
                                                                                        ways are expected to achieve in 2006-
                                                                                        07. This will have a telling effect on
                                                                                        Lalu Prasad’s magic statistic, captured
                                                                                        under the head “cash surplus before
                                                                                            Many of the promises in the Rail-
                                                                                        way Budget, which drew widespread
                                                                                        cheer, are actually contingent on fac-
                                                                                        tors that have not been readily under-
                                                                                        stood by common folk. For instance,
                                                                                        while Lalu has promised to reduce Air-
                                                                                        Conditioned Three Tier fares for pas-
                                                                                        sengers, these are only applicable on
                                                                                        coaches with a capacity of 81 passen-
                                                                                            Currently, only coaches with a ca-
the capital account. While there may       capacity of 100 million tonnes, result-      pacity of 64 passengers ply the rail
be no quarrel on grounds of principles     ing in Rs.5,000 crore of extra revenue.      network; the reduction in fares will not
of accountancy, it is evident that the     “This,” he said, “is the foundation of       be available to passengers travelling on
budget papers do not enable a fair         our financial turnaround.” Sceptics,          these coaches. The new 81 passenger
comparison of how the Railways are         among them senior railway officers,           coaches are unlikely to be on the net-
performing relative to their perform-      have expressed dismay that railway as-       work before the end of the next fi-
ance in the past.                          sets are being flogged with no concern        nancial year. Even when they start
    Even after accounting for changes      for safety.                                  rolling out they will still be only a frac-
in the way the accounts are presented,         Obviously, there are limits to what      tion of the Railways’ capacity.
there can be no denying the fact that      can be achieved by a one-time step-up            It is indeed true that the tremen-
revenues of the Indian Railways have       in capacity. The same applies to what        dous potential of the Indian rail sys-
increased sharply in the last two years.   can be achieved by accounting inge-          tem can be exploited by undertaking
The question is whether this can be        nuity. The figures speak for them-            investments in new capacity – not only
sustained. The projections for 2007-       selves. First, the 100-million-tonne         in fresh rolling stock but also in new
08 indicate that the Lalu magic may        increase in freight capacity is not re-      lines and in modernisation. But Lalu
begin to fade in the next financial year.   flected in the budget papers (see             Prasad’s new-found enthusiasm for
    The Indian Railways’ performance       chart). Second, gross traffic revenues        Public-Private Partnerships (PPP)
in terms of movement of freight – from     will grow at a slower pace next year,        threatens the very financial viability of
which they earn two-thirds of their to-    while growth of earnings through pas-        the Indian Railways.
tal income – was truly remarkable in       senger traffic is projected to remain             The concept of dedicated freight
2005-06 and in the following year.         stagnant. Third, the growth of total         trains and dedicated freight corridors,
Gross traffic revenues increased by 16      receipts – from passenger as well as         which is already being applied to spe-
per cent in 2006-07 (revised estimate)     freight traffic is – projected to deceler-    cial container trains on routes with
over levels registered in 2005-06, after   ate in 2007-08.                              high traffic potential, is likely to divert
having increased by over 15 per cent in        But the most significant aspect of        profits from the Indian Railways to
the previous year. This was made pos-      the Lalu effect on the Indian Railways       private operators. Dedicated freight
sible by increasing the carrying capac-    is going to be felt in the area of freight   trains, operated by private companies
ity of the Indian Railways without         traffic. In 2005-06, revenues from            to move their own cargoes, will choke a
actually adding a single wagon to its      freight traffic increased by a healthy        profitable source of revenue for the
rolling stock. Lalu Prasad did this in     17.9 per cent. This sharp increase was       Railways. Dedicated freight corridors,
2005-06 by allowing each wagon to          obviously made possible by the addi-         which are likely to be built by private
carry an additional four to eight          tional load allowed on rail wagons. In       parties on routes where there is a high
tonnes.                                    2006-07, the trend continued, but            density of traffic, will make it more and
    In fact, in his budget speech last     even Lalu Prasad expects that the Indi-      more difficult for the Indian Railways
year, Lalu Prasad claimed that he had      an Railways will lose steam in the fol-      to operate routes that are not as re-
found an additional freight carrying       lowing year.                                 munerative.

                                                     F R O N T L I N E   3 9
Patent Issues                                                                                          MARCH 23, 2007

Batting for MNCs
        Plagiarism was not the most important charge against the Mashelkar report; it
        was its bias towards MNCs that was most shocking. B Y D I N E S H A B R O L

Instead of suggesting strategies to
strengthen the current parents law
against the practice of ‘evergreening’,
it tried to pass off the interests of
multinational corporations and
select Indian corporations as the
national interest.
            THE report of the Technical Expert Group on
        Patent Law Issues is currently in the eye of a storm.
        This group was set up by the government on April 5,
        2005, under the direction of Parliament in order to
        examine whether India should limit the grant of
        patents to new chemical entities (NCEs) and define
        micro-organisms to exclude genes/gene-constructs
        from patent protection. It was also meant to suggest

                                                                                                                           P.V. SIVAKUMAR
        how this could be done without violating the Agree-
        ment on Trade Related Aspects of Intellectual Prop-
        erty Rights (TRIPS) of the World Trade
        Organisation (WTO). Dr. R.A. Mashelkar, who                 R . A . M AS HE LKA R withdrew his report amid
        chaired this group and submitted the report, is a           accusations that important conclusions in it were
        highly embarrassed man because some of its impor-           plagiarised.
        tant conclusions have been criticised for being litera-
        lly copied from a paper prepared by Shamnad                 Basheer’s paper. If he is to be believed, this error
        Basheer, Associate of Oxford Intellectual Property          crept in inadvertently at the hands of a sub-group
        Research Centre.                                            that the committee had created for drafting the re-
            This criticism was first made in an article pub-         port. Mashelkar responded to the criticism from all
        lished in The Hindu on February 12, 2007, by Chan           over the world by withdrawing the report and sought
        Park of the Lawyers Collective HIV/AIDS Unit and            three months’ time from the government to resubmit
        Achal Prabhala, a researcher on intellectual property       it.
        rights. They refer to the issue of plagiarism to show
        how the report, essentially, copied its major conclu-       MULTINATIONAL CONNECTION
        sions from a work that INTERPAT, a Swiss pharma-            The charge of plagiarism is not the only serious
        ceutical lobby group of multinationals, had                 allegation against the Mashelkar Committee. The
        sponsored.                                                  recommendations of the report are also influenced
            Mashelkar’s stated claim was that the “technical        by its multinational connection: Ranjit Shahani,
        inaccuracy” was very unfortunate and was basically          vice-chairman and managing director of Novartis
        in terms of the failure to acknowledge the source of        India Limited, chairs INTERPAT, India, and is also
        eight to 10 lines that were taken verbatim from             the elected president of the Organisation of Pharma-

                                               4 2   F R O N T L I N E
MARCH 23, 2007

ceutical Producers of India (OPPI),
which advocated the acceptance of the
TRIPS proposals.
    The Mashelkar Committee’s con-
nection with multinational corpora-
tions (MNCs), including Novartis
India, is perhaps evident from the fact
that Novartis could benefit directly
from the recommendations of the re-
port. Currently, this company is fight-
ing a case in the Madras High Court
over the ‘patentability’ of its “new” salt
used in the treatment of cancer. The
case is of interest to small and medium
Indian companies and cancer patients
who have opposed Novartis’ patent ap-
plication for Gleevec, an essential
medicine for the treatment of leukae-
mia. If Novartis is granted the patent
for it, the price of the medicine could
increase. The same drug sold by Indian
companies is about 10 times cheaper
than Novartis’ Gleevec in the Indian

Experts consider the patent applica-
tion filed by Novartis to be an impor-
tant example of one of the many
possible ways of ‘evergreening’ of pat-
ents. This court case effectively chal-
lenges the legal validity of Indian
companies’ right to produce the drug.
Novartis has even challenged the gov-
ernment on the validity of Section 3(d)
of the Patents (Amendment) Act,
2005. It claims that the provisions of
this law are TRIPS incompatible.
Shockingly, the Mashelkar Committee
report, in Para 5.11, endorses this view,
tangentially. The issue of the legal val-    interests of MNCs and select Indian         opments that build on the original
idity of the provisions of the Patents       corporations (such as Ranbaxy and Ni-       patented product – and therefore, such
(Amendment) Act, 2005, was not part          cholos Piramal) as the national             incremental innovations ought to be
of the Committee’s terms of reference.       interest.                                   encouraged by the Indian patent
    Going by the spirit of the deliber-           The Committee concluded:               regime”;
ations in Parliament, the Committee’s             1. “[I]t would not be TRIPS com-           4. “with an enabling provision for
mandate was to suggest ways by which         pliant to limit granting of patents for     protection of intellectual property in
India would be able to further streng-       pharmaceutical substance to new             bio-technological innovations and in-
then the Patents (Amendment) Act,            chemical entities”;                         ventions provided through the provi-
2005. The Committee was asked to                  2. “excluding micro-organisms per      sion       of     patentability     of
suggest strategies to prevent multina-       se from patent protection would be vi-      micro-organisms, the Indian bio-
tional companies from making use of          olative of the TRIPS Agreement”;            technological research would be en-
the ‘evergreening’ possibilities availa-          3. “limiting grant of patents to new   abled to compete globally, attract
ble to them under the current patents        chemical entities will not be conducive     collaborations, FDI, contract R&D
law. The Mashelkar Committee did             to competitive growth and incremen-         etc”.
the opposite: it tried to pass off the       tal innovations are sequential devel-           The Committee’s conclusions were

                                                       F R O N T L I N E   4 3
                                                                                                            MARCH 23, 2007

The Committee
ignored the
reached by a
WHO panel.
biased; its analysis was thin and pre-
sented without cogent arguments. The
conclusions were not even based on
the clarifications provided in the Doha
Declaration on TRIPS Agreement and
Public Health. This declaration clearly
affirms that “the Agreement (TRIPS)
can and should be interpreted and im-
plemented in a manner supportive of
WTO members’ right to protect public
health and, in particular, to promote
access to medicines for all”.
    The Mashelkar Committee conve-
niently ignored the recommendations
of the 2002 study entitled “Integrating
Intellectual Property Rights and De-
velopment Policy” produced by United
Kingdom Commission on Intellectual
Property Rights, an authoritative in-
ternational group. It also ignored the
conclusions reached by the World
Health Organisation (WHO) Com-
mission on Intellectual Property
Rights, Innovation and Public Health
in its 2006 report.

                                                                                                                                K.K. MUSTAFAH
    Both these international bodies
have unambiguously clarified that
“since there is no definition of inven-
tion in the TRIPS Agreement, devel-        A D RU G S T O RE in Kochi. Many essential medicines could go out of
oping countries may determine in           reach of the common man if companies are allowed to patent derivates
their own ways, the definition of an        of existing drugs.
invention, the criteria for judging pat-
entability, the rights conferred on pat-   also recommended that “pharmaceu-          interest groups but also of the Indian
ent owners and what exceptions to          tical patents should be granted only for   Pharmaceutical Alliance (IPA) and the
patentability are permitted”.              new chemical entities or new medical       Indian Drug Manufacturers Associ-
    In fact, the U.K. Commission spe-      entities”.                                 ation (IDMA), the two most important
cifically recommends that developing            The Mashelkar Committee’s re-          groups of the Indian drug industry.
countries should aim at “limiting the      port was full of quotes from laws of           The Committee’s report indicated
scope of subject matter that can be        developed nations on the patenting of      that it was in the national interest to
patented”. Mashelkar was himself a         pharmaceutical inventions and micro-       allow incremental innovations since
member of the U.K. Commission. Fur-        organisms. It had no analysis of the       in-house capabilities of the Indian
thermore, the Pharmaceutical Re-           political economy of these laws and        drug industry were limited. It reached
search and Development Committee           was hardly concerned about their les-      this conclusion on the basis of the ex-
(PRDC), which produced its report in       sons for the interests of India. It ig-    amination of international patents fil-
2001 and was chaired by Mashelkar,         nored the views of not only public         ed by selected Indian companies. It

                                                     4 4   F R O N T L I N E
MARCH 23, 2007

ignored the fact that patents law was         a law, it will need to include additional
territorial in nature and had to be in        safeguards of clinical superiority. This
line with both the stage of develop-          strategy would encourage the Indian
ment of the industry and the socio-           drug industry to develop as a complete
economic conditions of the nation. In-        value chain, allow the national innova-
terestingly, Shamnad Basheer himself          tion system to become more oriented
states: “The key failing of the Commit-       to the domestic market and encourage
tee is not engaging with the tough pol-       public sector research-and-develop-
icy issues. The conclusions may be            ment (R&D) organisations to under-
correct, but there is much to be said for     take more work on neglected diseases.
the manner in which they were arrived              The Mashelkar Committee did not
at.”                                          distinguish between discrimination
     The issue of the cost of drug re-        and differentiation. It cited Article
search appeared only once, indirectly,        27.1 of the TRIPS Agreement to argue
in the report; the Committee was scep-        that it would be TRIPS incompatible
tical of the capacity of Indian compa-        to limit patentability to NCEs and that
nies to raise investments for the             India could not exclude certain kind of
development of NCEs. The Committee            “pharmaceutical inventions” from the
noted: “Drug discovery research is still      scope of patentable inventions. The
finding its feet in India. Though many         Patents (Amendment) Act, 2005, ex-
companies are investing, it will at least     cludes patenting of inventions relating
be a decade before a critical mass is in      to atomic energy (Section 4) and in the
place and results start accruing. Thus,       area of national security (Section 39)
restricting patentability to just NCEs        broadly if the invention is relevant for
would mean that most of the pharma-           defence purposes.
ceutical product patents would be                  As for the problem of attracting
owned by MNCs.” But it did not ad-            foreign direct investment in contract
dress the obvious question: would             R&D and the manufacture of bulk
MNCs not be successful in owning the          drugs, a good contract law that meets
largest number of incremental phar-           the requirements of confidentiality
maceutical product patents too?               would suffice. Already, India has been
     The Committee did not even con-          able to attract a lot of investment in
sider possible alternatives within the        contract R&D and also foreign direct
framework of the TRIPS Agreement              investment; it can do so in the future,
on the issue of patentability of incre-       too, without strengthening the Patents
mental innovations. It would be in the        Act in favour of MNCs.
interests of both the public and the               Parliament might consider refer-
Indian industry to design a patents law       ring the matter of the Mashelkar Com-
that would protect only “new drugs”           mittee report to the Standing
(NCEs) under the provision of product         Committee of the Ministry of Com-
patents and use the provision of proc-        merce, instead of allowing Mashelkar
ess patents to protect the remaining          to resubmit the report. That would put
incremental pharmaceutical innova-            Parliament in a better position to work
tions. In this way, it would still be pos-    out the mechanisms of strengthening
sible, in a manner compatible with            the patents regime and to address the
TRIPS, to use the provisions of “de-          issues raised here.
pendent” non-voluntary or compulso-           Dinesh Abrol is co-convener of the
ry licences for the introduction of even      National Working Group on Patent
those new drugs that are still under          Law and a scientist with the National
product patents. Indian companies             Institute of Science, Technology and
would still be required to use the Pat-       Development Studies of the Council of
ents Act as an instrument of balanced         Scientific and Industrial Research.
competition, involving less litigation.
If Section 3(d) of the current Act,                  ’Cleaning up after Mashelkar’
which spells out what is not patentable               by Praful Bidwai on page 94
in the drug industry, is retained in such

                                 F R O N T L I N E   4 5
Patent Issues                                                                                           MARCH 23, 2007

Against monopoly
        Interview with Dr. Yusuf Hamied, chairman, Cipla Limited. B Y S A R A H H I D D L E S T O N

                                                                    ents Bill was passed, is what the definition should be
“A patent to me is the grant of a                                   for patentability. For that, there was Section 3 (d)
                                                                    [which states] that unless there is a substantial im-
favour by the state to the inventor.                                provement in the efficacy of a drug, you cannot
                                                                    patent a polymorph or a salt or an esther or a metab-
You have a monopoly for 20 years.                                   olite or a pro-drug and so on. Now, that is correct,
                                                                    because that is what stops evergreening. The point
If it is something that I have gifted                               they put in was [that there should be a] substantial
                                                                    improvement in efficacy. How do you define that?
to you, it is something that I can                                  It’s vague, it can go to court. What Mashelkar was
                                                                    saying was that incremental improvements should
withdraw as well.”                                                  be allowed to be patented.
             YUSUF K. Hamied is the chairman of Cipla, one
        of India’s largest pharmaceutical companies and the         What should be the defining criteria for a patent?
        country’s fifth largest private spender in research             A patent has to be something that is totally novel,
        and development. Both an entrepreneur and a scien-          inventive. Suppose this is a product [holds a business
        tist, Hamied is considered a pioneer of the Indian          card] and then you just do that [turns it through 90
        drug industry. Since returning from Cambridge with          degrees], is that a novelty or not? In my personal
        a PhD in organic chemistry in the 1960s, he has             opinion, no. You have a patent or a dozen patents on
        fought for the right of the Indian industry to develop
        drugs for sale at low cost on payment of a royalty to
        the inventor. In February 2001, he broke the monop-
        oly of multinational drugs companies on HIV/AIDS
        drugs by offering the world the first triple therapy
        combination at less than a dollar a day.
             Hamied was awarded the Padma Bhushan in
        2005 for his efforts in trade and industry. Ironically,
        that was the same year India amended its patents
        laws to adhere to the Agreement on Trade-Related
        Aspects of Intellectual Property Rights (TRIPS). In
        the light of controversies on the Mashelkar Commit-
        tee report, Hamied spoke to Frontline on the Patents
        (Amendment) Act, 2005, and the Indian pharma-
        ceutical industry. Exerpts from the interview given
        in Mumbai:

        How does India’s Patents Act interplay with
        international obligations under the TRIPS
            Patent laws in general are national laws, not
        international. No two countries have the same pat-
                                                                                                                             SARAH HIDDLESTON

        ent laws. British law is different, American law is
        different, German law is different. So every country
        decides for itself, within a framework, what the na-
        tional laws should be. And within the needs of that
        particular time. That is important.                         YUS UF K. HA M I E D with Cipla’s version of
            The present problem, which arose after the pat-         Imatinib, an anti-cancer drug.

                                               4 6   F R O N T L I N E
MARCH 23, 2007

a product – fine. But some products           were not invented by the guys who are          dollars per capita income. Moreover,
today have 240 patents – is that what        selling them. I develop something I            any country with a population of over
patenting is all about? Take the first        can’t sell; I go to Pfizer and ask them to      75 million cannot be considered least
anti-AIDS drug, AZT. It was invented         sell it for me. They’ll take it up. Lipitor,   developed. Why is India not in the
in 1963. Only in 1985 did they find out       the world’s number one drug, was not           least developed category? Look at the
that it was good for HIV/AIDS. So it         invented by Pfizer. Ninety per cent of          Human Development Report. Under
was re-patented in 1985, [and given a]       the drugs for HIV were not invented by         Low Human Development Index, In-
usage patent for AIDS until 2005.            the originator.                                dia; under medium, even Peru, Sri
Come 2003, GlaxoSmithKleine says                  In 1987, I came out with Deferi-          Lanka and so on. We are in the bottom
that AZT by itself is no good, and it has    prone, marketed as Kelfer, a drug for          50 of 138 countries.
to be given in combination with a drug       thalassemia [an inherited disease of
called Lamuvidine. Lamuvidine’s pat-         red blood cells]. I thought it would sell      What action should the government
ent expires in 2007. They put the two        well in India; it was an iron chelator. It     take?
together in one tablet, and took out a       didn’t sell. So, I go to doctors in India           The issue that makes my blood boil
patent in 1997. That patent in America       and say here is a drug, why aren’t you         is that this should have been done pri-
and most European countries is valid         using it? [Their response was:] “Dr            or to March 2005, not post-March
up to 2017. Now, directly and indirect-      Hamied, if the drug is as good as you          2005. I am not against patents, I am
ly, AZT, has a monopoly for 54 years.        say it is, how come other companies            against monopoly. The word ‘incre-
My fight over this patent issue is not        like Pfizer haven’t brought it out?”            mental’ never existed when the patent
against patents. We have never been          Even if I do the research, the accept-         law was discussed. All this should have
against patents. An inventor should be       ability is not there. How many coun-           been discussed pre-2005. Let Parlia-
rewarded. But countries in the third         tries have come out with a drug on             ment withdraw the patents law of
world cannot afford a monopoly….             their own steam? None. So, how will I          2005 and reinstate the 1970 Act until
    Now, post-2005, you will see us          be successful on my own if I bring out a       it sorts out the problem of defining
going back to the pre-1972 era. I call it    new product? It’s very difficult.               patentability and so on. And, if not,
genocide. In 2015, drugs won’t be                                                           then get out of the WTO. In what way
available at affordable prices. It’s going   Do you think patents should be                 has membership of the WTO helped
to be a catastrophe.                         restricted to new chemical entities?           India? Not at all. Every deal is bilateral
                                             And to what extent do you agree with           today. China was not a member, yet the
What would you say to the idea that          the analysis of the Mashelkar report?          Americans gave preferred-country
the Indian pharmaceutical industry’s             Definitions should be very exact.           treatment to China, so all the imports
strength is just in making small             There is no real definition of a new            to China were duty free.
changes?                                     chemical entity. I would say “a new
     What do you mean by small chang-        chemical entity in relationship to a           The Ministers and Secretaries say the
es? There are two types of R&D [re-          drug”. Then I can say for certain if it is     government is bowing to the
search and development] in the world.        active, if it has some efficacy. Patenting      inevitable. Kamal Nath has said we
One is concept, and the other is ‘me         is when someone has invented some-             cannot upset the international
too’. Now, conceptual research is done       thing [and] needs a suitable award. A          community…
essentially by universities, NIH [Na-        patent to me is the grant of a favour by            What do you mean by that? In-
tional Institutes of Health], [and is]       the state to the inventor. You have a          vestment in India is short term. They
government funded. In America, $20           monopoly for 20 years. If it is some-          will only invest in India if they can get
billion is spent in universities and NIH     thing that I have gifted to you, it is         their money out in three years. Then
on conceptual research. The multina-         something that I can withdraw as well.         they don’t mind continuing. We are
tional pharmaceutical industry, even if          In the context of India’s develop-         sitting here like guinea pigs.
it is Pfizer or Bayer, is essentially in-     ment, a national law should be made to              What we have [going on] is PR&D
vesting in ‘me too’ research. Diazepam,      suit India and to suit Indians. Just           [public relations and development]
the first major tranquiliser [is a] con-      because six or seven pockets of India          All research has to be accountable.
cept drug. Then you have Alprazolam          are superdeveloped, it doesn’t make            Mashelkar makes a statement that
and Lorazepam and Midazapam and              India a superdeveloped country. There          CSIR will take out 1,000 patents every
Temazepam, and so on, [of the same]          are several Indias within India. If you        year. Since 1995 they should have tak-
family. Typically, the breakthrough          take Assam, Bihar, Uttar Pradesh and           en out 10,000 patents. Has any one
drugs normally happen through gov-           Madhya Pradesh, we are backward.               drug come out of it? No. Can he ex-
ernment-supported venture capital or         Has the WTO defined ‘least developed            plain the outcome of the CSIR re-
small companies, and then they get           country’? How do you define ‘least de-          search in actual commercial terms?
taken over by the big boys. Today, 70        veloped’ country? I tried to investigate       It’s very easy to talk, but what is the
per cent or more of all drugs marketed       it. There is a U.N. definition – 500            track record?

                                                        F R O N T L I N E   4 7
Patent Issues                                                                                          MARCH 23, 2007

‘No need to patent
small changes’
        Interview with Dilip G. Shah, secretary-general, Indian Pharmaceutical Alliance.

                                                                   How do we define new chemical entity?
“If everyone can patent small                                           New chemical entity is not defined either in
                                                                   TRIPS or in Indian law, not even in the United States
changes, why should anyone go in                                   patent law. Only the [U.S.] Food and Drug Adminis-
                                                                   tration [FDA] has defined NCE. Besides, nowhere
for high-end research? There, the                                  else is there a definition of NCE. This makes it clear
                                                                   that each country has the freedom to define in its
fruits are at the top, where risk is                               own law what it considers to be a new chemical
                                                                   entity. This [FDA definition] is a good definition,
high and rewards are uncertain.”                                   which very clearly says that for any new inventive
             WHEN the Patents (Amendment) Bill was un-             drugs you can submit a patent and any derivatives
        der debate in March 2005, concerns were raised in          [with small changes in form, usage] are not eligible.
        Parliament about what type of pharmaceutical prod-         It’s a negative definition.
        ucts should be eligible for patent in India and the
        country’s obligations under the World Trade Orga-          When it comes to patenting small changes to
        nisation (WTO) Agreement on Trade Related As-              known drugs, how can we distinguish between
        pects of Intellectual Property Rights (TRIPS). A           incremental innovation and evergreening, that is,
        technical experts group headed by R.A. Mashelkar           extending the life of patent for changes that do not
        was set up to examine whether India could limit            involve an inventive step?
        patents to new chemical entities (NCEs). The report             Currently, India allows patents [on derivatives]
        it submitted was voluntarily withdrawn in February         for incremental innovations in which the efficacy has
        on the grounds of technical inaccuracies and plagia-       significantly increased. But if one is making a tablet
        rism. The issue remains unresolved.                        of a product and then develops a paediatric dosage by
             For the Indian pharmaceutical industry, there is      way of a serum, this is not innovation because any
        much at stake. The IPA is an association of 12 large       person skilled in chemistry knows how to make
        research-based national companies. Together they           that.… Cipla developed a triple therapy antiretro-
        hold 30 per cent of the domestic market, account for       viral. There was no invention or innovation on that.
        one-third of exports, and contribute 90 per cent of        If we permit this sort of patenting, that’s evergreen-
        research and development spending. D.G. Shah has           ing. Or take usage – a drug which was used for
        40 years of experience in the industry, 30 of which        epilepsy was granted a [second] patent for obesity.
        were spent working for Pfizer India. As well as head-       Do we want such new uses to be patented?
        ing the IPA, he is currently co-chairman of the Fed-
        eration of Indian Chambers of Commerce and                 What is at stake for the Indian industry and India in
        Industry’s committee on pharmaceuticals and the            general when considering patents on small
        chief executive officer of Vision Consulting.               changes?
             Shah spoke to Frontline on what type of pharma-          Our position is this. We don’t need such patents
        ceutical products should be eligible for patent in         in India. Now if the U.S. industry and the U.S.
        India, innovation in the Indian pharmaceutical in-         government think that they should protect such “in-
        dustry and the Mashelkar report. Excerpts from the         ventions” and that this encourages innovation, fine.
        interview conducted in Mumbai:                             But we believe that patents granted for such devices,

                                              4 8   F R O N T L I N E
MARCH 23, 2007

                                                                                                             als] is how to contain the Indian
                                                                                                                 Almost half of what we produce
                                                                                                             today is for export and half is for do-
                                                                                                             mestic [consumption]. By 2010, as
                                                                                                             much as 71 per cent of our production
                                                                                                             will be for exports and 29 per cent will
                                                                                                             be for the domestic market. Now that
                                                                                                             would give us almost 30 per cent of the
                                                                                                             global generic market for both APIs
                                                                                                             [active pharmaceutical ingredients]
                                                                                                             and finished dosage forms. So it is a big
                                                                                                             challenge. It is also a big opportunity
                                                                                                             for the Indian industry and for the
                                                                                                             Government of India. Because what
                                                                                                             we have seen is that in each decade
                                                                                                             –1980s, 1990s and 2000s – our ex-
                                                                                                             ports have increased tenfold. In 1990,
                                                                                                             the Indian industry’s exports of med-
                                                                                                             icines came to only $178 million.
                                                                                                                 Now, a tenfold increase in this dec-

                                                                                          SARAH HIDDLESTON
                                                                                                             ade would mean $20 billion [worth]
                                                                                                             of exports. That’s Rs.90,000 crore.
                                                                                                             That would mean an incremental in-
                                                                                                             vestment in our manufacturing sector
DIL IP G . S H A H ,   secretary-general, Indian Pharmaceutical Alliance.                                    of Rs.20,000 crore. Now that trans-
                                                                                                             lates into employment opportunities
for such “inventions”, would derail in-      but PhRMA still wants these patents                             for educated Indians. This and the in-
novation and would be detrimental to         to be kept alive. This is what in [the                          frastructure that would be created are
the progress of science. People [in the      name of] public health the govern-                              opportunities for this country.
industry] would focus only on these          ment has to consider. Is India in a
low-hanging fruits, which are low risk       position to allow such patenting and if                         The Mashelkar report concludes that
and high reward. This is why we have         we are, what would be its impact on                             India cannot limit patents to NCEs
section 3(d) of the Indian patent law        public health? We have seen the                                 because it contravenes Article 27 of
on incremental innovation. If every-         [high] prices of medicines, which are                           the TRIPS Agreement. What is the
one can patent small changes, why            off-patent but still have a single source                       IPA’s view?
would anyone go in for high-end re-          of supply. Patents will ensure that                                 The group has taken an interpreta-
search? There, the fruits are at the top,    there is only a single source of supply                         tion of Article 27 without examining
where risk is high and rewards are un-       and that this sort of pricing takes place.                      its nuances or considering practices
certain. If we want medical science to           This also has to be seen in a busi-                         followed by other WTO members,
progress, that is what should be the         ness perspective. The biggest ever                              such as Canada, or even taking note of
bar.                                         challenge to “big pharma” has come                              the judgment of the WTO dispute set-
    From a public health point of view,      from the Indian pharmaceutical in-                              tlement panel and appellate body [In-
the moment you grant provision for           dustry.… After TRIPS companies                                  dia-Patent         Protection       for
such liberal patenting there are never-      started seriously looking at the regu-                          Pharmaceuticals and Agricultural
ending patents. For Zidovudine, one of       lated market [in the U.S. and the Eu-                           Chemical Products AB-1997-5, WT/
the antiretrovirals, the first patent was     ropean Union] and we took the battle                            DS50/AB/R, December 19, 1997]. Ex-
filed in 1964 and the last patent is still    to their home ground. Between Ran-                              tensive volumes have been written on
to expire, in 2018, because they keep        baxy and Dr. Reddy’s about 50 para-                             interpretations of Articles 27, 7 and 8
the patents going. PhRMA [Pharma-            graph (4) challenges were filed in the                           and the Doha Declaration on public
ceutical Research and Manufacturers          U.S. – the highest coming from any                              health.
of America] has a list of Indian phar-       one country besides their domestic ge-                              Two commissions have also exam-
maceutical products, which it says in-       neric companies.… Now it is not just                            ined this. First, the United Kingdom
fringe on its intellectual property          the domestic market. The Indian ge-                             Commission on Intellectual Property
[products patented in 1969]. Those           neric industry has reached the rest of                          Rights [CIPR]. Mashelkar was a
patents should have expired in 1989,         the world. The issue [for multination-                          member. Second, the WHO set up a

                                                       F R O N T L I N E   4 9
Patent Issues                                                                                                      MARCH 23, 2007

commission on the same subject.                try is not true. It’s not true for the       systems”, why did he not record his
Mashelkar was also a member. The               simple reason that companies do not          dissent? Whether he quotes Shamnad
commissions came to the same conclu-           want to make any claims today on             Basheer or Frederick Abbott, that is
sion: defining patentability is a flex-          where they stand on the development          not the issue.
ibility provided in the TRIPS                  of a new molecule. They treat it as a
agreement.                                     trade secret. But we have enough evi-        What action should the government
     The absence of an international           dence that the Indian industry has the       take?
patent law has led some countries to           capability for original research. Be-            Since Mashelkar has withdrawn
seek harmonisation in the terminology          tween 1998 and 2004, there were 60           the report on his own we have to see
of patent law at WIPO since the con-           molecules in the pipeline. Only if you       what new evidence and analysis he
clusion of TRIPS. If TRIPS had pro-            ignore this data will you come to the        produces. This will create a credibility
vided uniform patentability, there             conclusion that we can only do tweak-        gap. How is he going to substantiate
should be no need for the U.S., the E.U.       ing of molecules. And by using that          any changes? Anything that he writes
and Japan to demand harmonisation.             argument you will only perpetuate            in the second report will be compared
     Instead of examining the technical        tweaking of molecules. If you block          with the first. He gave explanations [to
and legal issues of Article 27, and mak-       that route, you push companies to go         journalists] when they asked him why
ing use of available evidence, the             for high-end research.                       submissions like Frederick Abbott’s
Mashelkar group developed another                                                           were not included, that only docu-
[set of] criteria, which is purely politi-
cal. This committee wasn’t set up for          “There is no                                 ments with the Secretariat were used.
                                                                                            But all these documents were available
                                               need to keep                                 with the Secretariat. We submitted
                                                                                            some of them. If evidence was avail-
What were these criteria?
    First, the report says they [the           destabilising or                             able with him earlier, why did he not
                                                                                            examine that, analyse it and put it in
group] want access to affordable med-
icines. But all it says is that every effort   creating                                     the report? He has created a very diffi-
                                                                                            cult situation for himself and other
must be made to provide drugs at af-
fordable prices to the people of India.        uncertainty on                               members of the committee. The gov-
                                                                                            ernment should not let him withdraw
But on how and who will make them
[the drugs], there is nothing. You             the IPR                                      this report. Leave it and close this
don’t need an experts group to make
this statement. This is a political            regime.”                                     Do you think a new committee should
statement.                                                                                  be put together?
    Secondly, the report implies not               Fourthly, he says he wants to bal-            At this moment I think [we need
limiting patents to NCEs would en-             ance India’s obligations under inter-        to] give the present intellectual prop-
courage innovation by the Indian in-           national agreements with the wider           erty rights regime a chance to work.…
dustry. But this way you encourage             public interest. But he is a scientist,      Let it be implemented and take at least
only tweaking of molecules [manufac-           that is not his term of reference. He        five years to assess, one, its impact on
turing derivatives] instead of real            was asked merely to say whether this is      public health, specifically availability
innovation.                                    TRIPS-compliant or not. Balancing            and prices of medicines; two, whether
    Thirdly, the report claims that the        obligations is a political decision.         patented medicines are brought into
Indian industry is capable of only in-                                                      this country by the innovators; three,
cremental innovation. And, as evi-             What is your take on the fact that           impact on the domestic industry and
dence, Mashelkar cites in his annexure         Mashelkar’s conclusions are                  its ability to export; and four, what sort
IV of the report, 215 (not 339 as it           “borrowed without                            of R&D [research and development] is
would appear at first glance) patent            acknowledgement” from a paper                taking place and whether the Indian
applications for incremental innova-           funded by an association of                  industry has moved to high-end re-
tions. But why are Indian companies            multinationals?                              search or not. Then evaluate which di-
doing this? If the U.S. permits it [in-            That is not the issue. The issue is of   rection to take.
cremental innovation] and I am going           intellectual honesty. If Mashelkar did            Until that time there is no need to
to sell my product in the U.S. I will go       not agree with what was written in the       keep destabilising or creating uncer-
by U.S. rules, so I would file applica-         WHO report, or the U.K. CIPR report          tainty on the IPR regime. This will not
tions for the U.S. market for incre-           [whose committees he was a member            be acceptable to multinationals. So the
mental innovation. Concluding from             of] which stated that “developing            government has to make a clear state-
that, that incremental innovation is           countries should not be deprived of the      ment that we, in India, are taking a
the only capability of the Indian indus-       flexibility of defining their own patent       calibrated approach to IPR.

                                                         5 0   F R O N T L I N E
Architecture                                                                                             MARCH 23, 2007

Historic blend

       The palaces in Datia and Orchha prove that the assimilation of Islamic and Hindu
       styles is not an invention of the British. T E X T A N D P H O T O G R A P H S B Y A . S R I V A T H S A N

The seeds of such integration lay                                       EDWIN LUTYENS, who designed New Delhi,
                                                                    did not have many good things to say about Indian
in Mughal architecture. Ebba Koch,                                  architecture, but somewhere in between the scorns a
                                                                    few words of admiration slip past for Bir Singh’s
the architectural historian, has                                    palace at Datia in the erstwhile Bundelkhand region.
                                                                    Even to his disapproving eye, Datia’s blend of Hindu
observed that Mughal architecture                                   and Islamic styles was acceptable for its restraint and
                                                                    emphasis on a classical and symmetrical plan.
was flexible towards regional                                            The Datia Palace, about 35 metres tall, is perched
                                                                    on a mound and overlooks the Karna Sagar lake. It is
traditions and a style synthesising                                 deceptively simple – a square form with a central
                                                                    tower rising about five stories high. The simplicity of
heterogeneous elements.                                             form slowly leads to a labyrinth-like experience. The

                                               6 6   F R O N T L I N E
MARCH 23, 2007

                                                                    THE FA BLE D M AG N I FI CE N C E  of the
                                                                    17th century Datia palace, which is
                                                                    perched atop a rocky outcrop and
                                                                    encircled by a fort wall. (Inset) A view
                                                                    across the connecting bridges and
                                                                    domed pavilions of the central tower
                                                                    of the palace.

constant shift in the location of the
staircase, the multiple and changing
views of the building through connect-
ing verandahs and balconies, and the
views framed through beautiful brack-
ets and oriel windows make it an archi-
tectural delight.
    Bundelkhand refers roughly to the
region bound by the Yamuna in the
north, the Narmada in the south, the
Chambal in the west and the Ken in the
east. The important rulers of this re-
gion were the Chandellas, who broke
away from the Pratihara Rajputs and
established their capital at Khajuraho
and later at Mahoba. When the Chan-
dellas lost power and their sway over
                Continued on page 72

                                          F R O N T L I N E   6 7
                                                                     MARCH 23, 2007

Lakshmi Narayan temple. The
entrance to the temple is diagonally
located and aligned with the Jehangir
Mahal on the opposite side.

                                           6 8   F R O N T L I N E
MARCH 23, 2007

                 O N E O F T H E domed pavilions that adorn the corners of the temple boundary
                 wall. Arched openings, brackets and chajjas, along with domes, illustrate the
                 architectural fusion. (Below) One of the many paintings on the ceiling of the
                 temple. This one depicts the fort and the durbar in progress inside.

                          F R O N T L I N E   6 9
                          MARCH 23, 2007

7 0   F R O N T L I N E
MARCH 23, 2007

                                           THE C HA TUR BHUJ TE M P LE
                                           and the Raj Mahal Palace in the
                                           background sit elegantly on the
                                           beautiful landscape of Orchha.
                                           The spires, domes and
                                           cruciform layout of the temple
                                           form an unusual arrangement
                                           in temple architecture.

                 F R O N T L I N E   7 1
                                                                                                             MARCH 23, 2007

CE NO T A PH S O F T H E Orchha kings lined up on the banks of the Betwa river. The cenotaph of Bir Singh, at extreme
left, is explicitly Islamic.
the region in the 13th century, the        way from the Deccan, Abul Fazl was         exemplified in Fathepur Sikri. Rajput
Bundelas established themselves at         intercepted in the mountainous region      kings, too, explored this fusion, which
Kundar, one of the important Chan-         west of Datia near Shivpuri by Bir         was best exemplified in Man Singh’s
della cities.                              Singh, an errant chieftain related to      palace at Amber and the Govind Dev
    In the beginning of the 16th centu-    the Orchha king, and killed. His se-       temple at Vrindavan.
ry, Rudra Pratap Bundela found that        vered head was sent to Salim, who had          Indeed, a sprit of tolerance and ex-
picturesque Orchha also provided pro-      wished so because he was suspicious of     perimentation pervaded the 16th and
tection from the relentless attacks of     Abul Fazl and considered him a thorn       17th centuries. Akbar wore a tilak on
the Mughal army and shifted his cap-       in his relationship with Akbar.            his forehead and also encouraged Rak-
ital to Orchha. Rudra Pratap’s sons            Akbar was anguished at Fazl’s          hi ceremonies. According to the
Bharati Chand and Madhukar Shah            death. His army could not capture Bir      Mughal historian R. Nath, he even
built a fortress and a palace on the       Singh, who hid in the surrounding for-     commissioned the text “Allo Upanish-
small island created by the Betwa riv-     ests. Fatigued by the turn of events and   ad”, which combines Sanskrit and Ara-
er. However, the ravines, the dense        his long reign, Akbar eventually re-       bic and extols Allah. Even provincial
forest and the protection offered by the   proached with Salim and died in 1605.      rulers like Sultan Ibrahim of Bijapur
landscape were not enough to keep the      Not surprisingly, when Salim became        assumed the title Jagatguru and patro-
Mughal army away for long. Madhu-          the emperor all his loyalists were re-     nised all art forms. This assimilation
kar Shah’s son Ram Shah turned out to      warded. Among them was Bir Singh,          and adoption provided the larger tem-
be a weak king and was eventually de-      whom he appointed king. After his as-      plate for many rulers to follow suit,
posed by Jehangir. Since then the rise     cension, Bir Singh built a grand new       including rulers who were not so fa-
and fall of Orchha was entangled with      palace in Orchha and named it Je-          vourably disposed to the Mughals.
the history of the Mughals.                hangir Mahal.                                  Madhukar Shah, the fearless Bun-
    Akbar and Jehangir, or Salim as he         Bir Singh was a prolific builder.       dela who consistently opposed the
was known earlier, had a love-hate re-     Apart from Jehangir Mahal, which           Mughals, built the Chaturbhuj temple
lationship. Akbar’s long reign made        came up in the early 17th century, he      atop a small mound in Orchha. This
Salim impatient and impelled him to        built the Lakshmi Narayan temple and       temple is unusually laid out. It is mas-
rebel. As a result, he refused to obey     the palace at Datia. His buildings ea-     sive with small spires at the four cor-
Akbar’s directive to attack Mewar. Af-     gerly took to fusing Hindu and Islamic     ners and a large spire in the centre. The
ter an unsuccessful attempt to seize the   styles; the templates and models of        mandapa in front of the sanctum
treasury at Agra, he crowned himself       such hybrid buildings were already         sanctorum has a large dome. The plan,
an independent ruler at Allahabad. It      available to him. The free mix of          externally, appears square, but inter-
was at this time that Akbar sent for       domes, symmetrical plans, and surface      nally it is more cruciform. The space it
Abul Fazl, his close confidant and au-      decoration were well elaborated in Ak-     encloses resembles the nave of a
thor of Akbar Nama, for advice. On his     bar’s syncretic architecture and was       church rather than a compact temple

                                                     7 2   F R O N T L I N E
MARCH 23, 2007

interior. The walls of the temple are
decorated not by sculptures but by a
series of arch niches that are typical of
Islamic structures.
    The Raj Mahal built earlier by Ru-
dra Pratap Singh and completed by his
sons resembles the palaces built by
Rajput kings, as the one in Amber. It
has multiple courts with the surround-
ing walls decorated by ornamental
stucco work and arches. The interiors
are extensively painted. The spaces,
too, are divided into private and public
groups. Behind the Raj Mahal rise the
chatris or domed pavilions of Jehangir
    Bir Singh’s Jehangir Mahal is dif-
ferent from his Datia place in layout. It
is more spread and elaborate. It has
distinctive-looking chatris in the cor-
ners and presents a strong and simple
symmetrical appearance to the out-
side. This distinction is also percep-
tible in his cenotaph. On the banks of
the Betwa stand a series of 17th and
18th century cenotaphs of the rulers of
Orchha. Amidst this group of cubical
structures with temple-like spires, Bir
Singh’s cenotaph alone has explicit Is-
lamic features on it.
    His experiments extended to the
Lakshmi Narayan temple, which ap-
pears more like a fortress and reflects
an unusual mix of styles. Minaret-like
towers are located at the corners and
the sanctum sanctorum is turned to be
in alignment with the diagonal en-
trance, which is designed so as to align
with Jehangir Mahal.
    Jujhar Shah, one of the last Bunde-
la rulers, strengthened the fortifica-
tions of Orchha. This infuriated Shah
Jahan, who dispatched an army to rein
him. After a hide-and-seek battle, Juj-     T H E C O M B I N A T I ON OF
                                                                    large dome, open pavilion, continuing chajjas and
har Shah was defeated and killed. Be-       ornamental bracelet in the Jehangir Mahal in Orchha.
fore the army left Orchha, it was
ordered to demolish the temples. With       traditional Hindu architectures is not   a style synthesising many heterogene-
that the glorious period of Orchha          an invention of British architects. It   ous elements such as the transoxanian,
ended. It became so insignificant that       precedes the 19th century Indo-Sar-      the Timurid, the Indian, the Persian
Captain W.A. Pogson’s A History of the      cenic architecture. The seeds of such    and the European.
Boondelas, published in 1828, hardly        integration lay in Mughal architec-          The rulers of Orchha deftly adapted
has any description of Orchha.              ture, which was itself an assimilation   and experimented with the hybrid ar-
    What makes Datia and Orchha sig-        of many styles. Ebba Koch, the archi-    chitectural style that was prevalent
nificant to contemporary architectural       tectural historian, has observed that    then. To them it was a political necessi-
history is that they decisively prove       Mughal architecture was flexible to-      ty, besides being a choice of style and a
that the assimilation of Islamic and        wards regional building traditions and   route to experimentation.

                                                       F R O N T L I N E    7 3
MARCH 23, 2007
                                                                                             Public Health

Fragile lives
           The fundamental causes leading to high
           maternal mortality are yet to be
           addressed. B Y T . K . R A J A L A K S H M I

                                                                                                M A M TA B AHE LI A, Atribal
                                                                                                woman in Pathadeori village of
                                                                                                Madhya Pradesh’s Seoni district.
                                                                                                Weighing 52 kg into the eighth
                                                                                                month of her pregnancy, she
                                                                                                continues to do laborious work.
                                                                                                       PHOTOGRAPHS BY ANITA KHAMBA/UNICEF

                                                                           India (WRAI), a nationwide initiative that promotes
Financial constraints and bad roads                                        safe motherhood, there has been no significant de-
                                                                           cline in India’s maternal mortality rate (MMR) since
are among the factors that prevent                                         the 1990s. Surveys of the causes of the high MMR
                                                                           show how inaccessible timely medical attention still
pregnant women from accessing                                              is to many pregnant women. An inadequate health
                                                                           care system, lack of awareness, bad roads and, of
medical attention. The fact that                                           course, poverty are some of the major factors that
                                                                           come in the way of safe deliveries for pregnant wom-
trained nurses and midwives are not                                        en. Surveys have also found that the maximum num-
                                                                           ber of maternal deaths is recorded among the
available round the clock also pushes                                      Scheduled Castes, the Scheduled Tribes and Other
                                                                           Backward Classes.
up maternal mortality.                                                         Bimla of Duhiya village in Murar block of Mad-
               ACCORDING to the Sample Registration Survey                 hya Pradesh’s Gwalior district is an Accredited Social
           for 2001-03, around 78,050 pregnant women die in                Health Activist (ASHA). Madhya Pradesh is one of
           India every year. For every hundred thousand live               the 18 Empowered Action Group States covered un-
           births, there are 301 maternal deaths, the survey               der the National Rural Health Mission (NRHM); it
           says. According to the White Ribbon Alliance of                 is one of the “low-performing” States in terms of

                                                      F R O N T L I N E   8 9
                                                                                                             MARCH 23, 2007

                      auxiliary nurse midwife, has been working for eight years in Mamodhan village of Rajasthan’s
Dholpur district. In this photograph, making a home visit for an antenatal check-up.
institutional deliveries, along with Ut-   hands. Duhiya is a village of mainly        Sometimes, she says, Auxiliary Nurse
tar Pradesh, Uttarakhand, Bihar,           Jatavs, though there are a few landed,      Midwives (ANMs) refuse even to
Jharkhand, Chhattisgarh, Rajasthan,        upper-caste families too. Only a kutc-      “touch” pregnant women of lower
Orissa and Jammu and Kashmir. As           cha road links Duhiya to Gwalior city.      castes, let alone attending to their
an ASHA, Bimla gets Rs.600 for every       Bimla does not seem fully aware of the      needs.
pregnant woman she is able to take to a    provisions of the Janani Suraksha Yo-           According to an activist from a
government hospital for delivery. In-      jana (JSY), operational since April 12,     rights organisation in Murar, there
deed, all she can remember of her          2005, under which pregnant women            have been several cases in Duhiya
“training” is that she, and others like    get Rs.1,400 if they give birth in a gov-   where pregnant women were turned
her, were told that they would be paid     ernment hospital and are also com-          away from the government hospital
if they took pregnant women to             pensated if they give birth at home or      and forced to spend small fortunes on
hospital.                                  in accredited private hospitals. Only       treatment at private hospitals. “This
    But Bimla could not save the life of   two of the 25 women she took to a           also means that the ASHA does not get
her own sister-in-law, Khiloni. The        government hospital for delivery got        paid,” she said.
family says she died because there was     paid under the JSY. Her own payment             In an area where maternal mortal-
no trained “birth attendant” in the vil-   is often not on time and she is not paid    ity obviously needs more attention
lage and the government hospital           for conveyance any way. She is sup-         than it gets, priorities sometimes seem
where they took her would not accept       posed to serve a ‘population area’ of       strangely misplaced. The medical offi-
the case because it was complicated.       1,000, but she serves two panchayat         cer in charge of the primary health
    Bimla’s is a family of landless farm   areas with a total population of 2,000.     centre (PHC) in Hastinapur town of

                                                     9 0   F R O N T L I N E
MARCH 23, 2007

Murar block, for instance, could only        Rs.5,000 from the Health Department          the majority of the deaths were pre-
think of the missing boundary wall at        for emergency obstetric care services,       ventable and that people would access
his PHC when asked what problems he          but most of them were not aware of it        services if they could. Financial con-
faced at work. The centre he runs has        and did not use the money.                   straints and bad roads are among the
no blood bank or ambulance services,             Lack of nutrition is also a problem.     factors that prevent pregnant women
no female doctors, and its nurses are        The Integrated Child Development             and their families from accessing med-
not trained in Emergency Obstetric           Services centre at Duhiya functions          ical attention during and after preg-
Care Services (EmOC). It has a proper        from the home of an Anganwadi work-          nancy. The fact that trained nurses and
building but is understaffed. Local          er. The only diet supplement that chil-      midwives are not available round the
people say there is no one at the centre     dren and pregnant and lactating              clock also pushes up maternal
after evening though it has been con-        mothers receive here is soya puffs.          mortality.
verted into a 24-hour First Referral             The story is the same everywhere.            In the Purulia study of nearly 106
Unit under the NRHM.                         Banjara Ka Pura, also in Murar, is a         maternal deaths, it was found that
    He denied that there had been any        village dominated by Banjaras, a             nearly 80 per cent of the women had
cases of maternal mortality at his PHC.      Scheduled Tribe. All families in the         sought formal care at some point of
But he added that the families of preg-      village are landless and daily wages do      their illness and nearly 46 per cent had
nant women were usually to blame for         not exceed Rs.40. The entire village         sought formal care after complications
pregnancy-related deaths because             should have been categorised as Below        arose. Among the reasons for not seek-
they did not organise timely medical         Poverty Line, yet few residents hold         ing formal care, 23 per cent of the
attention. By the time a pregnant            BPL cards. Even the grain allotted for       respondents (family members) felt
woman was taken to a doctor, he said,        the BPL category is not sold at BPL          that transportation was a leading
it was usually too late. He also said that   prices. There are young widows and           cause. While 16 per cent felt that the
anaemia was a major cause of mater-          old destitute women in the village who
nal mortality. At least on this last         are not covered under the Antyodaya
point, the National Family Health Sur-       scheme for foodgrain entitlement. Ex-
vey III would agree with him. The sur-       penditure on health leads to bondage
vey data, released recently, show that       in the village.
nearly 82.6 per cent of the children in          One woman, Lakshmi, narrated
the age group of six to 35 months are        how her pregnant daughter-in-law
anaemic; 40.1 per cent of women have         died of haemorrhage after a miscar-
a body mass index (BMI) below nor-           riage because she did not get timely
mal; 57.9 per cent of pregnant women         treatment. “We used to take her in a
and 57.6 per cent of women who were          bullock cart every day to the PHC. But
ever married are anaemic.                    the centre refused to admit her. We
    The Economic Survey (2005-06)            spent Rs.800 on a jeep to bring her
says the NRHM is the chief vehicle for       body back,” she said. She added that
making good the promises made on             the entire family now worked as bond-
health care in the National Common           ed labourers for the local temple priest,
Minimum Programme. Commenting                who had lent them Rs.35,000. Laksh-
on the implementation of the NRHM            mi’s second daughter-in-law was luck-
so far, WRAI spokesperson Aparajita          ier; she delivered her child in a tractor.
Gogoi said there was no arrangement              A recent Maternal and Perinatal
for training midwives under the Mis-         Death Inquiry (MAPEDI) study by the
sion. Most ANMs are at present in-           United Nations Children’s Fund
volved with family planning and              (UNICEF), in Guna and Shivpuri dis-
health care for children. Skilled assist-    tricts of Madhya Pradesh and Purulia
ance at childbirth is not easily avail-      district in West Bengal, says most ma-
able. Much of what happens in                ternal deaths occur within six to 24
communities and in the hospitals goes        hours of delivery, the immediate cause
unreported and there is little account-      being hemorrhage. In most of the
ability for maternal deaths. Doctors         cases surveyed, the women were found         E VE N A B AS I C labour room like this
are often not trained in emergency ob-       to be severely anaemic, and had been         one is not something women have
stetric care services and nurses and         so from adolescence.                         easy access to in rural India. The
midwives are not encouraged to carry             The MAPEDI study, based on in-           government now offers cash
out life-saving procedures. Gogoi also       terviews with families that had lost         incentives to encourage women
said that panchayats were entitled to        pregnant mothers, highlighted that           to go to hospitals for delivery.

                                                       F R O N T L I N E   9 1
Public Health                                                                                                MARCH 23, 2007

                               Jawarkothi village in Seoni district belongs to a Scheduled Caste. Pregnant and
underweight (43 kg) at 19, she was taken to hospital for her delivery on a bullock cart by a midwife.
person herself did not perceive she was
sick enough, only a meagre 8 per cent      The MAPEDI                                 230,000 women in the 15-49 age
                                                                                      group and men in the 15-54 age group.
felt that the problem required tradi-
tional care. Nine per cent could not pay   study showed                               It found that 44.5 per cent of the wom-
                                                                                      en were married before the age of 18.
for transport, while 10 per cent said
transport was not available.               that most                                  Jharkhand recorded most of the cases
                                                                                      (61.2 per cent), followed by Bihar (60.3
    The study, presented by Sudha Ba-
lakrishan, indicated there was an          maternal                                   per cent) Andhra Pradesh (54.7 per
                                                                                      cent) and Rajasthan (57.1 per cent);
awareness of the need to seek health
care, just as there was in Madhya Pra-     deaths were                                the lowest numbers were reported
                                                                                      from Himachal Pradesh (12.3 per
desh. But while most respondents in
Purulia could afford transport to hos-     preventable.                               cent), Jammu and Kashmir (14 per
                                                                                      cent), Kerala (15.4 per cent) and Pun-
pitals and health centres, very few in                                                jab (19.4 per cent).
the Madhya Pradesh case study said         and general welfare, but also for at-           There seems to have been a shift
they could do so.                          taining the goal of population stabil-     from a vertical approach to health care
    Following the UNICEF study, the        isation. Population stabilisation is       to a more decentralised one and the
Government of West Bengal decided          proposed to be achieved by addressing      2007-08 Budget proposals include
to review every maternal death. It also    issues like that of child survival, safe   higher allocations for health care. But
issued an order making all maternity       motherhood and contraception” (Eco-        there needs to be a greater emphasis
beds in government hospitals free of       nomic Survey 2006-2007). Health ac-        on an inter-sectoral approach, espe-
cost. The problem is that despite          tivists have increasingly begun to         cially on food security. It is not only a
heightened allocations for health care,    de-link the goals of population stabil-    question of meeting the Millennium
the Central government continues to        isation from MMR and infant mortal-        Development Goals any more, it is
view health care as important “not only    ity rate (IMR), the government’s           about being accountable and sensitive
for reaping the demographic dividend,      approach remains much the same.            to the needs of one half of the nation’s
having a healthy productive workforce          The      NFHS-III      interviewed     population.

                                                     9 2   F R O N T L I N E
MARCH 23, 2007

Self-help doubts
                Opposition grows to the microfinance Bill on the grounds that it, among other
                things, excludes the big players in microfinance. B Y T . K . R A J A L A K S H M I

                                                                                              offer an enabling environment to ensure that the
It excludes from its purview NBFCs                                                            people, especially women and certain disadvantaged
                                                                                              sections, have universal access to integrated finan-
and not-for-profit companies, which                                                            cial services of banks.
                                                                                                   Another objective is to regulate the functioning
deal with 90 per cent of                                                                      of microfinance organisations. In its previous avatar
                                                                                              it was known as the National Bank for Agriculture
microfinance in the country. Instead,                                                          and Rural Development (Amendment) Bill, 2006.
                                                                                              The Bill was first drafted in 2000 with the objective
it seeks to regulate the smaller                                                              of giving a legalised structure to microcredit and
                                                                                              microfinance organisations.
players by imposing difficult                                                                       According to a note prepared by the Department
                                                                                              of Economic Affairs (Banking Division) in the Fi-
conditionalities on them.                                                                     nance Ministry, the Bill was formulated after consul-
                    THE heightened allocations to the social sector                           tations with the Reserve Bank of India (RBI), the
                and the rhetoric of women’s empowerment notwith-                              National Bank for Agriculture and Rural Develop-
                standing, a Bill meant to guarantee financial services                         ment (NABARD), and the Indian Banks’ Association
                to women and other disadvantaged sections has run                             (IBA).
                into rough weather. The Ministries of Women and                                    The logic was that “many microcredit-providing
                Child Development and Rural Development are not                               institutions such as MFIs [microfinance institu-
                in agreement with certain provisions of the Micro-                            tions] and SHGs [self-help groups] have been re-
                Financial Sector (Development and Regulation) Bill,                           peatedly stressing the need for regulation of this
                2007, which they believe has been drafted in haste.                           sector in view of its rapid growth and fear of less-
                    The main objective of the Bill is to provide for the                      than-credible institutions dealing with the poor and
                promotion, development and orderly growth of the                              illiterate people.” But the main problem with the Bill
                microfinance sector in rural and urban areas so as to                          is that it excludes the big players in microfinance.
                                                                                                   The Bill demonstrates perhaps that the talk of
                                                                                              “inter-sectoral” convergence is just rhetoric. It also
                                                                                              brings out the lack of inter-Ministerial discussion
                                                                                              and deliberation.
                                                                                                   For instance, the Rashtriya Mahila Kosh (RMK),
                                                                                              set up in 1993 under the Ministry of Women and
                                                                                              Child Development to provide credit to poor rural
                                                                                              women, has been left out from the to-be-constituted
                                                                                              microfinance development council (MDC), whose
                                                                                              objective is to advise NABARD on matters relating
                                                                                              to microfinance.
                                                                                                   The council will have two women nominees, who
                                                                            G. KRISHNASWAMY

                                                                                              may not necessarily represent the Ministry of Wom-
                                                                                              en and Child Development. This, said a senior wom-
                                                                                              an bureaucrat, was ironical as 90 per cent of
                                                                                              microcredit borrowers were women. Women and
                      office of the Mutually Aided                                             Child Development Minister Renuka Choudhary
Cooperative Thrift & Credit Society, which helps members of                                   said the Bill was inimical to the interests of poor
self-help groups.                                                                             women. Excluding the RMK was a big surprise,

                                                        F R O N T L I N E         9 7
                                                                                                                        MARCH 23, 2007

considering that it has benefited
5,68,000 women so far. The Bill has
also run into trouble from women’s
organisations and those closely in-
volved with SHGs.
    The All India Democratic Wom-
en’s Association (AIDWA) believes
that while the microfinance Bill ought
to be rejected outright, there is also a
need to look at the working of SHGs
over the past two decades. According
to AIDWA, unlike women’s and peo-
ple’s science groups, the Government
of India and other high-profile NGOs
viewed SHGs as banking institutions
whose savings needed to be mopped
up in order to ease the burden of public
    Among the problems facing SHGs,
it said, was the exclusion of a great
number of poor people from the for-
mation of SHG federations because of
                                            V. RAJU

definitional problems and the lack of
representation of women in the deci-                  A T S A T T EN A P ALLI I N Andhra Pradesh’s Guntur district in July 2006, a
sion-making processes. Said Sudha                     victim of harassment by microfinance companies is consoled by National
Sundararaman, general secretary,                      Commission of Women member Nirmala Venkatesh. The companies wanted
AIDWA: “Instead of replacing formal                   the girl to repay the loan taken by her mother who is no more.
credit institutions, the SHGs are de-
signed to function as groups to ensure                cent capital adequacy ratio (that is, the       He said MFIs in Andhra Pradesh
efficient transactions and repayments                  capital base of the organisation should     used coercive methods to make wom-
on a limited credit-based agenda. This                comprise at least 15 per cent of its out-   en repay their loans and added that he
works against the inclusion of issues                 standing loans), three years’ experi-       knew of many instances of such ha-
such as domestic violence, sexual and                 ence and NABARD certification.               rassment. He said that in the last seven
reproductive rights and political par-                    Nevertheless, the Cabinet and the       or eight years, a lot of SHGs and micro-
ticipation. Such issues are then ad-                  Group of Ministers has cleared the Bill     credit institutions had been formed
dressed by women ‘in spite of’ rather                 and it is likely to be tabled in the cur-   with the sole purpose of obtaining and
than as a legitimate agenda of the                    rent session of Parliament.                 disbursing loans. Only in some States,
SHGs.”                                                    The concern among non-govern-           especially Kerala, where linkages had
                                                      mental organisations (NGOs) in-             been made between literacy, political
MAIN OBJECTIONS                                       volved with SHGs is that MFIs,              empowerment and economic empo-
The main objections to the Bill are that              profit-oriented as they are, may intro-      werment within SHGs, the poorest
it excludes from its purview non-bank-                duce practices that might corrupt the       among the women had benefited and
ing financial companies (NBFCs) and                    SHG model itself. They also feel that       emerged as a force.
companies registered as not-for-profit                 the conditionalities are harsh consid-          Incidentally, estimates of the num-
under Section 25 of the Companies                     ering that even commercial banks            ber of SHGs in the country range from
Act; these two categories of companies                were required to have a capital ade-        seven million to more than a crore. The
deal with 90 per cent of microfinance.                 quacy ratio of only 8 per cent.             demand for micro-credit is estimated
The Bill, instead, seeks to regulate so-                  Thomas Franco Rajendra Dev of           to be close to Rs.1 lakh crore. Until
cieties, cooperative societies and trusts             the Mahalir Association for Literacy        December 2006, 24.82 lakh SHGs had
registered under State laws, also called              Awareness and Rights (MALAR), a             been credit-linked with a cumulative
microfinance organisations (MFOs),                     federation of SHGs in Kanyakumari           bank loan of Rs.13,720.82 crore. As on
which handle only 10 per cent of such                 district, said repayment rates were, by     January 25, 2007, about 24.33 lakh
services in the country.                              and large, very good and that was one       SHGs, with a bank loan of Rs.10,895
     These smaller organisations could                reason why MFIs wanted to enter the         crore, had been formed under the
also get into trouble, given the condi-               picture in a big way and that too with-     Swarnajayanti Gram Swarojgar Yoja-
tionalities such as profitablity, 15 per               out many regulations.                       na of the Ministry of Rural Develop-

                                                                9 8   F R O N T L I N E
MARCH 23, 2007

ment. Last year alone, Rs.65,000 crore      natural deaths of women in 2005-06,          On the other hand, there was a cap of
was disbursed as microcredit.               10 were confirmed to have committed           Rs.50,000 on borrowing. There were
    But there are doubts whether it can     suicide. In general, the district admin-     objections to NABARD functioning as
help rural poverty. Franco Rajendra         istration’s observations were that           the regulatory body because it was in-
Dev said it was an illusion that microfi-    MFIs imposed a non-transparent, flat          sufficiently manned in the districts
nance alone would eradicate poverty;        rate of interest instead of a simple in-     and there could be a conflict of interest
it had to be accompanied by other           terest on the diminishing principal          as it was a promoter of SHGs and
measures, including land reforms,           amount; the periodicity of repayment         NGOs. “A promoter cannot be a regu-
which was the experience of both Ker-       was weekly instead of monthly, the in-       lator,” said Franco.
ala and West Bengal. The Integrated         surance policy of MFIs was such that             Yet another criticism has been that
Rural Development Programme,                premiums were collected without giv-         State governments were not consulted
which began in 1979, he said, failed to     ing any policy; and they used methods        during the formulation of the Bill de-
reduce poverty, as it was unconnected       of recovery that were demeaning to           spite the fact that many of the MFOs
with the other causes of poverty.           women, including making them stand           were registered under State laws.
    He said that within MALAR,              in the hot sun, locking up their homes           The controversy over the Bill also
which was based on the People’s Sci-        and even advising them to commit sui-        comes in the context of a widespread
ence Movement model, nearly 10 per          cide.                                        SHG movement comprising mainly of
cent of the women had improved their            In raids on the local offices of some     poor women in the villages. The expe-
quality of life; handloom weavers had       of the MFIs operating in the district,       rience of the SHGs has been a mixed
become owners of looms, pottery             signed cheques, blank, signed plain          one, depending on the level of political
workers had turned owners and wom-          sheets of paper, and home-site pattas        awareness and rate of literacy and so-
en had opened grocery shops and got         and land title-deeds were seized.            cial and political organisation in the
into lease cultivation.                                                                  States. The possible enactment of the
    While this was a positive outcome,      CONTENTIOUS PROPOSAL                         microfinance Bill has caused conster-
the main problem was the small net          One of the proposals in the Bill is to       nation among groups working with
profit in these ventures and the chal-       allow MFOs that have a capital base of       SHGs.
lenges of the market. There was a lot to    Rs.5 lakh to mobilise thrift. Such a             A two-day national consultation
learn from the Kudumbashree model           move, critics argued, would restrict the     organised by Nirantar, an organisa-
in Kerala, where the poorest of the         expansion of the capital that was being      tion that deals with gender and educa-
poor among women were identified             created by SHGs. They said group sav-        tion issues, debated the implications of
under the Asraya scheme and market-         ings were normally used in an emer-          the Bill as well as the role of the SHGs.
ing outlets were provided for their         gency, but if MFOs were allowed to               More than 40 organisations from
SHG products. In West Bengal, too, 16       mop up the thrift, the purpose of SHGs       19 States participated. The conference
government departments were in-             would be defeated and women would            discussed a study prepared by Niran-
volved in SHGs in one way or other.         find themselves again at the mercy of         tar, titled “Examining empowerment,
There was a separate Ministry for           moneylenders.                                poverty alleviation, education within
SHGs as well. The marketing of the              Sources in the RMK said the word         self-help groups” and a broad consen-
products was allowed through the            “thrift” was a clever way of defining         sus emerged on the positive and the
public distribution system (PDS).           “public deposit” as the RBI had not          negative outcomes of the experiences
    Critics of the Bill accused the major   prescribed any “safety norms” for            of women in SHGs.
players of charging high rates of in-       banks that accepted public deposits.             The study was done among 2,750
terest and resorting to other irregular-    This could allow unscrupulous MFOs,          SHGs, the majority of them formed
ities, including inhuman methods of         as also moneylenders who could regis-        under government programmes, in 16
recovery, which, in States such as And-     ter as MFOs, a backdoor entry and            States. The survey revealed that the
hra Pradesh, even drove women to            accept not only savings from people          benefits had not percolated equitably
commit suicide. The majority of the         but also lend at very high rates of in-      to all women and most of them had not
borrowers were women, organised in-         terest. Another worry was that caste         received any capacity-building inputs
to SHGs or otherwise. Last year, the        and communal organisations could             for the past two years. The experience
Collectors of East Godavari and Krish-      enter the fray, especially if the Bill al-   differed from State to State and on the
na districts submitted a report each to     lowed them to collect deposits through       level of political consciousness as well.
the RMK about women committing              thrift.                                          At the consultation itself, the con-
suicide because of harassment by the            The Bill does not provide any cap        sensus was that the microfinance Bill
MFIs. Most of the suicides were re-         on the rate of interest, especially when     would do more harm than good to ru-
ported from Guntur, East Godavari           there were known instances of MFIs           ral women. It sought a wider consulta-
and Krishna districts.                      charging flat rates of 15 to 30 per cent      tion with all the stakeholder before the
    In Krishna district, of the 19 un-      and using unethical means of recovery.       Bill is passed.

                                                      F R O N T L I N E   9 9
Nuclear Issues                                                                                     MARCH 23, 2007

‘Moratorium is
       Interview with Dr. Anil Kakodkar, Chairman, AEC. B Y T . S . S U B R A M A N I A N

                                                            activities” of the DAE.
“The March 2006 Separation Plan                                 On March 2, 2006, during U.S. President George
                                                            W. Bush’s visit, India and the U.S. agreed upon a
document has a clear provision for                          Separation Plan document, which enables export of
                                                            nuclear reactors to India from other countries. The
building stockpiles of fuel to meet                         plan was a sequel to the Joint Statement made by
                                                            Prime Minister Manmohan Singh and President
the life-time requirements of                               Bush on July 18, 2005, in Washington D.C. It en-
                                                            tailed that India would place 14 of its 22 pressurised
reactors placed under the                                   heavy water reactors (PHWRs), in operation or un-
                                                            der construction, representing 65 per cent of its
International Atomic Energy                                 nuclear capacity, under the International Atomic
                                                            Energy Agency’s (IAEA) safeguards. The DAE was,
Agency’s safeguards.”                                       however, firm that its breeder reactors, would be
           THE year 2006 was “exciting” for the Depart- kept out of the purview of these safeguards.
       ment of Atomic Energy (DAE) on several counts. It        On May 21, 2006, the third reactor at Tarapur,
       kicked off the year with the inauguration of the an indigenous PHWR with a capacity of 540 MWe,
       golden jubilee celebrations of its nerve centre, the reached criticality. India will no longer build 220
       Bhabha Atomic Research Centre (BARC), Trombay MWe or 540 MWe PHWRs. All its future PHWRs
       on January 20. It was on this                                              that use natural uranium as
       day 50 years ago that Prime                                                fuel will be of 700 MWe capac-
       Minister Jawaharlal Nehru for-                                             ity. A problem, however, re-
       mally inaugurated the Atomic                                               mains: the shortage of natural
       Energy Establishment, Trom-                                                uranium that fuels the indige-
       bay (AEET), making the begin-                                              nous PHWRs. The projects for
       ning of India’s atomic energy                                              mining uranium are delayed
       programme. The AEET, found-                                                because of the local opposition
       ed in 1957 by Homi J. Bhabha,                                              especially in Meghalaya and
       the paterfamilias of the pro-                                              Andhra Pradesh. This in turn
       gramme, was renamed after                                                  has led to a delay in starting the
       him in January 1967, by Prime                                              construction of 700 MWe in-
       Minister Indira Gandhi. Today,                                             digenous PHWRs. The capac-
       BARC is the largest research                                               ity factor of the operating 220
       and development organisation                                               MWe PHWRs has also drop-
       in the world. Dr. Anil Kakod-                                              ped because of the shortage.
       kar, Chairman, Atomic Energy                                                    Kakodkar and representa-
       Commission and Secretary,                                                  tives of six other countries
                                                                                  V.V. KRISHNAN

       DAE, calls it “a technology                                                signed an agreement in Brus-
       powerhouse”.                                                               sels on May 24, 2006 to launch
           Dr. Srikumar Banerjee, Di-                                             the construction of the Inter-
       rector, BARC, describes it as D R. A N I L KA KOD KAR , Chairman,          national Thermonuclear Ex-
       “the fountainhead of all major Atomic Energy Commission.                   perimental Reactor (ITER),

                                            1 1 8   F R O N T L I N E
MARCH 23, 2007

                                                                                                       SUSHANTA PATRONOBISH
TH E MIL L UN D E Rconstruction at Turamdih in Jharkhand to convert the natural uranium mined in the
area into yellow cake, which will power Pressurised Heavy Water Reactors.

which is a fusion reactor.                 Act, passed by the U.S. Congress in           IAEA safeguards, not merely one extra
    The year was not without its share     December 2006, was equally unpalat-           “core” of fuel that the U.S. says these
of big controversies. In April/May         able to the DAE officials.                     reactors are entitled to.
2006, Russia supplied about 50 to 60            Asked whether the Hyde Act im-               It was in this context that T.S. Sub-
tonnes of enriched uranium for the         pinged on India’s strategic pro-              ramanian met Dr. Kakodkar at BARC
two light water reactors at Tarapur,       gramme, Kakodkar, in an interview             on March 2, 2007, for an interview:
invoking the safety clause of the Nucle-   published in The Hindu of January 27,
ar Suppliers’ Group guidelines. This       2007, said, “…Whether you take it at          What will be the future thrust of
angered the U.S.                           the level of the sense of the Congress,       BARC activities?
    On July 26, 2006, the U.S. House       the level of U.S. policy or the assess-           BARC is a technology powerhouse.
of Representatives passed the “United      ment and reporting requirement,               The future thrust will essentially be, of
States and India Nuclear Cooperation       there are a fairly large number of sec-       course, in the utilisation of thorium as
Promotion Act of 2006.” The Bill pro-      tions which essentially seek to, sort of      fuel, which has been the thrust all
voked angry reaction in India from the     contain or cap the Indian strategic           along. Next comes the generation of
media, academics and nuclear science       programme. And in fact, in some plac-         nuclear energy at high temperature so
community because it imposed many          es, it also articulates a policy or philos-   that we can produce hydrogen in addi-
new, tough conditions that were not        ophy of rollback. This is a very serious      tion to electricity because hydrogen is
part of the joint statement by Manmo-      issue and we need to seek clarifica-           likely to be another important carrier
han Singh and Bush. As Dr. M.R. Sri-       tions. This is one of the most impor-         of energy in future. Then another
nivasan, former Chairman, Atomic           tant things. There are of course many         thrust will be on ways of using tech-
Energy Commission, said, “During           others.”                                      nologies for storage, transportation
much of July and August 2006, poli-             Problems have surfaced again be-         and utilisation of hydrogen. We are
ticians, Members of Parliament,            tween India and the U.S. in the nego-         also talking about the role of particle
media, public opinion and the scien-       tiations leading to the “123 agreement”       accelerators.
tific community were greatly agitated       with the U.S. insisting that India could
over the attempts of the U.S. Congress     not conduct any more nuclear tests            Do you mean accelerator-driven
to rewrite what India perceived as a       and India sticking to its position that       systems?
settled agreement.” There was a simi-      its unilateral voluntary moratorium               A lot of technologies have to be
lar angry reaction when the U.S. Sen-      “cannot be converted into a bilateral         developed because particle accelera-
ate passed in September 2006 the           legality.” The DAE is also firm that           tors can be used for energy production,
“United States-India Peaceful Atomic       India should get lifetime of fuel supply      for example, through accelerator-dri-
Energy Cooperation Act.” The Hyde          for the reactors it places under the          ven systems. This is as far as area of

                                                    F R O N T L I N E   1 1 9
Nuclear Issues                                                                                              MARCH 23, 2007

energy is concerned.                       nuclear reactor at Kaiga, Karnataka       tests into a bilateral legality with the
    There are other areas. The spent       on February 26?                           United States. The U.S. officials have
fuel that comes out of the reactor con-       Kaiga-3 criticality went off very      told their Indian counterparts during
tains a lot of radioactive products such   well.                                     their negotiations on the “123
as cesium. It is an important material                                               agreement” that it is not merely a
for radiation processing. It is better     It is said there has been a delay in      nuclear test by India but any event in
than cobalt.                               starting the construction of the 700      India that “jeopardises supreme U.S.
                                           MWe PHWRs because the natural             national interests” will lead to the
Can cesium be used for irradiation of      uranium supply from the country will      termination of the Indo-U.S. nuclear
spices, potatoes and onions to             not match the demand. (The                cooperation.
increase their shelf-life and prevent      indigenous PHWRs use natural                  The question is our position re-
sprouting?                                 uranium as fuel and heavy water as        mains the same. The Prime Minister
    We can have a whole set of new         both coolant and moderator).              has very clearly stated our concerns in
technologies for radiation processing           Yes. We have to make some more       Parliament. Now, we are, of course,
using cesium. Other thrust areas will      progress on the mining and milling        approaching the whole matter in a
be a host of technologies, including       capacity of natural uranium in the        positive spirit. So what we would like
MEMs       [micro-electro-mechanical       country. We have this new mine com-       to see is explicit provisions that safe-
systems], high-precision engineering       ing up now.                               guard our interests in the light of the
and even futuristic micro-maching.                                                   concerns that were expressed in Par-
                                           Where is this new mine?                   liament by our Prime Minister. That
When will you start the construction           The uranium mine at Bandurung         will be the basis on which we will ap-
of the Advanced Heavy Water Reactor        [near Jaduguda in Jharkhand State] is     proach the negotiations.
(AHWR) that will use thorium as fuel,      ready. The erection of a mill at Turam-
which will signify the beginning of the    dih [also near Jaduguda for processing    If the U.S. insists that India should not
third stage of India’s nuclear power       the natural uranium] is almost com-       conduct any more nuclear tests and
programme? When you were BARC              plete.                                    that it will terminate the Indo-U.S.
Director, you had written an article in        We have the environmental clear-      nuclear cooperation if we do the
the BARC newsletter in 1999 that           ance for the Tumalapalle mine in And-     tests…
India should accelerate the utilisation    hra Pradesh. We also have the                  We don’t want to convert this [uni-
of thorium, which we have in plenty.       environmental clearance for explora-      lateral, voluntary moratorium on nu-
    Correct.                               tory mining at Gogi in Karnataka.         clear tests] into a bilateral legality. We
                                                                                     cannot do that. The moratorium on
In 2003, you said the DAE will start       Is the mine at Bandurung producing        nuclear testing is unilateral, voluntary.
the construction of the AHWR in            uranium ore?                              So that is the position. Nothing more
2004. It is 2007 now.                          They have reached the ore body. As    than that.
    I know.                                soon as the mill at Turamdih starts
                                           working, they will start producing the    The U.S. says that it would supply
Construction of the AHWR has not           ore at Bandurung. The mill is mechan-     only one extra “core” of fuel for the
begun. You said it would begin in          ically complete. They must be commis-     reactors instead of the lifetime fuel
2004.                                      sioning it now.                           supplies which had been agreed upon
    The peer review was completed                                                    earlier by India and the U.S.
sometime ago. It was being looked at       You have not been able to bring                The March 2006 Separation Plan
by the Atomic Energy Regulatory            around the Meghalaya government to        document has a clear provision for
Board for pre-licensing review. I be-      start the process of uranium mining       building stockpiles of fuel to meet the
lieve that has just been completed.        in the State.                             lifetime requirements of reactors
They are now preparing the project             In Meghalaya, some progress is        placed under the International Atomic
document. So we want to start the con-     there. It will take time. In the mean-    Energy Agency’s safeguards. That is
struction this year. That will be our      time, we are working on the prelimina-    what I am saying. We need everything
attempt.                                   ry activities on [starting the            to be built into the 123 agreement in a
                                           construction of] 700 MWe reactors         very explicit manner so that our in-
Has Tarapur been selected as the site      [at Rawatbhatta in Rajasthan and          terests are protected.
for the AHWR?                              Kakrapar in Gujarat].
     We have not decided on the site                                                 At what stage is our negotiations with
yet.                                       You said in September 2006 that           the U.S. on the 123 agreement?
                                           India would not allow its unilateral,         The 123 draft has just been given to
How was the criticality of the third       voluntary moratorium on nuclear           them.

                                                    1 2 0   F R O N T L I N E
MARCH 23, 2007
                                                                                                  The Bofors Case

Quattrocchi trail
           Mystery surrounds the government’s efforts to get Ottavio Quattrocchi, a key
           accused in the Bofors payoff case, extradited from Argentina. B Y V . V E N K A T E S A N

The chances of his extradition look
remote. This is because the Indian
government’s efforts for his
extradition from Malaysia in 2002
proved abortive.
               A RED Corner Notice is issued by the Interna-
           tional Police Organisation (Interpol) at the request
           of a country’s law enforcement department. It is an
           arrest warrant circulated worldwide with a request
           that the wanted person be arrested with a view to
           extraditing that person.
               When the arrest of Ottavio Quattrocchi, an Ital-
           ian businessman and a key accused in the Bofors
           payoff case, was held in Argentina on February 6 on
                                                                     JIMIN LAI/AFP

           the basis of a Red Corner Notice issued by the In-
           terpol on February 17, 1997, was announced, it led to
           intense speculation on why and how the Govern-
           ment of India suppressed the news for 17 days, al-                        OTTAVI O QUATTR OC C HI LE AVE S      the Sessions
           though it was informed of the detention quite early                       Court in Kuala Lumpur in 2002. The court rejected
           through diplomatic channels. He was detained at the                       India’s plea for the extradition of the Italian
           Iguazu International Airport in Missiones.                                businessman.
               The United Progressive Alliance (UPA) govern-
           ment had no convincing answer to its critics, who                         abortive. Quattrocchi has been granted conditional
           alleged that the government concealed the informa-                        bail in Argentina after a court impounded his pass-
           tion to avoid the issue being used against it in the                      port and ordered him not to leave the country.
           ongoing Assembly election campaign in Punjab, Ut-                             As the proceedings progress in Argentina, the
           tarakhand and Manipur, and that it was not keen to                        role of the UPA government and the Central Bureau
           initiate extradition proceedings in time. It was also                     of Investigation (CBI) will come under scrutiny for
           alleged that the government concealed the news of                         any deliberate lapses on their part, as the fugitive is
           Quattrocchi’s detention even from the Supreme                             alleged to have links with UPA chairperson Sonia
           Court, when it heard a related public interest litiga-                    Gandhi.
           tion (PIL) matter on the Bofors case on February 12.                          It will, therefore, be instructive to look at why the
               Although the government subsequently sought                           extradition proceedings in Malaysia failed though
           to overcome the embarrassment caused by the in-                           the Bharatiya Janata Party (BJP)-led National Dem-
           explicable delay, by submitting the relevant papers                       ocratic Alliance (NDA) government was in power at
           to the Argentinian government in the extradition                          the Centre then, and at the chances of his extradition
           proceedings within the stipulated 30-day period, the                      from Argentina now.
           chances of his extradition look remote. This is be-                           The case can be traced to the contract entered
           cause an earlier attempt by the Indian government                         into between the Government of India and A.B.
           to get him extradited from Malaysia in 2002, proved                       Bofors in Sweden on March 24, 1986, for the supply

                                                F R O N T L I N E   1 2 3
                                                                                                                MARCH 23, 2007

of 410 field howitzers, ammunition           did not appeal against this judgment         cluded that there was no clear indica-
and other accessories as part of the        in the Supreme Court. Ardbo passed           tion of the description of the offence
155mm gun system at a total cost of         away on July 15, 2004.                       that was committed. Thus it was held
Rs.1,437.72 crore. On May 2, 1986, ad-          In the PIL case (Ajay K. Agrawal         by the court that it was not possible for
vance payment equivalent to 20 per          vs Union of India) before the Supreme        it to determine whether the offence
cent of the contract value was made to      Court, the petitioner-lawyer, Ajay K.        could be regarded as an ‘extradition
the Bofors company by the govern-           Agrawal, challenged the action of Ad-        offence’ for the purpose of Section 6 of
ment. On April 16, 1987, Swedish radio      ditional Solicitor-General B. Dutta on       the Malaysian Extradition statute.
broadcast a story that Bofors had man-      December 22, 2005, informing the                  The Malaysian High Court, hear-
aged to obtain the contract from the        United Kingdom’s Crown Prosecution           ing the CBI’s appeal against the Ses-
Indian government after paying large        Service that there was no case against       sions Court’s verdict, held that a
sums as bribes. The internal Bofors         Quattrocchi for freezing two accounts        fugitive criminal was one who had
documents, seized by the Swedish po-        holding three million euros and $1           been accused or convicted, and that
lice, obtained by Indian journalistic in-   million respectively. The accounts           the accusation or conviction must be in
vestigation in 1988-89 and fully            were frozen following an earlier re-         respect of an extradition offence.
authenticated in the CBI investigation,     quest from the CBI, which said these         “Mere suspicion that an individual has
made it clear that the payoffs made by      accounts contained the Bofors payoff         committed offences is insufficient to
Bofors were directly contingent on          money. Dutta’s action led to defreezing      place him in the category of ‘accused
winning the contract.                       of the accounts on January 11, 2006,         person’,” it held, and added that the
                                            and withdrawal of the amount by              identification of the corruption offence
THE CBI CHARGE-SHEET                        Quattrocchi on January 16, 2006, even        alleged to have been committed by
The CBI submitted its charge-sheet in       though the Supreme Court on the              Quattrocchi in India was open to
the case on October 22, 1999, naming        same day had directed the CBI to en-         doubt. The court observed that the on-
as accused former Defence Secretary         sure that the money was not with-            ly offence with which he was charged
S.K. Bhatnagar; former Bofors agent         drawn.                                       was cheating. It observed:
W.N. “Win” Chadha; Ottavio Quat-                                                              “The thrust of this offence is the
trochhi; president of Bofors company        PROCEEDINGS IN MALAYSIA                      receipt of money by the respondent
at the time of signing the contract         The details of how the extradition pro-      (Q) following the appointment of A.E.
Martin Ardbo; and A.B. Bofors, Swe-         ceedings in Malaysia caused a setback        Services Limited of the United King-
den. On October 9, 2000, the CBI sub-       to the case are now available in the         dom at his behest as the consultants of
mitted a supplementary charge-sheet         CBI’s counter-affidavit filed in the Su-       Bofors since the appointment of
naming G.P. Hinduja, Prakash                preme Court in this case. The Red Cor-       agents was prohibited. However, it
Hinduja and Srichand Hinduja,               ner Notice was issued against                must be observed that paragraph 13 of
known as the “Hinduja brothers” and         Quattrocchi in 1997, even before the         the “charge sheet” of the Indian Au-
Rajiv Gandhi as accused.                    charge-sheet was filed. Since it was not      thorities refers to the prohibition as
    Rajiv Gandhi was accused of com-        possible to secure his presence, his trial   ‘the present Government did not ap-
plicity in the abuse of power and posi-     was separated from that of the other         prove of the appointment of Indian
tion in the grant of pecuniary favours      accused, and merged with the trial of        agent acting for foreign suppliers’.
to a number of Bofors middlemen. He         the other fugitive, Martin Ardbo, by         These facts cannot therefore be termed
was not prosecuted as he was no more        the trial court in May 2001. In order to     or treated as particulars for the offence
at the time of the filing of the charge-     facilitate progress of this case against     of cheating from the document made
sheet. In February 2004, Justice J.D.       the two fugitives, the CBI sought the        available.”
Kapoor of the Delhi High Court dis-         extradition of Quattrocchi from Ma-               Subsequently, when India ap-
charged the Hinduja brothers from the       laysia, where he was residing since he       pealed against the verdict in the Ma-
bribery charge, but held them, along        left India in 1993.                          laysian Court of Appeal, it was held by
with Quattrochhi and “Win” Chadha,               The Sessions Court in Kuala             that court that a right of appeal did not
liable for prosecution on other charges     Lumpur, while dismissing the extradi-        lie from the Sessions Court to the High
such as cheating and conspiracy to          tion case, came to the conclusion that       Court in an extradition proceeding.
cause wrongful loss to the government.      there was an ambiguity as far as the         The Federal Court of Malaysia also dis-
    On May 31, 2005, Justice R.S. Sod-      offences were concerned. It was held         missed the appeal on March 31, 2004.
hi of the Delhi High Court quashed the      that under both Malaysian law and                 In this context, the progress of the
proceedings in the trial court against      Indian law, conspiracy and cheating          extradition proceedings in Argentina
the Hinduja brothers. With Bhatnagar        were two separate offences, but when         will be keenly watched. It is not clear if
and “Win” Chadha passing away, there        they were read together they gave rise       the GoI and the CBI have learnt the
was a huge question mark on the fate        to duplicity of offences resulting in        right lessons from the collapse of simi-
of the remaining accused as the CBI         ambiguity. As a result, the court con-       lar proceedings in Malaysia.

                                                     1 2 4   F R O N T L I N E
MARCH 23, 2007
                                                                                   The Bofors Case

Hurdles galore
           An Argentinean Judge finds enough substance in the case to refuse Quattrocchi
           bail. But there are other factors too at play. B Y V A I J U N A R A V A N E I N P A R I S

                                                                          It then turned out that Quattrocchi had in fact
Argentina is trying to worm its way                                   been arrested two weeks earlier, on February 6, but
                                                                      the nation had been kept in the dark. Not only that,
back into Italy’s good books after the                                the day the announcement was made, the Italian
                                                                      businessman had already been released on bail by an
2004 blip in relations. The release                                   appellate court after having been refused conditional
                                                                      liberty by the federal court in El Dorado city on
of Quattrocchi would be a                                             February 14.
                                                                          To say that the government’s silence was baffling
small service that Buenos Aires                                       would be an understatement. There was a deliberate
                                                                      attempt to obfuscate and hide the truth. Well-placed
would be happy to render Rome.                                        sources indicate that secrecy was maintained be-
               THE announcement came like a bolt from the             cause the Quattrocchi arrest coincided with Assemb-
           blue. A laconic communique published by the Cen-           ly elections in India in three Sates and a visit by
           tral Bureau of Investigation (CBI) on February 23          Italian Prime Minister Romano Prodi. The Govern-
           announced that Ottavio Quattrocchi, one of the             ment of India did not wish either the elections or his
           prime accused in the multi-million dollar Bofors           trip to be hijacked by the ‘Q’ affair. Nor did it wish a
           kickbacks scandal, had been arrested in the Argen-         visiting head of government to be embarrassed by
           tine tourist hotspot of Iguazu on the basis of an          persistent questioning and harassment from the
           Interpol Red Corner Notice issued in 1997.                 press.

                                                                                                                                 R.V. MOORTHY

           I T A L I A N PRI M E M I N I S T ER Romano Prodi and his wife Flavia Franzoni with Congress president Sonia
           Gandhi at her residence on February 15. Prodi was in India when Ottavio Quattrocchi’s bail application
           was rejected in Argentina and his lawyers moved an appellate court.

                                                F R O N T L I N E   1 2 5
                                                                                                                  MARCH 23, 2007

     Be that as it may, this reporter con-   rested. “I examined his case in the light     again in 2005, that in London his bank
ducted a far-reaching interview with         of the law on penal cooperation given         accounts were unfrozen and that the
the Italian Prime Minister the day af-       the fact there is no extradition treaty       Malaysian High Court refused to ex-
ter Quattrocchi was arrested. Had            between the two countries. The In-            tradite him. All this will of course be
news of his detention been made pub-         terpol documents were substantial             taken into account when we prepare
lic, it is evident that the focus of the     enough for me to refuse bail. The case        the defence,” Freeland said.
interview would have been different. It      came to me because extradition law                 Quattrocchi was tracked down by
was Italy that helped Quattrocchi ob-        falls under the competence of the Fed-        an Indian television crew in Buenos
tain bail a week after Prodi’s visit. The    eral Ministry of Justice,” she told this      Aires and he has been confined to his
Italian Premier was in India when            correspondent in an exclusive inter-          hotel by a court order. He said the CBI
Quattrocchi’s bail application was re-       view. But she refused to go into further      case against him was false and that
jected and when his lawyers moved the        details on the grounds that the matter        there was no substance in it, that he
appellate court in the provincial cap-       remained sub-judice. Quattrocchi was          was being made a scapegoat and perse-
ital of Posadas.                             first produced before her on February          cuted unnecessarily.
     India had 30 days from the date of      14 in the courtroom of El Dorado, a city           It is not going to be easy to obtain
arrest to lodge an official extradition       close to Iguazu, a week after his Febru-      the extradition of Quattrocchi. The
request, a deadline that could be ex-        ary 6 arrest. At the time Romano Prodi        Italian Ambassador in Argentina, Ste-
tended by an extra 10 days. A two-           was still in India talking to Indian          fano Ronca, addressed a strong letter
member CBI team would travel to              leaders.                                      to the court in Missiones pleading for
Buenos Aires, it was announced, to ar-           Following Judge Arjol’s refusal to        Quattrocchi’s release. The letter de-
gue India’s case for having Quattrocchi      grant bail, Pedro Racagni, Quattroc-          scribed the businessman as a much-
extradited.                                  chi’s court-appointed lawyer, moved           decorated citizen of Italy who had
     Chief Prosecutor S.K. Sharma and        the federal appellate court in Posadas,       made valuable contribution to his
Superintendent of Police Keshav Mis-         the provincial capital of Missiones, on       country. Quattrocchi, like former
hra arrived in Buenos Aires on March 1       February 15 and obtained his client’s         Prime Minister Silvio Berlusconi, with
in torrential rain. Accompanied by In-       release. Judges Mario Boldu and Anna          whom he reportedly has excellent rela-
dia’s Ambassador Pramthesh Rath,             Minconi then ordered Judge Arjol to           tions, is often referred to as Il Cava-
the CBI team went the same afternoon         execute the sentence. She impounded           liere, which roughly translates as
to the Argentine Foreign Ministry for a      his passport, fixed bail at $10,000, re-       “knight”.
meeting with the head of the Asia Pa-        fused him permission to leave Argenti-             With 45 per cent of the Argentine
cific desk, Nora Jaureguiberry, and           nean soil and released him after              population being of Italian descent,
with the Ministry’s legal team led by        warning him to remain available to the        the two countries usually enjoy excel-
Gustave di Paoli. The meeting lasted         court. Freeland joined the legal team         lent relations and have strong trade
20 minutes, during which the Indians         later when he was contacted by Quat-          ties. Italy also has several consulates
were told the Ministry would take a          trocchi’s family.                             dotting Argentina. Claudio Miscia, the
few days to examine the 250-page dos-            In an interview with this corre-          Italian Consul-General in the provin-
sier to decide whether the case was          spondent, Freeland expressed outrage          cial town of Rosario, made it a point to
technically sound and if it could be         and anger at the conditions of his cli-       appear before the court in Posadas
sent on to the court for judicial            ent’s detention and the manner of his         where Quattrocchi’s bail appeal was
examination.                                 arrest. Both Freeland and his associate       heard. Speaking to journalists, he, too,
     However, the Ministry’s response        Tamini described Quattrocchi’s arrest         described the charges against Quat-
was surprisingly quick. Three days lat-      and subsequent jailing as “inhuman”,          trocchi as “absurd”.
er, the case was declared receivable         given that their client “is 68, not in very        In 2004, there was a blip in the
and the papers were despatched by            good health and has recently under-           relations on the heels of Argentina’s
special courier under the protection of      gone surgery”.                                2001 economic crash. Several thou-
the Federal Police to the court in El            “We now have to see if the exact          sand Italian small investors, mainly
Dorado where Quattrocchi had first            charges levelled against Quattrocchi          pensioners, were among those who re-
been produced before a magistrate.           by the CBI are considered a crime in          ceived just 25 per cent of the value of
His lawyers, Alejandro Freeland and          this country. Then there is the ques-         Argentine treasury bonds after Buenos
Adolfo Luis Tamini, will now have ac-        tion of the statute of limitations. This      Aires defaulted on its international
cess to the case papers prepared by the      case is almost 20 years old. How long         debt. Italian anger was palpable, with
CBI.                                         can someone be prosecuted? The                Prime Minister Berlusconi describing
     Quattrocchi’s bail application was      Judges will also go by the past history       the decision to devalue the bonds as
in fact refused by a vacation judge,         of the case, the fact that my client was      “grossly irresponsible”. Argentina is
Maria Arjol, who was replacing Judge         cleared of all wrongdoing by the High         still trying to worm its way back into
Hachiro-Doi when the Italian was ar-         Court in India first in 2004 and then          Italy’s good books. In addition, Presi-

                                                       1 2 6   F R O N T L I N E
MARCH 23, 2007

                                                                                                         the public prosecutor appointed by the
                                                                                                         court to represent the interests of the
                                                                                                         country requesting the extradition.
                                                                                                         The court initially appointed public
                                                                                                         prosecutor Carlos Guillermo Daneri to
                                                                                                         represent India. When contacted,
                                                                                                         however, Daneri said he had no desire
                                                                                                         to work on the Indian case. “I am not
                                                                                                         interested. Nobody has briefed me. I
                                                                                                         do not care since I have enough work
                                                                                                         as it is,” he snorted. The court then

                                                                                         V.V. KRISHNAN
                                                                                                         appointed an English-speaking lawyer
                                                                                                         based in Missiones province, Lillian
                                                                                                         Delgado, to represent India. However,
P R ODI A N D PR I ME Minister Manmohan Singh during the ceremonial                                      Pramthesh Rath confirmed that he
reception at the Rashtrapati Bhavan on February 14.                                                      had shortlisted several lawyers and
                                                                                                         that the CBI would retain the services
dent Nestor Kirchner is standing for         and the police are much more vigilant                       of one of them.
re-election and his wife Christina has       as compared to Buenos Aires”. Anoth-                            Pressure from the Italian govern-
already begun doing the rounds of Eu-        er reason for increased vigilance is that                   ment was clearly responsible for Quat-
ropean capitals to drum up support.          there is a large Lebanese Shia commu-                       trocchi’s conditional release. This
The release of Quattrocchi would be a        nity in the town of Ciudad Del Este, on                     correspondent obtained a copy of the
small service that Buenos Aires would        the Paraguayan side of the triple fron-                     verdict of the appellate court order.
be happy to render Rome.                     tier. Surveillance has been stepped up                          Quattrocchi’s appeal to obtain bail
    Argentina has traditionally been         there since 2001.                                           goes under the following description:
reluctant to extradite criminals, in-            Reacting to the news that the Ar-                       “Expte. No 9703/07 Quattrocchi, Ot-
cluding known Nazi officials accused          gentinean Foreign Ministry had decid-                       tavio s/ Recusro de Apelacion en
of war crimes, and it is not certain that    ed that the CBI case was receivable by a                    Excpte. No 581-1/07 - Defensor Oficial
Quattrocchi’s case will be considered        court, Freeland said: “The CBI has                          Racagni, Pedro”. The document is dat-
substantial enough to merit extradi-         failed to reveal the true picture to the                    ed February 23, 2007.
tion.                                        Argentinean authorities. The CBI                                Referring to the possibility of
    There is some controversy about          probably did not mention the two Del-                       Quattrocchi fleeing or otherwise evad-
the manner in which Quattrocchi’s ar-        hi High Court verdicts releasing Quat-                      ing justice, the verdict cites a letter
rest took place. His lawyers claim he        trocchi. The Bofors case is based on lies                   from Ambassador Ronca and the pres-
was arrested not upon entering Argen-        and does not exist.” He said his client                     ence of the Italian Consul-General
tina – he entered the country through        would most likely sue Interpol for ar-                      from the city of Rosario Claudio Mis-
Buenos Aires – but as he was preparing       resting him on “false and baseless                          cia, as a guarantee against such an
to depart after a sightseeing visit to the   charges. The petition will be rejected                      eventuality.The CBI team will not be
famous Iguazu falls. The Indian em-          once the court has access to the past                       allowed to meet or question Quattroc-
bassy refused to confirm his exact trav-      history of the case. Everything about                       chi directly. It will only come in direct
el itinerary on the grounds that the         this case is strange. The way he was                        contact with him if the Judge orders a
police were withholding information,         arrested, the way he is being persecut-                     confrontation in court.
but immigration authorities reported-        ed even after several verdicts clearing                         What, then, are the chances of
ly said Quattrocchi entered Argentina        him. There is no logic to this at all. It                   Quattrocchi being let off once again?
on February 6 on a flight from Italy,         seems surreal.”                                             Journalist Mauricio Naviero said: “We
changed planes at Buenos Aires and               There was also some confusion                           Latinos can be very legal-minded. It is
was arrested the same day when he            about the role of Carlos Guillermo                          possible the Italians are pushing us.
arrived in Iguazu.                           Daneri, the lawyer appointed by the                         But we also do not like to be pushed
    Asked why Quattrocchi had been           court to represent India’s interests. Al-                   around. Then there is the question of
detained in Iguazu and had not been          though no formal extradition treaty                         provincial judges who are sometimes
spotted in Buenos Aires upon arrival,        exists between India and Argentina,                         independent minded. Of course, these
his lawyer said “Iguazu is considered a      there are several provisions in the Ar-                     judges do fall under direct federal con-
‘hot frontier’ since it is located on the    gentinean extradition law that allow                        trol. At this point in time it is difficult
common border between Argentina,             such a procedure to take place. Article                     to say. But given our past record of
Brazil and Paraguay. All kinds of traf-      25 of the Extradition Law (Number                           extraditions, I would say the chances
ficking and smuggling goes on there           24767) specifically details the duties of                    are slim.”

                                                      F R O N T L I N E   1 2 7
Terrorism                                                                                                 MARCH 23, 2007

Sanjay’s case
       In the Mumbai serial blasts case, the focus shifts from the punishment for the
       main culprits to the alleged leniency shown to Sanjay Dutt. B Y A N U P A M A K A T A K A M

                                                                    these past months. Each time the actor appears in
While the Hindi film star seeks relief                               court the Judge grants him more time to surrender.
                                                                        In an effort to get him the minimum punishment
under Section 4 of the Probation                                    possible, the actor’s lawyers have been aggressively
                                                                    appealing that he be granted probation under Sec-
Offenders Act, family members of                                    tion 4 of the Probation Offenders Act, 1958 (POA).
                                                                    This Act allows the court to release a person guilty of
the other accused protest against                                   a lesser offence if it is satisfied that his conduct has
                                                                    been good and that he can be reformed.
what they see as preferential                                           In February, the Judge admitted Dutt’s plea
                                                                    seeking relief under the POA but has reserved judg-
treatment the actor has received.                                   ment on whether the actor will get the benefit of the
           WHEN Judge P.D Kode of the specially desig-              Act. It is not clear what will happen next, but lawyers
       nated Terrorist and Disruptive Activities (Preven-           speculate that the Judge will deliver his verdict along
       tion) Act (TADA) court in Mumbai began delivering            with the quantum of sentence.
       his verdict in August last year on those accused of              Understandably, Public Prosecutor Ujjwal Ni-
       causing the 1993 serial bomb blasts in Mumbai, it            kam is not pleased with the arguments. “Sanjay Dutt
       was believed that the 13-year trial, one of the coun-        knows the difference between a firearm for hunting
       try’s longest, had finally reached its last stage and         and one for mass destruction,” argued Nikam. “If he
       would end soon.                                              gets the benefit of probation, someone will have an
           More than six months later, while the verdict has        anti-aircraft gun on their terrace saying that he ap-
       been delivered, the sentences for those convicted            prehended some enemy aircraft [was going] to bom-
       have yet to be decided. Not only is the trial dragging       bard his house.”
       on but the focus also seems to have shifted from                 Furthermore, one cannot ignore his documented
       punishing the main perpetrators to finding a solu-            meetings with Dawood Ibrahim, Iqbal Mirchi and
       tion to Hindi film superstar Sanjay Dutt’s case. Dutt         Chota Rajan. A person’s character can be judged by
       is among the 138 people who were accused of in-              the company he keeps, said Nikam. Dutt’s mingling
       volvement in the bomb blasts. On November 28, the            with the underworld is a reflection of his character,
       Judge declared Dutt “not a terrorist”. However, he           and he is therefore not fit for probation, he argued.
       did find him guilty under the Indian Arms Act for the             Also frustrated with the proceedings on Dutt, a
       possession of an AK-56 rifle and a 9 mm pistol. For           group of 150 protesters, which included families of
       this, Dutt faces imprisonment between five and 10             those convicted in the blasts case, staged a demon-
       years.                                                       stration at the court gates on February 6. They shout-
           Murmurs of too much leniency and preferential            ed anti-Dutt slogans and accused the authorities of
       treatment being given to the star have started be-           showing partiality to a well-known personality.
       coming louder. Those convicted believe it is unfair              “It is extremely unfair that Sanjay Dutt is out free
       that Dutt is being let off, while others with less severe    while our brothers are in custody for the same
       charges are being punished. Investigators and law-           crime,” said a sister of one of the men who is charged
       yers following the case say the actor was aware of the       with storing some of the ammunition used in the
       gravity of the crime of keeping such weapons and             blasts. “Always the powerful and famous get off
       must not be allowed to get away this easily.                 easily.”
           Dutt was arrested in 1993, and he spent 15                   The leniency of Dutt’s judgment should be ana-
       months in jail. He has been out on bail from 1995.           lysed against Zaibunnisa Kazi’s case. The 64-year-
       Dutt was granted bail by Judge Kode after he deliver-        old woman made the mistake of looking into a bag
       ed his verdict. The bail period expired four times in        that her nephew (an accused in the case) had left in

                                              1 2 8   F R O N T L I N E
MARCH 23, 2007

                                                                                         ly he had a weapon that was part of a
                                                                                         consignment meant to be used during
                                                                                         the blasts. According to investigators,
                                                                                         along with the serial bombs, there was
                                                                                         a plan to kill some political leaders.
                                                                                             A police officer involved in the in-
                                                                                         vestigation told Frontline that it was
                                                                                         much too soft a judgment. He said
                                                                                         Dutt should have been convicted un-
                                                                                         der Section 5 (5) of TADA, which deals
                                                                                         with the illegal possession of weapons
                                                                                         in a notified area. Dutt was keeping the
                                                                                         rifle and the pistol. Furthermore, there
                                                                                         is evidence, as Nikam has repeatedly
                                                                                         pointed out, that the actor was in touch
                                                                                         with members of the underworld. Da-
                                                                                         wood’s brother Anees Ibrahim, in fact,
                                                                                         met Dutt several times. He even visited
                                                                                         him on a film set, says the police offi-
                                                                                         cer. Dawood, Tiger Memon and their
                                                                                         associates have been held responsible
                                                                                         for masterminding the blasts.
                                                                                             But Dutt was not always shown
                                                                                         leniency. In 1993, when his name pop-
                                                                                         ped up among those involved in the
                                                                                         blast, not many supported him. From
                                                                                         the media to politicians, nobody
                                                                                         spared the actor. Fundamentalist or-
                                                                                         ganisations, quick to take advantage of
                                                                                         the situation, immediately branded
                                                                                         him a terrorist and a traitor. They
                                                                                         burnt his effigies and closed cinemas
                                                                                         screening his films. Since his mother
                                                                                         was a Muslim, they said, he owed alle-
                                                                                         giance to terrorists.
                                                                                             The Shiv Sena, through its mouth-
                                                                                         piece Saamna, was particularly harsh.
                                                                                         However, Dutt’s father, Sunil Dutt,
                                                                                         who was a Congress Member of Parlia-
                                                                                         ment, appealed to Shiv Sena supremo
                                                                                         Bal Thackeray to help him get his son
                                                                                         out of jail. The story is that Sunil Dutt
                                                                                         told Thackeray, “I am not here as a
                                                                                         representative of any party but as a
                                                                                         father who needs help for his son….”
                                                                                             It is alleged that Thackeray then
SA NJAY D UT T A R R I V I N G   at the TADA court in Mumbai on February 20.
                                                                                         assured Sunil Dutt of his support. Al-
her house. It contained weapons that         Kode accepted the application and           though the Sena chief did what he
were to be used on the day of the blast.     asked the Central Bureau of Investiga-      could to help the family, Sanjay Dutt
For this she has been convicted under        tion (CBI) to respond to it.                has not been able to rid himself of the
TADA. Dutt, on the other hand, se-                “It’s unclear by what yardstick        terrorist tag.
cured weapons from a consignment             Dutt’s verdict has been arrived at,” says       It was used by Sunil Dutt’s political
that was linked to the case.                 a lawyer following the case. Although       adversaries. For instance, during the
    Meanwhile, 69 of the 100 found           Dutt says the weapon was for his fam-       1999 Lok Sabha elections, in spite of
guilty filed an application with the          ily’s protection as they were being         Thackeray’s support to Sunil Dutt, the
court seeking ‘parity’ with Dutt. Judge      threatened during the riots, technical-     issue was dredged up by the Bharatiya

                                                      F R O N T L I N E   1 2 9
Terrorism                                                                                                                        MARCH 23, 2007

                                                                                                          for the landing of arms and ammuni-
                                                                                                          tion on the western coast and decided
                                                                                                          who would execute the planting of the
                                                                                                               Dutt’s link to the conspiracy was
                                                                                                          discovered after the police arrested
                                                                                                          Ibrahim Musa Chauhan. Musa was
                                                                                                          picked up for storing the arms and
                                                                                                          ammunition that were smuggled in, in
                                                                                                          February 1993. He told the police that
                                                                                                          part of the consignment sent by Da-
                                                                                                          wood was in Dutt’s house.
                                                                                                               Dutt, who heard about the arrests,
                                                                                                          got nervous and asked his friends to
                                                                                                          destroy the weapons. They tried burn-
                                                                                                          ing them but were not successful.
                                                                                                               In his confession, Dutt said he had
                                                                                                          wanted to keep a weapon at home be-
                                                                                                          cause fundamentalist groups were
                                                                                                          threatening his family during the riots.
                                                                                                          His father had been helping riot-af-
                                                                                                          fected Muslims and had been very vo-

                                                                                        GAUTAM SINGH/AP
                                                                                                          cal against those responsible for the
                                                                                                          communal violence.
                                                                                                               After Dutt was arrested his father
                                                                                                          did everything he could to get him re-
P OL IC E PE R S O N N E L D ET A I N family members of people found guilty in                            leased. Sunil Dutt and many in the film
connection with the Mumbai serial blasts, after they staged a protest outside                             world maintained that “Sanju baba”
the TADA court on February 6. They were demanding that their relatives’                                   was not a terrorist. Eventually, not on-
cases should be treated on a par with Sanjay Dutt’s.                                                      ly was Dutt released after 15 months in
                                                                                                          jail but it is believed that TADA was
Janata Party-led National Democratic           In December 1992 and January                               repealed largely because of his father’s
Alliance.                                  1993, Mumbai witnessed widespread                              aggressive lobbying.
    Meanwhile, the court has been          rioting after the Babri Masjid was de-                              Sanjay Dutt has had a fairly rough
hearing sentencing arguments for the       molished. In the violence, an estimat-                         ride through his life. His mother, the
100 convicted and is expected to start     ed 1,800 people, mainly Muslims, lost                          famous film actor Nargis Dutt, died of
delivering its verdict very soon. CBI      their lives and thousands of families                          cancer when he was hardly 20. She was
counsel N. Natarajan is seeking the        lost their homes and livelihoods.                              his anchor, and her death shattered
maximum sentence for the 44 people             On March 12, 1993, Mumbai once                             him.
held responsible for planting the          again was a victim of violence – this                               He was the original Bollywood
bombs.                                     time in the form of 15 powerful serial                         brat. However, in spite of his use of
    Of course, the defence immediate-      bomb explosions of bombs at nodal                              drugs, his abuse of alcohol and his skirt
ly argued that each case had to be         points in the city. As many as 257 peo-                        chasing, he has always been a great
treated differently. They also said that   ple died and 1,400 were injured. The                           favourite with audiences.
no parallels should be drawn between       terror attack, the first of its kind in the                          In recent years he seems to have
this case and the one relating to the      country’s history, is believed to have                         cleaned up his act and has delivered
2001 attack on Parliament House, in        been a retaliatory move by Muslim or-                          several successful performances – the
which one of the accused, Mohammed         ganisations from abroad in coordina-                           best perhaps in the 2006 hit Lage Ra-
Afzal, has been given the death sen-       tion with the Indian underworld.                               ho Munnabhai.
tence. Defence counsel Majid Memon             Tiger Memon, Dawood’s most                                      Opinions are divided on whether
argued that the 1993 bomb blast was a      trusted lieutenant, is believed to have                        or not Dutt was shown leniency be-
retaliatory action and not an attack on    orchestrated the blasts, which, accord-                        cause of his stardom and political con-
government. The prosecution has            ing to the charge-sheet, were planned                          nections. However, if it were his
been relying heavily on the Supreme        in Dubai, where Dawood was living.                             audiences that had to deliver the judg-
Court judgment on the Parliament           Tiger Memon, the mastermind in In-                             ment, he would have been freed a long
House attack case in their arguments.      dia, arranged for men to be trained and                        time ago.

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