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					The Indian National Interest Review

August 2011                    50 $7


                                                        Of sanctimonious statists

                                                        The limits of the China-Pakistan relationship

                                                        After Japan's earthquake

                                                        Farming in the cities

                                                        Preoccupations of an emerging power
                                PERSPECTIVE                                                          HIGHLIGHTS
     The private property of religious institutions must be
     Harsh Gupta

6    The need for a debate on government intervention in
     religious affairs
     Shashi Shekhar

     Greater economic freedom will reduce corruption
     Vipin P Veetil and ishu kumar                                  8    Secrets of the
     Japan-India relations in the post-disaster environment
     Takenori Horimoto                                                   Sri Padmanabhaswamy’s source of wealth is documented
                                                                         Jayakrishnan Nair

     Promoting urban agriculture for food security
     Mukul G Asher

     I N PA R L I A M E N T
12   On Antiquities and Cultural Heritage: Four Laws and
     a Bill
     MR Madhavan                                                    18
                                                                         How all-weather
     India’s unserious response to a cyber attack on its security
                                                                         are the ties?
     agencies.                                                           The limits of the China-Pakistan relationship
     Srijith K Nair & Rohan Joshi                                        Andrew Small

     F I LT E R
     Geopolitical readings
     Ravi Gopalan

     PA R E TO
30   Economics in small doses
     Amol Agrawal

     Dissecting India’s foreign policy
     David M Malone

                                                                                                    The Indian National Interest Review
                                                                                         Published by the Takshashila Institution, an
                                   CONTRIBUTORS                                     independent think tank on India’s strategic affairs.

                                                                                                    Some rights reserved. This work is
                                                           Amol Agrawal                         licensed under the Creative Commons
                                                                                                          Attribution 2.5 India License.
    Amol Agrawal blogs at Mostly Economics (

                                                                                                                      Advisory Panel
                                                          Mukul G Asher                                               Mukul G Asher
      Mukul G Asher is professor of public policy at the National University of                                          Sameer Jain
                                                                     Singapore.                                         Amey V Laud
                                                                                                               V Anantha Nageswaran
                                                                                                                     Ram Narayanan
                                                            Ravi Gopalan
                                                                                                                       Sameer Wagle
                               Ravi Gopalan is a research associate at Pragati.
                                                             Harsh Gupta                                                     Nitin Pai
        Harsh Gupta is coordinator of Liberal Youth Forum of India’s Kolkata                                        Dhruva Jaishankar
                                                                                                                     Sushant K Singh

                                                                                                                  Editorial Support
                                                   Takenori Horimoto                                                   Priya Kadam
       Takenori Horimoto is a professor and specialist in contemporary South                                              Aruna Urs
                        Asian politics and US Asian policy in Shobi University                               Samudra Neelam Bhuyan

                                       Srijith K Nair & Rohan Joshi
                                                                                                                         Dibyo Haldar
    Srijith K Nair & Rohan Joshi are fellows at the the Takshashila Institution.                                       Aditya Dipankar
They blog at Vyūha ( and Filter Coffee (filtercoffee.                                          Anuj Agrawal
                                                                                                               Oxford University Press
                                                          MR Madhavan
                                                                                                                Daily News & Analysis
     M R Madhavan heads research at PRS Legislative Research (
                                                       David M Malone                            
         David M Malone is president of Canada’s International Development                        
                                                               Research Centre.
                                                                                             Neither Pragati nor The Indian National
                                                                                               Interest website are affiliated with any
                                                     Jayakrishnan Nair                          political party or platform. The views
         Jayakrishnan Nair is a resident commentator on the Indian National                          expressed in this publication are
                    Interest and blogs at Varnam (                   personal opinions of the contributors
                                                                                       and not those of their employers or of Pragati .
                                                         Shashi Shekhar
                                                                                       We accept letters and unsolicited manuscripts.
Shashi Shekhar is a social media commentator on Indian Politics and blogs
                                           at Offstumped (                                       Community Edition
                                                                                                  Pragati (ISSN 0973-8460) is available
                                                           Andrew Small                for free download at
                                                                                                 This edition may be freely distributed
    Andrew Small is a transatlantic fellow with the German Marshall Fund of
                                                                                                   (in its complete form) through both
                                              the United States’s Asia Program                             electronic and non-electronic
                                                                                                   means. You are encouraged to share
                                    Vipin P Veetil and ishu kumar                                your copy with your local community.
Vipin P Veetil is pursuing a PhD in economics at Iowa State University. Ishu
       Kumar, a communicating reality intern at Centre for Civil Society is an
                                 undergraduate at Lake Forest College, Illinois

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2                                                                                      PRAGATI The Indian National Interest Review
                                                                                                         Public Policy

Harsh Gupta is coordinator of Liberal Youth Forum of India’s Kolkata chapter.

The sanctimony of
The private property of religious institutions must be respected

     It has been said that the kings in the past                                used for general welfare—it actually cannot
     interfered with the religious endowments                                   be, as it is private property. The temple
     and why then do you now object to the                                      is managed by a private trust controlled
interference of the State as now constituted?                                   by the former royal family of Travancore.
The very constitution of the State will show                                    Its primary fiduciary responsibility is the
the difference. Our kings in the old days,                                      preservation and upkeep of the temple and
the Hindu kings, endowed properties for the                                     its deity according to historical traditions.
temples and mutts…But what is the case                                          Just because a religious trust has huge assets
now? The Government which has got an                                            does not mean that those assets are now
ecclesiastical department has nothing to do                                     state property. Even if the temple was not
with the endowments of the properties of the                                    registered as a formal trust, for precedent
Hindus, yet wants to interfere with the religious                               we nonetheless have the Privy Council in
institutions”                                                                   London which had before independence
- Sriman Mayasaya, a Madras Legislative                                         concluded that the standard to determine
Councillor opposing the Hindu Religious                                         what should and should not be done in a
Endowments (HRE) Board bill, August 1926.                                       temple is “custom and usage” and that will
                                                                                “outweigh the text of the law.”
Treasures and assets, ostensibly worth
billions of dollars, have been recently                                         Unfortunately, many politicians have long
“discovered” in the Padmanabhaswamy                                             disagreed—the national Hindu Religious
Temple in Kerala. Few could have predicted                                      Endowments Commission of 1960-62
such undiscovered treasures outside                                             appointed by Jawaharlal Nehru had said
of Hollywood movies—but what was                                                “We are aware that consistently with the
completely predictable was the response                                         proclaimed and accepted objective of a
by many Left-leaning Indian eminences.                                          socialistic pattern of society it is necessary to
The gold must have been either looted or                                        benefit the tenants and tillers of the soil and
collected by duping the gullible, implied                                       for this purpose the available land (of Hindu
some. Others, less inclined to publicly equate                                  temples) has to vested increasingly in the
faith with the Marxist concept of “false                                        cultivating tenants”.
consciousness” perhaps, concentrated not on
                                                                                At the state level, bureaucracies like Tamil
the genesis of the treasures, but with their
                                                                                Nadu’s HRE board and its successor,
disposal. Should not such vast wealth be used
                                                                                the Hindu Religious and Charitable
for social welfare, they asked with a twinkle
                                                                                Endowments (HRCE) department have long
in their eyes?
                                                                                tried to take over private temples, remove
But not only should the discovered wealth                                       the hereditary rights of local priests, and
not be considered national property or                                          standardise or “depoliticise” local Hinduism

PRAGATI The Indian National Interest Review                                                                                      3
McKay Savage

 4             PRAGATI The Indian National Interest Review
itself, as documented in Franklin Presler’s          as well as general inhabitants of the area
excellent book Religion under Bureaucracy.           co-terminus with the erstwhile Travancore
The book informs us that in Tamil Nadu “in           kingdom. But the latter could only be a
1973, 11015 temples and mutts were under             tertiary priority. Around three centuries ago,
HRCE administration. Collectively they               the royal family of Travancore had declared
owned 441,004 acres of land, some of it the          themselves—and by all accounts, followed
best paddy-growing land in the state...and,          through on their promise—as dasas and
an additional 41,306 institutions had, as            sevinis (servants) of the temple and its specific
HRCE officials put it, ‘escaped’ departmental        deity; the wealth was accumulated in the
control.”                                            temple on the basis of that understanding.
In effect, our governments, even after
independence, have partially nationalised                The Padmanabhaswamy
many Hindu temples and destroyed the
de facto trusts operating them. “The clear                 Temple treasures must
design was to modify local traditions,
customs and practices to bring them                    remain in a fiduciary trust
into line with the political interests and
ideological preferences of westernised                     of the erstwhile royals.
elites, bureaucrats, political parties and
social reformers”, Presler concludes. Now,           Generally, controlling places of worship
of course, the government needs to make              goes against separation of state and religion.
sure that all trustees perform their fiduciary       Moreover, liberalism and the rule of law are
duty. But that calls for prudential regulation       violated when properties associated with one
and required disclosures (regarding major            religion are nationalised, and other religions
activities like selling of land) as well as courts   are treated differently. Any temporal vs
to solve disputes—not bureaucrats who want           spiritual distinction in temple regulation
to micro-manage every aspect of our places           breaks down in practice. One HRCE officer
of worship.                                          told Presler: “Once in a temple, I saw some
                                                     pictures (lithographs) of gods in the sanctum
Nonetheless, in the specific case of the
                                                     sanctorum. Now, in Hinduism, we have idol
Padmanabhaswamy temple even those who
                                                     worship. Pictures are all right in the homes,
support the “sanctity” of private property
                                                     but not in the temple. So I called the priest
could reasonably ask—why let so much gold
                                                     and asked him…to take it down immediately”
just accumulate in a temple? Would the
original priests and kings be satisfied with         Not to mention that state control of religion
this status quo? Should not the trustees             is bound to present opportunities to
concentrate on preserving those jewelery and         unethical political entrepreneurs to pit one
coins which have more antique or spiritual           caste or faith against another. Divide-and-
value, and sell some of the remaining                rule becomes too tempting for many, and
treasure to be invested better and/or to serve       liberal nationalism is the first casualty. For
underprivileged locals, especially those who         example, the Dravida Munnetra Kazhagam
belong to the community which has long               (DMK) played both the language and the
prayed at this temple?                               caste electoral cards by trying to force out
                                                     Sanskrit-chanting Brahmins in favour of
They could have a point—a creative
                                                     Tamil-chanting non-Brahmin priests in
interpretation of the cy-pres legal doctrine
                                                     temples. Even if one has great sympathy
(meaning here “as near as possible to the
                                                     for the results of some specific cases of
original intent of the trust”) could potentially
                                                     social engineering, one must be sceptical of
override any formal deed. Therefore, some
                                                     Faustian bargains with the state.
parts of the wealth could (not should) be
“liquidated” by the trustees to help the
specific sect which the temple represents            Continued on Page 11

PRAGATI The Indian National Interest Review                                                         5
                                                                                                                                  Public Policy

                SHASHI SHEKHAR
                Shashi Shekhar is a social media commentator on Indian Politics and blogs at Offstumped (

                A secular state that runs
                Hindu temples
                The need for a debate on government intervention in religious affairs
Abhinav Bhatt

                        he Parliament (Prevention of                                               constitution listing governing boards of
                        Disqualification) Act of 1959 was                                          religious institutions to which sitting
                        amended in August of 2006. The                                             members of the legislature may be appointed,
                amendment was more popularly known as                                              by the state. Secularism in India over the
                the Office of Profit Bill. The Bill shot into                                      decades has come to mean state control
                fame on account of the political controversy                                       of religious institutions by both direct and
                around Congress President Sonia Gandhi’s                                           indirect means. Many state governments
                role in the National Advisory Council. It is                                       have entire departments dedicated to the
                thirteen pages long. It includes a table with                                      management of Hindu temples with some
                the names of 55 public sector entities across                                      even having dedicated ministers.
                India that would be not deemed to be Offices
                                                                                                   The origins of state control and direct
                of Profit, and thus eligible to be occupied
                                                                                                   management of Hindu temples is
                by sitting members of the legislature. Item
                                                                                                   complicated. In some instances it was the
                number 20 in that table is the Tirumala
                                                                                                   result of more than a century of British
                Tirupathi Devasthanams Board. It keeps
                                                                                                   interference in the management of provinces
                company with the Bihar Hindu Religious
                                                                                                   and kingdoms where these temples were
                Trusts Board, with assorted Wakf Boards and
                                                                                                   situated. In other instances it was in response
                the Haj Committee.
                                                                                                   to existing caste prejudices prevalent in the
                Here is the irony of a secular state’s                                             first few decades of the twentieth century. In

                6                                                                                               PRAGATI The Indian National Interest Review
either case a paternalistic state injected itself   TTD is not the only instance of State
into political management of matters of faith       interference in religious institutions. From
by seeking to protect religious institutions        Amarnath Yatra in Jammu & Kashmir to the
from the moral vagaries of the elite on behalf      annual Sabarimala pilgrimage in Kerala, the
of the unwashed masses.                             past few years have seen many instances
                                                    bringing faith and government control into
An editorial in the Indian Express on 9th
                                                    sharp focus. Every stray incidents of Dalits
February 1949 summed up the debate on
                                                    being barred from temples reinforces the
the Hindu Religious Endowments and
                                                    original argument in favour of Government
Charitable Endowments Bill quite well.
                                                    control thus deflecting the debate away from
Describing the case in support of the Bill,
                                                    the real issue.
that editorial quoted the proponents as those
whose only intention was to ensure the
proper administration of Hindu temples and
trusts while preventing caste and other social
                                                               The state is not a
abuses within these bodies. The opposition          particularly effective vehicle
to the Bill came from those arguing that a
secular state had no business legislating on               in the elimination of
the management of Hindu temples. The
editorial goes on to allude to the long history                personal bigotry.
of legislating on Hindu Temples during the
British era.                                        It is nobody’s case that caste prejudice no
                                                    longer exists in India. Political empowerment
To best appreciate how the state
                                                    of Dalits has gone a long way in reducing
legislating on matters of faith had become
                                                    that prejudice to a large degree in public
commonplace during the British era one has
                                                    affairs. However government intervention
to only look at the number of acts that were
                                                    in the form of quotas and laws against hate
passed on the management of the Tirumala
                                                    crimes targeting Dalits have done little to
Tirupathi Devasthanam (TTD).
                                                    remove personal prejudices which continue
The TTD was first established by a British          to linger in many pockets. As six decades
era legislative act in 1932. But the history        of interventions have shown the state is
of British control goes back much further.          not a particularly effective vehicle in the
With the Nawabs of Arcot becoming vassals           elimination of personal bigotry.
of the East India Company, the Tirupati
                                                    There ought to be no room for caste
temple came under the control of the East
                                                    prejudices and discrimination in Hindu
India Company in 1801. In September
                                                    temples. Zero tolerance against the same can
2007, The Hindu carried a detailed account
                                                    only come through continued and sustained
of the various transitions that took place
                                                    social reforms within the Hindu community,
prior to 1932 quoting from the Mackenzie
                                                    which has generally overcome such
manuscripts the infamous 1821 Bruce Code
                                                    prejudices and discrimination. However by
and the 1843 decision in assigning a Mutt to
                                                    seeking recourse to state control those who
manage its affairs.
                                                    are rightfully outraged over caste prejudices
Post-independence state control of TTD was          hurt both their own cause and the long-term
solidified by a series of legislations passed       interests of Hindu institutions.
in 1951, 1969, 1979, 1987 before the Office of
                                                    The debate over the newly-discovered
Profit constitutional amendment in 2006. To
                                                    wealth of Thiruvananthapuram’s
date the affairs of TTD continue to remain
                                                    Padmanabhaswamy temple is an opportunity
hostage to politics in Andhra Pradesh with
                                                    to revisit a debate India barely had in 1949.
the incumbent government appointing
bureaucrats to manage its affairs in response
to recent political controversies.                  Continued on Page 11

PRAGATI The Indian National Interest Review                                                     7

           Jayakrishnan Nair is a resident commentator on the Indian National Interest and blogs at Varnam (

           Secrets of the cellars
           Sri Padmanabhaswamy’s source of wealth is documented
Ebin Sam

                  he 8th century CE was a period                                              sites for Vaishnavites, as one which has “lots
                  of Hindu resurgence in Kerala.                                              of trees, lots of fragrant flowers, and most
                  Adi Sankara, who wrote about                                                beautiful gardens” and called it Ananthapura
           Advaita with literary force and philosophic                                        implying it was enclosed by walls. He also
           depth lived during this period. The Tamil                                          describes the idol of Vishnu as reclining on
           poets—Saiva nayanars and Vaishnava                                                 the venomous Adisesha, exactly the same
           azhvars—created large volumes of influential                                       way see him today.
           devotional literature and triggered a popular
                                                                                              Over the next millennia, Sri
           mass movement. Economically these were
                                                                                              Padmanabhaswamy would see prosperity,
           prosperous times due to extensive external
                                                                                              war, and invasions—both domestic and
           trade. Devotion coupled with wealth resulted
                                                                                              foreign. Initially he was part of a small
           in a spurt of temple construction; rulers and
                                                                                              kingdom, but that small kingdom, under the
           lay people considered the construction and
                                                                                              leadership of a visionary king would grow to
           protection of temples as an essential social
                                                                                              become one of the three major kingdoms of
           responsibility and donated generously.
                                                                                              Kerala, encompassing not just South Kerala,
           Though the original shrine may have                                                but parts of Tamil Nadu as well. Eventually
           been built in the 6th century, it is during                                        the kingdom would belong to him. He
           this period that we hear about Sri                                                 would also accumulate staggering amounts
           Padmanabhaswamy temple for the first                                               of wealth over centuries; a humbled Dutch
           time in Thiruvaimozhi of Nammazhvar.                                               captain and a powerful British Resident
           In ten verses Nammazhwar describes                                                 would among the many who would go before
           Thiruvananthapuram, one of the 108 sacred                                          him with their offerings. The story of how

           8                                                                                               PRAGATI The Indian National Interest Review
this wealth came to be and how it was safely    When various kings ascended the throne,
guarded by the priests and the royal family     they too donated gold and other precious
for all these years is inseparable from the     stones to Sri Padmanabhaswamy.
history of Kerala.
                                                In the 17th century, the pettiness of the kings
Source of wealth                                of small territories came quite handy to the
                                                Dutch who devoured Kochi, Kollam and
In Cleopatra, A Life, Stacy Schiff recounts
                                                various other kingdoms. Interfering in the
how Egyptian temples stood at the center
                                                internal affairs and exploiting the difference
of religious and commercial life with the
                                                of opinion among the kings was the Dutch
temple priest also moonlighting as a reed
                                                policy and by this they could eventually
merchant. Such a system did not exist in
                                                control the whole of Kerala and the lucrative
Kerala. Its temples were never known for
                                                spice trade. During this period, Travancore
odious extravagance or opulence. Many
                                                was whipsawed by a poor economy
other ancient kingdoms accumulated
                                                and constant conflict between temple
wealth by invading and plundering their
                                                administrators and noblemen.
neighbours, but according to historians,
Sri Padmanabhaswamy’s cellars do not            This was a feud which had started at least
contain war booty. Then how did the temple      a century earlier. Rules for managing the
accumulate so much wealth?                      temples of Kerala were set as early as the
                                                9th century when various noblemen met
After the mention of the temple in the
8th-9th century by Nammazhwar, there is         in Paravur. In 12th century, the committee
not much information for another three          which managed Sri Padmanabhaswamy
centuries. Around the 12th century, Venad,      temple used to frequently get together to
a small Kollam-based kingdom became             make decisions, but the relationship between
an independent entity and Sri Kotha             the king and the temple administrators
Keralavarma (1125 - 1155 CE) started the        was not always cordial. In the 17th century,
reconstruction of the temple which would        during the time of Adityavarma (1672 - 1677
go on for another six centuries. During         CE), a group of eight noblemen under the
this period, we hear about donations to         direct supervision of the king was responsible
the temple for the first time: silver by a      for the temple management. The temple
nobleman in 1183 CE and ten golden lamps        administrators divided the temple property
by Parantaka Pandya. Veera Keralavarma,         into eight and gave them to Nair chieftains
ruler of Venad (1344 - 1350 CE), donated vast   for revenue collection. Soon a feud started
amounts of land and about 3000 pieces of        with with the king’s men on one side and the
gold to the temple in response to him being     rest of the administrators on the other side
responsible for the death of a few Brahmins.    leading to a brief closure of the temple.
The current wealth has been retrieved from      All this leads to the resolute and brilliant
some of the six cellars around the sanctum      Marthandavarma, the founder of the
sanctorum. These cellars existed around 550     kingdom of Travancore as well the person
years ago and there is mention of ornaments     responsible for the the current state of the
being retrieved from the cellars to decorate    Sri Padmanabhaswamy temple. During this
the painting of the king of Venad during that   period of strife, Marthandavarma annexed
period. In 1686 CE, the temple was gutted       the smaller kingdoms around Venad to
by fire and there was no worship for three      create Travancore. He defeated the Dutch in
decades but the priceless valuables remained    the Battle of Kolachel in 1741, sixteen years
safe in the cellar. Just two years before the   before the Battle of Plassey. For India of that
fire, Umayamma Rani, who would later            period, this was a distinction of some weight.
flee due to an attack by a Mughal invader,      The Dutch agreed to support the king in his
donated various ornaments and silk to the       fight against other European powers and the
temple. It is mentioned that such donations     commander of the Dutch forces, Eustachius
were moved to the cellar for safe keeping.      De Lannoy, became the commander-in-chief

PRAGATI The Indian National Interest Review                                                   9
of the Travancore armed forces. De Lannoy       successor, Adityavarma, who was responsible
too made donations to the temple and it         for constructing the Krishna temple and
is possible that the Dutch coins and the        protective shelters for cows in 1374 CE too
Belgium cut-glasses came from him.              repelled such attacks. In 1690, a person
                                                referred to as “Mughal Sardar” attacked the
Marthandavarma also embarked on a
                                                southern border of Venad causing the regent
construction spree at the temple. The repairs
                                                Umayamma Rani to flee. Kottayam Kerala
and the construction of the buildings around
                                                Varma who had come on pilgrimage from
it started in 1731 and was completed two
                                                Malabar defeated this adventurer.
years later. The current temple structure
and the sanctum sanctorum were built            On record
during his period. Some of the underground
                                                Since it does not contain war booty, did all
cellars were strengthened with the aim of
                                                the wealth, found in the underground cellars
keeping the temple wealth safe from fire. In
                                                come via offerings by various devotees,
1733, the idol of Sri Padmanabhaswamy was
                                                kings, queens, and traders? Besides the
reconstructed using saligram silas (Ammonite
                                                temple inscriptions and royal decrees, the
fossils) bought from Gandaki River in Nepal.
                                                most detailed records of the assets come
The construction of the temple tower
                                                from what is known as the ‘Mathilakam
which had started in 1566 CE, reached five
                                                records’ which are about 100,000 palm
stories high during this period and would be
                                                leaves stored in thousands of bundles, in
completed during the time of his successor.
                                                the Kerala Archives. Some of these records
He also made arrangements for the main
                                                were published, but a vast majority of them
festival to be conducted twice a year.
                                                remain unwrapped; an effort was launched
This visionary king in a unique historical      in 2009 to publish the rest, but the plan was
and spiritual move surrendered all his riches   abandoned in 2011 as the government does
and the kingdom he built to the family deity    not employ anyone who can read the ancient
on January 3, 1750 CE; he and his successors    script.
would rule the kingdom with the official
                                                This is disappointing, since the royals kept
designation of Padmanabhadasa or devotee
                                                meticulous records and if we could read
of the deity. That arrangement continues till
                                                them we would know the source of the
                                                Roman and Napoleonic era gold coins,
Donations would continue to flow even           Venetian ducats and drachmas as well as the
during the British reign with the Resident      solid gold idols of Sri Krishna and Vishnu.
offering generously to the temple. In           It could also help solve another mystery:
1932, when Chitra Thirunal ascended the         In 1766, the Zamorin’s entourage fled from
throne, one of his first acts was to open       Malabar to Travancore, presumably after
these cellars and estimate the wealth; it was   emptying the Calicut treasury, to escape the
calculated to be around one crore rupees.       pillage of Haider Ali. The Zamorin took his
If the temple had so much wealth, how did       own life than surrender. It is possible that
it survive looting by the insiders and the      some of that wealth reached Travancore
invaders? Appropriation of temple wealth        treasury. If the records don’t mention this, an
was considered as one of the five great sins    inventory of the items would reveal if there is
prescribed by the Dharmasastras and it may      any truth to this.
have prevented the looting of the temple by
                                                The discovery of the the wealth has caused
the administrators.
                                                various experts to advance theories on
Though Mahmud of Ghazni, the Mughals            its origins including some indulging in
and Tipu Sultan did not reach South Kerala,     imagination. Usually absence of facts
various Islamic invaders did attack Venad.      causes myth to be created, but in this
In the 14th century, there is mention of        case speculation and hoary propaganda
Muslim invasion into the region and how         is unwarranted since the source of
it was spoiled by Iravi Ravivarma. Another      the wealth is well documented. If the

10                                                     PRAGATI The Indian National Interest Review
government cannot find a specialist to           (The author wishes to thank Manmadhan
translate the royal records, it should           Ullatil (for pointing out the Calicut link),
have them carefully digitised and                Lakshmi Srinivas, Nikhil Narayanan, R N
published online, so that the job can be         Iyengar and @NR_Tatvamasi for sharing
crowdsourced.                                    information.)

The sanctimony of statists: Continued from
Page 5

The same state that may seem benign on           various god-men in India—instead of new
some days sets many “barriers of entry”          sects based on theological debate (which
every single day for progressive offshoots       is common in American Christianity—
of existing religions. Religious trusts are      suggests that “regulatory arbitrage” is at
burdened with bureaucratic paperwork,
                                                 play here. Belief systems in India do not
government quotas apply only to some pre-
defined communities and castes, personal         have the flexibility of formally diverging
laws present the binary of full acceptance or    or converging because the state impedes
apostasy, and indeed the very enunciation of     that progress. Just like free speech does
any theological re-interpretation could result   not amount to much on a state-owned
in imprisonment on grounds of blasphemy          printer, freedom in religion cannot thrive if
and offence.                                     the state controls the property of our holy
Indeed, the proliferation of cults around        places.

A secular state that runs Hindu temples:
Continued from Page 7

Much of the angst behind political Hindutva      of thought with the potential for inter-
on the issue of proselytism arises from          generational impact.
the fact that while Christian evangelical
                                                 We have an opportunity to revisit this larger
NGOs can funnel millions of dollars of           debate on how should Hindu trusts be
foreign funds towards the larger goal of         managed, and to determine how devotees
proselytisation, Hindu wealth locked up in       and pilgrims who contribute to their large
trusts is hostage to government interference     coffers can become stakeholders in the
and corruption, instead of being leveraged       decision-making process. This should be
towards socio-religious welfare programmes       about making Hindu trusts transparent,
of Hindu choice. There is also angst over        accountable to their ordinary stakeholders.
the failure of Hindu institutions to invest      The government and the courts can play
in making the large body of Hindu thought        the role of an invisible guiding hand.
and knowledge relevant to modern times           Ultimately, though, this is a matter for Hindu
by creating new knowledge assets—digital         civil society to stand up and demonstrate
assets, physical universities and new schools    leadership.

PRAGATI The Indian National Interest Review                                                 11
                                                                                                              Foreign affairs

M R Madhavan heads research at PRS Legislative Research (

In Parliament
On Antiquities and Cultural Heritage: Four Laws and a Bill

       he treasure found at the Sri                                      finder and the owner of the place where it
       Padmanabhaswamy temple in                                         was found in the ratio of three-fourths and
       Thiruvananthapuram has opened up                                  one-fourth. In short, the law says “finders,
the question of determining the ownership.                               keepers”, with some caveats. If the finder
Press reports suggest that the contents have                             does not inform the collector or deposit
been valued over a trillion rupees, with two                             the treasure, his share shall vest in the
more vaults yet to be opened. There have                                 government; he may also face a one-year jail
been questions about the future ownership                                term and a fine.
of these assets. In this context, we discuss the
                                                                         What are the safeguards against valuable
various laws that govern our historical and
                                                                         antiques being exported? The Antiquities and
cultural heritage and assets.
                                                                         Art Treasures Act, 1972 regulates the trade
Four Acts of Parliament are relevant. These                              in antiquities and art treasures. It defines
are the Indian Treasure Trove Act, 1878;                                 antiquities as a coin, sculpture, painting, an
the Ancient Monuments Preservation                                       object detached from a building or a cave, or
Act, 1904; the Ancient Monuments and                                     of historical interest, and which is over 100
Archaeological Sites and Remains Act, 1958;                              years old. Art treasures are any other human
and the Antiquities and Art Treasures Act,                               work of art declared to be so by the Union
1972. In addition, the National Commission                               government. Only the Union government or
for Heritage Sites Bill, 2009 is pending in                              an agency authorised by it are permitted to
Parliament. Some states also have laws to                                export antiquities or art treasures. All dealers
protect monuments.                                                       in these items need to obtain a licence. The
                                                                         government may specify certain objects that
What do you do if you find a pot of gold
                                                                         need to be registered; every sale of those
buried under your house? The Indian
                                                                         objects require registration. The Act also
Treasure Trove Act, 1878 deals with this
                                                                         permits the government to compulsorily
issue. The finder is required to inform the
                                                                         acquire any antiquity or art treasure with
district collector about the nature and
                                                                         the objective of preserving it in a public
approximate value of the treasure, and
                                                                         place (such as a museum). In such cases,
date and place of finding. The finder is also
                                                                         the government must pay compensation of
required to deposit the treasure or provide
                                                                         120 percent of the value of the object; the
security. The collector will then issue a
                                                                         fair value is to be decided by agreement or
notice inviting claims. If the collector
                                                                         arbitration. The decision of whether or not
determines that there is reason to believe
                                                                         an article is an antiquity or art treasure will
that the claimant had hidden the treasure in
                                                                         be determined by the director-general of the
the previous 100 years, he will allow time to
                                                                         Archaeological Society of India.
file a civil suit to establish the right. In other
cases, or if the suit is rejected, the collector                         What about monuments and sites? Two Acts,
will declare the treasure to be ownerless.                               enacted in 1904 and 1958 seek to protect
The treasure will be divided between the                                 such sites. The Ancient Monuments and

12                                                                               PRAGATI The Indian National Interest Review
Archaeological Sites and Remains Act, 1958       large number of unprotected monuments
permits the Union government to notify           and sites; there is no comprehensive list
an archaeological site or a monument             of such sites. This Bill seeks to establish a
older than 100 years as a being of national      commission that would notify heritage sites,
importance. These are then called protected      and maintain a roster of these sites. The
area or protected monument. The Ancient          commission will also recommend policies to
Monuments Preservation Act, 1904 has             conserve, protect and maintain such sites.
jurisdiction over any structure, monument,       It can also issue directions to any person
cave and inscription of historical,              owning such site to provide access to the site
archaeological or artistic interest, and which   for its maintenance.
has not been declared to be of national
importance. Most of the provisions of the
two Acts are similar. The key difference              The treasure belongs to
is that the 1958 Act specifies the director
general of archaeology as the relevant             the temple, and in turn, to
authority, whereas this role is with the
district collector in the 1904 Act.
                                                   whoever is in charge of the
The Union government may purchase, take                               temple.
lease of, or accept as a gift any protected
monument. In other cases, the government         So what happens to the
may enter into an agreement with the             Thiruvananthapuram treasure? This belongs
owner of the monument to ensure that it          to the temple, and in turn, to whoever is
is maintained, not defaced or altered, and       in charge of the temple. The accession
access permitted to the public. If a protected   agreement signed by the Ruler of the pricely
monument does not have an owner, the             state of Travancore provided that the
government can assume guardianship. It           administration of the temple will remain
can also use the “public purpose” provision      vested in trust in the Ruler of Travancore.
of the Land Acquisition Act, 1894 to             These provisions were incorporated in
compulsorily acquire a monument (and pay         the Travancore-Cochin Hindu Religious
compensation using the principles laid down      Institutions Act, 1950. After the death of
in that Act). There are special provisions       the then Ruler, his brother claimed that he
for places of worship that ensure that           had inherited the trusteeship. However,
there is access for religious usage and any      the Kerala High Court, in January this year,
customary restrictions are followed. There       held that the Constitution has abolished
                                                 the concept of Ruler, and the new “ruler”
are also provisions to protect archaeological
                                                 would be the state government. However,
sites and restrict activities such as mining,
                                                 as the state is secular, it ordered the state
blasting and construction in such areas. The
                                                 government to create an authority to
government can also restrict the moving of
                                                 administer the temple. It also said that the
any antiquity, and may also compulsorily
                                                 treasures should be exhibited in a museum
acquire antiquities.
                                                 for public viewing. From this judgement,
Is there any new law in the offing? The          it appears that the government will be a
government has introduced the National           “trustee” to the temple, but cannot monetise
Commission for Heritage Sites Bill, 2009 in      the treasure. The Supreme Court has
Rajya Sabha. Currently, the Archaeological       constituted a committee to take inventory of
Survey of India maintains 3,667 monuments        the treasure. Either the courts, or a new law
and sites, and state governments protect         by the Kerala Legislative Assembly, will have
3,573 monuments. In addition, there are a        to provide a final decision on this issue.

PRAGATI The Indian National Interest Review                                                  13
                                                                                                                                            Public Policy

                VIPIN P VEETIL AND ISHu KuMAR
                Vipin P Veetil is pursuing a PhD in economics at Iowa State University. Ishu Kumar, a communicating reality intern at Centre for Civil Society is an undergraduate
                at Lake Forest College, Illinois.

                Why an ombudsman
                won’t help India
                Greater economic freedom will reduce corruption
Deepankar Raj

                          enry Louis Mencken—the 19th                                                and property rights. Business freedom is “a
                          century American essayist and                                              quantitative measure of the ability to start,
                          satirist—once said “For every                                              operate, and close a business that represents
                problem there is a solution which is simple,                                         the overall burden of regulation as well as the
                clean and wrong”. The proposed Lokpal                                                efficiency of government in the regulatory
                (Ombudsman) Bill, in both the government                                             process”. There is a strong correlation
                and non-government versions, is one such                                             between business freedom and Transparency
                solution to the problem of corruption.                                               International’s corruption perceptions
                India is high on corruption because it is                                            index—a measure of the “degree to which
                low on business freedom. This relationship                                           public sector corruption is perceived to
                holds true across the world, including the                                           exist”. Seven of the world’s ten least corrupt
                Nordic nations from whom the concept                                                 countries rank amongst top ten in business
                of Ombudsman has been borrowed. The                                                  freedom: New Zealand, Singapore, Denmark,
                                                                                                     Canada, Sweden, Finland and Iceland. The
                solution lies in changing the nature, and not
                                                                                                     ten most corrupt countries have an average
                necessarily the size, of the Indian state.
                                                                                                     business freedom rank of 154, while the ten
                The Heritage Foundation and Wall Street                                              least corrupt have an average rank of 12. India
                Journal’s annual Index of Economic Freedom                                           has a business freedom rank of 167, below
                ranks countries based on ten benchmarks,                                             Burkina Faso, Mozambique, Bangladesh,
                including business freedom, trade freedom                                            Pakistan, Sierra Leone and Egypt. The

                14                                                                                                PRAGATI The Indian National Interest Review
correlation coefficient—a measure of the        government and corruption internationally.
strength of linear relationship between two
                                                Empirical evidence and economics theory
variables—between business freedom and
                                                tell us that an ombudsman is unlikely to
perceived corruption for the year 2010 is a
                                                solve the problem of corruption in India.
high 0.68.
                                                In the Nordic countries all the ombudsman
The story gets even more fascinating. The       does is fine-tune a well-functioning system.
relationship between size of government         According to the Swedish Parliamentary
and corruption is weaker than and opposite      Ombudsmen Report a total of 6,112
to that of the relation between business        complaint cases were concluded during
freedom and corruption. If we rank countries    the period 1 July 2007 to 30 June 2008, of
starting with the nation with the lowest        these only one ended with “prosecution
ratio of government spending to GDP, the        and disciplinary proceeding.” Imagine the
ten most corrupt countries have an average      number of people such an institution would
government size rank of 52, the ten least       have to prosecute in India. A good analogy
corrupt have a rank of 129. The correlation     is that of the anti-trust commissions in the
coefficient between size of government          United States and the European Union who
spending and corruption is a negative 0.32.     look into acts of abuse of market power
We have a bit of a paradox here. When           by monopoly firms to promote healthy
government intervention takes the form          competition. The institution is meant to
of lowering the freedom to start and run        work in a largely free-market economy. In
businesses we have more corruption, but         the same way that a competition commission
when government intervention takes the          fine tunes a market economy an ombudsman
form of taxation and redistribution we don’t    too may fine tune a mostly uncorrupt system
see an increase in corruption. Why so?          but it cannot create one. An ombudsman
                                                cannot fix a broken system like India.
The public choice school of economics
tells us that politicians and bureaucrats
are self-interested agents who are likely to
exploit profit making opportunities. Low
                                                   Many of the most corrupt
business freedom corresponds to extensive              countries have been
government intervention in the form of
licenses, permits and quotas (LPQ). Profit-           governed by socialist
maximising politicians use LPQ levers to
extract rents from businesses. Entrepreneurs                  governments.
too are profit-maximising agents, but they
operate under the perennial gale of market      Jakon Svensson writes in a 2005 Journal
forces. These forces play the tune to which     of Economic Literature article: “Strikingly,
entrepreneurs dance to satisfy consumers.       many [of the most corrupt countries] are
It is for this reason that Adam Smith held      governed, or have recently been governed,
that “it is not from the benevolence of the     by socialist governments.” Technically,
butcher, the brewer or the baker, that we       India too is socialist. But socialism comes in
expect our dinner, but from their regard to     various flavours; the command and control
their own self interest.” Thus while market     philosophy and welfare state philosophy
forces channel the self-interest of private     mean very different things as far corruption
entrepreneurs to promote social good,           goes. Well-designed welfare schemes in
making the pie grow larger, the undisciplined   which government plays the role of a
self-interest of politicians extracts a piece   financier rather than producer can go a long
of the sweet pie while hindering its growth.    way in cutting down on corruption. India
High government taxation and redistribution     needs innovation in governance; and for
does not necessarily create LPQ levers for      lessons on governance, bureaucrats in New
extraction of rent, and this is why we do
not see a positive relation between size of     Continued on Page 17

PRAGATI The Indian National Interest Review                                                  15
                                                                                                                                         Foreign affairs

Srijith K Nair & Rohan Joshi are fellows at the the Takshashila Institution. They blog at Vyūha ( and Filter Coffee (filtercoffee. respectively.

Hacked and shamed
India’s unserious response to a cyber attack on its security agencies.

        he website of the National Security                                      to check vulnerability of our site” (emphasis
        Guards (NSG) was successfully                                            added).
        attacked on July 2, 2011. Some
                                                                                 This should mark a low point in attribution
reports mention that the mail system of
                                                                                 with the NSG pointing fingers at another
the organisation was also breached. Two
                                                                                 government agency for publicly defacing
days later, the website of India’s National
                                                                                 its website. If true, this was a rather
Investigation Agency (NIA) was taken down
                                                                                 unusual public “hack-and-shame” process,
to “tighten security mechanisms in order
                                                                                 unprecedented in the Indian government’s
to prevent hacking.” More than two weeks
later, the NIA website was still offline. These
Government of India online assets are                                            More likely, however, is the possibility that
maintained by their own internal technical                                       the NSG was caught unaware and is taking
wings, in consultation with the National                                         creative liberties in coming up with a reason
Informatics Centre (NIC).                                                        that does not implicate its officials for lack of
                                                                                 competence. If this is indeed true, the Indian
Defacement of websites is a routine
                                                                                 government must warn all agencies that such
occurrence and usually not a cause of major
                                                                                 public accusation cannot be made in order
concern, apart from the embarrassment
                                                                                 to avoid tough questions from the media.
caused by the negative publicity. However,
                                                                                 Accusing a “foreign power” is one matter, but
unauthorised access to the email system is a
                                                                                 accusing another agency amounts to serious
different matter altogether. Depending upon
                                                                                 allegations that will have repercussions for
the practices being followed, this could either
                                                                                 various parties involved, depending on the
have leaked encrypted digital communication
                                                                                 validity of the accusation.
between various officials in NSG and beyond,
which would be of no practical use to the                                        This episode brings to mind the incident
attacker, or could have revealed unencrypted                                     in 1998 involving the Bhabha Atomic
emails discussing sensitive topics. The details                                  Research Centre (BARC) in which the group
have been sketchy but at least one media                                         “milw0rm” broke into the BARC network
report states that the computer system used                                      and accessed sensitive emails related to
by an arm major-general had been ‘hacked’                                        the Indian atomic programme. It can be
into, as it was discovered that a number                                         reasonably hoped that the NSG incident is
of “letters” were sent on the behalf of the                                      not as grievous as the BARC one.
general officer.
                                                                                 However, irrespective of the effects of the
The NSG downplayed the event. However,                                           break-in, the incident highlights the need
it’s explanation was bizarre: “The problem                                       for better security measures to safeguard the
was detected on Friday... and we have                                            sensitive communication exchanged among
ordered upgradation of security features on                                      government agencies that perform a crucial
our site. There was no loss of crucial data.                                     role in national security. The old saying, “a
It was done by government agencies of India                                      chain is only as strong as its weakest link”,

16                                                                                            PRAGATI The Indian National Interest Review
while hackneyed, still rings true, especially in    government’s security experts to remedy
the fast-paced world of digital security.           these vulnerabilities. There has been a
The government must invest in a rigorous            distinct paucity of probing questions in
vulnerability management programme, more            India’s mainstream media on issues related
so for Internet-facing infrastructure.This          to security breaches. Nowhere is this paucity
must necessarily include not only Internet-         of probing questions more apparent than
facing content, but also their supporting           in the NSG spokesperson’s response to the
infrastructure—network devices, web & mail          compromise of the email account of a serving
servers, databases and terminals. Over the          general officer of the armed forces, where
years, think tanks and non-governmental             the spokesperson confidently indicated
organisations have articulated the need             that “there was no loss of crucial data.” The
for such a programme; indeed, many                  media ought to have done a better job in
                                                    challenging incredulous statements made by
governmental bodies at various points of
time have made representations that such
a program will be instituted along with
“security hardening” mechanisms. However,              There is a substantial gap
while we are not fully aware of the nature
of security exploits that caused the above
                                                       between policy statements
breaches, it is clear that there is a substantial
gap between policy statements made to
                                                          made to assuage public
assuage public fears, and ground realities             fears and ground realities.
about the state of security of NIC’s Internet-
facing infrastructure.
                                                    Given the NSG spokesperson’s
More troubling are the questions about the          representation, it is not clear whether the
manner in which NIC’s security experts              government truly understands the need to
are going to address these issues. The long         take very concrete steps in implementing its
downtime of NIA’s website is an indication          own policy statements on security hardening
of a lack of resilience. While the need to          and vulnerability management in line with
balance security imperatives and information        best practices. With due apologies to the
dissemination is understandable, there              English sitcom, Yes Prime Minister, the
has been no communication on the nature             time for “something must be said. This is
of the attack and steps being taken by              something. Therefore we must say it,” is over.

Why an ombudsman won’t help India
: Continued from Page 15
Delhi need not trouble themselves with a            senator and historian of the Roman Empire,
flight to Oslo—Patna will do. The Nitish            in the Annals says “The more corrupt the
Kumar government handed out money to                republic, the more numerous the laws.”
parents to buy bicycles for girl children,          There is no genetic or cultural reason
rather than use government employees or             to presume Indians are less ethical than
contractors to produce and distribute them.         Norwegians. The difference lies in legal rules
This cut out a whole group of parasites.            that govern economic activity, and that is
Publius Cornelius Tacitus (AD 56-117), a            what needs to change.

PRAGATI The Indian National Interest Review                                                     17

            ANDREW SMALL
            Andrew Small is a transatlantic fellow with the German Marshall Fund of the United States’s Asia Program.

            How all-weather are the
            The limits of the China-Pakistan relationship
Keith Tan

                  ince the Abbottabad raid, each                                               Islamabad for the purpose of poking a stick
                  negative twist in ties with Washington                                       at Washington makes China profoundly
                  has been followed by an upsurge                                              uncomfortable. China’s relationship with
            of speculation about a deepening Sino-                                             Pakistan has its own momentum—and its
            Pakistani partnership—much of it fanned by                                         own frustrations. But Beijing has no desire
            Islamabad. A recent statement that, following                                      to be caught in the middle of this fight and is
            the suspension of US military aid, “China will                                     doing its best to avoid it.
            help meet this gap” was of a piece with the
                                                                                               Wen Jiabao’s visit to Pakistan in December
            Pakistani defence minister’s more theatrical
                                                                                               last year, the first by a Chinese premier
            claims about China’s takeover of Gwadar
                                                                                               in many years, was supposed to lay the
            port. The message to the United States and
                                                                                               groundwork for an expanded program of
            the Pakistani public is clear: we have other
                                                                                               co-operation. With 2011 marking the 60th
                                                                                               year of diplomatic relations, China has
            This has put Beijing in a tricky spot. China                                       been making another effort to address the
            certainly has important long-term projects                                         relationship’s weakest element: economics
            in Pakistan, Gwadar among them. But                                                and trade. Hydro-electric projects, mining
            they are laden with enough sensitivities—                                          investments, and the next phase of the
            and practical difficulties—as it is. Any                                           Chashma nuclear power plants would
            instrumentalisation of these initiatives by                                        provide the ballast, since some of the other

            18                                                                                              PRAGATI The Indian National Interest Review
signature initiatives have clearly been             their movements and Pakistan has been
struggling. The upgrading of the Karakorum          required to provide substantial armed
highway, for instance, has turned into              protection. While these efforts have
a repair job: the large artificial lake that        meant that there have been no killings or
submerged a stretch of the route in Hunza           kidnappings since 2009, Pakistan has seen a
valley was only the most visible of the             higher rate of violent incidents for overseas
many practical complications. Persistent            Chinese than any other country in the last
internal security difficulties mean that the        decade.
most ambitious Sino-Pakistani venture—
connecting Xinjiang with the Arabian Sea in
a transport and energy corridor—remains a           Beijing is concerned that
dream for now.
The military elements of the relationship
                                                    Pakistan’s deteriorating
are in better shape. The deepening of US-           internal situation is
India ties has encouraged Beijing to accord
heightened significance to Pakistan’s regional      diminishing its capacity
security role. Its ability to protect Chinese
interests in Afghanistan after Western              to play the role of regional
withdrawal has given this additional weight.
China will hence continue to provide active
                                                    counter-balance effectively.
backing for Pakistan to act as a strategic
counter-balance to India, whether through
naval, air, or ballistic missile capabilities. In   At a more strategic level, the concern in
addition to the cementing of this traditional       Beijing is that Pakistan’s deteriorating
rationale for the relationship, China has           internal situation is diminishing its capacity
moved to provide direct support to Pakistani        to play the role of regional counter-balance
counter-terrorism efforts, with a $400              effectively. It is precluding any possibility
million package that encompasses everything         that Pakistan can function without external
from container-screening equipment to               support, which will leave it as a cash drain
bulletproof vests. Over the longer term, it         and potential liability for China. Worse,
also clear that China has its eyes squarely         there are growing anxieties about the
on Gwadar: turmoil in the Middle East,              “Islamisation” of Pakistan’s military, which
China’s nascent counter-piracy operations,          poses the risk of internal fractures in
and the process of evacuating more than             Pakistan; of future Mumbai-style incidents
30,000 Chinese workers from Libya have              that could precipitate regional war; and of a
tipped the balance in Beijing in favour of          long-term weakening of the secular-strategic
those who want to see the port function             rationale that informs Sino-Pakistani
as a Chinese naval facility when required.          relations.
Defence Minister Mukhtar’s statement was            China sees its investments in Pakistan as
icily received in Beijing. But as one Chinese       part of the solution. Given how little return
analyst said: “the timing and the detail were       they bring and their state-financed nature,
wrong but the underlying substance was              they are essentially aid, but Beijing hopes
right.”                                             that support for infrastructure, power, ports
However, the political and security situation       and transportation may yield benefits over
in Pakistan is a profound concern for               the longer term. It is under no illusions,
China. This is partly a practical challenge         however, that they will do much to deal
for China’s investments. Chinese workers            with the Pakistan’s array of short term
have to operate under particularly straitened       challenges. China had started to raise its
conditions: in Karachi and Baluchistan they         concerns and complaints about Pakistan
are virtually confined to their dormitories.        with other governments more directly,
Elsewhere, elaborate precautions inform             openly wondering how the continued slide

PRAGATI The Indian National Interest Review                                                     19
could be reversed. And then along came the        considerations. China does not want to be
May raid on Osama Bin Laden’s compound            left as Pakistan’s primary financier. It sees
in Abbottabad.                                    no reason why the economic backing it does
                                                  provide to Pakistan—mostly on-the-ground
While welcoming the operation’s success,
                                                  rather than direct budgetary support—
China reacted quickly to provide backing
                                                  should become a further complication in its
for Pakistan. It issued an official statement
                                                  difficult relationship with the United States.
of support despite being unclear on many
                                                  Hostile relations between Washington and
of the details of the incident. It gave private
                                                  Islamabad would imperil China’s interest in a
reassurances that it would protect Pakistani
                                                  stable, militarily capable Pakistan—as well as
officials from any international sanctions
                                                  potentially dragging Beijing into the conflict.
that might follow. Since then, however,
Beijing has been careful to ensure that           This doesn’t mean that China will be
Washington is briefed every step of the way.      restrained in pressing ahead with the
Both before and after the Yusuf Raza Gilani’s     spectrum of its joint initiatives with
visit in May, China gave unusually detailed       Islamabad. However, Beijing shares many
read-outs to US diplomats in Islamabad            concerns with the United States about the
and Beijing. Its messages, both then and          situation in Pakistan and is not interested
in the subsequent US-China Strategic and          in exacerbating it. The result is that China
Economic Dialogue, have been consistently         will be deeply cautious in how it handles
reassuring: that it is encouraging Pakistan to    squalls between Washington and Islamabad.
patch up its relations with the United States     It will be in no rush to fill space that the
and that it has no interest in exploiting         United States vacates. And while Beijing has
differences between the two sides.                tolerated Pakistan playing the China card
While this may sound too good to be               in recent weeks, in private it has made clear
true, it is informed by a few important           that this tolerance has its limits.

20                                                       PRAGATI The Indian National Interest Review
                                                                                                                                                Foreign Affairs

                    TAKENORI HORIMOTO
                    Takenori Horimoto is a professor and specialist in contemporary South Asian politics and US Asian policy in Shobi University.

                    After the great
                    Japan-India relations in the post-disaster environment

                            n March 11, a magnitude 9.0                                                 advanced in the aftermath of the earthquake:
                            earthquake—said to be the fifth                                             humanitarian, economic and strategic
                            largest in the world since 1900—                                            dimensions. India looms large in all of these.
                    occurred off the northeastern coast of Japan                                        There are several implications.
                                                                                                        First the outpouring of international
                    The earthquake generated a gigantic tsunami                                         condolence and help must be mentioned.
                    that struck the area and killed people in                                           Japan received messages of condolence
                    huge numbers. The Japanese National                                                 and offers of assistance from a range of
                    Police Agency has confirmed 15,401 deaths,                                          international leaders. According to Japan’s
                    with 8,146 people missing, as of June 9.                                            foreign ministry, 116 countries and 28
                    Moreover, the earthquake and tsunami                                                international organizations have offered
                    caused several nuclear accidents, most                                              assistance to Japan, all of which have been
                    importantly the level 7 meltdowns at three                                          accepted. The overwhelming good wishes
                    reactors in the Fukushima I Nuclear Power                                           and assistance have been greatly appreciated
                    Plant complex. Officially, the catastrophe has                                      by the Japanese people and has warmed
                    been designated as the Great Eastern Japan                                          hearts and cheered many grief-stricken
                    Earthquake.                                                                         residents.
                    Various international responses have been                                           Second are economic implications, which

                    PRAGATI The Indian National Interest Review                                                                                                   21
present two main aspects. One acute issue        safety checks, thereby causing a power
is Japan’s supply chain. Japan accounts for      shortage in Japan. The Ministry of Economy,
roughly 10 percent of the world’s economic       Trade and Industry (METI) has urged
output. However, the combination of the          consumers of the Tokyo area and Tohoku
earthquake, tsunami and reactor accidents        who use more than 500 kW of electricity
effects has disrupted Japan’s supply side        to cut consumption by 15 percent from last
because of wrecked and damaged factories in      year’s levels between July 1 and September
the affected areas.                              22. Such an order is the first in 37 years: the
                                                 last was issued in 1974 during the OPEC oil
The goods exported by Japan in 2010,
mostly machinery and transport equipment
including multilateral parts and components,     Still the Japanese government has stuck to
were worth $470 billion. However, reduced        its guns in maintaining its nuclear policy.
figures this year seem to be unavoidable. For    Banri Kaieda, the trade & industries minister,
example, Japan’s seven automakers in the US      has pledged to do his utmost to return idled
have been affected severely. May sales figures   nuclear reactors back on line and has stated
had decreased 23 percent year-on-year mainly     that nuclear power will remain a core energy
because of the short supply of parts. Another    source for Japan.
example is silicon wafers: the building blocks
                                                 Tokyo Electric Power Company (TEPCO),
of computer chips. Japan produces about
                                                 the largest electric power company in Japan,
60 percent of the world’s supply, but the
                                                 which owns the reactors at the Fukushima
shutdown of two factories by the earthquake
                                                 plant, plans to adhere to its dependence on
removed a quarter of that global capacity.
                                                 atomic energy. Its first annual shareholders’
Masaaki Shirakawa, the Governor of the           meeting on June 28 concluded with a vote to
Bank of Japan, predicted on April 23 that        continue using nuclear power for generation.
the recovery of Japan’s supply chain would       Other electric power companies have
begin by around August. Earlier he had           adopted policies similar to TEPCO’s.
been optimistic enough to estimate the           Why are the Japanese government and these
timing as June to July. Recovery appears         companies adamant to promote nuclear
to be brighter than expected, as shown           energy as a primary electricity resource
by the Index of Business Conditions              in defiance of growing public opposition?
published by the Cabinet Office on June          Simply put, Japan has few energy resources.
24, which characterized conditions               Oil and gas are unstable with fluctuating
simply as “Improving.” The main factor           prices. Solar and other renewable resources
contributing to improvements is the              remain unreliable. These may prompt the
apparent rapid restoration of infrastructure.    move to maintain and expand nuclear power
A typical example would be the case of the       reactor usage in Japan.
Tohoku Shinkansen, a high-speed rail line
connecting Tokyo and northeastern Japan.         Another less obvious reason not to do
It recommenced operations 49 days after          away with nuclear reactors is related to
the earthquake. Toyota Motor Corporation,        public subsidies. Most Japanese people are
which was affected severely by the tremor,       unwilling to accept reactors because of the
                                                 unforgettable experiences of the atomic-
has come back strongly by employing an
                                                 bombings of Hiroshima and Nagasaki
additional 3000–4000 seasonal workers
                                                 and reactor accidents at Chernobyl and
throughout Japan from July.
                                                 other places. Nevertheless, the national
More important than the supply chain is          government has poured huge subsidies
an acute economic problem: atomic power          into areas where nuclear plants would be
generation. Nuclear power supplies 24            constructed to pacify anti-reactor sentiment.
percent of the total power generated in          Perhaps for that reason, areas chosen
Japan. The country has 54 reactors, of which     for nuclear plants are areas where local
35 have suspended operations because of          governments lack fiscal viability.

22                                                       PRAGATI The Indian National Interest Review
The subsidies encourage not only acceptance      least desirable situation for the United States
of a plant but also, over time, its expansion.   would be a weakened Japan, which would
Politicians benefit by such subsidies in terms   jeopardise its Asian policy.
of money and votes. In reality, nuclear plants
                                                 At a Congressional hearing in May, all
are political power generators. For a country
                                                 specialists giving testimony emphasised the
that is dependent on nuclear energy and
                                                 importance of supporting and assisting of
subsidies, it is difficult to reverse course.
                                                 Japan in the backdrop of a rising China. One
Aside from domestic factors, there are           speaker to the committee, Michael J Green,
several reasons for Japan to be persistent       of the Center for Strategic and International
in its pursuit of nuclear energy. Japan can      Studies, testified “If we stand squarely with
be classified as a nuclear energy promoting      Japan it will make a difference in the months
country along with France, the United States,    and years ahead-for Japan, for us and for the
Russia, and Korea. These countries are users     world.”
of nuclear energy and exporters of nuclear
                                                 The US armed forces immediately
software and hardware. Since Fukushima,
                                                 implemented Operation Tomodachi (literally,
Switzerland, Germany, and Italy have ceased
                                                 Operation Friends) to assist and support
their reliance on nuclear energy. Promoting
                                                 Japan. Ten days after the disaster, 20 US
countries will never relax their vigilance
                                                 naval ships, 140 aircraft, and 19,703 sailors
against efforts by Japan to forgo and jettison
                                                 and marines were involved in humanitarian
its nuclear policy.
                                                 assistance and disaster relief efforts in and
The IAEA—an international organisation           around Tohoku with an estimated cost of
with member countries said to be sharing the     $80 million.
same bed with different dreams—initiated
discussions designed at adopting new strict
safety standards of nuclear reactors in June
                                                  Both Tokyo and New Delhi
2011 in Geneva. Fundamentally, promoting
countries would like to see strict standards
                                                    see in the other a reliable
upon which they might be able to expand             partner on the economic,
their nuclear reactor-related exports.
According to Mike Weightman, head
                                                       security, and strategic
of the IAEA fact-finding team, “Japan’s                                 fronts.
response to the nuclear accident has been
exemplary, particularly (as) illustrated by
                                                 China dispatched a rescue team to Japan and
the dedicated, determined and expert staff
                                                 also evaluated Japan’s defense preparedness.
working under exceptional conditions.” He
                                                 One such evaluation found that military
pointed out that the greatest lesson learned
                                                 preparedness of Japan’s Self Defense Force
by the international community from the
                                                 would amount to 90 points out of 100 in a
Fukushima accident has been the spirit of the
                                                 normal situation but 50 points in the case of
Japanese to face up to it. He cheered Japan
                                                 its operations after an earthquake.
in its maintenance of its nuclear-oriented
energy policy and its decision not to abandon    The humanitarian, economic and strategic
it.                                              dimensions mirror those of relations
                                                 between Japan and India. India sent a rescue
The third implication of the Great Eastern
                                                 team of 46 personnel deployed at Rifu-cho in
Japan Earthquake is a strategic dimension.
                                                 Miyagi prefecture, 365 km from Tokyo, along
Among the countries which have shown
                                                 with rescue supplies. Miyagi was the worst
the strongest concern is the United States.
                                                 affected prefecture in the March 11 tragedy,
Washington wants Japan to resurrect
                                                 with more than 9,000 dead.
itself in economic and security terms so
that the latter can remain in its role as a      Among the economic dimensions, a bilateral
counterbalance against China’s rise. The         nuclear co-operation agreement is the most

PRAGATI The Indian National Interest Review                                                   23
important point because this agreement           reciprocal visits. Building on the momentum
would become a pace-setter for similar           created by the establishment of the Japan–
agreements with other countries.                 India strategic partnership two years earlier,
                                                 both governments issued a joint statement
Japan and India started negotiations on a
                                                 on security co-operation to mark Prime
bilateral nuclear cooperation agreement in
                                                 Minister Singh’s visit to Japan in 2008.
June 2010. India plans to produce 20,000 GW
                                                 In February 2011, the two governments
of nuclear power generating capacity by 2020
                                                 indicated a further strengthening of relations
to meet planned cuts in gas emissions and
                                                 by signing the Comprehensive Economic
to sustain industrial growth. India’s energy
                                                 Partnership Agreement (CEPA), a major step
market is beckoning and many companies—
                                                 in fostering closer economic ties.
including those partially or wholly owned
by Japanese investors are working in close       This developing pattern closely dovetails
co-operation such as General Electric, Areva,    with the growing realisation that Japan
and Westinghouse Electric—or responding.         and India share many strategic concerns,
                                                 including that of a rising China. Japan must
Nevertheless, these companies cannot use
                                                 contemplate the possibility of a gradual
Japanese technology in India without a
                                                 dilution of the US–Japan alliance over the
bilateral nuclear deal and subsequent easing
                                                 long term, while India must now chart a
of Japan’s ban on the transfer of military-
                                                 viable strategy that responds to present
related technology. A particularly coveted
                                                 weaknesses and which can accommodate
cluster of such Japanese technologies belongs
                                                 future greatness. In short, Tokyo and New
to Japan Steel Works, which claims 80
                                                 Delhi see in the other a reliable partner on
percent of the global market for large forged
                                                 the economic, security, and strategic fronts
components for nuclear plants and which
                                                 at the moment. Nuclear co-operation might
also produces steam generators and turbine
                                                 become one measure to fortify constructive
                                                 efforts in such directions.
During Prime Minister Manmohan Singh’s
                                                 India has announced that “it was also
visit to Tokyo in October 2010, a joint
                                                 agreed to establish an India–Japan–United
statement underscored the point that both
                                                 States trilateral dialogue on regional and
officials welcomed the commencement of
                                                 global issues of shared interest. These
negotiations between the two countries
                                                 consultations, agreed to earlier by the US,
on the agreement. They encouraged
                                                 will be conducted by the Foreign Ministries
their negotiators to arrive at a mutually
                                                 of the three countries.” Japan’s Sankei
satisfactory agreement for civil nuclear
                                                 newspaper pointed out that the trilateral
cooperation at an early date.
                                                 dialogue would deal with close sea-lane
Even after the Fukishima accident, both          defense co-operation in the Indian Ocean
governments have remained determined to          among the three countries to restrain China’s
proceed with their nuclear policy. However,      growing presence there.
in the case of Japan, it is a hard choice. The
                                                 Japan has overcome exceedingly difficult
nuclear agreement would signify Japan’s
                                                 situations twice in modern history. The
abandonment of a half century of anti-
                                                 first was during the Meiji period (1868–1911)
nuclear weapon advocacy, likely giving the
                                                 when Japan radically metamorphosed from a
impression that it prioritises economic
                                                 feudal state into a modern state. The second,
interests at the cost of its highly moralistic
                                                 which occurred after the Second World
cause. At the moment it appears that
                                                 War, occurred when Japan lifted itself up to
both governments intend to finalise the
                                                 status as a country with a viable economy
                                                 and democracy. Both challenges have been
Japan–India relations have been improving        successful. Now is the third occasion. Japan’s
rapidly since 2005 when the Japanese and         ability to cope with disastrous situations is
Indian prime ministers began alternating         being tested.

24                                                      PRAGATI The Indian National Interest Review
                                                                                                              Foreign affairs

Ravi Gopalan is a research associate at Pragati.

Geopolitical readings

                                                   International Security Program        and predictability that form the
ANALYSIS OF WORLD ENERGY                           at the Chatham House reviews          bedrock of the national economy
CONSUMPTION                                        the vulnerability of developed        and the credibility of national
                                                   states to aggressive economic         government.
    Analysts at British Petroleum
                                                   action through cyberspace asking
state that global energy
                                                   whether economic cyber warfare
consumption in 2010 grew by
                                                   should be considered a strategic      A ‘NANOTECH’ FUTURE
5.6% with the OECD growth at
3.5% and non-OECD growth at                                                                   Researchers under the
7.5%, the highest rate since 1973                      In his working paper, “The        direction of JUDIT CASTELLA
with total energy consumption                      Vulnerabilities of Developed          of the Barcelona based Fundació
surpassing the pre-recession                       States to Economic Cyber              Catalana per a la Recerca i
peak reached in 2008.                              Warfare”, he states that a            la Innovació (FCRI) review
                                                   composite of economic warfare         nanotechnology , its economic
    In their 60th annual review
                                                   and cyber warfare - economic          and social implications, and
of world energy, “BP Statistical
                                                   cyber warfare could offer a low-      its role in public policy and
Review of World Energy June
                                                   cost, low-risk alternative to cause   state that private investment in
2011”, they state that oil at 34%
                                                   grave damage to an increasingly       nanotech had exceeded public
continued as the world’s leading
                                                   interconnected global economy,        funding with a total overall
fuel, followed by coal (30%),
                                                   a parasitism of sorts whereby the     annual R&D spend of over $4
natural gas (24%),Hydel (6%),
                                                   attacker would seek to exploit        billion led by US, Japan and the
Nuclear (5%) and renewables
                                                   the target economy through            EU.
(1%) although coal consumption
                                                   espionage and intellectual
grew by 7.6% and natural gas                                                                 In a report for the FCRI,
                                                   property theft, rather than to
consumption grew by 7.4%.                                                                “Nanotechnology: What is it and
                                                   destroy or impede it.
                                                                                         how will it affect us?”, they state
    India’s energy consumption
                                                       He concludes that economic        that nanotechnology could cause
increased by 9.2% to 524 mil
                                                   cyber warfare should be subject       significant disruption in multiple
tonnes oil equivalent from 2009
                                                   to sustained and careful              industries and require massive
on the back of a strong growth
                                                   scrutiny requiring more agility       investments in infrastructure
in coal consumption (11%) and
                                                   and mutually supportive               with development forecast over
natural gas (21%). Although
                                                   relationships between national        three phases:
nuclear energy grew 37%, it still
                                                   governments and critical sectors          1. the current early-stage
constituted 1% of the energy
                                                   of the economy such as science,       spanning 5 years focused on
                                                   innovation, manufacturing,            investigation phase,
                                                   industry, financial and banking           2: a commercial development
                                                   sectors since the first casualties    phase spanning 5-10 years
                                                   of economic cyber warfare             wherein applications would
     PAUL CORNISH of the                           were likely to be confidence          begin to be produced on an

PRAGATI The Indian National Interest Review                                                                               25
industrial scale and                were under strain with the           and Analyses reviews India’s
     3: a mature phase              UN estimating that 85% of the        infrastructure in the North-
spanning 10-15 years featuring      world’s fish stocks were fully       East in the backdrop of China’s
a consolidation of the              exploited in the run-up to           rapidly augmented infrastructure
industry with a market for          Rio+20 summit in June 2012,          along the Line of Actual Control
nanotechnology-enabled              being held 20 years after the        with all-weather, double-lane
applications exceeding $ 1          landmark Earth summit in Rio         roads, a road network of 58,000
trillion.                           in 1992.                             kms, extension of Qinghai-
                                                                         Tibet railway up to Shigatse
    They state that                     In their op-ed for the
                                                                         and additional airfields under
nanotechnology could be             Project Syndicate, “Fixing Our
                                                                         construction in Tibet. He states
compared to electricity which       Broken Oceans”, they state that
                                                                         that all passes and military posts
caused disruption in most           fragmented marine management
                                                                         on the LAC have been linked
industries on introduction          practices, lack of high-seas         with highways, logistic depots
contrasting that with genetics      governance, and over-subsidies       and military installations and
which impacted only medicine        for fishing have resulted in twice   China could mobilize more than
and agriculture and was impeded     as many industrial fishing vessels   30 divisions and outnumber
by social concerns. They            catching fish as the oceans can      Indian forces by 3:1.
conclude that the challenge for     sustain.
governments was to secure a                                                  In his op-ed for IDSA
niche for new economic growth            They advocate an investment     Comments, “Is India’s Transport
by empowering local industries      of $110 billion over the             Infrastructure Prepared for
to assimilate new technologies,     coming years in strengthened         the Eastern Front?”, he states
building a large, multi-            fisheries management                 that although infrastructure
disciplinary educated workforce,    including the establishment          development had picked up in
and addressing public concern       of marine protected areas,           the northern sector there was a
over health and environmental       decommissioning and reduction        considerable lag in the eastern
issues.                             of fleet capacity of industrial-     sector undermining New Delhi’s
                                    scale large vessels, retraining of   capability to thwart external
                                    workers impacted by job losses,      aggression in the eastern front.
HALTING THE DECLINE IN FISH         and policy measures to enable a
                                                                             He calls for enhanced
STOCKS                              recovery of fishery stocks.
                                                                         transport connectivity in the
    ACHIM STEINER of the                                                 region with establishment
UN Environment Program                                                   of railway networks in the
and JOSHUA REICHERT of                                                   hinterland, timely construction
                                    DEVELOPMENT IN NORTH-EAST
the Pew Group state that the                                             of roads that extend to the
high seas containing the largest        SHIVANANDA of the                borders, and expedited
reservoir of Earth’s biodiversity   Institute for Defence Studies        construction of bridges.

26                                                              PRAGATI The Indian National Interest Review
                                                                                                                                        Food security

                 MuKuL G ASHER
                 Mukul G Asher is professor of public policy at the National University of Singapore.

                 Farming in the cities
                 Promoting urban agriculture for food security
Choo Yut Shing

                        s Indian households strive to                                                   urbanisation in different states.
                        maintain food consumption in the
                                                                                                        The share of India’s population living
                        face of high inflation, increasing
                                                                                                        in the cities of more than one million
                 demand, and relatively slower increases in
                                                                                                        people will increase from 12.5 percent in
                 supply, promoting urban agriculture in a
                                                                                                        2010, to 15.5 percent in 2025. Thus, India’s
                 scientific manner could contribute to food
                                                                                                        future is increasingly urban, just as India’s
                 security. Low per capita consumption of
                                                                                                        demographic trends suggest increasing
                 food by Indian households, and increasing
                                                                                                        ageing of the population.
                 urbanisation of the Indian population
                 lend greater urgency to promoting urban                                                When such a large proportion of the
                 agriculture.                                                                           population becomes totally detached
                                                                                                        from agricultural activities, while demand
                 In 2008, for the first time in history, a
                                                                                                        continues to grow, huge strains on food
                 majority of the global population was
                                                                                                        logistics and the supply chain can be partially
                 classified as urban. In India, urbanisation is
                                                                                                        mitigated by promoting urban agriculture.
                 accelerating. The share of urban population
                                                                                                        In India, significant migration from rural
                 was 30 percent in 2010, and projections by
                                                                                                        to urban areas, some of which is seasonal,
                 the United Nations Development Program
                                                                                                        provide an opportunity to use agricultural
                 (UNDP) suggest that this will increase to 40
                                                                                                        skills of the rural migrants in an urban
                 percent in 2030 and to over 50 percent in
                 2045. The averages for the country conceal
                 wide variations in the level and pace of                                               This, of course, is not a substitute for

                 PRAGATI The Indian National Interest Review                                                                                            27
improving the productivity and sustainability     the existing ways of combining various
of the agricultural sector as a whole by          factors of production to obtain economically
applying knowledge management concepts            more efficient outcomes. Urban agriculture
and techniques.                                   is ideally suited for such reconfiguration and
                                                  therefore innovation-led economic growth.
High food inflation is a global phenomenon,
and it is expected to continue. In May 2011,      As India develops new townships, and
the Food and Agricultural Organisation            as the concept of sustainable cities
(FAO) of the United Nations’ food price           becomes increasingly acceptable, there are
index was 37 percent higher than a year ago.      opportunities to build environmentally
The G20 nations have placed food security         and economically sound urban agriculture
at the centre of their 2011 agenda, launching     systems, involving waste and water
an Agriculture Market Information System          management incorporated from the
(AMIS) initiative to develop better data          beginning.
on global production and stocks of food           As urban agriculture is knowledge-intensive,
commodities for better policy coordination        scientific management of and involves
and reduction in price volatility.                solid waste management and scarce water
There is a growing interest in urban              resources, there are potential opportunities
agriculture, though its scale and reasons vary.   for socially-oriented enterprises to specialise
Urban farming yields direct income through        in this area, thus helping to diffuse such
sales and employment, or indirect income          knowledge throughout the country. As
through reduction of expenditure on food.         is well known, many cities and other
Greater autonomy over food production by          parts of the country will be facing water
urban residents could also assist in urban        scarcity, requiring the implementation of
human security and co-operation, and be an        newer methods of water conservation and
integral part of greening efforts of cities.      augmentation.

The FAO defines urban agriculture as:             The role of government should remain as
“An industry that produces, processes and         a facilitator, as any uniform regulation for
markets food and fuel, largely in response        heterogeneous needs and capacities will
to the daily demand of consumers within a         be counter productive. This is especially
town, city, or metropolis, on land and water      true in India where urban governments
dispersed throughout the urban and peri-          are still struggling with performing basic
urban area, applying intensive production         municipal functions with a reasonable degree
methods, using and reusing natural resources      of technical competency and economic
and urban wastes to yield a diversity of crops    efficiency.
and livestock.”                                   There are encouraging experiments in
The FAO definition however suggests               urban agriculture in different parts of India.
that organising and sustaining urban              Thus, the nutritional garden programme in
agricultural (and horticultural) activities       Cuttack in Odisha benefits primarily low-
is a complex task, particularly given the         income households.
acute scarcity of space, water, and other         The Resource Centre on Urban Agriculture
resources in urban areas. It also suggests that   and Food Security Foundation (RUAF) has
agricultural activities should be combined        documented urban agricultural activities
to the maximum extent possible with the           in many cities, including Mumbai and
management of water resources, and of             Hyderabad. Among the findings are that
municipal solid waste particularly organic        vertical structures can increase the surface
materials.                                        area to grow vegetables; and that new
An important insight from the literature          technological experiments are essential to
on growth theory suggests that innovation         integrate growing food with organic waste
generated progress comes from reconfiguring       and waste water.

28                                                        PRAGATI The Indian National Interest Review
Urban agriculture can be practiced in vertical   weak. Financing urban agriculture activities
spaces in the city, including municipal lots,    through self-help groups and through
areas of housing co-operative societies,         other entities including individuals, has the
household kitchens, schools and colleges.        potential to become a socially productive
Examples of terrace gardens at Mumbai            opportunity for micro-finance institutions.
Port Trust, and at Rosary High School in         Other financial institutions, such as the co-
Mumbai have often been cited to indicate the     operative banks, can also play a useful role.
potential of urban agriculture.
                                                 In assessing the governance performance
But these represent a very small beginning.      of various states, appropriate indicators of
There is a need for greater awareness of the     the extent to which urban agriculture is
urgency and feasibility of urban farming         facilitated should be included.
throughout the country. A facilitative
                                                 The constraints in promoting urban
environment, including clarity of property
                                                 agriculture are organisational and attitudinal,
rights of urban open spaces, and co-
                                                 not technical or financial. The mind-set of
ordination among multi-stakeholders
                                                 urbanites, particularly the upper income
are needed. Social-oriented enterprises
                                                 groups who regard food security as simply
have a significant potential role to diffuse
                                                 being able to buy food from the market,
knowledge-intensive techniques in this area.
                                                 and regard farming as a loco status and
In India, the micro-finance sector has a         less skilled activity, also needs to undergo a
good potential to expand in the urban            change in order to recognize the importance
sector where it has so far been relatively       of urban agriculture.

PRAGATI The Indian National Interest Review                                                     29
                                                                                                              Foreign affairs

Amol Agrawal blogs at Mostly Economics (

Economics in small doses

                                                   monitoring of these networks           policy works the best. If the Fed
                                                   by police and secret service,          had followed Taylor’s rule, it
TULLOCK CHALLENGES FOR                             employing professional pro-            would have avoided fueling both
FACEBOOK                                           government bloggers, and can           the Great Inflation of the 1970s
    Gordon Tullock believed                        use internet to divert attention       and the Great Deviation of the
that what is important will be                     form politics like attractive films,   2000s, while closely following
manipulated by the government.                     and video clips.                       its successful policy of the
He was always sceptical of                             The lesson from Tullock is         1990s. Moreover, the original
innovations which claimed to                       that one needs to probe further        rule shows QE was not needed
undermine government’s role.                       before accepting public choice         and Fed funds rate around 0.5%
                                                   innovations.                           would have done the job.
    BRUNO FREY provides two
Tullock challenges (Tullock                                                                   Even now, Fed seems to
Challenges: Happiness,                                                                    be using Taylor variants to
Revolutions and Democracy)                         TAYLOR’S RULE VERSUS TAYLOR            defend its ultra loose policy. If
to two innovations, which are                      RULES                                  history is any guide then Fed is
seen as new ways to undermine                           The Crisis led to various         again deviating from the policy
government’s role: Happiness                       debates over Taylor rules such         suggested by the original rule.
Index and Facebook. Experts                        as - Was fed policy too low before     And whenever that happens, it is
say Happiness Index could push                     the crisis? Is current Fed policy      a disaster.
governments into doing things                      good enough, post crisis? Was
which make people happier while                    QE needed? Taylor’s original rule
Facebook is seen as a major force                  says Fed policy should be around       SEBI’S OBJECTIVE AND
in overthrowing governments in                     0.5% and QE is not needed.             FUNCTIONS – A LEGAL
Egypt and Tunisia.                                 However, variants show Fed             PERSPECTIVE
     Frey points that both these                   policy should be negative and as           DHARMISHTA RAVAL
so-called innovations are likely to                rates cannot go down beyond            points how SEBI is as much a
be manipulated by government                       zero, QE is needed.                    legal body as a finance one and
for its own benefit, and used to                      With this background, ALEX          has been designed accordingly
influence policy consequences. In                  NIKOLSKO-RZHEVSKYY AND                 (Improving the legal process in
first, they could introduce a new                  DAVID PAPELL write a timely            enforcement at SEBI).
happiness indicator favouring                      paper (Taylor’s Rule versus Taylor         She says India set up a
the politicians in power. As far                   Rules).                                few independent regulators
as Facebook are concerned,
                                                       They say that the original         after 1991. These included
government has a lot of incentive
                                                   rule is applicable when monetary       SEBI (securities markets),
to manipulate them such as

30                                                                               PRAGATI The Indian National Interest Review
TRAI (telecom) and CERC              independent compared to others.      by many governments has led
(energy). Of these, SEBI has         SEBI is also more transparent as     to mis-investment in the non-
been seen as more effective          it first prepares a concept paper    tradable sector at the expense of
in terms of delivering on a          and asks people for comments         growth-rich tradables.
mandate that includes (a)            and then frames laws based on        • China and some others
protection of the investor,          feedback..                           are big deployers of growth-
(b) prudential regulation of                                              enhancing sectoral policies. The
markets intermediaries and (c)                                            challenge for Europe is how it
development of the markets.          SHOULD EU PUBLIC POLICY TILT         can design and govern sectoral
SEBI was different as regulators     TOWARDS INDUSTRIAL POLICY?           policies that are competition-
in other countries did not have                                           friendly and thus growth-
                                          Such titles immediately raise
an explicit mandate to develop                                            enhancing.
                                     eyebrows. Should one move
securities markets.
                                     towards industrial policy in             They look at criticisms
    SEBI Act of 1992 is broadly in   advanced economies? This short       of industrial policy. First,
two parts - Role of Government       paper (Rethinking industrial         government cannot pick
in SEBI, (appointment of board       policy) by PHILLIP AGHION et         winners. Second, it leads to rent
members, SEBI accounts to be         al says industrial policy is not     seeking and corruption. Both are
maintained by GoI, Functioning       necessarily bad. If done properly,   true but there are many benefits
of SAT) and Role of SEBI             it could be important for Europe     as well. They point to a pretty
(regulating intermediaries,          in certain areas and help Europe     interesting research finding
insider trading/ take-overs etc,     become more competitive.             where tariff protection leads
regulations on stock exchanges            They point to three reasons     to benefits in some cases. They
etc.)                                                                     point to further evidence that
                                     where Europe needs industrial
                                                                          industrial policy and competition
    SEBI act is different from       policy.
                                                                          policy should be seen as
other acts as here SEBI is allowed   • climate change: without
                                                                          compliments not substitutes.
to frame both the regulatory         government intervention
framework and implementation.        in clean technologies it will            There are many papers
Other regulators usually just        encourage investment in dirtier      debating the role of government
implement government orders.         technologies.                        in today’s economies. This one
Hence, it has been more              • laissez-faire complacency          just adds to the debate.

PRAGATI The Indian National Interest Review                                                              31
Elyce Feliz

 32           PRAGATI The Indian National Interest Review
                                                                                            In Extenso

David M Malone is president of Canada’s International Development Research Centre.

Preoccupations of an
emerging power
Dissecting India’s foreign policy

         uthor’s note: The following excerpts            markets for itself globally, investing widely
         are drawn from the book’s introduction          and taking over industrial and service icons
         and focus on three major preoccupations         abroad.
of Indian foreign policy and an important
                                                         The size and population of India is now
partner. In the
                                                                                     complemented by
interest of brevity,
                                                                                     sufficient economic
references have
                                      Does the Elephant Dance?                       progress as to
been cut. The book
                                Contemporary Indian Foreign Policy.                  guarantee it a place
seeks to understand
                                          By David M Malone.                         at the global high
Indian foreign policy
                                     Oxford University Press, 2011,                  table of influence.
mainly through the
                                                  425 pages                          In the G-20
Indian literature
                                                                                     emerging powers
on the subject, and
                                                                                     like India clearly
through a focus
                                                                                     matter more than a
on history, geography and capability. Some
                                                         number of the Western participants. When
themes shine through: India’s quest, arising
                                                         Indian PM and distinguished economist
out of its colonial subjection, for autonomy
                                                         Manmohan Singh spoke during the global
in its international relations; and its innate
                                                         financial and economic downturn of 2008–
caution in international relations, one aspect
                                                         2009, those at the G-20, table listened.
of which—its “strategic restraint”—is much
discussed among the geo-strategically inclined.          Thus, it was India’s economic significance
This caution might best be attributed to Indian          that lent weight to the country’s
politicians rather than to India’s commentariat,         international profile. Its foreign policy,
media or elements of the security establishment,         regional concerns, and geo-strategic views
all sometimes excitable and quick to believe that        were largely unknown to the rest of the
India is not sufficiently “standing up” for itself.      world, as they are to most Indians, who
India is a huge, boisterous nation bursting              remain overwhelmingly preoccupied
with optimism for its future, and reaping                with the struggle for improved conditions
some early fruits of its profitable engagement           within their own country. But, as of
with globalization, while struggling to reduce           2008, India escaped from the partial
the severe poverty afflicting hundreds of                international purdah into which its nuclear
millions of its citizens. Like the USA, India            tests had consigned it since 1974, thanks
is primarily inward-oriented. But today, we              to multilateral acceptance of its nuclear
witness an India reaching out: its private               cooperation agreement with the USA. In this
sector is doing so aggressively, carving out             sense, India “emerged” fully in 2008.

PRAGATI The Indian National Interest Review                                                              33
The scope of Indian foreign policy is             and Burma. The relative paralysis of the
daunting. This may explain the few scholarly      South Asian Association for Regional
attempts at surveying Indian foreign policy       Cooperation (SAARC) suggests the absence
of late.                                          of an overall plan and a largely reactive
                                                  Indian approach to regional developments.
     The daunting scope of                        However, the chapter notes a much gentler
                                                  approach to managing regional bilateral
     Indian foreign policy may                    relations today than was evident in the 1980s.
                                                  India’s second major preoccupation, China,
     explain the few scholarly                    warrants a chapter of its own. It outlines the
     attempts at surveying it of                  history of ties and conflicts dating back to
                                                  the emergence of the Communist regime
     late.                                        in China and Nehru’s early quest for comity
                                                  with it. Against this backdrop it touches on
                                                  tensions over border issues that precipitated
Among the basic decisions attending the
                                                  war in 1962; friction over Tibet; China’s
planning of the book was whether to devote
                                                  support for Pakistan; and suspicion over
a chapter to Pakistan or to fold Pakistan into
                                                  the motives of other powers in the region
a wider discussion of India’s neighbourhood.
                                                  (notably the Soviet Union and the USA). The
I chose the latter course. As India has trained
                                                  relationship today is defined increasingly by
its aspirations on wider ambitions, the place
                                                  both economic competition and cooperation.
of Pakistan in its preoccupations has shrunk
somewhat. Of course, India itself contributed     China constitutes India’s only convincing
significantly to shrinking Pakistan in 1971,      rival in Asia and is currently more powerful
when its military intervention allowed the        economically and militarily. Thus, the
emergence of an independent Bangladesh            relationship today is complex, growing fast
from the wreckage of East Pakistan.               economically, but contentious in other
The cautious nature of India’s military           spheres. Outright military conflict seems
engagements with Pakistan since then,             highly unlikely, as both governments are
particularly India’s carefully calibrated and     focused on economic expansion, and
low-key response to Pakistan’s adventurism        are quite prudent by nature, but their
on the Kargil heights in 1999, suggests that      competition touches on many other
a full-scale war between the two countries        countries, and spurs policy innovation by
is today less likely than ever (barring the       both. Nevertheless, Indian resentments
accession to power in Pakistan of radical         linger.
individuals or groups).
                                                  The third major preoccupation of late
A discussion of Pakistan along with India’s       has been its “emergence” as a major actor
other neighbours brings out several               on the global stage, due to its economic
characteristic Indian pathologies when            performance. India’s effort to establish a
dealing with neighbours—some already              meaningful partnership with Brazil and
fading into history, others still topical.        South Africa under the IBSA banner is an
This accounts for a long chapter on India’s       imaginative way to give practical expression
immediate neighbourhood, the first of its         to the idea of South–South cooperation,
three major foreign policy preoccupations.        too long an empty vessel. Its emphasis on
It raises questions not just about India’s        democratic kinship within this formation,
management over time of its sub-continental       which might be taken as a dig at China,
links with such often resentful and               should perhaps also be seen as an effort by
sometimes unhelpful neighbours as Pakistan,       India to develop a ‘soft power’ component to
Bangladesh, Nepal, and Sri Lanka, but also        its diplomacy. Placing many bets on different
how it has factored in historically and geo-      playing fields, India has also courted the
strategically important ties with Afghanistan     Shanghai Cooperation Organization (SCO),

34                                                       PRAGATI The Indian National Interest Review
participated in BRIC Summits, and formed         The difficult path towards this
other groupings of convenience.                  rapprochement was marked by a degree
                                                 of anti-imperialist prickliness on India’s
This third preoccupation connects with           part, and a large dose of condescension
India’s wider role in international relations.   in Washington during the Cold War. In
Early on, non-alignment, in theory, allowed      engineering the unshackling of India from
India to play the two blocs against one          its nuclear pariah status, the USA, a key
another during the Cold War. After the           partner for India today, needed to overcome
1950s, India was not successful in doing         aspects of the non-proliferation regime it
so. The actual achievements of India’s           had itself set in place to punish India and
multilateral diplomacy are open to question      to discourage any further proliferation.
and it is perhaps to this sphere (rather than    These were ultimately an unsuccessful
to that of bilateral diplomacy, in which India   set of arrangements as demonstrated by
has often been remarkably successful) that       subsequent developments in North Korea
Indian policymakers and analysts need to         and Pakistan – and perhaps soon in Iran.
devote more thought as India gains access to     The negotiations were thus difficult on both
the most coveted multilateral forums.            sides.
The India–USA relationship, a historically       Thus, talks first engaged in the late 1990s
contentious and counterproductive one, has       only came to fruition a decade later. US
been largely transformed of late, yielding       motivations may have been as much
a major happy recent surprise in India’s         commercial as geo-strategic, but the
international relations: an improvement          political rewards for India, and perhaps
pregnant with potential implications for both    also for the USA, have significantly altered
countries and also for other regional and        the positioning of players on the global
global actors.                                   chessboard.

PRAGATI The Indian National Interest Review                                                     35
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