February 13. 2010

February 13, 2010

ü       Nearly a week after setting up a five-member committee on the Telangana issue, the Union government on Friday announced the panel’s seven-point terms of reference.

·         The committee, headed by the former Supreme Court judge, Justice B. N. Srikrishna, has been asked to examine the situation in Andhra Pradesh with reference to the demand for a Telangana State as well as the demand for maintaining the present status of a united Andhra Pradesh.

·         “The committee is requested to submit its report by December 31, 2010,” a Union Home Ministry statement said. The panel may hold its first meeting here on Saturday, informed sources said.

·         The committee can only make recommendations. The power to take any decision, however, vests with the Union and state governments and Parliament and the State Legislature.

·         Let us look at a bit of history now

o   THE demand for the formation of a Telangana state has been voiced for more than fifty years now.

o   Soon after the creation of Andhra Pradesh in 1956 as the first linguistic State in post-Independence India, Telangana, a major region within the State, began to witness the demand for political autonomy and cultural identity within the broader parameters of federal polity and political economy of development.

o   The States Reorganisation Commission (SRC) appointed by Jawaharlal Nehru in 1953 was initially against the unification of Telangana with Andhra.

o   The SRC Report, submitted in 1955, states: “One of the principle causes of opposition to Vishalandhra also seems due to the apprehensions felt by the educationally backward people of Telangana that they may be swamped and exploited by the more advanced people of the coastal area. The real fear of the people of Telangana is that if they join Andhra, they will be unequally placed in relation to the people of Andhra and, in this partnership, the major partner will derive all the advantages immediately while Telangana itself may be converted into a colony by the enterprising Andhras”

o   Nehru ridiculed the idea of merging Telangana with the Andhra State, fearing a “tint of expansionist imperialism” in it. Later, he compared the merger to a matrimonial alliance having “provisions for divorce” if the partners in the alliance cannot get on well.

o   However, the demand for separate statehood for Telangana has rested on factors such as the scale of inter-regional inequalities causing socio-economic backwardness of the region, inadequate industrial infrastructure, lack of educational and employment opportunities, diversion of water and natural resources of Telangana to the coastal region of Andhra, the hegemonic control of the coastal capitalist class over the Telangana region, the hegemony of upper castes and upper classes through the Congress party leaders in the State, and the distinctive historical and cultural identity of the region.

o   India’s fifth largest State, in terms of area as well as population, Andhra Pradesh comprises 23 districts – 10 in Telangana, a semi-arid region that remained under the despotic rule of the Nizam of Hyderabad for some time even after Independence; nine in Andhra along the State’s 1,000-km coastline; and four in the Rayalaseema region, which were known as Ceded (to the English East India Company) districts.

o   THE demand for a separate Telangana state has always been an emotive issue and politicians have frequently used it to their advantage. The region’s backwardness, unemployment and absence of development have repeatedly provided a rallying point for ambitious politicians.

o   The movement of 1969 petered out after Marri Channa Reddy merged the Telangana Praja Samithi (TPS) with the Congress after the former won in the 1971 elections all the 16 Lok Sabha seats and the majority of the Assembly seats in the region. Pressure groups within the Congress have frequently used the issue as a springboard to get into the State Cabinet.

o   THE vast, undulating landscape of Telangana, the Telugu-speaking part of the Nizamat of Hyderabad, a princely state during the British Raj, has long been a scene of struggle. It saw a communist-led peasant uprising against feudal landowners between 1946 and 1951. In 1948, a clash between secessionists and nationalists set the stage for Telangana’s violent accession to the nascent Indian Union.

o   The state reorganization commission of 1954 recommended two separate states, with the option of merging the two States after the 1961 elections if the respective legislatures voted in favour of such a merger. But the recommendation was ignored and the political map was redrawn, with the State of Andhra Pradesh comprising the Telugu-speaking districts of Telangana and the State of Andhra.

o   Predictably, Hyderabad as the State capital attracted large inflows of “settlers” from the coastal Andhra and Rayalaseema regions of the State. For the affluent and enterprising families migrating from the fertile delta, land was the most coveted investment. And it was easily acquired, given that Telangana had developed little under a feudal dispensation.

o   The now famous Telangana agitation of 1969 found unlikely supporters in dissident Congress legislators from the region, led by Marri Channa Reddy, one of the founders of the Telangana Praja Samithi (TPS). Post facto narratives often see Channa Reddy as a “Congress infiltrator” and accuse him of dismantling students’ unions and women’s committees to centralise the organisation. The TPS went on to win the midterm elections in 1971. But the victory was short-lived as Channa Reddy suspended the agitation and merged the TPS with the Congress. Meanwhile, P.V. Narasimha Rao, a native of Telangana, replaced K. Brahmananda Reddi as Chief Minister. The latter became the most common target of Telangana ire.

o   The Telangana agitation had demanded, among other things, the implementation of a 1919 firman by the Nizam, which said only “Mulkis” were eligible for public appointments in Telangana.

o   After a full Bench of the Andhra Pradesh High Court held the “Mulki” rules to be invalid after the formation of Andhra Pradesh, the State government appealed to the Supreme Court.

o   For 11 months in 1973, the State was under President’s Rule in the face of a growing agitation. After the 1973 elections, Jalagam Vengala Rao succeeded P.V. Narasimha Rao as the third Chief Minister in less than five years. The Supreme Court judgment was nullified by an Act of Parliament, and a Six Point formula was drafted guaranteeing “adequate preference to local candidates in admissions to educational institutions” but “subject to the requirements of the State as a whole”.

o   Much of the 1980s were taken up with N.T. Rama Rao’s political debut followed by the Telugu Desam Party’s (TDP) heady rise to power. The actor-turned-politician’s rhetoric of Telugu unity overshadowed, if not dulled, the demand for a Telangana state.

o   By 1996, when the TPS convention was held, Telangana slogans had become sharper, liberally using words such as “colonisation” and “exploitation” to describe the situation in the region

o   Five years later, K. Chandrasekhara Rao, a former TDP MLA, founded the Telangana Rashtra Samithi (TRS), which became the movement’s political platform. If nothing else, it ensured that Telangana remained an electoral issue. So much so that nearly every political party in the State has, at least in theory, accepted a separate Telangana.

o   Yet, the Telangana movement today is not driven by economic grievances alone. It is about a people whose identity has been eroded by dominant narratives. Beyond the many misgivings is a culture smarting from decades of perceived insult.

o   Telugu cinema’s classic theme of “Telangana villain versus Andhra (lately even Rayalaseema) hero” has made a parody of the region’s culture. The demand is as much for recognition as it is for separation.

o   The latest episode in the Telangana movement goes back to a 1985 government order (G.O. 610), which sought to correct continuing illegal appointments. A 2004 report by the Girglani Commission on the irregularities finally led to the Congress government’s decision in 2006 to repatriate close to 3,000 non-local policemen from Hyderabad. Ruling against non-local employees’ plea against repatriation, the High Court held Hyderabad to be under the sixth zone and not a free zone. But the apex court overturned the order on October 9 on a special leave petition. Once again, the status of Hyderabad returned to the centre of the Telangana agitation.

·         This raises a very important question now? Are smaller states justified?

o   The answer could be a clichéd “ It depends”

o   It is important that we look at various examples we have in front of us, not limiting ourselves to the recently formed new states.

o   A baby grows when it is able to stand on its own legs

o   The most important factor that should be taken into consideration is that is the State able to survive on its own?

o   True, Jharkhand, Chhattisgarh and Uttarakhand have performed remarkably well, beating even their home states.

o   Let us look into these states a bit deeper. Jharkhand has not conducted a local body election since its creation and corruption is at its peak, Uttarakhand had the advantage of being declared a hilly state leading to economic incentives for investment and Chhattisgarh is still under the threat of Naxals.

o    Let us look a bit back and we find smaller states like the North Eastern states and other states like Punjab and Haryana that were created in the 1970s or earlier. The latter states have done remarkably well in economic terms which is not the case with the North Eastern states.

o   But, Punjab and Haryana lad behind the North Eastern states in other factors like Male-Female ratio, Literacy rate, female infanticide etc.

o   Small states like Kerala have performed remarkably well in Human Development Index but have lagged behind in the industrial sectors.

o   Large states like Maharashtra have performed well in the industrial sector, but the disparity in wealth has grown.

o   The two major economic indicators of a states performance are GDP and resource utilization. While creating or formulating smaller states, the centre has to keep in mind these two factors.

o   Decentralization is another aspect. Regional backwardness can be tackled to an extent by decentralizing the system thereby providing people to have a better chance to have their say in governance.

o   Greater autonomy could be a solution to most of the demands as this could address the problems of several ethnic groups.

o   The decision has to be taken with the possible domino effect in mind.

o   A strong argument said in favour of smaller states is that first state reorganization committee tabled its proposals when the population of the country was 32 crores. Now, it has risen to 100 crores.

o   The people are the most important players involved. Their views have to be taken into consideration. But a referendum is not the answer as our constitution provides no such method.

o   Smaller states become successful when they move out of the centre’s shadow and grow. This has to be kept in mind.

ü       The cliff-hanger over the release of My Name Is Khan ended on a jubilant note on Friday with 35 to 40 theatres releasing the film in the city, some starting with shows from noon and Mumbaikars turning out in droves to watch the Shah Rukh Khan-starrer. After much dithering, multiplexes decided to call the Shiv Sena’s bluff and go ahead with screenings which went almost full right from the start.

ü       Pakistan said on Friday that its Foreign Secretary would travel to New Delhi for talks with his Indian counterpart on February 25.

ü       Warning television channels that do not follow its advisories and notices on showing programmes or visuals that violate the Cable TV Act regulations, the Centre said on Friday that it has the power to pull a channel off the air for a specific period.

ü       U.S. President Barack Obama has again targeted American firms having their operations in India to save taxes and called such businesses tax evaders.

·         Accusing US companies outsourcing business to India of following unfair business practices, President Barack Obama says his proposal to tax firms shipping jobs overseas was only intended to provide a level playing field.

·         But what are the advantages of outsourcing?

o   The company is able to focus on its core activities.

o   There is an obvious increase in efficiency.

o   The overhead costs are reduced.

o   Continuity is ensured as the job is segregated with one particular department of the company.

o   The outsourced activities are also performed well.

o   The company has higher flexibility with regards to staff related matters.

o   The company has higher operational control.

o   Enhanced risk management is possible.

o   The company, when in need of developing internal staff skills, can bring in on site outsourcing teams to train the personnel.

o   Jobs are created in different markets.

·         But then why do some oppose outsourcing?

o   Even though one gains operational control, the managerial control might be lost for certain functions.

o   Hidden costs are always present.

o   Security related concerns are a huge drawback.

o   Confidential information, such as technical knowhow of a product, might have to passed down.

o   Quality is always an issue.

o   An outsourced company becomes tied to the financial well being of another company.

o   Outsourcing brings bad publicity and ill will.

o   Even though jobs are created, jobs are also lost.

ü       The first wide-ranging dialogue between India and Pakistan after the November 2008 Mumbai attacks will take place here on February 25.

·         This followed a phone call to Foreign Secretary Nirupama Rao from her Pakistani counterpart Salman Bashir on Friday stating that February 25, one of the two dates suggested by India, was acceptable to Pakistan.

ü       Union Commerce and Industry Minister Anand Sharma on Friday said India would work for concluding the comprehensive trade opening pact or the Free Trade Agreement (FTA) with the European Union by the end of the year.

Advantages of Free Trade Agreements

·         But what is a FTA and what are the advantages?

o   FTA is the second stage of economic integration.

o   Free trade area is a type of trade bloc, a designated group of countries that have agreed to eliminate tariffs, quotas and preferences on most (if not all) goods and services traded between them. It can be considered the second stage of economic integration.

o   Countries choose this kind of economic integration form if their economical structures are complementary.

o   FTA reduces the trade barriers between participating countries.

o   FTA eases up the movement of goods between countries.

o   It has been seen that FTA improves the trade volume of the countries.

o   The most important advantage is based on the theory of comparative advantage, leading to specialization.

o   FTAs have agreements in which protection of local goods is ensured.

o   FTAs also discourage re exporting goods once imported.

o   But the major opposition against FTA has been the fact that they talk only about overall welfare. A fear of uneven distribution of this wealth has been raised.

ü       The Reserve Bank of India Governor, D. Subbarao, on Friday said that the recent financial crisis had dented the credibility of central banks.

·         There is widespread apprehension that many advanced country governments will not be able to wind down borrowing because of demographic factors and consequent growing social security payments.

·         IMF studies estimate that even if the governments in the advanced economies reverse the crisis-induced fiscal stimulus, these economies will still end up with a structural primary deficit of 2 per cent of gross domestic product (GDP).

·         Government debt in the advanced economies is projected to jump from the pre-crisis level of 78 per cent of GDP in 2007 to 118 per cent by 2014 assuming some discretionary tightening beginning this year.

·         There are two concerns; The first was that rescuing financial institutions was an inherently political act and getting involved in such decisions might compromise the technocratic credentials of central banks; The second concern was the risk that coordination with governments in the area of financial stability might spill over into other areas within central bank purview thereby undermining their independence

ü       In yet another surprisingly better-than-expected show, as in the case of the 7.9 per cent GDP (gross domestic product) growth in the second quarter this fiscal, industrial growth soared to 16.8 per cent in December 2009 as against a contraction of 0.2 per cent in the same month a year earlier.

·         Even though the healthy IIP (index of industrial production) figures released by the Central Statistical Organisation (CSO) here on Friday derived advantage from the low base effect, the mere robustness of the growth numbers may be interpreted as a further acceleration in economic recovery and spark a fresh debate on the timing of withdrawal of the fiscal stimulus packages.

·         According to the IIP data, the surge in overall industrial growth was mainly driven by the manufacturing sector with an output increase of 18.5 per cent during the month as compared to a slippage of 0.6 per cent witnessed in December 2008.

·         It was the consumer durables industry segment of autos, refrigerators and other white goods makers that posted a robust growth of 46 per cent in December 2009 as against a contraction of 4.2 per cent in the like month in 2008.

·         What is more, even the capital goods industry segment, which caters to the equipment needs of other manufacturers, also posted a production increase of 38.8 per cent to indicate a sustained high growth momentum during 2010 as well.

·         For the first nine months of this fiscal, industry witnessed a growth of 8.6 per cent as compared to just 3.6 per cent in the same period a year ago.

·         Not surprising then that the government is hoping for a higher GDP growth than the 7.2 per cent projected by the CSO in its advance estimates for the entire fiscal year.

·         While hailing the healthy growth numbers, India Inc., however, was circumspect and cautioned against any early withdrawal of the stimulus measures.

ü       Cricket has been formally endorsed as a recognised sport by the International Olympic Committee (IOC), the first step toward eligibility for inclusion at the 2020 Summer Games.