Saturday, December 20, 2014

Gauging the pulse and pace of the Modi Govt Oct through mid December 2014

No one can deny that the Modi govt has begun to cause tectonic changes in the speed at which files are being cleared and stalled projects being reinstated. The entire bureaucracy is energized like never before. However, on the ground reality is that economy is not showing signs of stable recovery. To expect that it will happen overtime is futile. While many of his bureaucrats are working overtime to come up with effective legislations or amendments to existing legislations the lack of majority in Rajya Sabha has tied Modi's hands. Major legislations that can bring the economy back on track requires majority from both Lok and Rajya Sabha members. The government is very well aware of the fact that until 2016 Rajya Sabha numbers won't change. Legislations such as amendment to Land Acquisition Bill, Labor Reforms and Goods and Services Tax (GST) - are critical to make "Made in India" a reality. Of these 3 the last one is something the government has been making real headway. If all goes well at least GST will be a reality making the entire country into one tax system cutting across all states. The remaining ones are highly doubtful as mentioned earlier with the government in a minority in Rajya Sabha and Congress will not easily support just like BJP did not during the UPA time.

In spite of being cognizant of all these facts the BJP government has given the fuel for opposition to prevent the normal functioning of Rajya Sabha. The sad pace of legislative bills getting passed in this Winter session is very disappointing. Clearly, the government is at fault for a lot of this. Allowing irresponsible statements from some of his irresponsible ministers is definitely casting shadow on Modi's image and government. The statement by Sadhvi saying people of Delhi will have to choose a government that of the "Raamzaade" or that of "Haraamzaade" and statement by Saakshi Maharaj calling "Godse a patriot" are clearly just unwanted and ridiculous statements. These cast a shadow on thousands of supporters who voted for BJP the first time. It also tarnishes the very governance agenda that he wants to fulfill. This is still early in the game and Modi hopefully will be able to contain these elements just like he did in Gujarat when the fringe elements began to take over his governing agenda. 

6 months in office is too early to conclude about the policies of the government, but the road is very rocky. This article is my own critical evaluation of the govt mainly from Oct to mid Dec 2014. This is because October and November brought about an unusual pace of effective activity.  They were series of decisions that have created optimism in the economy. This by no means is enough although promising.

The PM is working 24*7 even if his government is not. There is over time activity to get legislations drafted so that some basic foundation can be laid on top of which all promises made can be fulfilled. 
Modi remarked in one of his speeches on the evening of "Made in India" event that his aim is to make India reach 50 in the list of countries in the ease of doing business. Currently, India is at 143. To achieve this a slew of legislative changes in labor, tax and land is very much needed. 

Some of the good steps taken so far are as below:

1) Decentralizing diesel prices and removing them from the subsidies. Inflation has been reduced to lowest levels one can think of  and luck is a factor with the government. There was no Modi effect on inflation being low. Global crude prices have been falling since the last 2 months that has drastically decreased inflation. The government basically took advantage of this opportunity and eliminated the subsidies on diesel and made it in line with the market prices just like petrol. This is required and yet good as long as prices are down. The distribution channel of goods need to be structured so that inflation effects are moderated (GST is supposedly going to answer this anomaly). 

2) The random computerized selection of inspectors and units to be inspected to aid 1.3 million companies.
This has been pending since a decade. Prior to this law the 1800 inspectors from EPFO, Employees’ State Insurance Corporation, Central Labour Commissioner and Director General of Mines’ Safety used to randomly select manufacturing units, conduct arbitrary inspections, manipulate reports and harass manufacturing units in the name of non-compliance. With this new rule no manufacturing industry will know ahead of time which inspector is going to inspect its premises for safety and regulatory audits and what the criteria is. The fact that these inspectors have to submit their report within 72 hours makes it even more difficult to bribe or manipulate the inspectors (although very much possible).  However, there are some major doubts - can the inspector himself be trusted? Will 72 hours be a guarantee that a honest report is done? What is the certainty that the inspector is not bribed?

3) Launching of a Universal Account Number for Provident Funds so that employees who switch companies need not cancel existing PF account and open a new one. This was waste of time and energy for both employer and employee. With this announcement sooner or later there will be a universal number for employees.

4) Transfer of LPG subsidy directly into Bank Accounts: This is a huge initiative. Banks are working overtime to meet the target set by the Government. Earlier when the UPA government wanted to implement this scheme using AADHAR, the Supreme Court passed an order that citizens cannot be forced to get an AADHAR since the bill to make it mandatory has not been passed by the Parliament. Therefore, the government issued a directive to consumers whether they have AADHAR or not, having a bank account and registering or linking that to the LPG is a must. This way they honored Supreme Court order but still allowed money to reach directly into consumer's bank account. Now, there is a huge rush across country to open bank branches in the name of "Jan Dhan Yojana". If played correctly all the subsidies or benefit transfer of fuel and fertilizer can be done through this mechanism. This will eliminate crores of rupees being eaten by the middle men in the system reducing a lot of corruption. Just by pushing LPG subsidy into Bank Accounts the Government aims to save 10,000 crore of rupees in a year which is lost in corruption. An interesting article to read is this.


5) The bill to change the coal block allocations passed in Lok Sabha- Coal is still used to source 60% of India's electricity needs. There is no proper coal transportation mechanism in the country and the expenses in transporting coals to the plants where electricity is produced is very high. All the coal allocations done (whatever mechanism used) from the 1993 till 2014 have been scrapped by the Supreme Court. So, Lok Sabha passed a new bill that allows private companies to aid in the mining of some of the coal mines without any monopoly attached to any one company.(Source). However, this bill needs its clearance in Rajya Sabha which is very challenging. If this bill gets passed then the coal supply and production will get a new life and will aid in meeting electricity demands.

6) The approval of 25 solar parks each with 500MW of solar energy production - This is to aid to generation of solar energy and its contribution to the electricity grid. These parks will not have to go through any environmental clearance or other regulations. These solar parks will have "Made in india" solar panels. Hopefully these projects will see the reality.

7) Filing one form instead of 16 to comply with 44 labor laws of the Center. In a huge relief the Government announced an online way of filing labor related forms so that one form will replace 16 different forms and ease the pace of business.

8) A tangible and result oriented foreign policy is being pursued and Modi is spearheading the policy despite Sushma Swaraj being the External Affairs Minister. He has established strong relationships with countries in East Asia, Australia, Russia, USA, and Middle east. His recent visits to some of these countries has attracted them to invest heavily in India for manufacturing. He has ensured that Pakistan is forced to accept no talks after attacks on Kashmir border and made China go silent for a while at the border. Here is an article in World Politics Review which sums up Modi's foreign policy as "Zero Problems Approach"

9) Aadhar based Digital Life Certificate for pensioners. This would help pensioners get their pension continuously without having to produce certain documents every year. For more on this one can read this article.

While the above are very encouraging there have been several failures or non-starters and some of them are as below:

Ganga Rejuvenation Plan:
No one knows where this plan is headed. There is absolute silence on the implementation of this Rejuvenation Scheme. This personally is something I am keenly waiting for since it is a constituency the PM is elected from and there are great expectations on this. 6 months is too early to judge this but with a person like Modi at the Center there is more to expect.

Failure on the Black Money issue:

The UPA Government had mentioned that there is no clear way of coming up with a figure as to exactly how much money is stashed illegally abroad in Swiss banks and any effort in getting it is not government's alone. The BJP at that time said that Congress was intentionally not interested in bringing back the money and Modi had promised that next Government (BJP) will bring it. He also went to the extent saying each salaried individual will get a share of the money. 6 months into the office the Government has no proper figures and nor a concrete mechanism to get it out. The only good thing is the Special Investigation Team (SIT) has been constituted and it is doing some serious work on it. Despite having information the government mentioned only 4 names to the public and then sent the entire document to the Supreme Court after it gave a harsh statement to the Modi government. Read this article that explains how the numbers stack up

Smart cities:

If the Government cannot get Land Acquisition Act amended Smart cities will only be a dream. There has no headway in the direction so far other than a blueprint which serves no purpose. I see this as a distant dream - something not even visible in the next decade. Do the readers think otherwise?

Swach bharath
With all the nice gestures and sincere attempt by the PM there is no ground breaking move yet in the direction of making Swach Bharath a successful mission. There is still ambiguity over how much Center is willing to spend and how the states and also how the private companies will build toilets or implement solid waste management projects. This needs to resolve at the earliest.(source).


In a nutshell even though Modi is working 24*7 and keeping the requisite grip on bureaucracy he has to still rein in elements meant to spoil his party, government and agenda. He has to make sure through legislation radical changes are done to Land and labor laws. The whole world is waiting for this to make Made in India a reality. 

What do you think about the last 3 months of Modi's policies?

Thursday, September 25, 2014

Modi's China gamble and Japan's secure friendship

When Modi ascended to power there were doubts about his diplomatic ability to gauge our neighbors who share boundaries with us and with other countries whose investment can tremendously help India. In the past few months his visit to Bhutan, Nepal, and Japan clearly demonstrated his diplomatic and business acumen of dealing with various East Asian countries. Modi's Japan tour is extraordinarily historic because no Indian Prime Minister has been able to extract such concrete investments in one single visit. 

Back in 1993 when former PM Narasimha Rao coined "Look East" policy term it was for Indian diplomacy to look east of India to countries such as China, Japan, ASEAN - (includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam). Subsequent governments irrespective of parties contributed to this policy. At the beginning of 2000, former PM Vajpayee dedicated a lot of his diplomatic strength to make America a long standing ally of India in addition to engaging East Asian countries. His achievement was to change the definition of Indo-US ties forever. However, political, diplomatic and security compulsions led to this direction. The current PM Mr. Modi is leading this policy again of Look East but purely for economic gains. This is the first time an Indian PM is trying so hard to get China and Japan together to invest in India in very specific sectors.

Even though his tours of Nepal and Bhutan were significant for India an enormous excitement was in store for his Japan tour. The tour resulted in Japan investing close to 35 billion dollars in very specific sectors like High Speed Railways to give financial, operational and technical support. Unlike the World Bank loan which can be siphoned off easily without achieving the objective for which the loan was taken Japan will not give away hard cash. It is going to invest over 5 years and will monitor how India performs on speedy clearances and expedition of processes to ease business in India. Japan will participate in helping "Clean Ganga", "Develop Smart cities" and "Metro projects in Ahmedabad", "set up Industrial parks in the two countries", "make Varanasi like Kyoto"





The key achievement was to sign up agreements specific to these projects to be implemented in a time bound manner. I hope that the agreement translates into a reality everyone would love to see.

Apart from the photo ops and speeches made by Modi it was clear that he needed to act on this investment in a transparent manner. He has decided to set up a special team to look into the way these funds are utilized and will have a member from Japan as well. This is good as we hope that the investment is sincerely utilized to realize the election promise and the dream of India getting the bullet train. The time of completion may be 10 years but it is important to get it started.

Besides Japan also decided to sell US-2 amphibian aircraft something India needs since it carries the strength of 21 firefighting helicopters. US2 will significantly enhance Indian Navy's capabilities. For more information on the abilities read here. It is no mean achievement that Japan lifted sanctions on India with respect to sell and transfer military equipment. After World War II this is the first time Japan has done so with India. One of the most important reasons why Modi was able to extract this from Japan is because Japanese PM Abe and Modi share a personal rapport and friendship of many years.

If Japan's tour was picture perfect, Chinese President Xi's visit to India was that of a big gamble. In my previous articles I had already articulated the reasons for India's defeat of 1961 war, the cause and solution of the disputes in the Ladakh and Arunachal region. Modi knew that just like Japan, Chinese investment in India and their expertise will be of great significance. He played this gamble in a near perfect manner until the intrusion in Ladakh region became the stumbling block.

Let's understand the role of China in the Asia Pacific Region in a larger context. There are 2 hard facts to consider:

1) The control of South China Sea for decades has been a bone of contention amongst several countries like Indonesia, Vietnam, Singapore, Malacca Straits, Cambodia, Thailand and many more. 

(image courtesy: Wikipedia)

China has for ages dominated the control of this sea. In order to balance this domination US allied with Japan and together they form the other end of the control. However, in recent times China has begun to get in touch with all these countries giving them economic and financial aid thereby getting their support. With the US beginning to lose its grip it began to ally with India and Japan to balance the control. In this context since 2011 Indian diplomats began steps to secure friendship with countries such as Bangladesh, Vietnam etc. The "Look East" policy that was active in 1993 under Narasimha Rao and then under Vajpayee till 2003 suddenly lost momentum and again in 2011 gained slow speed under Manmohan Singh. Modi is accelerating this policy with targeted investments so that there is a win-win situation. South China Sea is known for huge oil reserves and all countries want to control it. With China having territorial disputes with almost everyone in the region has always upped the ante. China's arch enemy is Japan and both cannot stand each other.

In this context, recently India signed agreements to provide loan and sophisticated boats to Vietnam against China's territorial aggressions in return for getting oil supply from the waters around Vietnam. The Chinese categorically warned of consequences if India extracts oil from Vietnam.

2) String of Pearl strategy by China:  When China began to rise in 2001 it began this policy of involving all of India's neighbors to form a string so that upon necessity it can prepare for attack on India. For this it began to develop friendships with Nepal flooding its market with goods and helping it in financial aid. It then began to deepen its friendship with Pakistan to develop Gwadar port to the west of Gujarat, controlling ports in Bangladesh and putting pressure on Bhutan to support China in every way. Besides all these ventures China also began developing Tibet such that within an hour through roads and high speed railways can reach Indian borders if a situation arises. The UPA Government was least interested in acting upon these steps. Only in the last few years of UPA II the former PM Manmohan Singh began to take steps to mend friendships with Bangladesh.

Modi wanted to change the situation to make China an economic partner and go beyond just boundary disputes. Keeping the boundary issues aside he wanted to involve China to invest with a strong economic agenda. When he was Gujarat CM he visited China several times and often in his speeches he talked about China as the real competitor to India. When Chinese President Xi came to India the rumor was that investment would be to the tune of 100 billion dollars - thrice the amount Japan agreed to invest. It was a huge gain if China had invested this amount. However, it reduced to 20 billion dollars, which is less than Japan's investment. What triggered this?

Like Modi, Xi is considered reform oriented Chinese President. An investment to the tune of 100 billion would have benefited China as well. It looks like there was a hidden twist to this whole story. The Chinese, exactly hours before the meeting of Modi and Xi, infiltrated into Chumar region of Ladakh. The number was 1000. This is the highest number of soldiers entering the territory post 1962 war. This whole incident shadowed the event Modi had organized.

On one side Modi achieved a lot when agreements were signed to make Pune and Ahmedabad export and manufacturing hubs, train Railway officials to increase the speed of Bangalore-Mysore-Chennai train, rejuvenating Railway stations, setting up a Railway university, giving enhanced access to Indian agricultural and pharma products in China, and opening up a new route to Manas Sarovar through Sikkim.



On the other side he had to talk tough to ask Xi to withdraw his troops. The tough negotiations by Modi finally led to the withdrawl of the troops. However, things did not stop here. Two days after this meeting troops again entered the territory. This time the number was just 50. Since this is a mystery that will hardly be revealed, this article explains 3 possible reasons as to why the Chinese intruded right at this moment - a) The People liberation Army (PLA) that is controlled by the Chinese Government is not under Xi's control b) Xi knew this intrusion and was done intentionally c) Xi wanted PLA to do its work and he wanted to do his. So, one wing aggressively pursuing border issues and the other economically winning deals with India. 

In my personal view the third reason is most probable since Chinese history is well know to all countries in South China Sea. China is probably the only country yet to have so many territorial disputes with everyone in its neighborhood. India has no options but to constantly monitor the situation and rise economically and strengthen its infrastructure in these regions.

Since Modi's ascent he seems to be planning to break the very trap China has set up. With India cozying up to Japan and the recent steps taken by his Government to engage Vietnam and Bangladesh to corner China this game of Chinese checkers is getting very interesting. China was quite naturally baffled and decided to intrude into Indian territory to increase the scale of provocation.

Such diplomatic games by China is hard to play with. With a single party and a single focused agenda Chinese government, economy and defense is way ahead of India by about 50 years, With changing political equations and central governments India lacks a consistent tough leadership. As long as Modi is going to rule India there will be tough moves by his government in every way possible.

At this point the country's economy is very important and the investments from China and Japan would play a critical role in realizing many projects which we do not have expertise in. Together this is the biggest investment India can dream of getting in to achieve its most complex goals.

Monday, September 8, 2014

Why Planning Commission needs a credible replacement?

I remember my school days when I used to study about Five-Year Plans in Civics class and it was so painful to understand and remember what the First, Second, Third Five Year Plan outlined and so on. At one point in 1999 when I saw the rise of cell phones a question did come to my mind. Just one year and one policy brought a meteoric rise of cell phones in India and how could a five year plan think of changes needed in 5 years from the point of planning? 

India's bureaucratic system is notorious for having multiple agencies doing the same task and in certain cases a single agency having no power. 

Recently, the PM decided to abolish this body and replace it with a brand new body with new powers. No one knows what shape it will take. Planning Commission is currently chaired by the PM and it has experts in Economics, Administration, Industry and Science. This article tries to understand why the existing Planning Commission has become so non-functional and obsolete and what the possible solutions are.

To understand this one has to know 3 facts. The first - Planning Commission is not a body recognized by the Indian Constitution. The second - it's authority has far exceeded its capability (This statement was made by Mr. Modi (Source) when he was the CM of Gujarat). The third is the existence of Finance Commission of India which is accountable to the Parliament and is appointed by the President to look into many of the affairs Planning Commission does and thereby duplicating responsibilities.

Let's elaborate these further. Planning Commission was constituted by India's first PM Nehru who was inspired by Soviets and thought a centralized planning body would help India grow much faster than anticipated. His idea which also translated into a Resolution had 5 major functions -a) Formulate 5 year plan providing framework for development b) How much money each scheme announced by the govt would get c) Appraising the scheme to see if resources are optimally utilized d) Monitoring the same e) act as a mediator between center and states.

The Planning Commission did some commendable jobs. Until the late 1960's Planning Commission had some great experts whose recommendation was taken seriously by Nehru and he established the IIT, IIM, DRDO, IISC and such other prestigious institutions that have helped the country tremendously. Many aspects of land reforms were also formulated and implemented by the Planning Commission. Planning Commission was responsible for recognizing and establishing steel plants (Bhilai, Rourkela, Durgapur), Hydroelectric power projects, state electricity boards and many more.

Since this was not a body accountable to the Parliament and has no constitutional authority each of the successive governments used it to push their agenda and made Planning Commission a transfer agent of centre's money to the states. This was an absolute deviation from the vision it was set up with. As each state became more complex to manage it was in the late 60's that the amount of money to be given to any state became dependent on tax the state generated, its population and many such parameters(Gadgil Formula as it is called). 

When the economy opened up in 1991 private sector began to control many of the resources which the government controlled till then. As an example amount of money needed to make roads, airports or ports. These began to be built in partnership with private companies and no state or government could get into the business of allocating resources. This began to make its role of resource allocation meaningless. Instead of planning with a vision they became a body of monitoring central schemes and transferring money to states in the name of the schemes. So, post 1970's functions a), b),d) became the only function of the Planning Commission.

Truly, formulating a 5 year plan has become obsolete now since every year new technology and scientific innovation forces existing mechanisms to be re-evaluated. So, the Planning Commission is out of touch with this reality. If one remembers this commission was widely criticized for coming up with the definition of poverty which was anyone close to spending Rs.32 per day or below. 

Let's explore now the 3rd fact before getting to the second one. The Finance Commission of India was set up under Article 280 of the Constitution (Source). Its functions, roles and responsibilities are all explained on the website. This body contains 5 experts nominated by the President of India and has done a fair job in coming up with numbers as to which states must get what money and it has a wide variety of parameters based on which it comes up with a formula. It also changes these parameters as and when required. This money typically is the transfer of total taxes collected on various items or services collected by the Center to various states on various formulae (Source). Unlike Planning Commission which uses its own discretion about how much money needs to go to one state, the Finance Commission applies formula and rationale behind its math. The Government of the day has to submit a report about "action taken" and both the Government and Finance Commission are accountable to the Parliament. The Finance Commission also meets with the concerned officials of every state and has the powers of a civil court in the event of discharging such duties. 

Now, coming back to the second fact - The Planning Commission's authority far exceeds its capability. This is very true because Planning Commission is an extra constitutional authority. It has no powers to transfer money to the states and is often accused of using adhoc mechanisms to estimate several parameters and make it binding on the states to accept it. Over the past 10 years according to this article, Planning Commission began to appraise all PPP projects in infrastructure something which the respective departments in the Government must do. Planning Commission got into a direct conflict between several departments.

Clearly, the function of formulating plans with a vision was sidetracked and Planning Commission became a body of monitoring schemes and transferring money to states. 

What can be done in this scenario?

a) Finance Commission is appointed every 5 years. Instead, it should be 2 or 3 years and must be made permanent.
b) It should now become the de-facto body of transferring funds to states since it has the required expertise. Currently, it does non-planned expenditure only. The difference between the two must be removed and all money transfers must now take place only through Finance Commission.
c) Make the recommendations of the Finance Commission binding on the Union Government. So, far almost all Central Government's have accepted Finance Commission recommendations. However, the Commission must be given powers to identify if the Govt has indeed acted on the report it produced in the Parliament.
d) Make Planning Commission strictly a body that can formulate plans with a vision and have experts in it who have enough experience to plan with a big picture.
e) Have planning commission officials in every state who can share their expertise with the respective state since each state has its own geography, resource constraints and demographics. One suggestion applied in Kashmir may not work in TamilNadu and one formula applied in Kerala may not work in West Bengal.
f) There should be one wing of academicians who study the similar problems that exist in other parts of the world and solutions applied to the same. These academicians must submit a report of their own assessment. 
g) A reward mechanism must be set in place where such students/academcians who suggest out of the box and practical solutions be given recognition.

Only time will say when the new body will be formed and whether it will be made effective enough to cause a difference in the broad policy framework. Planning is essential, but planning that includes policies that are feasible to implement is the only way of measuring success of such a body.

While Mr. Modi is in the right direction he needs to take it to the right conclusion. If this does not happen then the new body will be like the old wine in a new bottle.


Tuesday, July 22, 2014

A directional analysis of the maiden budget

The Modi government's first Railway and Union Budget  are a reflection of prioritizing promises made in the manifesto personally ratified by PM Modi during election campaign. Just like it was Arun Jaitley's maiden budget so is my analysis. The intent of writing this blog post is not to highlight the maze of numbers going into budget or aspects connected to bond and investor market, but to analyze the direction in which the Govt is headed. Of the 2 budgets passed the Railways was more path breaking than the Union Budget. The Finance Minister(FM) Jaitley had very little time and little financial resources to expand or initiate big reforms.
The maiden budget preparation time has been too short (around 45 days) and so to expect to do something from scratch in such a short time and that too with a new government in place is a lot to expect from. This was also compounded by the fact that the country is in an extremely messy and tough financial condition.

However, many well known economists have said Jaitley's budget was disappointing and called repackaged UPA's budget. It is true that Chidambaram said -"Modi talked about Congress Mukt Bharat, but he could not even do Congress Mukth Budget". It is true that lack of time and lack of money made the budget less revolutionary. However, no one denies that money has been allotted in the right sectors with right priorities. 

According to this article the NDA government added 59.9 million jobs between 1999-2004 mainly because of high expenditure on infrastructure of ports, highways and airports while UPA added only about 14 million jobs during the whole decade (2004-2014). While UPA increased subsidies in the form of farm loan waivers, oil and LPG, fertilizers etc it was expected that Modi's government would seriously think of reducing it. On the contrary it increased even more. It has to be observed that from 1999-2009 there were huge tax revenues for the government which both governments used to pay for subsidies (Source). To be fair it was NDA which started reforms giving huge tax revenues which UPA continued until 2009. During UPA II tax revenues saw a sharp fall, but the government went ahead with increasing subsidies without analyzing how to raise money for the purpose. The first budget of Modi's government was expected to increase growth despite the expected increase of fiscal deficit, but it appears that the government wants to balance both. Hence, the government retained many of the populist schemes of UPA, but has initiated the process of being pro-business.

So, here's the quick analysis of the sectors where Budget concentrated on and the direction in which these would go in the overall growth of the economy.

Regarding the power sector: Close to 80% of energy needs are still met by thermal plants and they already have reached a point where there is not much coal left. There is no proper coal distribution supply and linkage in the country today and neither is a Coal Regulator. Obviously, solar energy and other renewable energy must be tapped. Jaitley has alloted Rs.1000 crore to develop Ultra Mega Solar Power Plants in Rajasthan, Gujarat, TamilNadu and Ladakh which receive huge amount of radiation every year. I still remember the India Today Conclave Speech of last year when Modi highlighted a fact that in the intense hot regions of Rajasthan there is immense potential to tap solar energy and despite his written proposal to the then PM Singh no action was taken. Keeping this in view he has definitely asked Jaitley to allot money in such areas. Imagine if power from renewable energy reaches 30% from the existing 13% we would have added a lot of electricity to the grid. It is interesting to note while UPA's Jawaharlal Solar Mission Project's aim is to install 20GW by 2020 we are no where near that target until mega projects are actually taken off and, hopefully, this allocation will yield results. Customs Duty has been reduced for any equipment bought for this purpose. In the power sector Jaitley has also given a 10 year tax holiday on any firms that are willing to generate and start transmission by Mar 2017. This is a huge incentive that will propel companies to start getting into electricity generation and will aid in the direction of 24*7 electricity target. This Jyoti Gram Yojana that was called in Gujarat is now called Deen Dayal Upadhyaya Gram Jyoti Yojana. Further, an additional 500 Crore has been allotted to separate the distribution lines so that rural areas get high priority.

Regarding Highways: The government has promised to reduce the number of clearances and early resolution of disputes. Clearly, the government of the day knows that Public Private Partnership route (PPP) has not yielded much results and yet they have promised to reduce the disputes. It is amazing that 189 of 332 National Highway Authority of India (NHAI) projects in 20 states are struck due to disputes over environmental and legal clearances. This has scaled down our pace of roads despite huge improvement in national highway connectivity. It is beyond doubt that airports and national highways have been transformed in India, but highways require huge investment. The total length of expressways is minuscule compared to that of China. The big vision of UPA to have 44 expressways by 2022 has not taken off with just only 4-5 in progress. The problem is not lack of private builders but that of arbitrations that never end. We will have to wait and see if the government ensures the newly enacted Land Acquisition Act is amended to expedite these clearances.

Regarding Insurance: By increasing the FDI cap in increase to 49% (with full Indian Management through Foreign Investment Promotion Board. This  means any foreign company can set up its shop with 49% partnership and 51% Indian counterpart with Indian Management control). Jaitley has only increased the competition amongst insurance companies. There will be an increased capital inflow with companies willing to set up insurance markets on a massive scale now. This is a good sign.

Regarding Defence: Increased FDI to 49%. This is an area where Modi government failed to seize the opportunity despite the fact that the government wants defence manufacturing to be developed in India. For that more than 50% FDI with mandatory technology transfer must take place. This is a clear failure. However, it is not the end of the road.

Regarding Broadband in India's villages: This "Digital India" programme to provide broadband connectivity with the help of Indian hardware and software companies is a good step forward. This will spur the growth of home grown companies to contribute back to the society.

Regarding Ganga Rejuvenation:  There is no concrete plan yet to revive and rejuvenate Ganga river and around Rs.2000 crore has been set aside. Not sure where this money will go and if there will truly be a revival. For the past 15 years all the money spent on this has yielded nothing but zero result. This is the toughest gamble PM Modi has taken on behalf of his constituency. 

100 crore club projects: Continuing the trend of UPA's 100 crore projects, Jaitley announced close to 27-  100 crore club projects and they are listed here. Only time will tell if the money allotted to each of these programs is utilized with utmost sincerity.

Regarding Agriculture: The Government has decided to start a new mission to promote irrigation, a 24 hour news channel only for farmers, restructuring Food Corporation of India (a poll promise Modi made), loans to landless farmers, and reducing transportation and distribution losses and increasing efficiency of Public Distribution System (PDS). The announcement that wheat and rice will be provided at reasonable prices to weaker sections may not work on the ground unless PDS is improved. Nothing is new about improving PDS, but the fact is that a lot of money has already been spent on this and yet no changes are visible on the ground. There is no evidence that restructuring FCI would change things. Unless Agricultural Produce Marketing Act (APMC Act) is amended that allows farmers to sell to anyone they want to inflation cannot come under control and hoarding will not cease to exist. I, personally, am waiting when this act will be amended.

Regarding Goods and Services Tax (GST): This GST has been hanging around and struck in discussions despite its introduction and numerous discussions with all states since 2009. Jaitley disappointed on this since he only stated he wants to expedite it. The passage of GST and implementation across the country alone can increase GDP up to 2%.

Regards Railways: Railway Minister Sadananda Gowda's budget was a path breaking one. This was because for the first time a large sum of money has been alloted for building new tracks, improving freight transport, safety and cleanliness of stations. Modi's brain was clearly behind several of these announcements. To overhaul 10 major stations, concentrate on railway food safety and railway safety are welcome things to hear. FDI in railways is totally unheard of the Railway budgets till now. FDI is required and private participation is required to increase the track length, cleanliness of stations and freight corridor development. The Budget talked about outsourcing cleaning to private players in 10 major stations.

Most importantly, the bullet train from Mumbai to Ahmedabad requires huge investment which India can't even afford at the moment. My personal thought is that the PM Modi might seek Japan's help like in the case of Delhi Metro. When Delhi Metro was first envisaged everyone thought India can never get such a transportation system. Such negative thoughts have been proved wrong with massive metro constructions and openings in almost all major metro and several non-metro cities. Let us hope something serious on the ground happens within the next 3 years. Railway budget also concentrated a lot on increasing efficiency of online ticket booking from 2000 to 7200 tickets per minute, allowing platform tickets to be purchased online and to go paperless in 6 years. Some of the other friendly initiatives including ready-to-eat foods of reputed brands to be made available in trains, food courts of various cuisines to be set up in several stations, feedback of food quality through IVRS, battery operated vehicles for disabled people and many more. The starting of semi-high speed trains between several short distance cities in the next 1 year is a huge welcome although 160-200 km is still slow when compared to China and Japan.

It is just so shameful that of the 99 new lines announced only 1 has been completed correctly in the past 60 years and in the past 30 years, 676 projects were sanctioned and only 317 completed. Our sluggish growth has made our Railways 100 years behind current time. Hopefully this will change.

Regarding Smart Cities Creation: Rs.7000 crore has been allotted to develop smart cities which will be brand new and would avail the best of facilities an ordinary man would accept. This proposal is surely going to take forever since it is an investment that will not easily match the returns. Don't be surprised if this will not take off in the next 5 years.

Regarding start ups and young entrepreneurs: For the first time in a decade a special Rs.10,000 crore for early start ups has been allotted. 100 Crore for start ups involving rural youth, 200 Crore for SC/ST youths. This has clearly created one of the highest financial pools for start ups anywhere in the world. However, it remains to be seen how the local banks would provide these for the start ups and if there are simplifications in availing the same.

The first Budget disappointed regarding tax rules that were undone by UPA Government despite Supreme Court order of not taxing Vodafone for acquiring assets within India and abroad. Jaitley only promised to look at them under the guidance of Central Board of Direct Taxes. Such taxation rules will discourage investment and seriously must be amended.

At the end of the day this government cannot be judged by this Budget since this is a beginning and the country's finances are in such a mess that big initiatives can't be easily taken. The Government appears to be fairly serious about amending Land Acquisition, Labor Laws and APMC Acts. Unless these 3 laws are amended and passed there is no hope for growth to pick up steam and neither will manufacturing pick up easily. It is therefore paramount to see these legislations pass through.

Thursday, June 19, 2014

How Modi is shaping, shaking and inspiring his bureaucracy

Ever since Modi took oath and reached Prime Ministers Office (PMO), he has made almost every move historic. Actually, let me correct. Even before taking oath he played a masterstroke by inviting all SAARC leaders for attending his swearing ceremony. It was entirely his brainchild in order to send out a strong message that Asia's stability is more important than developing friendly relations with Europe or America.

Modi has taken some very unusual steps of getting his bureaucratic team to work with extreme seriousness and dedication. When former PM Manmohan Singh took office he made merit based appraisal to be in place every year. No one saw it happen and constantly incompetent and corrupt officials dominated the PMO. In fact, PMO was rendered powerless and all decisions were taken by Sonia Gandhi.

On the contrary, Modi has converted his PMO the ultimate decision making office. He has asked his bureaucrats to report to him first before leaking any matter to media or the public. Such a meeting happened almost after 8 years. The very first day he met all bureaucrats - 72 Department secretaries (Source)of various departments under one roof and gave them clear cut instructions on how he is accessible by email, phone, SMS, personal interaction and that he would welcome any idea that works. He made it clear asking them to work without "fear or favor" and that he would protect them in return for their complete dedication. He clearly asked them to work long hours, make their offices functional and friendly to everyone who can walk into their office. He asked them to use technology as far as possible in their functioning. He has told them to make India relevant and everything else irrelevant. 

Unlike Singh, Modi appears to have an acute sense of listening and speaking out his ideas. All this is not new to bureaucrats in Gujarat but the whole country is now witnessing this unprecedented work style.. In fact one of the news articles stated that when asked about how to get Bus Rapid Transport System (BRTS) work the official gave a few ideas and Modi said he would get back to him. 24 hours later he came up with his own ideas and a blend of both was employed. It shows how seriously Modi takes his work and implementation of his vision. There is a personal touch he adds to every initiative which makes him more accountable. His team in Delhi is waking up to this new reality. With discouraging family members or acquaintances to occupy posts in the office and asking them to work from 8 am to 8 pm 5 days a week or 6 days a week from 8 am to 5 pm - he clearly has made it very rigid for the bureaucrats to become performance oriented. Typically, these bureuacrats are Indian Administrative Officers (IAS) who report to their respective Minister. Under Singh, the PMO gave full freedom to the Ministers asking them to depend on these officers and take decisions. If the head of a team is not cognizant of what his team is up to the team collapses in no minute. This is true to anything - be it sports, a movie production, a company or even a society. The former PM was not strong enough to show his command and authority. Modi, however, has set a very strong foundation where he has categorically stated he won't tolerate  any such acts. His 10 point agenda for all bureaucrats is truly noteworthy and he has chosen fairly a reliable team.(source)



Modi talks sharply and crisply is a matter now well known. The very first day in office he asked all his Secretaries to make Power Point Presentations conveying what projects are stalled, what can be done and all had to be in bullets and no lengthy paragraphs or theoretical data. This itself shows he means business and that he expects his officials not to form committees for no reason to research something. Here is an article that explains how bureaucrats were excited and motivated to work after their interaction. Some of them were even worried to tune to Modi's style.

Modi has chosen some really impeccable officers of the highest integrity known to India in his core team. He is relying more on these officials than his own ministers. He wants his ministers to take political actions while the officers take policy actions. Here is a very interesting article that explains how Modi chose his core team of bureaucrats and why he chose ones with high merit and proven track record. This is truly motivating.

Modi himself puts 18 hours of work a day. This act of Modi is beginning to inspire several honest and committed bureaucrats to follow suit. He has never taken a vacation as CM of Gujarat even for a single day according to his own tweet. His relentless energy is visible in whatever he does. His team is just astonished to see his energy.


He scrapped GOM, EGoM (Video) which were formed during UPA and the committees did nothing but just met and did some paper work without really coming up with concrete implementations. This is truly one of the best steps because we don't need committees but people who are committed to taking actions.

Another interesting thing is when Modi asked all bureaucrats to report to him on any final decision without just conveying it to their respective MP's. Unlike the previous regime where bureaucrats would override PMO, Modi has asked that PMO overrides every MP and every bureaucrat. Basically, nothing goes out with Modi and if anything has gone he would get to task of correcting it. Such steps work as long as the leader heading the team is vigilant on every activity. Modi has shown to be so vigilant in Gujarat and he will be so.

The new phrase these days doing the rounds is "The Prime Minister is watching you".

Just within a fortnight he has set up so many meetings, met so many officials - sometimes as late as 9 pm. 
An interesting article was published here which stated that everyone is struggling hard to cope up to this work style. Here is another where ministers are expressing it is not easy to take a vacation unless results are shown.

Despite this workaholic style of working, Modi seems to find time to communicate directly to people through Twitter. He creates his own media and speaks directly to the very people to whom he is accountable. It is this distinctive style that has made him a very special politician seen in the last 30 years. 

While all of this is truly path breaking and a solid foundation is now laid we have to wait for results. The challenges and promises made are huge. Such groundwork seems to be promising, but having a good team is one and performing during crucial circumstances is another. A team's best test is when it has to perform in a harsh terrain. India is a harsh terrain in every angle - social, economical, financial or geo-political. It  is too early to comment on the team's performance since the journey has begun.

Many promises Modi made are quite tough to implement across the country. River linking, creation of 100 smart cities are just two of them to mention. Many action plans that have worked in Gujarat are tough to replicate across the country especially in states where the anti-Modi parties function.

One thing is for sure. A true action-oriented person who has occupied the highest post. He has his task cut out and let's hope that this good team indeed does some good work.

Going by the standards of how our bureaucracy functions in all states cutting across all political parties, it is a welcome change to see the spirit with which Modi's team of bureaucrats are beginning to perform.

The PM has already indicated that he will take harsh steps which may not please everyone who loves him. Let's see if these steps are harsher than the harsh conditions we already are facing.

Tuesday, May 20, 2014

An unfathomable victory of the Modi led BJP

BJP's victory and ride to power in 2014 is truly unfathomable. As a student of Indian politics since 1998 I always had a firm belief that a non-Congress party will never get a majority on its own. Even when BJP (that claims to be the other pole of Indian politics) rose in numbers from 2 to 189 it was still believed to be difficult to see a day of it getting an absolute majority. The quote - "Every dog has its day" was too difficult to be applied for any non-Congress party in this context. Congress's reach to the remotest parts of the country is unbeatable and the strategy to get rural votes is best known to Congress and hence they have been invincible time and again.It's leftist approach in 70's and rightist approach in mid 90's attracted every section of the society towards it. Every caste and religion found a place in the party. It was a fortress that was impregnable until the rise of regional parties in mid 1990's .With the shocking loss of NDA in 2004, UPA came to power and the first UPA term had some innovative ideas but in the 2nd term it turned leftist when the country was moving towards rightist tendency. It made a gross miscalculation in gauging this public mood.

When Assembly elections were held last year Congress lost all of them and it was too late to make any reversal of its policies. It was a wake up call. The party was over confident that its pro-poor policies will win them every vote. My personal dislike with the way Congress started going to 1970's era intensified with the passage of Food Security Act. The drubbing Congress got need not be elaborated. It is crystal clear.

BJP getting absolute majority on its own has changed the political scene for many years to come. Truly, BJP has now become the other pole in Indian politics. Of all the leaders Modi was the only one who was confident of achieving this feat. Even though exit polls were giving signals of a BJP led government I was sure of NDA getting majority but not BJP on its own. The way Modi campaigned throughout India has set a new benchmark in election campaigning. Modi used one tactic which was a great gamble. This tactic was to change the tone and tenor depending upon the place he campaigned. Here is an article that explains how Modi attracted people in different parts of the country by connecting people's hearts easily. This is an unseen strategy by a politician in India. Indira Gandhi could connect naturally everywhere she went because she projected herself as Nehru's daughter and Nehru had a reach no politician can match till date. For a person with no such background to market himself, and to make both aggression and future vision as the center of campaign was the greatest gamble. Another huge gamble he played was to confidently tell people why he fits the PM post and made it centric to him.

As Modi took this daunting task head on he carefully planned to bust the perception that BJP cannot make a presence in South and Eastern states. He silently made NDA an alliance of 17 parties  from just 4 within a few months after he was announced PM candidate. In addition to all these efforts he crafted a brilliant marketing campaign unseen and unheard in Indian political history. His oratory skills is by far the best we have seen after Vajpayee. Modi spoke exactly that was in tune with the aspirations of the people. His focused speeches with clarity of thought removed several myths and notions people had about him. He traveled 3,00,000 km, addressed 437 big rallies, 5827 public events spread over 25 states. His "Chai Pe Charcha" program and reaching out to the remote villages in UP explaining how development had changed Gujarat opened the eyes of millions of people and raised the hopes of a better future. His slogan "Sab ka vikas, Sab ka saath" catched everyone's attention. The use of the word "development" in all his speeches dominated more than the words "communal" and "secular" used by almost all parties anti to BJP. 

This scale of campaigning and victory is unfathomable to not just politicians of other parties but to many inside BJP itself. The old guard of BJP lost the hope to see a day like this after Vajpayee retired in 2005 from active politics. Over the next few weeks journalists, psephologists, sociologists, thinkers and historians will continue to unravel more stats. Here are just some of the startling stats revealed so far. Of the 31 string Scheduled Tribes constituencies, 21 were won by BJP. Of the 80 seats in UP BJP won 71. Of the 16 seats in UP where Muslims dominated between 20-50% BJP won all of them. This doesn't mean Muslims overwhelmingly supported BJP, but a large number of them definitely did. The party that was known to be a Brahmin party gained almost all of the OBC and Dalit seats in UP and Bihar. It appears that the caste perception barrier was broken when Modi reached to everyone and asked to them to fight poverty than against one another. In 10 states Congress did not open an account. In states where it was strong was proved weak. BJP has 31% of the total vote share and it sprung into majority. This as per many stats is the lowest voteshare that gave absolute majority to a party at the center. The Congress used to have 40-70% vote share that converted to a majority in its glory days. Here's another very interesting article that illustrates a fact that of the 12 largest states (Uttar Pradesh, Maharash­tra, West Bengal, Andhra Pradesh, Bihar, Tamil Nadu, Madhya Pradesh, Karna­taka, Gujarat, Rajasthan, Orissa and Kerala) that account for 440 (81% of seats to Lok Sabha) seats BJP won 61% of seats - something no party has ever been able to achieve including Congress anytime ever.

No matter what one says this victory is purely Modi's, not even BJP's. He worked so tirelessly and campaigned aggressively that many within the party did not even go to even half the distance he traveled. His idea to reach the remotest corners of the country where BJP doesn't even have a presence was something the party had to do in 2004. He did this and he will continue doing this. He is known for taking a task and not relinquishing it until finished to perfection.

Now that the victory celebration is done it is time to serious work. If one has observed his track record he is known to surprise everyone by his sheer hard work and political acumen. After declaring himself Mazdoor Number 1 we have to see to witness this at a national scale. There are many promises Modi made that are feasible and some that are very daunting given the complexity of India. It is often said that the greatest hurdles come in the way of people who have the greatest will power. It is such a moment in India now. Let's hope for the best.

In the days and years to come he will be judged by how he takes the country forward. People,however, must have patience since "Rome was not built in a single day".

Tuesday, March 25, 2014

Settling the cause of India's Pearl Harbor (1962 Indo-China War)

No other dispute in the world is as long, more complex and more controversial than that of the India-China border. The 1962 Indo China war was fought in the age of pre-internet, pre-social media, and pre-television. Radio and newspapers were the only source of information. Recently, some of the pages of the inquiry committee report of the war were leaked out. Post this leakage it's high time for settling the cause and many blunders committed during and before the war that continues to impact our diplomatic and political relationship with China till date. There has never been a public debate going into the cause, effects and solution to the problem.

China has always had expansionist mindset and it has exhibited this over centuries and more so in the early 1940 and 1950's. It is Nehru who never understood this despite many of his ministers, particularly, Sardar Patel warning him several times. I had explained the cause and solution of the border dispute clearly in two part series on my own blog 5 years ago.

The two articles above are very lengthy and I did a great deal of research to get into the root cause and find out who is right - India or China over its claims. If one gets scared at the sheer length of the article here's the conclusion. My conclusion below may provoke you to read the above articles again and again.

Solution to the Aksai Chin area: Split the Aksai Chin area into 2 parts and let India and China have it equally. This is because Aksai Chin belongs to no one based on historical records and currently this area is with China. China will not cede it and India won't give up its claim on the entire area.

Solution to Arunachal Pradesh Region: The whole area of Arunachal Pradesh except TAWANG region belongs to India. Currently, India has TAWANG that belongs to China. India won't give up and China won't stop pursuing it.

The 1962 war was the most humiliating war India ever faced and fought. India lost so badly that it took years to recover the army's morale. The war saw a patriotic wave across the country to an extent never seen before. Everyone was scared that China might penetrate deep into the Indian territory. Till date no government has ever made an attempt to declassify the exact cause of the war and the only inquiry committee report (Henderson-Bhagat report) has never been made public. The report doesn't go into explaining why the dispute started, why Tibet's voice was not even heard by China and why Tibet's annexation was unacceptable to India since it was military inquiry report. According to sources in the Indian Defense Ministry there were 3 copies of this report - two with the Government and third with Neville.  

Neville Maxwell, the journalist at that time had access to a copy of this document which he used as a basis of his book India's China war (Source). Neville's book according to several readers is more an explanation or analysis of the report and not the actual report. The book does go into the origins of the conflict. The book for the first time pin pointed Nehru for many misadventures. The problem with the book though is that it is pro-China in many ways and anti-India. One cannot take this source as an unbiased account. 

The actual report's pages were made available on Neveille Maxwell website and then several magazines such as Outlook magazine added them on Mar 18th 2014.(Source). Although the book has been in publication for quite sometime now, the report itself was made public on his website http://www.nevillemaxwell.com/ (no longer available now). 

There are parts of this report which are truly chilling and nerve raising. In the below paragraphs I have made an attempt to explain this in a brief, but clear cut manner. The report has 3 volumes and only the first volume has been leaked. Some pages of the report have been deliberately deleted. We don't know how many more generations or decades it would take to know this complete report. However, the first volume itself speaks volumes about the military blunders that continue to haunt India. 

Lt. General Henderson and Bhagat in 1962 wrote the inquiry report that went into the details of how India lost the war and what political and military decisions were taken during and before the war. 

Henderson-Bhagat Report squarely blames India for the war and puts the onus on Indian political and military leadership. The report clearly blames "Forward Policy" in Nov 1961 (the actual war started on Oct 20th 1962 and ended in a month) when it was set in motion by Nehru. The policy, according to the report, provoked Chinese to attack in a full blown scale. This policy's aim was to put troops on the border who could go deep into the areas bordering China so that Chinese will not think of claiming any territory of India as theirs. The assumption to go into this adventure was that Chinese will not retaliate and that we are capable of fighting the Chinese. 

Image courtesy: (Link)


                                               
The report highlights on military failures more than lack of political sagacity. Based on CIA report (source)we know that both Nehru and Defence Minister V.K. Menon never agreed with the estimates given by the military General B.M. Kaul and Intelligence Bureau Chief Mullick who asserted that Indian military was better prepared to deal both in the Eastern and Northern sectors. V.K. Menon blindly trusted the military and then blinded Nehru into going forward with sending troops to the border. The war significantly highlights one thing - A country's head like that of India's must not depend upon one source to take decisions in matters of defense and border disputes.

The report (Source) also explains how Lt.Gen Kaul had deep political influences and scarce regard to military hierarchy and neglect of assessing the real lack of preparation. His election itself as the Military Head of the operations in the North East was politically motivated since he was a distant relative of the then Prime Minister Nehru. He was a failure in several operations before this and yet he was appointed for the operations of the North East. North East was more difficult to fight (mainly because of temperature and terrain) and required at least 12,000 troops more than the force in Ladakh and required air force deployment. It could be one of these reasons that the Govt may have been hiding the report since it can hit the morale of the Indian Army and also the fact that Kaul was appointed because of Nehru's influence would be brought to the forefront. However, fact is a fact and hard truth cannot be hidden just because it is harsh.

                   

Indian Army was not prepared for high altitude battle. It was used to fight on the plains with Pakistan. Lack of equipment and training to fight Chinese soldiers caused India dearly.

It was China that backtracked from its position in Arunachal Pradesh otherwise it would have conquered both north and eastern parts of India. We have to thank China for both destroying and saving the day. Their attack destroyed India and their withdrawal saved India. If that was not the case West Bengal would have been part of China since the attack could have spread so deep into the heart of India.

                                    
(Image courtesy: Hindustan Times, Calibre)

If anyone is interested in reading this report or Claude Arpi's (French journalist living in India and is considered one of the experts in Indo-Tibet-China issues) interpretation of Neville's book it is here or even Arun Shouries' book - Self Deception: India's China policies

My own take is that following political and diplomatic blunders Nehru committed with regards to China: 
  • He refused formally to discuss border issues with China despite having the opportunity several times between 1950-1954, especially after China conquered Tibet. Even when China did not respond to his oral announcement in Indian Parliament he took their silence as admission of border India claimed. Never until 1958 did it occur to Nehru that a country that is in the process of formalizing its borders (post independence) get written confirmations from China. Long before his formal letter to China time he had asked formal maps to be published indicating the Mc Mohan line and Aksai Chin part of India. As a reply to 1958 letter, Chinese rejected Mc.Mohan Line.
  • Sending Indian officials in Tawang and allow them to take care of the affairs was wrong as it was part of China.
  • The biggest opportunity was when India and China signed Panchsheel agreement and Nehru accepting claims of China over Tibet. When this was accepted all the boundary agreements that Tibet signed also was indirectly accepted by India. It was a golden opportunity to settle all border issues at that time. Had they been settled we would not have reached the position we are in right now.
  • Nehru must have given up Aksai Chin in lieu of China giving up its claims on Arunachal (Source) right in the initial stages.
  • When Nehru accepted Tibet as part of China there was no need to welcome Dalai Lama. The smart move would have been to leave the matter to China. If Nehru had not accepted so then giving refuge to Dalai Lama was not a mistake at all.
  • Blindly trusting his defense minister V.K. Menon's assessment of things without having a sharp understanding of the ground reality.
  • Ignoring Sardar Patel's written letter to be cautious of China when it invaded Tibet and reassess border posts and military strengths. (The letter is published in Makers of India's Foriegn Policy: From RajaRamMohan Roy to Yashant Sinha by J.N. Dikshit)
  • Nehru supporting for UN seat For China amidst all this.


Relying on multiple sources of information coupled with sharp understanding of the enemy is a must. Indira Gandhi and Vajpayee had both these qualities and they exhibited them in 1971 and 1999 wars with Pakistan respectively. While Indira used all the might to defeat Pakistan with a great sense of smart thinking, Vajpayee used might and diplomacy to bring Pakistan to its knees. These two wars were examples of exemplary leadership by and far, despite flaws in the operations of the two wars. Nehru lacked what both these leaders exhibited. The underestimation and overconfidence led to the most expensive and humiliating war at the hands of China.

This war has taught one lesson in matters of geographic neighbors. Never underestimate the country whom you consider as a threat, never provoke it until you are prepared with the onslaught and have a firm written document as evidence in any matters, specifically related to borders and defense.  If Nehru exhibited all these 3 qualities he would have never led India on this dangerous path.

Nehru's blunder is so deep and profound that over the years it has made it harder for any party that rules India to go back on what Nehru accepted as the true borders It is politically suicidal for any party to give away any Aksai Chin.

It's high time this issue is laid to rest and the public debate and awareness created so that everyone is aware of the geo-political reality of 1962 and its effect on the coming generations. Let's hope whoever forms the next government in May 2014 gets a chance to settle this piece of history.

Some of the good articles in this matter can also be read here: