Over 100
dead in Pakistani
terrorist strike

business in
state of flux

India takes

These are a sampler of several thousand published articles by Minhaz Merchant in The Times of India, The Times, London, DNA, The Economic Times and other newspapers and magazines.


Physician, Heal Thyself
Stents represent the tip of the iceberg: over-charging has become endemic in private hospitals

Tuesday, February 28, 2017

In global surveys to rank professionals that the public trusts most, doctors and teachers top the list. Politicians and journalists rank at the bottom – but that’s another story. 

Scratch beneath the surface though and a different picture emerges. Over the years, medicine has become commercialised. Big pharma is big business. In the United States, some high-priced essential drugs are beyond the means of middle-class Americans. 

In India too, a storm is brewing. Over the past year, several key drugs have been placed under price control. But what has drawn battlelines between the government and the paying public on one side and pharma companies, hospitals and doctors on the other is the new price controls imposed on medical stents. 

Anyone who has had the misfortune of needing heart surgery knows that the price of medical stents was extortionist. Depending on quality, stents (which are used to unblock vascular arteries) cost up to Rs. 2 lakh. Few patients were aware that their actual cost was a fraction of this. 

The mark-up begins with the distributor. But it is hospitals that make a killing, marking up stent prices by as much as 600 per cent. 

As the Indian Express noted on February 22, 2017: “After analysing the margins or profit of various players involved in the stents trade, the National Pharmaceutical Pricing Authority (NPPA) has found that they were ‘exorbitant and irrational’, indicating ‘vulgar profiteering’ by every player but mainly by hospitals. While the average maximum margin for manufactures on a commonly used drug-eluting stent (DES) was 27 per cent, the distributors and hospitals were earning an average maximum margin of 196 per cent and 654 per cent on it, respectively.” 

The government has moved swiftly to end this daylight robbery. The NPPA has capped the price of bare metal stents (BMS) at Rs. 7,260 and of drug-eluting stents and biodegradable stents at Rs. 29,600. 

In future too, hospitals have been instructed to itemise separately the price charged to patients for stents. Hospitals and doctors have been reluctant to follow the new guidelines which substantially reduce their bottomlines. But the recent filing of an FIR against several well-known hospitals for non-compliance (many are continuing to over-charge patients) seems to have brought prices down in most medical institutes. 

Stents represent the tip of the iceberg: over-charging has become endemic in private hospitals. Every time a specialist visits a patient, upscale hospitals add up to Rs. 5,000 for a one-minute chat and cursory examination. 

Worse, doctors often recommend far more laboratory tests than a patient requires. On each over-charged test (MRI, ECG, blood, thyroid, liver function, etc), doctors, labs and hospitals share hefty margins. 

Pharma companies add to the mix by sponsoring doctors’ foreign trips to medical conferences while pitching their own formulations. Some doctors feel obliged to prescribe expensive brands over generic drugs that retail at a fraction of the price. The government last week said it planned to end this practice as well. 

Not all doctors and not all hospitals are guilty. Sadly though, many are. The new NPPA order on stents is only the first step to reform our health sector. India won global admiration when local pharma companies like Cipla sold AIDS medicines in Africa at $1 a shot, a fraction of the price Western pharma firms were charging the poor in Africa. The Serum Institute of India too has done outstanding work in providing inexpensive vaccines in developing counties. 

These are the examples India’s healthcare industry needs to draw inspiration from by putting patients above profit.

Follow@minhazmerchant on twitter

Why I fear Kashmir will see its deadliest summer in 2017
Stone-pelters have already employed a lethal new tactic to help Pakistan-sponsored jihadis.

Thursday, February 23, 2017

As the snow melts along the mountain ridges that lead into the Kashmir Valley, the summer of 2017 could be the troubled state’s deadliest yet. Stone-pelters have already employed a lethal new tactic to help Pakistan-sponsored jihadis. Last week several jawans and a major were killed by terrorists even as stone-pelters harried the army’s counter-terrorism operation, allowing militants to escape into safe havens across the border.

Chief of army staff General Bipin Rawat said Kashmiri youths creating hurdles in counter-terrorism operations or displaying Pakistani or ISIS flags would be treated as anti-national: “Those supporting terror activities are being given an opportunity to join the national mainstream but if they continue with their acts, security forces will come down hard on them.”

On cue, the Opposition undermined the army. Congress leader in the Rajya Sabha Ghulam Nabi Azad warned Gen Rawat instead of warning the stone-pelters or their paymasters in Islamabad: “To threaten Kashmiri youth like this is unjustified. The government is to be blamed for the situation in Kashmir.”

 As winter gives way to spring in April and then to summer, the stone-pelters will be out in full force. They will again confront the Indian army. The failure to control the Pakistan-sponsored mobs last summer rests at least partly with Jammu and Kashmir’s PDP-BJP government. The opposite poles in the coalition do not agree on how to deal with the violent stone pelters. Chief minister Mehbooba Mufti favours an accommodative line while the BJP wants tougher measures. But with an anaemic deputy chief minister Nirmal Singh, it has been unable to impose its will.

An under-prepared army last summer used pellet guns on mobs which attacked army bunkers, severely wounding and blinding many protesters. The subsequent invective of Opposition politicians, especially from the National Conference, against Indian security forces played into the narrative of Pakistan’s ISI which choreographs violent protests in the Valley.

According to the Indian army, “at least 25 terrorist have escaped the army dragnet during a dozen anti-terror operations over the last one year due to direct interference from stone-pelting mobs.” A senior army officer added: “They include the encounters at Frisal and Hajan on February 12 and 14, in which, though five terrorists were killed, four managed to escape. Six soldiers, including a major, were also martyred in Frisal, Hajan and another encounter at Handwara.”

Gen Rawat was chosen as army chief, superseding Gen Praveen Bakshi, largely due to his experience in counter-terrorism operations in Kashmir and along the Line of Control (LoC). In his first two months as army chief, Gen Rawat says he tried to adopt a “people-friendly manner”. Stonepelting mobs helping terrorists escape by using diversionary tactics have, however, led to a spike in fatalities among jawans. In a change of tactics Gen Rawat has vowed to “pursue them relentlessly”.

The PDP-BJP government’s handling of the violence in the Valley has been disappointing but entirely predictable. The two parties are ideological foes. The PDP is a soft separatist party, the BJP a nationalist party but with deeply polarizing elements in its hierarchy. An alliance between the two is a misfit in governing a complex state like J&K.

As I wrote previously: “Will the PDPBJP marriage of convenience survive Mehbooba’s pro-separatist ideology? In the long-term, a Mehbooba-led PDPBJP government is unlikely to overcome its constituent parties’ inherent ideological contradictions.”

The Centre is not blameless either. The funds promised after Kashmir’s devastating floods have still not been released. Since Mufti Mohammad Sayeed died in January 2016, governance in J&K has meandered. Mehbooba continues to play a double game. Her government has finally proposed a scheme (which amounts to no more than a pilot project) to resettle around 40,000 Kashmiri Pandits on designated lands in the Valley.

Even if the scheme takes off — and separatist violence will ensure it won’t — the sheer number of Kashmiri Pandits displaced since 1989 (well over 4,00,000) makes resettlement plausible only when the Valley’s creeping Islamisation is reversed.

Pakistan, beset with resurgent terrorism on its own soil, and uncertain about the Trump administration’s stand on terrorism in south-central Asia, will use J&K to befuddle the Trump White House as it did the Obama and Bush administrations.

Pakistan’s permanent representative to the United Nations, Maleeha Lodhi, has been lobbying furiously with the White House to soften its perceived anti-Pakistan bias. She has predictably blamed violence in J&K as a destabilising force in the region, tracing the root cause to the “failure of India to hold a plebiscite in the Valley as the UN requires it to.”

As Lodhi knows perfectly well, the UN does not require India to hold a plebiscite in Kashmir till every last Pakistani soldier vacates Pakistan-occupied Kashmir. She is hoping the Trump administration will ignore this pre-condition at the core of the August 1948 UN resolution.

It is the Modi government’s job to make sure Washington takes cognizance not only of the August 1948 UN resolution on J&K but also Pakistan’s terror factories that continue to churn out jihadis. The US has called Pakistan “the most dangerous country for the world”. That is a fine distinction from calling it the “most dangerous country in the world” along with several others in the Middle East. It is time to put Pakistan, to borrow Hillary Clinton’s phrase, in the same basket of deplorables.

Follow@minhazmerchant on twitter

Why Pakistan is under siege on four fronts
India has the best opportunity to reset its foreign policy.
Wednesday, Februay 22, 2017

Pakistan is under siege on four fronts. First, the terrorists it has for decades bred to attack India are coming home to roost. Over the past 10 days assorted jihadi groups have struck Pakistan as many as eight times.

Second, the Islamic State (ISIS), which claimed responsibility for the devastating attack on the Lal Shahbaz Qalandar Sufi shrine in Sindh, now poses a real threat to Pakistan.

Third, the Trump White House has emitted mixed signals on its future Af-Pak strategy. The state department announced last week that it would support Pakistan’s “fight against terrorism”, parroting the post-9/11 Bush-Obama line that treats Islamabad as a victim of terror rather that a perpetrator. The bad news for Islamabad though is that the White House is set to favour a much tougher line overall on Pakistan, stopping short of designating it as a state sponsor of terrorism.

The fourth and most worrying problem for Islamabad is the near-complete breakdown in its fraught relationship with Afghanistan. Following the ISIS terror attack on the Sufi shrine, which Pakistan blames on ISIS safe havens in Afghanistan, the Pakistan army for the first time launched strikes on militant bases on Afghan soil last Friday (February 17). The strikes are continuing with heavy artillery and mortar being deployed.

According to reports from Islamabad, “Four camps of Jamaat-ul-Ahrar terror group were targeted in the strikes across the border of Pakistan’s Khyber and Mohmand tribal agencies. An official said the security forces used heavy weapons and mortar shells to hit several training centres of Omar Khalid Khorasani, the head of the Jamaat-ul Ahrar group. People living near Landikotal in Khyber Agency were asked to vacate their houses to avoid collateral damage. Some reports (since disputed) said that several militants, including the deputy commander of Jamaat-ul Ahrar, Adil Bacha, were killed in the strikes.”  

Pakistan is now beset by terror groups on all sides. The recent attack on senior police personnel in the centre of Lahore killed over a dozen people. The strike on the Sufi shrine was even deadlier, killing 88 people. Other terror attacks in the past 10 days have been carried out by jihadi groups which are affiliates of ISIS, Tehreek-e-Taliban, the Afghan Taliban and several breakaway terrorist factions.

Pakistan which since 1989 had converted itself into a factory exporting terror has created an enabling and self-perpetuating ecosystem of terrorism. If you want to learn how to wage jihad, Pakistan is your university of choice.

The irony of the Pakistan army’s strike on terror safe havens in Afghanistan cannot have been lost on Islamabad. For years it has given sanctuary, arms, money and training to jihadi groups attacking Afghanistan. Its objective: browbeat Afghanistan into being its vassal state to give Islamabad strategic depth in its proxy terror war against India.  

The tables have turned. Afghanistan is now giving sanctuary to terror groups attacking Pakistan. Islamabad has accused Kabul of doing exactly what it has done to Afghanistan and India for decades: providing safe havens to terrorists.

After the terror attack on the Sufi shrine in Sindh, Pakistan’s army chief General Qamar Javed Bajwa said terrorist safe havens in Afghanistan were “testing our current policy of cross-border restraint.”

The words could have been taken straight out of Indian army chief General Bipin Rawat’s mouth.

Pak policy reset
With Islamabad under pressure from multiple sources — Kabul, Washington and a mélange of terror groups — India has the opportunity to reset its Pakistan policy. National Security Advisor (NSA) Ajit Doval’s recent under-the-radar meeting with the Russian leadership in Moscow got India included in the regional peace conference on Afghanistan hosted by Russia last week.

In an insightful piece in Forbes on February 17, 2017, Anders Corr wrote: “Russia barred the US from the Afghanistan peace conference held in Moscow on Wednesday (February 17), much to the consternation of Afghanistan. The peace conference was surrounded with public recriminations. Russia, China, Pakistan and Iran are on one side, and Afghanistan and India are on the other. Pakistan, Iran, and Russia have supported the Taliban. China had direct talks with the Taliban last year, and its military vehicles have recently been spotted in Afghanistan. Russia says support of the Taliban will counter the Islamic State, which is the more dangerous foe. But such support will really just weaken the current elected government of Afghanistan.

“The citizens of Afghanistan will (then) lose their relatively secular government in exchange for more violence, the old fundamentalist Islamic government of the Taliban, or both. It will also be a very public failure of the US and NATO. The Taliban are known for their opium trade, harsh laws against women, and blowing up of massive ancient Buddhist statues during their rule from 1996 to 2001. It is unfortunate that Russia, China, Iran and Pakistan prefer to side with the Taliban, rather than support the elected Afghan government.”

It was Russia (then the Soviet Union) that laid the foundation for militancy in Afghanistan by invading the country in 1979. It withdrew in 1989, beaten by CIA-trained Afghan militants who later formed the nucleus of the Taliban in the early 1990s under the watchful gaze of prime minister Benazir Bhutto.

Afghanistan has been benighted ever since.

The Russia-China-Iran-Pakistan convergence of mala fide interests in Afghanistan can be countered only if the US, NATO, India and Afghanistan form a counter strategy. Once ISIS is evicted from Syria and Iraq, it will move lock, stock and barrel into Pakistan which, like a magnet, attracts jihadis of all stripes.

Pakistan propagates the fiction, with the help of China (and increasingly Russia and Iran), that the Taliban is an antidote to ISIS and should therefore be part of the Afghan government. Because of their rivalry with the US and NATO, Russia, China and Iran swallow this fiction.

Indian foreign policy faces its sternest test in Af-Pak. It must not blink. Nor should the US. And, most of all, nor should the Afghan government of Ashraf Ghani.

Also read: Why Pakistan fails to eliminate terrorism in its backyard

Also read: Why Pakistan fails to eliminate terrorism in its backyard

Follow@minhazmerchant on twitter

Melting pot to molten pot In Trump, US has got just the president it deserves
America's treatment of its original inhabitants (indigenous Indians) and the wars it has waged in Asia, Middle East and South America deserve a volume of its own.
Friday, February 17, 2017

Former United States ambassador to India John Kenneth Galbraith famously called New York the world’s melting pot. “Never before in history,” Galbraith declared, “had so many people of such varied languages, customs, colours and culinary habits lived so amicably together.”

New York is a microcosm of the United States, the world’s melting pot. Every American is essentially an immigrant. The only exceptions are indigenous Indians who have been in North America for several thousand years and now lead deprived lives in reservations across the country.

President Donald Trump himself is of British-German descent. His father Frederick was from a German family in Bavaria, originally called Trumpf, which immigrated to America in 1885. The irony couldn’t be richer.

Trump’s mother, Mary MacLeod, came from a Scottish island. Mary immigrated to the US in 1930 to find work as a nanny. She met and married co-émigré Frederick Trump six years later.

Being anti-immigrant is never a good political strategy in America. Trump won the presidential election not on an anti-immigration plank but on an anti-refugee plank. His “Muslim” travel ban, dismissed by an appeals court, was poorly thought out and abysmally executed.

Trump is planning to issue a new executive order for a less over-arching travel ban. The courts will come into play once again, distracting attention from an issue that has been clouded by Trump’s recklessness.

That issue of course is terrorism. Terrorists claiming refugee status have poured into Europe, especially Germany which has taken in one million refugees fleeing the brutal sectarian wars in Syria, Iraq and Libya.

Trump was lifted to victory in the presidential election by a tide of anger among whites (including, contrary to popular fiction, educated whites and white women) against what they saw as “reverse racism”.

Their jobs were being outsourced, black and Hispanic crime was driving them away from urban centres, school violence had spiked, civic standards were falling and infrastructure was crumbling. Trump, however, made the classical mistake of believing that inflammatory campaign rhetoric can morph into presidential governance.

Prime Minister Narendra Modi (to whom Trump is erroneously compared) did not make that mistake. He did not let his election rhetoric seep into governance.

During the 2014 Lok Sabha campaign, Modi threatened to jail the Gandhis and Robert Vadra. As prime minister he has done nothing except repeat the rhetoric during the current Assembly elections (“Congress should hold its tongue, I have its entire janam patri”). Rhetoric in India remains confined to electioneering.

On Pakistan too, Modi breathed fire and brimstone during the 2014 general election. And yet his first move after winning the election was to invite Pakistan PM Nawaz Sharif to his swearing-in ceremony.

In contrast, Trump has behaved like a bull in a China shop, making America a molten pot of seething internal conflicts. The sacking of National Security Adviser (NSA) General Michael Flynn over sensitive pre-inauguration discussions with the Russians exposes cleavages within Trump’s cabinet and White House staff over a raft of issues, including immigration, the battle against the Islamic State (ISIS) and relations with Russia.

In an extraordinary and combative press conference at the White House on Thursday, February 16, Trump again accused the US media of being “dishonest”. He said it had a political agenda: to make it difficult for America to repair its relationship with Russia by publishing leaks from mid-level intelligence officials (holdovers from the Obama administration) on General Flynn’s contacts with the Russians.

Strength in diversity
America’s greatest strength is its diversity (as is India’s). In an interesting article in Business Standard, Farhad Manjoo embellishes this point well: “If you want to understand why tech employees went to the mat against Mr Trump’s executive order barring immigrants from seven Muslim-majority countries, you need to first understand the crucial role that America’s relatively open immigration policies play in the tech business. And you need to understand why people in tech see something cataclysmic in Trump’s executive order, and in the other immigration crackdowns waiting in the wings: the end of America’s standing as a beacon for the world’s best inventors.”

Silicon Valley attracts the brightest minds because it welcomes people from all over the world. Religion does not matter. Colour does not matter. Nationality does not matter. Sexual orientation does not matter. Gender does not matter.

What does matter is grey matter. Merit is the official religion of Silicon Valley. America’s diversity was built over centuries by defying discrimination.

Catholic immigrants suffered great prejudice at the hands of the Protestant majority. The sectarian intra-Christian prejudice was so deeply embedded that America elected its first Catholic president only in 1960: John F Kennedy. Immigrants of Irish descent (like President Kennedy) were discriminated against through the 19th century.

The waves of Italian immigrants (all Catholic) during that period too were subjected to prejudice and name calling. Blacks of course had neither the right to vote nor in the deep south, even liberty.

It took the civil rights movement in the 1960s to give African-Americans the same rights the high-minded American Constitution guaranteed all Americans.

America’s treatment of its original inhabitants (indigenous Indians) and the wars it has waged in Asia, the Middle East and South America deserve a historical volume of its own.

A new book by Joshua Kurlantzick, A Great Place to Have a War: America in Laos and the Birth of a Military CIA, reveals the gory details of how the US has killed millions of civilians around the world.

In a review of the book, The Economist writes: “The bombing of Laos in the 1960s and early 1970s always used to be referred to as America’s ‘secret war’. This was not just a mistake or even a misunderstanding: it was a terrible misnomer. For the Laotians who cowered in caves to escape what is considered the heaviest bombardment in history, the campaign was certainly not a secret. The American air force unleashed an average of one attack every eight minutes for nearly ten years. By 1970 tens of thousands of American-backed fighters were involved, at an annual cost of $3.1 billion in today’s dollars. By the time the campaign ended in 1973, a tenth of Laos’ population had been killed. Thousands more accidental deaths would follow from unexploded bombs left in the soil.” 

Given its violent past, America has perhaps, in Anglo-German Trump, got just the president it deserves.  

Follow@minhazmerchant on twitter

The Post-Truth Budget
There are two arrows left in the finance minister’s quiver... the huge amount of black money deposited... (and) the goods and services tax

Wednesday, February 15, 2017

Like most post-truths, Union Budgets tend to hide more than they reveal. The 2017-18 Budget was no exception. Since its strengths and weaknesses have been debated ad nauseam over the past fortnight, I’ll stick to interesting micro-numbers that once extrapolated, can provide clues to this government’s political and economic priorities. 

First, the bad news. The government spends 25 per cent of its annual Budget outlay on interest payments. In 2017-18, out of the Budget’s total size of Rs 21.47 lakh crore (up from last year’s Rs 19.78 lakh crore), Rs 5.23 lakh crore will be eaten up by servicing India’s domestic and external debt. 

Defence, meanwhile, gets Rs 2.62 lakh crore, a little more than last year. This though, is still barely two per cent of India’s GDP (Rs 150 lakh crore). But the bigger worry is that a major chunk of the defence budget goes into salaries and overheads, leaving little for modernising weapons systems across the Army, Navy and Air Force. 

Health and family welfare fare worse. They have been allocated Rs 0.49 lakh crore. Subsidies continue to receive nearly 12 per cent of the Budget at 
Rs 2.40 lakh crore. 

Agriculture gets Rs 0.57 lakh crore, while rural development receives Rs 1.29 lakh crore. The Rs 48,000 crore allocation for MGNREGA too, in real inflation-adjusted terms, is only a smidgen above allocations made in 2008-09. 

On the receipt side, there is a welcome surge in personal income tax revenue (Rs 4.41 lakh crore), a rise of 25 per cent over last year’s revenue of Rs 3.53 lakh crore. Corporation tax though, has only edged up by nine per cent from Rs 4.93 lakh crore to Rs 5.39 lakh crore, indicating a slow pick-up in corporate earnings — a worrying sign for the government. Service tax has risen more smartly — by 20 per cent — from Rs 2.31 lakh crore to Rs 2.75 lakh crore, while customs and excise revenue have ticked along at a growth of nearly 18 per cent. 

Beyond numbers though, lies a fundamental question: what is the broad economic philosophy of this government? We have already had four Budgets from Finance Minister Arun Jaitley, including the interim Budget in July 2014, two months after the BJP-led NDA government took office. 

Several clues have since emerged. First, Jaitley is a cautious finance minister who believes in incremental, not big-bang, reforms. The only big-bang fiscal event in the past 33 months of the government’s tenure has been demonetisation — a move spearheaded by the Prime Minister, not the Finance Minister. 

The second clue is that Jaitley has a lawyerly approach to economic and tax policy. He has not yet repealed former finance minister, Pranab Mukherjee’s noxious retrospective tax because there are ongoing legal arbitrations which, he says, must wind their way through the judicial process. Such a tortuous, counterfactual defence of retrospective tax will please few except its author, President Mukherjee. 

Even the UPA’s former finance minister, P. Chidambaram (Mukherjee’s predecessor and successor as finance minister) has called for the abolition of retrospective taxation. This piece of draconian legislation only helps lawyers as cases wind their way interminably through the rusted legal machinery. Meanwhile, the retro tax greatly damages India’s global reputation as an investment destination with coherent tax laws. 

The third clue the 2017-18 Union Budget has thrown up is that many ministries are poorly administered. The defence ministry hasn’t spent its entire budget designated for weapons acquisitions, leading to a Rs 7,000 crore unspent corpus. Shockingly, too, the small Rs 1,000 crore Nirbhaya fund for women’s safety, remains largely unspent. 

The good news is that pilferage in the public distribution system (PDS) has reduced with the widespread use of Aadhaar’s biometrics technology. The government has meanwhile, kept the fiscal deficit to 3.2 per cent, balancing increased public expenditure with fiscal prudence. The current account deficit (CAD) is down to 1.9 per cent, largely on account of soft oil prices (though they are on the rise again) and lower gold imports.

Since the Railway Budget was subsumed in the Union Budget for the first time, it has received little attention. There is a 22 per cent rise in budgetary allocation, much of it devoted to building new railway infrastructure and enhancing safety, given the recent spate of train accidents. 
The construction of bio-toilets sits well with the government’s Swachh Bharat initiative. The proposed listing of IRCTC, IRFC and IRCON will unlock further resources to fund Indian Railways’ shambolic infrastructure.

The damage done to economic growth by demonetisation has been largely contained, though industrial production has declined and FMCG and retail sales have been hit. This negatively impacts tax revenue, but there are two arrows left in the Finance Minister’s quiver. 

The first is the huge amount of black money deposited between November 9 and December 30 last year. In the Budget, Jaitley put the amount at Rs 10.38 lakh crore out of demonetised notes valued at Rs 15.44 lakh crore, a fact that was under-reported in the media. It is estimated that around Rs 5 lakh crore of these cash deposits represent unaccounted income. 

If Rs 5 lakh crore comes into the formal economy on a recurring basis, India’s abysmally low tax base will grow significantly. Personal income tax revenue in 2017-18 could well beat estimates by Rs 1 lakh crore, shaving up to 0.5 per cent of the targeted fiscal deficit. 

The second arrow in Jaitley’s quiver is the Goods and Services Tax (GST). If GST is implemented as expected in July 2017, there will be a rise in overall indirect tax collections after a short time lag.

Jaitley though has only one more Budget (in February 2018) left. In February 2019, with the Lok Sabha election due in April-May 2019, there will be a vote-on-account Budget rather than a full Budget. 

Jaitley needs to use his last opportunity next February to put GST on an even keel and reduce corporation tax for all companies to 25 per cent as he had pledged two years ago. 

If promises once made are broken, the credibility of the government can erode quickly even in a post-truth world.

Follow@minhazmerchant on twitter

Don't trust Pakistan when it comes to sending terror towards India
Ceasefire violations have reduced significantly since General Bajwa took charge as Pakistan Army chief on November 29, 2016.

Thursday, February 9, 2017

Two recent signals have led analysts to believe that Pakistan is rethinking its decades-old strategy of using terrorism against India as an instrument of state policy.

First, the new Pakistan chief of army staff (COAS) General Qamar Javed Bajwa, unlike his India-obsessed predecessor General Raheel Sharif, is seen as less confrontational. Ceasefire violations have reduced significantly since General Bajwa took charge on November 29, 2016.

Snow, however, rather than any dovish policy change is the key factor. Terror infiltration has not reduced significantly, leading credence to the belief that Pakistan’s policy of bleeding India by a thousand cuts remains unaltered.

The second signal comes from the White House: Pakistan was warned through diplomatic channels last month that it could be subjected to international sanctions aimed at stopping terror financing. A rattled Islamabad placed Jamaat-ud-Dawa (JuD) founder and Lashkar-e-Taiba (LeT) mentor Hafiz Saeed under house arrest to mollify the Trump administration.

The JuD meanwhile quickly changed its name to Tehreek Azadi Jammu & Kashmir (TAJK) to escape sanctions. Pakistan is mortally afraid of being sanctioned by the US and its allies under the Financial Action Task Force (FATF). That would cut terror financing vital to terrorist groups like the LeT. Islamabad may not be in imminent danger of being put on the FATF blacklist (from which it emerged only two years ago) but another terrorist attack on Indian soil traced back to the ISI could tip the balance.

Leopards though don’t change their spots. Pakistan’s interior ministry said defiantly: “Pakistan does not need any certification or endorsement from India over the recent actions it has taken in relation to Hafiz Saeed. India has constantly been using Saeed’s political activities as a tool to malign Pakistan. The international community should take note and understand that Pakistan is a democratic society where the judiciary takes free, independent and transparent decisions.”

Saeed’s arrest (which only amounts to protective custody in a safe house) citied an old UNSC resolution (1267 of December 2008), adopted following the 26/11 terror attack on Mumbai. The Bush and Obama administrations turned a blind eye to the UN’s $10 million (Rs 67 crore) bounty on Saeed’s head. Pakistan hopes the Trump administration will do the same. It might be right.

Defence secretary James “Mad Dog” Mattis last week in Tokyo called Iran the biggest state sponsor of terrorism in the world. Pakistan was not mentioned. That would have pleased Islamabad which has run circles around successive US administrations for nearly 20 years.

Shia Iran is locked in a battle with Sunni Saudi Arabia for primacy in the Middle East. The Islamic State (ISIS) received early funding from Saudi Arabia and Qatar before ISIS turned on the Saudi royals, vowing to unseat them.

Pakistan is part of the Saudi orbit. General Raheel Sharif heads the proposed 39-country Islamic Military Alliance (IMA) to fight Islamist terror. Shia Iran, Syria and Iraq are notably absent from the coalition.

By targeting Iran as the principal source of terror, the US defence secretary has given Saudi Arabia and Pakistan, both founts of global terror, a free pass. Islamabad’s relief though could be shortlived. While James Mattis is Iran-focused, others in the Trump administration, including National Security Advisor General Michael Flynn, know the danger Pakistan poses.

On Tuesday, February 7, the US moved a proposal in the UN to designate Jaish-e-Mohammad chief Masood Azhar a global terrorist. China again blocked it. A concerted bid to name Pakistan as a state sponsor of terrorism floundered under the Obama White House which flatly refused to consider it.

Congressman Ted Poe, chairman of the sub-committee on terrorism, tabled a bill in September 2016 to designate Pakistan a state sponsor of terrorism. The bill got nowhere. That could now change. Trump is serious about Islamist terrorism and especially defeating ISIS. The recapture of Raqqa, ISIS’s de facto headquarters in Syria, is taking longer than expected. The battle for Mosul in Iraq too is stuck in a quagmire.

As the Trump administration turns its attention east of Iran, it will have to deal with Pakistan’s terror role in Afghanistan and India. Sensing the danger to its transactional friend, China has sent vice foreign minister Cheng Guoping, in charge of external security and terrorism, to Islamabad. Beijing has finally recognised that Pakistan’s terror factory poses a threat to its Muslim province Xinjiang in the northwest as well as to work on the China-Pakistan Economic Corridor (CPEC) in Balochistan.

With pressure mounting from Washington and Beijing, Pakistan will be forced to recalibrate its strategy on India. It may reduce terror attacks outside Jammu & Kashmir but continue funding and arming militants in the Valley under the umbrella of freedom fighters. The JuD’s new name, Tehreek Azadi Jammu & Kashmir, is a clear indication of this new strategy.

For India, three responses are necessary. First, liaise closely with the White House to sanction Pakistan. Second, improve the armed forces’ and paramilitaries’ working conditions and equipment. Third, do not be seduced into an early resumption of talks following a few cosmetic arrests of Hafiz Saeed and other JuD/LeT terrorists.

There may be a brief lull in terror attacks against India but for the Pakistani army old habits die hard. Do not trust. Verify.

Follow@minhazmerchant on twitter

Arun Jaitley's 2017 Union Budget raises a cause for worry
Tax terrorism will be BJP’s Waterloo.
Monday, February 6, 2017

A good Union Budget can easily turn sour if, in the name of culling the black economy, the cure becomes worse than the disease.

The proposed cure by the finance ministry involves new search and seizure rules for the Income Tax department that are straight out of Orwellian dystopia.

The fine print of the Finance Bill 2017 that lays out details of the 2017-18 Union Budget does not make for pleasant reading.

First, in search and seizure cases, the assessing officer does not have to provide a reason for the operation.

Worse, the officer can search charitable organisations, again without seeking permission from the principal commissioner as was the case earlier.

The fine print in the Finance Bill 2017, which will be tabled in Parliament, has more such incendiary proposals.

For example, one particularly draconian proposed amendment in the I-T Act permits the assessing officer to order attachment of the assessee’s property for six months after obtaining sanction from a senior officer.

Such wide discretionary powers can – and will – beget abuse.

Prime Minister Narendra Modi is instinctively against such abuse that amounts to tax terrorism and defeats the principle of maximum governance, minimum government. His officials in the finance ministry, however, are clearly playing to a different tune and a different conductor.

The prime minister must step in and remove these tax amendments – or accept responsibility for them along with the opprobrium.

Last year’s Union Budget had numerous rollbacks on pension funds, interest rates and EPF withdrawls. The finance ministry hasn’t learnt from those setbacks, which were deeply unpopular with the middle class.

The proposed amendments in the Finance Bill 2017, if enshrined in law, will - like Pranab Mukherjee’s retrospective tax law of 2012 - remain a blot on India’s tax legislation.

On February 4, revenue secretary Hasmukh Adhia made a startling admission. He said finance minister Arun Jaitley’s pledge in the 2015-16 Union Budget to cut corporate tax in stages, from 30 per cent to 25 per cent, depended on how much additional revenue was obtained from personal income tax in future. Each one per cent reduction in corporate tax, he said, meant a loss in revenue of around Rs 19,000 crore.

This is an extraordinary state of affairs: the finance minister pledges a tax cut in a Budget speech and two days later his ministry introduces a conditionality. Trust in government is the first casualty.

A conservative Budget
The Union Budget for 2017-18 was a cautious effort to consolidate the economy after the pain of demonetisation. But the return of the Inspector Raj is not an outcome the government needs.

The prime minister has just one year to reset his economic goals. In 2018, he will be immersed in winning difficult elections in Madhya Pradesh, Rajasthan and Chhattisgarh. All three will encounter strong anti-incumbency headwinds.

Together, the three states account for 65 Lok Sabha seats. In the 2014 general election, the BJP won 62 of those seats which, along with its performance in Gujarat, Uttar Pradesh and Maharashtra, swept it to a comfortable majority.

With the 2019 Lok Sabha election looming and reverses likely in Punjab and Uttar Pradesh in 2017, the 2018-19 Union Budget next February will be intensely “political”. There will be giveaways, farmer loan waivers and other populist measures.

Elections can sometimes be won on such populism but the economy needs a healthy dose of liberal reform to overcome anti-incumbency. The quality of leadership in the finance ministry has been ambivalent. Several bureaucrats from the UPA regime continue to call the shots.

The implementation of demonetisation was botched by bureaucrats in the finance ministry as well as some in the Reserve Bank of India (RBI). Thankfully, some of these officials are retiring shortly.

They should have been transferred out of the finance ministry as soon as prime minister Modi took office. An invisible hand has protected them.

The appointment of economist and historian Sanjeev Sanyal as principal economic advisor is a positive indication that Modi has decided, albeit belatedly, to induct top-notch technocrats from the private sector (Sanyal was managing director of Deutsche Bank in Singapore).

After two similar appointments early in his tenure – Arvind Panagariya and Bibek Debroy in Niti Aayog – Modi has relied on political appointees.

That must change. For example, the induction of former editor MJ Akbar as minister of state for external affairs has paid rich dividends. Akbar has made successful trips to the Middle East, met Syria’s embattled president Bashar al-Assad and taken over some of the burden from external affairs minister Sushma Swaraj, recovering from a kidney transplant.

Politics vs governance
While politics is about winning elections with the likes of Yogi Adityanath, governance needs domain expertise. The Modi Cabinet lacks it.

Defence minister Manohar Parrikar has been a disappointment. He is straining at the leash to return to Goa as chief minister (if the BJP wins the Assembly election). Sushma Swaraj and Arun Jaitley have been workmanlike at best. Rajnath Singh as home minister has not brought the robustness his office needs.

In the rest of the Cabinet, those who have shone possess a technocratic or professional background. For example, power minister Piyush Goyal was a Mumbai-based investment advisor and entrepreneur. Commerce minister Nirmala Sitharaman, a JNU alumna, was a senior manager in PriceWaterhouseCoopers and worked for the BBC World Service.

The finance ministry needs more specialists like Sanjeev Sanyal. With Arvind Subramanian, the anodyne chief economic advisor (CEA), likely to leave when his term expires in October 2017, Sanyal (who reports to Subramanian) could move up.

More such talented men and women drawn from academia, the professions and the private sector should be inducted in government as it completes three years in office in May 2017.

The de-bureaucratisation of decision-making will make issues like tax terrorism a distant memory as India prepares for the next two intensely political years.

Follow@minhazmerchant on twitter

Modi's moment of truth
There are state polls in 2018... the road to Delhi in 2019 will thus pass through not only Lucknow but Ahmedabad, Bhopal, Raipur and Jaipur

Friday, February 3, 2017

Punjab and Goa go to polls on 4 February. Both have single-phase voting. Attention will then turn to Uttar Pradesh, where voting extends over seven phases from 11 February to 8 March. 

The cliché is that the path to Delhi passes through Lucknow. If the Bharatiya Janata Party (BJP) does not win Uttar Pradesh, according to conventional wisdom, the road to Delhi in 2019 will be blocked. 

Like all nuggets of conventional wisdom, the truth is more complicated. Winning Uttar Pradesh is vital for Prime Minister Narendra Modi for two reasons. 

First, it is a quasi-referendum on demonetisation. Uttar Pradesh is a microcosm of India with high levels of rural poverty. Victory in UP will be a vindication of demonetisation, which has been positioned as pro-poor and anti-corruption. Second, UP will test whether the Modi electoral tidal wave, which lifted the BJP to an unprecedented 71 out of 80 Lok Sabha seats in the State in 2014, has ebbed or not. 

The alliance between Akhilesh Yadav’s Samajwadi Party (SP) and the Congress could coalesce minority votes around the two dynasts. 11 March, when votes in all five States are counted, will be a moment of truth not only for the Prime Minister but also for the Opposition. Opinion polls project the BJP winning in Uttar Pradesh, Uttarakhand and Goa, and the Congress winning in Punjab. Manipur, battling a blockage and an unsettled voting environment, is too close to call. Defections in the Manipur Assembly are rife, even though the State Congress is unlikely to meet the fate of Arunachal Pradesh. 

By projecting himself as a man of the masses, Modi has switched seamlessly from suit-boot sarkar to pro-poor messiah. The makeover has worked so far. Opinion polls show an average of 74 per cent of people across Uttar Pradesh, Uttarakhand, Punjab and Goa in diverse age and income demographics back demonetisation. 

There is an element of schadenfreude in this: if the rich are suffering, the poor conclude, Modi must be doing something right. This Robin Hood reaction is an indictment of decades of misgovernance that has made the inequality of incomes between rich and poor in India among the highest in the world. 

In 1971 the then Prime Minister, Indira Gandhi coined the slogan ‘garibi hatao’ to project herself as pro-poor and anti-rich. It worked like a tonic. She won the March 1971 general election in a near-landslide with 352 seats, riding the wave of populism. India’s decisive victory over Pakistan in the Bangladesh war later that year enhanced her popularity.

What happened three years later, in 1974 should, however, interest Modi. He was then a 24-year-old pracharak in the RSS. Indira Gandhi, in the eighth year of her prime ministership, was seemingly invincible — but cracks had begun to show. Jayaprakash Narayan’s Sarvodaya movement had eroded her credibility. Within a year, it would be destroyed when she declared an Emergency that has historically diminished her stature as a leader. 

Is there an analogy to be drawn with Modi? The short answer: no. 

The non-Congress Opposition has tried to project a similarity between Modi of 2017 and Indira Gandhi of 1975. There is none. When Indira Gandhi was Prime Minister, there was little opposition in parliament or within the Congress. Modi in contrast has to deal with a vituperative Opposition that taunts him daily. Elements in his own party, and some even in RSS-affiliated groups, oppose him behind closed doors on a range of issues. 

In Indira Gandhi’s time, especially during the Emergency, the media was a lapdog. Today a broad swathe of the media is (as indeed it should be) a watchdog. It misses no opportunity to mock or eviscerate Modi. 

Indira Gandhi locked up thousands of Opposition leaders, journalists and activists in 1975. Modi has done little to even pursue strong cases of alleged corruption against the Gandhis, Robert Vadra, P. Chidambaram and a host of others in the UPA government, instead allowing the investigations and cases to grind their way through the tortuously slow judicial system. 

However, Modi has proved himself to be the classical disrupter. He has disrupted the cosy consensus in New Delhi’s political establishment where leaders across party lines duelled theatrically in parliament during the day and networked collegially after dusk.

Modi is a loner. He often dines alone at his sprawling three-bungalow residence, briefed daily by a close group of advisors, some drawn from his days as Gujarat chief minister. 

Modi spent the first half of his term resetting India’s foreign policy. He has strengthened defence and strategic cooperation with the United States, befriended the Arab world, used surgical strikes to increase the cost to Pakistan of terrorism and followed an act-East policy with Japan, Vietnam and littoral States in the South China Sea as both an economic strategy as well as a lever against an increasingly bellicose China. 

Modi is set to spend the second half of his first term — and make no mistake, he does not wish to be a single-term Prime Minister — on domestic policy. Demonetisation is the first, disruptive step. 

The election results in five States on 11 March will reveal how the Prime Minister will further reset policy. The Gujarat Assembly election looms in December 2017. There are three vital State elections in 2018: Rajasthan, Chhattisgarh and Madhya Pradesh. 

The road to Delhi in 2019 will thus pass through not only Lucknow but Ahmedabad, Bhopal, Raipur and Jaipur. 

Indira Gandhi destroyed the powerful Congress syndicate in 1969, her third year as Prime Minister, and ended up wielding absolute power. Modi, in his third year as Prime Minister, confronts no internal party threat of the magnitude Indira Gandhi faced. Whatever the outcome in Uttar Pradesh, none is likely to emerge contrary to what gnarled Lutyens commentators, still co-opted by the old ecosystem, wishfully think. 

The threat, if any, lies in economic reforms being derailed by lack of focus. After this Union Budget, the Prime Minister must take ownership of economic policy. It is his real pathway to victory in 2019.

This article was published in BW Businessworld issue dated 'Feb. 23, 2017' with cover story titled 'INDIA’S PRIVATE EQUITY RAINMAKERS'

Follow@minhazmerchant on twitter

BJP is walking into Uttar Pradesh’s dynasty trap
Run by dynasts for decades, the state's backwardness couldn’t offer a more compelling argument against dynastic politics.
Thursday, February 2, 2017

Is dynasty back? In America, there are little Trumps popping up everywhere — Donald junior, Eric Trump, Ivanka Trump, Jared Kushner (Ivanka Trump’s husband and president Donald Trump’s newly appointed senior advisor).

In Uttar Pradesh it’s even worse. Nine members of Samajwadi Party patriarch Mulayam Singh Yadav’s clan are contesting the 2017 assembly election, including 26-year-old Aparna Yadav, wife of Mulayam’s younger son Prateek.

The Rahul Gandhi-Akhilesh Yadav “Ganga-Yamuna” alliance, as Rahul pertly put it, symbolises the dynastic fervour spreading across India.

Priyanka Gandhi is, meanwhile, laying the ground work for her putative electoral debut from Rae Bareli in the 2019 general elections when she is likely to inherit the constituency from mother Sonia Gandhi.

The BJP, despite Prime Minister Narendra Modi’s stern warning against family members of serving politicians contesting elections, is pressing ahead with its own dynastic debutants. Home minister Rajnath Singh’s son Pankaj Singh will contest from Noida while senior leader Kalyan Singh’s grandson Sandeep will stand from Atrauli.

In Uttarakhand, the BJP’s Ritu Khanduri Bhushan, former chief minister BC Khanduri’s daughter, will contest from Yamkeshwar constituency.

A Banerjee dynasty is, meanwhile, being seeded in West Bengal: Abhishek Banerjee, Mamata Banerjee’s ambitious and wealthy nephew, a Lok Sabha MP, is firmly in charge of Trinamool Congress (TMC) affairs.

Mayawati’s brother Anand Kumar, currently under criminal investigation, has allegedly amassed huge wealth though a complex web of companies during his sister’s four terms as UP chief minister. He is proving again, if further proof was needed, how profitable dynastic politics can be.

Political dynasties are not restricted to India. In France, for example, Marine Le Pen, daughter of Jean-Marie Le Pen, has emerged as a populist without some of her father’s racist rhetoric. She is though unlikely to win the 2017 French presidential election, where Francois Fillon is the right-of-centre favourite.

So is political dynasty really back? Yes and no. In Asia and the Middle East it never went away. But in Europe and America, it is still the exception, not the rule.

For example, despite having a father (George H Bush) and a brother (George W Bush) as past presidents, Jeb Bush was clobbered in the 2016 Republican primaries. Hillary Clinton, despite being married to a former president, lost to a man who had never held elected office: Donald Trump.

What about Canadian prime minister Justin Trudeau, former prime minister Pierre Trudeau’s charismatic son? Doesn’t he prove that dynasty works even in the West?

No, it doesn’t. Canada has had 23 prime ministers since 1867. Justin Trudeau is the first Canadian prime ministerial dynast in 150 years.

Ditto America. Since 1789 when George Washington became the first US president, there have been just three dynastic American presidents in 228 years (the Adams, Harrisons and Bushes). Of these, the Adams and Harrisons lived in the 19th century. George W Bush is the only US dynast-president in over a century (the Roosevelts, Theodore and Franklin, were fifth cousins and don’t count).

No de Gaulle or Churchill dynasty exists. The children of Tony Blair and Margaret Thatcher are not remotely connected with politics.

In the US, the farthest Caroline Kennedy’s career went was her appointment as ambassador to Japan. Daughter of president John F Kennedy, she declined an opportunity to contest the New York senate seat.

Priyanka, the next dynast?
In India, the Congress is betting on Priyanka to revive its fortunes in the 2019 Lok Sabha election. Sonia is likely to hand over Rae Bareli (like a family heirloom, never mind the constituency’s debilitating poverty) to Priyanka just as Rahul inherited Amethi from father Rajiv (who in turn had taken it over from brother Sanjay).

The real reason Priyanka will not campaign outside Rae Bareli and Amethi in the 2017 Uttar Pradesh elections is that her “brand” could be tarnished if the Congress fails, despite her UP-wide campaign, to win more than 25-odd seats. If the SP-Congress alliance does well, Priyanka and Rahul will share the credit. If it does badly, Priyanka will be protected from the blame.

It is vital for the Congress to ensure that Priyanka’s vote-getting charisma — so far untested and only part of Congress lore — is not prematurely damaged. The 2019 general election is when Priyanka will be formally launched. Any over-exposure before that could do more harm than good.

Priyanka’s relatively low-key campaigning will also serve another key purpose: Rahul’s primacy in the Congress, once Sonia steps aside as president, will not be undermined by those clamouring for a larger role for Priyanka.

Rahul and Priyanka share a close bond. Priyanka will do nothing to upset her brother’s political applecart (he is of course perfectly capable of doing it himself without outside help).

In the end, political dynasts have to be judged by performance. In the Congress, the Scindias, Deoras, Prasadas, Hoodas and Gandhis have done little to inspire confidence. The exception is Sachin Pilot but again that tends to prove the rule: dynasty rarely works.

In fields where only performance counts — for example, sport — dynasty has long been discounted. None of the sporting greats — Rod Laver, Donald Bradman, Pelé, Mansoor Ali Khan Pataudi – have produced dynastic champions. In sport, there are no second chances, no fiefdoms to fall back on.

Public life should be the same. Dynastic politics narrows the choice voters have in a democracy. When nine members of Mulayam’s family stand for election on the strength of a family name, they deprive nine others who can claim merit but not family.

Run by dynasts for decades — from the Bahugunas to the Yadavs — UP’s continuing poverty and backwardness couldn’t offer a more compelling argument against dynastic politics. It’s a lesson the BJP’s UP dynasts may learn the hard way.

Follow@minhazmerchant on twitter

Is India Back In Business
Chidambaram and Manmohan Singh's assessment of the economic impact of withdrawal of high denomination bank notes was wrong

Monday, January 30, 2017

In the days and weeks following Prime Minister Narendra Modi’s announcement withdrawing Rs. 500 and Rs. 1,000 bank notes, prophets of doom rose in chorus: the end, they said, is nigh. 

Former Prime Minister Manmohan Singh declared in parliament that India’s GDP in fiscal 2017 would plunge by 2 per cent. He added darkly that the implementation of demonetisation reflected “monumental mismanagement ”. 

Former Finance Minister P. Chidambaram was even more scathing. He appeared on a series of television shows to warn that bank liquidity would take “seven months” to normalise. 

Dr. Manmohan Singh and P. Chidambaram have, for the better part of two decades, run the Indian economy in one capacity or the other. How accurate has their assessment of the impact of demonetisation proved? 

Not very. To be fair, both Dr. Singh and Chidambaram were right to describe the implementation of demonetisation and remonetisation as deeply flawed. But their assessment of the economic impact of withdrawal of high denomination bank notes was wrong.

Here’s why. Aditya Puri, Managing Director and CEO of HDFC Bank, is the epitome of rectitude. He runs one of the most successful and professional banks in the country. His views on the after-effects of demonetisation are thoughtful and precise: 

“The transitory and long-term effect should be viewed separately. The transitory pain is largely behind us. Increase in deposits has brought down interest rates. The process of digitisation has been speeded up by three to five years. This will increase transparency, reduce rent seeking, improve financial inclusion and reduce costs. Now, we have 4 lakh point of sales (PoS) terminals, compared with 2.9 lakh pre-demonitisation. Card swipes have gone up by 300 per cent. We feel excessive pessimism is not warranted. We spoke to top executives across industry from Reliance and Mahindra Finance to Birla Finance, ITC, HUL, Pidilife, Marico and even Jaguar. The response was the same – recovery has been far more V-shaped than they expected. Activity is close to normal and there is general expectation of recovery in this quarter.” 

Other CEOs are equally sanguine. True, they say, the implementation was botched. The flip-flops could have been avoided with better planning. But now that we are in a post-remonetisation phase, the digital thrust will begin to pay rich dividends.

As Mint wrote on January 30, 2017: “The impact of demonetisation on corporate earnings may have been overestimated, December quarter earnings data shows. More than 58 per cent of the top firms that have reported their financial results for the three months ended 31 December exceeded or met analysts’ estimates. A Mint analysis of 94 of the BSE 500 companies shows that 55 have reported earnings that met or beat estimates.” 

Parliamentary committees – and especially the Public Accounts Committee (PAC) –have interrogated RBI Governor Urjit Patel numerous times in the past few weeks. Three key points have emerged from the RBI governor’s verbal and written statements: 

One, discussions between the government and the RBI on demonetisation began in early 2016 when Raghuram Rajan was still governor (and seeking a second term); 

Two, work on the design of the new 500 rupee note began in January 2016, again when Rajan was in charge. 

Three, around 75 per cent (in value) of demonetised notes are expected to be replaced by new notes by end-February. The slack of about 25 per cent would be taken up by the surge in digital transactions. It would be unnecessary to replace the full value of bank notes withdrawn so as to achieve a “less-cash” economy. 

With the Budget session set to be stormy, what two Rajya Sabha MPs in particular, Dr. Manmohan Singh and P. Chidambaram, have to say in parliament about the post-demonetised economy and their predictions two months ago will prove interesting.

Follow@minhazmerchant on twitter

Why the killing fields of Kerala only draw collective silence (even from BJP)
The rising tide of political, communal violence diminishes the reputation of a state that has led the country across a swathe of parameters.

Thursday, January 26, 2017

The murder of a BJP worker named Santhosh in Kannur last week is the latest in a symphony of orchestrated political violence that has made Kerala a tinderbox of religious fundamentalism.

Over 44 per cent of Keralites are minorities  the highest ratio in India after Jammu & Kashmir. Over 25 per cent are Muslims. Another 19 per cent are Christians.

Kannur is a symbol of the inflammatory potential of mixing politics with religion. An ancient trading city with deep links to the Arabs and Persians, Kannur was ruled by a Muslim dynasty, the Arakkal Sultanate. Along historically with imports of Arab spices and timbre, it has in recent years imported strains of Wahabism from the Middle East.

Santhosh was allegedly killed by CPI(M) activists in his own house at Andaloor in Dharmadam which ironically is Kerala chief minister Pinarayi Vijayans own constituency. Kannur has given Kerala two chief ministers  K Karunakaran and EK. ayanar. It is a politically volatile district. Muslims comprise 38 per cent of its population. Five out of 20 ministers in the Kerala cabinet are from Kannur  including the chief minister.

Kerala is no stranger to communal and political murders. Though the Left and the Congress have dominated the states politics since Independence, the RSS set up base in the 1940s. Its rally in 1948 addressed by Sarsanghchalak MS Golwalkar was attacked by Communist workers in Thiruvanthuparam.

The killings havent stopped since. Kerala has a literacy rate of 98 per cent for men and 96 per cent for women, among the highest in India. Yet it ranks among states with the countrys most violent communal incidents. In May 2003, eight Hindus were killed by a Muslim mob in Marad. A judicial commission found the Indian Union Muslim League (IUML) guilty of being involved in both the conspiracy and the massacre. Other districts and towns in Kerala have witnessed similar outbreaks of communal violence.

With the growing influence of the RSS and the BJP nationally, fundamentalism in Kerala has spiked. Conversions are rife. Abductions and kidnapping have increased. In several districts minorities are now the majority. For example, in Malappuram and Kottyam, Muslims comprise the majority. In Ernakulam, Christians are in the majority.

Communal violence is not restricted to Hindu-Muslim clashes. Muslims and Christians have rioted as well. In May 2009, the two communities clashed in Cheriyathura. Five Muslims were killed. Most communal clashes in recent years though have been between Muslims and Hindus. State leaders claim the RSS and the BJP are deliberately polarising the communal atmosphere to expand their political footprint.

Of south Indias five states, the BJP has a solid presence only in Karnataka (which it could win in the next Assembly poll in 2018) and, through ally TDP, in Andhra Pradesh. It has tried to make headway, with little success, in Telangana.

In Tamil Nadu, following Jayalalithaas death, it senses an opportunity. Hence the central governments quick decision to bow to Tamil sentiment and issue an ordinance allowing Jallikattu. However, the AIADMKs internal power struggles between Sasikala and Deepa Jayakumar (Jayalalithaas lookalike niece) has muddied the waters.

That leaves Kerala where the BJP picked up 10.3 per cent vote share in the 2014 Lok Sabha election (up from 6.4 per cent in 2009) and 15 per cent vote share in the 2016 Assembly election (up from 6.3 per cent in 2011). Threatened by the BJPs rising numbers, the CPI(M) and the Congress have made Kerala a communal hotbed.

The silence of the media over Keralas descent into a communal abyss typifies how biased the Indian mainstream media has become. Excessive police action in Jammu & Kashmir against stone-pelters is (rightly) excoriated by the media. The death in random violence of Muslims and Dalits is (again rightly) headlined, often with week-long protests by NGOs and activists. But political murders in Gods own country draw collective silence.

Members of Parliament from Kerala have been equally remiss. They are quick to denounce communal violence in Gujarat or Jammu & Kashmir (rightly so) but feign amnesia about communal murders in their own backyard, often instigated by cadres of the CPI(M) and the Congress.

The silence meanwhile of the BJP-led NDA government is astonishing. Though law and order is a state subject, Union home minister Rajnath Singh has done little to reprimand the Left government in Kerala.

The rising tide of communal violence diminishes the reputation of a state that has led the country across a swathe of parameters: literacy, womens rights, education, culture and the arts. Keralas matriarchal tradition too is one of Indias most progressive. Yet when it comes to politics and religion, Kerala has succumbed to a virulent form of Wahabism from the Middle East where so many Keralites work.

Evangelical Christians regard conversion as their birthright. In the end, Hindus have themselves to blame. The disgraceful treatment of Dalits by upper castes has allowed conversions to take place either through inducement or coercion. Caste disunity has similarly let Muslims wage an undeclared communal war in sensitive districts of Kerala with Islamist undertones.

Last weeks murder of Santhosh in Kannur is an indictment of a state that has dangerously lowered the secular standard it once set for the rest of India.

Follow@minhazmerchant on twitter

Liberals protesting against Donald Trump are being most illiberal
Protest his presidency for the next four years by all means. But do it with civility
Monday, January 23, 2017

“I’d like to punch Donald Trump in the face.”

Guess who said that? A fascist? A right-wing extremist? A white supremacist?

None of the above. The words belong to Robert de Niro, the storied if rapidly ageing actor and a lifelong defender of liberal values — tolerance, democracy and non-violence.

Now, I’m not a fan of Donald Trump. I’ve called him a braggart and worse.

There’s plenty not to like in Trump. His protectionist trade policies are counter-productive. Appointing son-in-law Jared Kushner as senior advisor is nepotism of the kind we have long condemned in Indian politics. And Trump’s misogyny is beyond the pale.

As they say, Trump will make America grate again.

All of this doesn’t excuse Robert de Niro’s outburst or Michael Moore, the filmmaker, saying just after Trump’s inauguration as president last Friday: “We will stop this man. He will not last four years.”

And then Moore delivered his coup de grace to an adoring crowd of protesters on inauguration day, sneeringly calling Trump a “sociopath”.

Sounds familiar? It’s not unlike the “psychopath” abuse Arvind Kejriwal likes to direct at Prime Minister Narendra Modi.

The comparison between Trump and Modi has of course been overstated. Both are outsiders but have arrived at the top of the political totem pole from vastly different places.

One was born into wealth, the other into poverty. One served as chief minister of a state for over 12 years before becoming prime minister, the other served no elected office before leapfrogging into the presidential race. One believes in open markets and free trade, the other in trade protectionism. One backs rapprochement, the other confrontation, with China.

The one thing Trump and Modi do have in common is the abuse they attract from tolerant, liberal people like de Niro, Moore and, in India, from a hoary cabal of those who think they are liberal, but flout every rule of liberalism. 

The first rule is civility. Anyone who uses profanities to describe a person holding an opposing point of view is not liberal. Trump himself fails the test along with his abusive critics. In India, abusers in politics and media on the Left and the Right (and a few in the centre) fail the test too.

The second rule of liberalism is tolerance. Self-declared liberals like actor Shah Rukh Khan, who was banned by the Wankhede Stadium management in Mumbai for abusing a guard, are not role models of tolerance.

The third rule of liberalism is respecting the will of the people. You may loathe Trump – and there are good reasons to do so – but to say he is “an illegitimate president” puts you in the same “basket of deplorables”, to quote Hillary Clinton, as Trump.

Protesters continue to claim that Trump is an illegitimate president because he got 2.1 million fewer popular votes than Hillary Clinton though he won the electoral college comfortably 306-232.

They couldn’t be more wrong. Clinton won the popular vote  almost entirely because of the way California voted, giving Hillary a 2.5 million vote win in that state alone. Take California out of the equation (and keeping even a heavily Democratic state like New York in) and Clinton’s 2.1 million national vote lead vanishes.

Protest Trump’s presidency for the next four years by all means. But do it with civility, non violence and respect for the will of the people, also known as democracy.

The final rule of liberalism of course is non-violence. Many protests in America since Trump’s inauguration have been violent, even vicious. Dozens of people and police have been injured. That places the protesters firmly in the same basket of deplorables to which, they believe, Trump belongs.

The Women’s March across 400 US cities and several others worldwide began as a renewed call for women’s rights and gender equality. They quickly morphed into massive anti-Trump rallies addressed by “liberal” celebrities like Madonna who declared on live television that she would like to “blow up the White House”.

Meanwhile in Davos
While Trump was bashing the US media after his inauguration and was in turn being bashed by it, the rich and the restless in Davos at their annual talking shop were served an unexpected piece of parody.

President Xi Jinping presented China as the “liberal” leader of the new world order, a position the US had held since World War II but, with Trump as an unpredictable president, was about to relinquish.

The humour was not lost on all. China, which blocks Facebook, Twitter and Google, which bullies its neighbours, which doesn’t hold democratic elections, which imprisons dissidents, was in all seriousness setting itself up as a leader of the “free world”.

Such though is the manic despondency among the global "liberalati" at the rightwards lurch of countries, ranging from America and Britain to India and Japan, that they half-believed Xi's fiction.

Meanwhile, the discourse in India has been increasingly illiberal. As a senior journalist wrote in The Hindustan Times on January 20: “The Opposition this time instead is sharply personal, driven by a deep fear and mistrust of the prime minister’s individualistic attitude. Indeed, the language used against Modi is abusive and hate-filled. A senior Trinamool MP went ballistic in describing the prime minister as a ‘son of a rat’. Arvind Kejrival has already call the Prime Minister a ‘psychopath’, but now even Rahul Gandhi has attacked Modi as someone who lies about his yoga skills. The coarse and offensive discourse suggests that the Opposition has run out of fresh ideas to mount an effective challenge to Modi.”

In the US, the Clintons and Bushes have given dynasty a bad name. Barack Obama came as a breath of fresh air, but America’s first black president has ironically left race relations in the US worse off than when he took office eight years ago.

That in the end is what cleared the way for a Trump presidency in 2017 with the aggrieved white vote titling in his favour.

As with Modi, the media – in hock to a discredited, putrefied ecosystem – will criticise Trump’s every move. And it should. That’s what we do in a liberal, tolerant democracy. Without resorting to abuse

Follow@minhazmerchant on twitter

Modi cannot rely on Trump to tackle the threat Pakistan and China pose
New Delhi must be prepared to act alone.
Wednesday, January 18, 2017

All eyes will be peeled on President-elect Donald Trump's showbiz-style inauguration on Friday, January 20.

The real action though begins on Monday, January 23 when Trump has pledged to hit the ground running and "sign lots of notifications", some undoing policies of the Obama administration. Obamacare, the controversial medical insurance scheme for low-income Americans, could be the first casualty.

Rex Tillerson, the incoming secretary of state, has meanwhile already roiled China by telling it to stop monopolising the South China Sea.

Tillerson, the former chairman of ExxonMobil, directed his ire at China's aggressive moves to build artificial islands in the South China Sea: "First the island building (must) stop and second, your access to those islands is also not going to be allowed."

Beijing reacted with customary fury through its official mouthpiece Global Times:

"China has enough determination and strength to make sure that (Tillerson's) rabble rousing will not succeed. Unless Washington plans to wage a large-scale war in the South China Sea, any other approaches to prevent Chinese access to the islands will be foolish. Tillerson's statements regarding islands in the South China Sea are far from professional. If Trump's diplomatic team shapes future Sino-US ties as it is doing now, the two sides had better be prepared for a military clash."

Behind Beijing's bluster lies a deep sense of insecurity. China's annual military budget at $146 billion is less than one-fourth America's ($614 billion). Its navy is hopelessly outgunned.

America has 19 aircraft carriers and 68 battleships. China has just one aircraft carrier and 32 battleships. The last war China fought was in 1979 when tiny Vietnam gave it a bloody nose in a short, sharp battle that left Beijing humiliated.

That was the year President Deng Xiaoping launched China's ambitious economic reforms which have transformed the country from an impoverished behemoth to the world's second largest economy in little over a generation.

China's economy slows
And yet China still has many vulnerabilities. Public and private debt is unsustainably high. Banks are over-leveraged. Exports have declined for two consecutive years. Last week, the official export numbers were released for calendar 2016: exports fell by 7.7 per cent over 2015, the year exports had first begun slipping.

Chinese GDP growth is slowing as well. China's official position is that it is comfortable with the current GDP growth rate of 6.5 per cent. In reality, GDP growth - without fudged numbers - is nearer 5 per cent as the economy cools.

For India, America's bellicosity towards China is welcome. Incoming defence secretary General James Mattis said at his confirmation hearing last week that US ties with India are of "utmost importance".

General Mattis, who takes over from outgoing defence secretary Ashton Carter, added: "US policy should continue to pursue a long-term strategic relationship with India based on convergence of our interests and our shared democratic values."

General Mattis was blunt about confronting China, saying Washington should not tolerate "inappropriate" Chinese behaviour and deepen its partnership with India.

He added: "We have a strong interest in ensuring safe and secure access to maritime routes there, and to a stable, peaceful and prosperous region. India, Australia, Japan, and several of the Gulf Cooperation Council states are key partners for addressing the security challenges in this region, and it is my view that increasing our security assistance and military-to-military engagement with strategically positioned nations such as these is essential."

General Mattis' remarks are being closely followed in Pakistan which since 2001 has successfully "gamed" two successive American administrations of Presidents George W. Bush and Barack Obama. That could be about to change.

Untrustworthy Pakistan
General Mattis, nicknamed "Mag Dog Mattis", says coldly: "Sanctuaries and freedom of movement for the Afghan Taliban and associated militant networks inside Pakistani territory is a key operational issue faced by the Afghan security forces. I will examine efforts to deny sanctuary to the extremist forces undermining the stability and security of Afghanistan. We have long faced a lack of trust within the Pakistani military and government about our goals in the region."

Cynics say they've heard it all before. America under Trump will continue to be gamed by the shrewd, ruthless generals in Rawalpindi GHQ who use their country's geostrategic location and in-house terror groups to remain indispensable to the three great powers: America, Russia and China.

New Delhi cannot rely on a Trump presidency or Mattis-Tillerson rhetoric to tackle the threat Pakistan and China pose to India. Pakistan believes the China-Pakistan Economic Corridor (CPEC) makes it indispensable to China as well as Russia which needs to sell to China a large portion of its oil and gas that is currently under severe sanctions from the US following Moscow's annexation of Crimea.

But there are increasing signs that the CPEC may not be quite the lottery Pakistan thinks it has won. Apart from growing violence in Balochistan where the CPEC begins, problems have surfaced in Gilgit-Baltistan through which it passes on the way to Xinjiang.

China has reportedly closed part of its border with Pakistan-occupied Kashmir (PoK) to stem the flow of terrorists who pose a long-term threat to the CPEC. The blunt message from Beijing to Islamabad: you can have either the CPEC or terrorists, not both.

For India, the challenge as the Trump administration takes office this week is to make clear to Washington that, as far as Pakistan and China are concerned, it can't be business as usual.

In the end though India must be prepared to act alone. The new chief of army staff, General Bipin Rawat, was right to assert last week that India wants peace with Pakistan. However, if Islamabad does not reciprocate, he said future surgical strikes on Pakistani soil cannot be ruled out.

Peace is a priceless commodity. But it needs strength to win it

Follow@minhazmerchant on twitter

Decoding Team Trump
How good, Bad or neutral will a Trump presidency be for India? New Delhi’s main fear revolves around Trump’s intent to cut H-IB visas

Friday, January 13, 2017

President-elect Donald Trump will formally take office on January 20, 2017. He brings with him the whitest, oldest, richest Cabinet in decades. 

There are token women (Betsy deVos as Education Secretary) and token Blacks (Ben Carson as Housing and Urban Development Secretary). But the overwhelming majority of Trump’s Cabinet is cast in his image: old, white, wealthy private sector bosses and tough-talking retired army generals. 

There are two former Goldman Sachs senior executives (Steven Mnuchin and Gary Cohn), a billionaire investor (Wilbur Ross) and one of the world’s highest paid CEOs (Rex Tillerson). This collection of alpha males includes three army generals (John “Mad Dog” Mattis, John Kelly and Michael Flynn). It dovetails with Trump’s stated policy priorities: trade and terrorism. 

Trump has largely ignored establishment technocrats that his predecessors, Presidents Barack Obama and George W. Bush, inducted. There are no lawyers, academics, think-tankers or career bureaucrats in the Trump Cabinet. 

The most intriguing choice is the man who will hold the top-ranking Cabinet post of secretary of state: Rex Tillerson. As boss of ExxonMobil, the world’s largest energy company (and the third largest firm in the world), with an annual turnover of over $280 billion (Rs 19 lakh crore) and a market cap of $390 billion (Rs 26 lakh crore), Tillerson is a hard-charging boss. He is personally close to Russian President Vladimir Putin. ExxonMobil has major interests in Russian oil and gas. 
Could this cause a geopolitical conflict of interest? When Tillerson is negotiating with Moscow on Syria and Iraq, will US foreign policy be compromised? Under President Obama’s two secretaries of state – Hillary Clinton in 2009-13 and John Kerry in 2013-17 – US Middle East policy had a single-minded objective: oust Syrian President Bashar al-Assad. The battle against the Islamic State (ISIS) suffered as a consequence. The CIA armed, funded and trained a rag-tag group of Syrian rebels fighting to depose Assad.

Under a Trump presidency the focus will shift decisively to defeating ISIS. The new defence secretary, General John “Mad Dog” Mattis, has a reputation for being a no-nonsense advocate of proportionate force. A former head of US Central Command overseeing US military operations in the Middle East, Northeast Africa and Central Asia, General Mattis calls President Obama’s policy on ISIS “strategy-free”. Mattis told the Senate Armed Services Committee that the US needs to “come out from our reactive crouch and take a firm, strategic stance in defence of our values.” 

General Michael Flynn, nominated as national security advisor (NSA), is if anything even more hawkish than General Mattis. He has called radical Islamic terrorism a threat to America. General Flynn served combat missions in Afghanistan and has a strong intelligence background. Obama promoted him as director of the Defence Intelligence Agency (DIA). As Trump’s NSA, Flynn will be a vital cog in America’s war against Islamist terrorism. 

Clues to Trump’s economic policies were scattered all over the long presidential campaign: reduce outsourcing, protect American jobs, retaliate against China’s high trade tariffs on US goods, bring manufacturing industry back to America, and rebuild the country’s “crumbling” infrastructure. 

Trump’s pick as treasury secretary is an old Wall Street hand, Steve Mnuchin. A former Goldman Sachs partner, Mnuchin will be expected to deliver on Trump’s campaign promises on the economy. He will also have to wrestle with a national debt of $20 trillion and soaring budget deficits. 

Trump wants to increase military spending (which has declined during the Obama years) to preserve America’s global footprint. Mnuchin will have to balance that objective with the tax cuts Trump has also promised. He’ll need all the ingenuity he acquired at Goldman Sachs and later as a hedge fund investor. 

Trump’s choice as interior secretary, Ryan Zinke, has drawn sharp criticism. Zinke is a pro-coal advocate. Trump himself is a climate change-denier. While he has moderated his rhetoric (he frequently called global warming a “hoax” during the election campaign), there’s little doubt that Trump will revive America’s fossil fuel industry to the dismay of environmentalists. 

Trump’s critics are worried that with oilman Rex Tillerson as secretary of state and a global warming sceptic like Ryan Zinke as interior secretary, America will turn its back on its commitments to reduce carbon emissions. That’s unlikely. The Paris climate deal has been ratified by most countries, including the US, China and India. But Trump will back a surge in investment in fracking now that oil prices are climbing. (Fracking is profitable at prices of $50-plus per barrel.) 

Trump has also promised coal miners in Pennsylvania and other industrial states that he will protect their mining jobs – jobs that Hillary Clinton during the election campaign had pledged to eliminate. That alone could have cost her the Rust Belt states of Michigan, Wisconsin and Pennsylvania (with their 46 Electoral College votes), all of which Trump won by narrow margins. Had Hillary won those traditionally Democratic states, she would have been US president-elect today with 278 Electoral College votes to Trump’s 260 rather than the 306-232 margin by which Trump won. 

How good, bad or neutral will a Trump presidency be for India? New Delhi’s main fear revolves around Trump’s intent to cut H-IB visas. However, Trump is a pragmatist. He is unlikely to make drastic cuts in a scheme that has served both India and the US well for decades. 

On Pakistan and China, India will welcome Trump’s overall strategy. Despite the faintly ridiculous telephone conversation with Pakistan’s Prime Minister Nawaz Sharif in which he allegedly called Pakistanis “fantastic people”, Trump has a deep antipathy for Islamabad’s duplicitous policy on terrorism of chasing with the hounds and running with the hares. The India-US strategic partnership, with Trump-friendly Russia and Japan on board, will be an effective counter to the toxic China-Pakistan axis. 

The involvement of Trump’s family (Donald Jr, Eric, Ivanka and Jared) in the administration though, is worrying. Trump says he will dissociate himself from the Trump Organisation, his holding company. But with his family so closely entwined in business and politics, conflict of interest is inevitable. For the moment, Trump is enjoying an extended honeymoon with voters. Too many Trumps though, may spoil the broth.

Follow@minhazmerchant on twitter

SC ban on using religion for votes is secular, liberal - those opposing it aren't By using religion and caste in elections, political parties have divided Indians for years. That must stop.
Thursday, January 12, 2017

It is both amusing and telling that the sharpest criticism of the Supreme Court order barring invocation of religion, caste, creed and language during electioneering has come from card-carrying secular-liberals. The order is in fact both secular and liberal. Those who oppose it — and as many on the Right as on the Left do — are neither.

One of the arguments advanced against the Supreme Court order is that it is impractical to enforce. How on earth, this earnest argument goes, can the Chief Election Commissioner (CEC) possibly monitor all the inflammatory speeches politicians often make during election campaigns.

This argument was given legs within 24 hours by Mayawati asking Muslims not to “waste” their votes on the Samajwadi Party followed by the BJP’s Sakshi Maharaj decrying Muslim women’s propensity to have multiple children. Both denied they had invoked caste or religion. The CEC, Nasim Zaidi, busy with the Opposition’s demand to delay the Union Budget, meanwhile, said nothing. The Supreme Court kept its counsel — for the moment.

And yet, the argument on enforceability is utterly flawed. Laws are made because they serve public interest not because they are easily enforceable. The Supreme Court order barring politicians from using religion, caste, creed and language to influence votes is right in principle and, with effort, can be made to work in practice. The larger, subterranean, argument against the Supreme Court’s “secular” verdict is that it isn’t actually secular at all.

After all, Muslims must retain their right to be swayed by religion-based sops during electioneering. The same argument is advanced for Dalits. Why bar the BSP from invoking Dalit pride by pointing to the grand statues built for Mayawati even while Dalits pine for social justice and economic mobility?

By using religion and caste in elections, parties like the Congress, Samajwadi Party, BSP, RJD, BJP, Shiv Sena, NC, PDP, NC and All India Majlis-e-Ittehadul Muslimeen have divided Indians for years. That must stop. The Supreme Court’s order is only the first step. Strict enforcement by the Election Commission’s large machinery is necessary.

The court order backs the EC which can now disqualify a candidate for using religion, caste, creed or language to influence voters. The EC has been given legal teeth by the Supreme Court. It must use them. Campaigning for the five state Assembly elections will be its first severe test.

The most unworthy argument against the Supreme Court’s order is sub-textual: that the order somehow violates the freedom of politicians to campaign using all the tools at their disposal — including religion and caste. This argument transports the issue from the sublime to the ridiculous. It cites the example of parties with a religion named within it (the All India Majlis-e-Ittehadul Muslimeen, for example) being potentially disqualified on account of the Supreme Court order.

This, of course, is nonsense. The apex court order targets — and rightly bars — the invocation of religion in electioneering. Parties with a religious or caste affiliation within their name, as long as they campaign without inflaming religious or caste passions, do not violate the Supreme Court order in letter or spirit.

The BJP should welcome the order as well. It has a long and dodgy record of using religion to win votes. LK Advani’s rath yatra in 1990 was designed to garner Hindu votes after the party (founded in December 1980) had been reduced to two Lok Sabha seats in the 1984 general election. By using religion at every subsequent opportunity, the BJP by 1998 had clambered up to 182 Lok Sabha seats. The Ram temple in Ayodhya is still a centrepiece of its manifesto, though the party says it will do nothing till the Supreme Court delivers its final verdict in the case.

The Supreme Court judgment seeks to sever the umbilical cord between politics and religion in India. No amount of intellectual sophistry can discredit that objective or the legal means the count has chosen to achieve it. There are good reasons though why the Congress, SP, Trinamool Congress and other parties that dress themselves up in fabricated secular clothes are more worried about the Supreme Court’s order than parties like the BJP which have traditionally been regarded as communal.

The most important reason is that the BJP has moved on (or at least parts of its have) from its rath yatra days. It still attempts to polarise Hindu votes but most of its polarising work these days is done gratis by “secular” parties like the Congress, SP, NCP, Trinamool Congress and AAP. They are perceived as being so anti-Hindu that the BJP now wins resentful Hindu votes by default. That explains its sanguine reaction to the Supreme Court verdict.

The BJP has changed gears from religion to development while the Congress and its fellow travellers are still bogged down in the old politics of minority appeasement that the minorities themselves, seeking empowerment instead, have grown tired of.

The Supreme Court order gives the BJP an opportunity to move even further away from the politics of religion. Polarisation has reached its sell-by date. The BJP must shed its old clothes and put its best development foot forward.

Sakshi Maharaj and others will harm the party if they think invoking religion will help win Uttar Pradesh. Development is India’s new religion. And no Supreme Court order bars its invocation.

Follow@minhazmerchant on twitter

2017 UP assembly election rests on a knife edge
Rasputin-like Amar Singh could be the X-factor in the unfolding Yadav saga.
Monday, January 9, 2017

As the farcical war between father and son plays out in Lucknow, replete with an evil uncle lurking in the background, Uttar Pradesh awaits liberation from caste and religion. Next months seven-phase election is unlikely to provide it.

Whether or not the Samajwadi Partys Mulayam Singh Yadav and his suddenly clean-as-a-whistle son Akhilesh fight the UP Assembly election together, its outcome will shape the narrative for the 2019 Lok Sabha poll.

According to the recent India Today-Axis opinion poll, the BJP is currently the front-runner. It is projected to win 206-216 seats in the 403-seat UP Assembly (excluding one seat reserved for an Anglo-Indian member nominated by the governor). That would bring the party back to power in Indias largest state for the first time since March 2002.

But things can change rapidly in a state charged with communal and caste tension.

Akhilesh has tried to erase his governments anti-incumbency disadvantage by shifting the blame of UPs lawlessness and corruption over the past five years to the old guard. That includes his father Mulayam, his uncle Shivpal and the Rasputin-like Amar Singh.

The India Today-Axis poll was conducted from December 12 to 24. It captures the demonetisation effect (76 per cent in UP, according to the poll, back it) but crucially does not capture Akhileshs post-Christmas revolt. 

There are three factors at play here. First, by distancing himself from the SPs five-year misrule, Akhileshs SP Version 2.0 may get the benefit of doubt from voters. That though will be negated following a split among the Yadav and Muslim vote, a part of which will stay with the Mulayam-led SP Version 1.0 - if father and son dont patch up and the divided partys election symbol of a cycle is frozen by the Election Commission (EC).  

Second, if the Akhilesh and Mulayam factions do make up and the SP fights the poll jointly, but with Akhilesh choosing candidates who get tickets, theres a possibility of internal sabotage by those promised tickets by Mulayam and Shivpal. They could stand as Independents, splitting the Yadav-Muslim vote once again.

Third, there is the Rahul Gandhi factor. If Akhilesh has his way and the SP and the Congress fight the election together, will the math change? 

Examine the vote-share projected in the India Today-Axis poll. The BJP gets 33 per cent, the SP and BSP get 26 per cent each and the Congress gets six per cent.

In an SP-Congress alliance, not all of Congress's vote-share will transfer seamlessly to the SP given the states complex caste and religious faultlines. Voters in both parties opposed to the alliance could switch their allegiance to the BSP or BJP. The math of an SP-Congress alliance is therefore not linear.

Four-cornered battle
Prime Minister Narendra Modi, one of the shrewdest politicians India has produced in three decades, saw the dangers early. That is why he has been addressing rallies with growing intensity in Uttar Pradesh since last year.

BJP president Amit Shah has meanwhile been laying the booth-level groundwork for the UP elections for over two years.

In a four-cornered battle with the SP and the Congress contesting independently, the BJP is likely to emerge, according to the India Today poll, as the largest party with a narrow majority.

In a three-cornered fight, with the SP and the Congress coming together, the math changes - but not by as much as Rahul and Akhilesh would hope. Heres why.

In an SP-Congress alliance, the SP will allot the Congress not much more than 75 seats. Of these, the Congress is unlikely to win, despite the charged alliance arithmetic, more than 20 seats. Thats more than it would win fighting alone, but not decisively more.

The SP meanwhile could increase its tally in the 325 seats it contests to around 110, giving the alliance 130 seats compared to the combined total of 100-odd seats the IndiaToday poll projects for them if they fight separately.

Thats probably not enough to deny the BJP a wafer-thin majority though a hung Assembly becomes a distinct possibility.

All of this explains Rahuls keenness to ally with Akhilesh - and vice versa. Both dynasts know the only way to have a sliver of a chance to keep the BJP out of Lucknow is to fight the election together. The Congress doesnt mind being a bit player in UP as long as the BJP is thwarted.

Where does all this leave Mayawati? She has distributed tickets liberally to Muslims to inveigle those disenchanted with the internecine Yadav family feud. But her resources have dwindled since demonetisation.

Family matters
For Akhilesh, there is the additional matter of family. His mother Malti Devi died in 2003. His step-mother Sadhna Gupta, who is close to Amar Singh, had ambitions for her own son Prateek, Akhileshs step-brother.

But 28-year-old Prateek, who runs a real estate business and plans a chain of gyms, says politics doesnt interest him. It does, however, interest his 26-year-old wife Aparna. She has been given a ticket to fight the 2017 UP Assembly election from the Lucknow Cantt constituency.

Akhileshs wife Dimple - Aparnas step sister-in-law - is the MP from Kannauj, Akhileshs old parliamentary seat.

And in this family game of thistles, the peripatetic uncle, Amar Singh, slides in and out of the frame. He could still be the X-factor in the unfolding Yadav saga in Uttar Pradesh.

Follow@minhazmerchant on twitter

2017 UP assembly election rests on a knife edge
Rasputin-like Amar Singh could be the X-factor in the unfolding Yadav saga.
Tuesday, January 3, 2017

The first major political interview I did ended badly. AR Antulay, then chief minister of Maharashtra, became progressively more annoyed at my line of questioning.

Antulay was at the centre of a controversy in the early-1980s over "donations" made by industrialists to the Indira Gandhi Pratibha Pratishthan, a trust set up in the prime minister's name.

Arun Shourie, in lacerating prose in The Indian Express, headlined the scam on the front page, titling his series of investigative reports "Indira as Commerce".

When I pressed Antulay on his alleged role in the scam, he lost his temper.

"Out," he shouted, ending the interview 10 minutes after it started. His minders shook with fright. Antulay in high dudgeon was a sight to behold: nostrils flaring, eyes bloodshot, body tensed.

It would have been comic were it not for the chief minister's aides scampering around to escort me out of Antulay's office.

It was the age of entitlement. Chief ministers like Antulay epitomised what was wrong with India in the 1980s: elitism.

The entitled elite thought it could do and say what it wanted. The public was a distraction, taken for granted. During the first relatively sedate minutes of our interview, I reminded Antulay that the word minister was derived from Latin and meant servant.

He couldn't believe his ears. "Servant? We are doing public service but do not call us servants," he said in his colourful English. As the conversation moved to corruption in the Indira Gandhi Pratibha Pratishthan, the interview ended abruptly. The entitled don't like to be called out.

Has anything changed in 35 years? Is the elite still an entitled species, taking the public for granted?

In a developing country it's inevitable that entitlement won't be easily extinguished. The old elite is a hardy animal. It guards its turf fiercely.

Entitled elites traverse sectors: politics, media, bureaucracy, business and the professions. They resent the rise of merit. They worship at the feet of dynasty.

The socialism of the Indira Gandhi years hid entitlement under a povertarian cloak. It demoted the old elite - India's 600-plus royals - by banishing privy purses and titles. But it did nothing to curtail its own entitlement.

Politicians became the new royalty. Rajiv Gandhi, though born to entitlement, tried to be different. For 12 years, from 1968 to 1980, he flew old Dakota planes to small towns for Indian Airlines, eschewing most of the trappings of elitism before two accidents of history (brother Sanjay and mother Indira's deaths) plunged him into precisely the sort of entitlement he had tried to escape.

When societies become more equal, the Gini coefficient (which measures inequality in countries based on the gap between the highest and lowest incomes) falls. That's when income disparities reduce. So does entitlement.

Sweden has among the world's lowest differentials between rich and poor. Its prime ministers often cycle to work. Elitism, as we know it, is extinct in Sweden. India has among the world's worst Gini coefficients: inequality has declined in recent years but remains high.

The most glaring example of entitlement is political dynasty. Of India's 10 largest political parties, eight are family owned where entitlement is an article of faith (Congress, Shiv Sena, Samajwadi Party, RJD, LJP, NC, PDP and NCP). This list is selective, not exhaustive.

India has a long history of bowing to self-declared nouveau elites. The country was subjugated by ragtag hordes of Mongol warriors and later Turko warlords led by the Mughal Babur who had been driven out of central Asia.

The Mughals entitled themselves at India's expense till they were replaced by British mercenaries of the East India Company. Self-declared entitlement again followed. India continued to suffer.

As Shashi Tharoor in his book, An Era of Darkness: The British Empire in India, writes: "In 1930, a young American historian and philosopher, Will Durant, stepped onto the shores of India for the first time. He had embarked on a journey around the world to write what became the magnificent eleven-volume The Story of Civilization. But he was, in his own words, so 'filled with astonishment and indignation' at what he saw and read of Britain's 'conscious and deliberate bleeding of India' that he set aside his research into the past to write a passionate denunciation of this 'greatest crime in all history'. His short book, The Case of India, remains a classic, a profoundly empathetic world of compassion and outrage that tore apart the self-serving justifications of the British for their long and shameless record of rapacity in India.

"As Durant wrote: 'The British conquest of India was the invasion and destruction of a high civilisation by a trading company (the British East India Company) utterly without scruple or principle, careless of art and greedy of gain, over-running with fire and sword a country temporarily disordered and helpless, bribing and murdering, annexing and stealing, and beginning that career of illegal and 'legal' plunder which has now (1930) gone on ruthlessly for one hundred and seventy-three years.'"

And yet, the displaced Indian elite - maharajas and the landed - slipped effortlessly into subservience. At Independence, a colonial-minded Nehruvian ecosystem produced a new form of entitlement - political dynasts, Left-leaning historians and Westernised intellectuals whose lack of self-belief made them craven caricatures whom the post-imperial West mocked behind their backs.

But as India becomes a more egalitarian society, where a chaiwala can become prime minister and a petrol pump attendant the founder of India's second largest business empire, the era of entitlement will gradually pass into history.

Follow@minhazmerchant on twitter

How Mamata Banerjee has converted West Bengal into a communal cauldron
Dhulagarh is only the latest symptom.
Thursday, December 29, 2016

I first visited Kolkata as a teenager to watch a Davis Cup tennis match between Australia and India. As we sat in packed stands to cheer a young Vijay Amritraj lead India to a 3-2 win over favourites Australia, a friend spoke to me with awe about a 17-year-old Swedish prodigy called Bjorn Borg who was taking the European tennis circuit by storm: Mark my words, hell win Wimbledon. Borg duly did two years later at the age of 19 in 1976.


Kolkata was then a pleasant city. The Communists had not yet inflicted their cruel depredations on the state. Mamata Banerjee was still a young student leader of the Congress (I). The subject she chose for her masters degree at the University of Calcutta was Islamic history.

40 years later, in her sixth year as chief minister of West Bengal, Banerjee has tightened her grip over the state. She has done so by polarising West Bengal along communal lines in a manner unprecedented in the states history.

To consolidate power, the Trinamool Congress (TMC) has torn the secular fabric of Bengal into shreds. Ironically, Banerjee poses as a secular leader while she systematically practises the most cynical and egregious form of communal politics.

West Bengals Muslims form 27 per cent of the states population. Counting Bangladeshi refugees and non-Census citizens, the actual percentage of Muslims in West Bengal today is closer to 30 per cent. Banerjee has collared this vote-bank. She gives it no development but hands it generous sops  ranging from job quotas to hard cash for madarsas.

Muslims in Banerjees Bengal remain desperately poor and backward. But they vote en masse for her. This 30 per cent vote bloc, along with a smattering of divided Hindus, gives Banerjee a vice-like grip over the electorate.

It is hardly surprising that she won the last Assembly election with a landslide. Poverty and communalism are her calling cards.

Few outside Bengal had heard of Dhulagarh till two weeks ago. This small industrial and business hub in Howrah district has acquired infamy after Muslim mobs attacked Hindus and burnt their homes. The attack was triggered by a group of Hindus verbally objecting to a procession by Muslim groups on Eid-e-Milad, the Prophets birthday.

The mainstream media has typically under-reported the Dhulagarh violence. Swarajya magazine recorded the events leading up to the violence: Muslims brought out a procession complete with loudspeakers blaring Hindi film music on 13 December to celebrate Eid-e-Milad which actually fell on December 12 and was a public holiday. On December 13, Hindus at Dhulagarh village, like in the rest of the country, were observing Margashirsha Purnima. Hindus at the village requested those in the procession to lower the volume of the loudspeaker since the music was interfering with some rituals.


"This incensed a section of those in the procession and they started attacking Hindu homes and shops. According to local people, the attackers were non-local Muslims. Hindu houses and shops were looted and then set ablaze while police who reached the village were attacked by bombs and prevented from stopping the rioters.

If such communal violence had broken out in a BJP-governed state, the media would have front-paged it  and justifiably so  for days. In the case of Dhulagarh, coverage by the media was sparse. It took an outpouring of scorn on social media to spur television anchors and newspaper editors to run stories on the Dhulagarh riot which resulted in horrific arson on dozens of Hindu homes.

Dhulagarh is only the latest symptom of West Bengals descent into a communal cauldron instigated by violent TMC cadres. If the thuggishness of the CPI(M) was notionally secular, the viciousness of the TMC is unabashedly communal. Riots are its preferred way of life.


As the website CatchNews reported earlier this year: West Bengal has witnessed a spike in communal violence during Mamata Banerjees tenure. There have been the infamous Canning and Deganga riots and communal incidents increased to 106 in 2013. The previous five years witnessed about 12-40 communal incidents. Many attribute the recent belligerence of Muslim hardliners in West Bengal to the politics of appeasement played by Mamata ever since she came to power.

Following demonetisation, Banerjee has become increasingly shrill in her criticism of PM Narendra Modi. Last Thursday (December 22), she told the media shortly after a core committee meeting of the TMC: Modi Hatao, Desh Bachao is our key slogan now. A person who lost credibility has no moral right to rule the country. He and four of his men are practically running the country and ruining the nation. The Narendra Modi government has lost credibility and had no moral right to remain in office. A person who started his career with riots cannot govern the county.

Banerjee sees herself as a national leader. Like Arvind Kejriwal, Mulayam Singh Yadav and Sharad Pawar earlier, her misbegotten route to the top has been through Muslim appeasement. None of these leaders of straw pause for a moment to think how they could empower, rather than appease, Muslims.

NGOs and human rights activists, so quick (again rightly so) to condemn communal violence elsewhere in India, have remained largely silent on Dhulagarh. Bengal deserves their attention.

Above all, Bengal deserves a secular chief minister.

Follow@minhazmerchant on twitter

Suleiman and Anwar discover demonetisation is not a failure, liberals are Criticism of government policies by Left-leaning liberals may woo the studio audience, but at the grassroots, the BJP is still winning.
Tuesday, December 27, 2016

"Suleiman!” Anwar’s voice boomed over the phone. “I’ve been invited to a post-Christmas adda by a friend who’s a true-blue liberal. The place will be full of clever liberals. None of these silly right-wingers.”

Suleiman was delighted. After spending over a decade in illiberal Saudi Arabia he always looked forward to meeting liberals in India on his visits home. “That’s great, Anwarbhai,” he said, glancing around his sparsely furnished room in Delhi. He was in India for a few days and was keen to learn about all the frenetic things that were going on in the country. It’ll be nice to listen to liberal, open-minded people, he thought to himself.

Anwar picked Suleiman up just after 6.00pm on the day after Christmas from his modest rented home. “Nice car, Anwarbhai,” Suleiman said as he slid into the front leather seat of his friend’s black 5 Series BMW. “When did you get it?”

“Oh, just a few weeks ago, Suleiman,” Anwar replied with a slightly embarrassed smile. “It’s a gift, actually. I couldn’t afford the Rs 60 lakh price tag myself.”

“A gift from a liberal friend?” Suleiman asked quizzically. “They seem to be the ones caught with black money in all those raids after demonetisation.”

Anwar changed the subject. “Ah, here we are, Suleiman,” he said as he eased his BMW into a parking slot just outside an imposing building in south Delhi. “My media friend is a great organiser of these idea addas.”

As the two friends entered the large hall with theatre-style seating, a bespectacled man with a neat moustache who used to edit a newspaper greeted them. “Anwar, Merry Christmas, so nice to see you. You’ll meet lots of your friends here. And we have a great line-up of speakers today.”

As Suleiman and Anwar settled down in their seats towards the front of the room, the first speaker on stage was just getting into his stride. “The liberal, democratic ethos of our country is under attack,” he thundered. “First, the failed demonetisation experiment. Then the banning of all those secular NGOs. Now these nasty right-wingers are even telling people what not to name their child. We are heading towards fascism.”

Suleiman nudged Anwar. He whispered in his friend’s ear: “But Anwarbhai, if India was heading towards fascism, how come these people call Prime Minister Narendra Modi psycho, madman, coward, fool, Hitler and yet nothing happens to them? ”

Anwar shot him a warning glance but Suleiman continued: “Anwarbhai, I read in a Saudi newspaper that Mamata Banerjee and Arvind Kejriwal had warned of riots because of demonetisation. Have there been any riots?”

“No, there haven’t, Suleiman,” Anwar said crossly. “But that doesn’t mean there won’t be any. My liberal friends says there’s still hope –” Anwar stopped mid-sentence, biting his tongue. “I didn’t mean it to sound like that Suleiman. You know, liberals like us hoping for riots…”

Suleiman interrupted him with a grin: “So that we can blame it on Modi, Anwarbhai? The only riots I’ve read about are in West Bengal and Mamata, not Modi, is in charge there.”

A second speaker had meanwhile taken the stage to applause. Suleiman recognised him as a renowned historian with a withering contempt for right-wing intellectuals.

“He mumbles,” Suleiman said, nudging Anwar. “He’s as incoherent a speaker as he is a writer.” Anwar looked at his friend with a shocked expression. “Suleiman, that’s our pre-eminent historian! Sure, he swallows his words but he’s right, the Right hasn’t produced an intellectual since Arun Shourie.

“And the Left has produced Rahul Gandhi,” said Suleiman mischievously.

“Shhh…” Anwar gestured to the stage as yet another speaker arrived at the lectern. “That’s the famous op-ed columnist who heads a think tank,” Anwar said to Suleiman softly. “Listen carefully. He’s a fount of wisdom.”

Suleiman spent the next half-hour in rapt attention as the columnist waxed eloquent about the “renegade attempt to destablise an economic sub-system with a mendacious strategy unencumbered by rational thought.”

Suleiman looked sideways at Anwar. “I think, in English, he means demonetisation was a bad idea.”

Anwar grinned sheepishly. “Yes, he does rather get carried away with words. But he’s right, you know. Demonetisation is an utter failure.”

“Really Anwarbhai,” Suleiman asked, puzzled. “If it’s so bad, why did the BJP sweep the Chandigarh municipal election last week? I heard they won 21 out of 26 seats along with their alliance partner SAD. And of those the BJP won 20, SAD just 1 and the incumbent Congress 4. Looks like voters don’t agree that demonetisation’s a failure.”

Anwar rolled his eyes. “Suleiman, you’ve incorrigible. Anyway, here’s the panel discussion. Listen!”

On stage, a group of three grim-faced men were discussing the rise of right-wing fascism. When it was question time, a woman at the back of the hall asked: “Would you call the Left, with its record of bloody violence in Bengal and Kerala, fascist as well?”

There was a short silence before one of the panelists, an aman ki asha veteran, launched a defence of why Left-wing fascism was part of a people’s movement while Right-wing fascism was imposed by fringe Hindutva elements. He was met with liberal applause from the audience.

Suleiman shook his head in mock despair. “Anwarbhai, the RSS and the Left are two sides of the same coin. Both are conservative on economic policy. And liberals on the Left still worship Marx!”

Anwar sighed. His friend would never change, he thought to himself. “You’ve been away from India for too long Suleiman,” he said good-naturedly.

After the adda was over, Anwar and Suleiman walked slowly back to their car. Both were lost in deep thought. Suleiman broke the silence.

“You know, Anwarbhai, if what we just heard was an example of clever liberals, I’m not sure they’re either clever or liberal. They seem intolerant to other views. And that’s not liberal. Nor were their ideas particularly original or clever.”

Anwar patted his friend on the back. “Forget it, Suleiman. Maybe it was just their off-day. They’re usually better than this.”

Suleiman smiled to himself as they slid into Anwar’s gifted new BMW. That’s why, he mused, liberals are called gifted people

Follow@minhazmerchant on twitter

Demonetisation Gain After Pain
By January 31, new notes valued at around Rs 11.50 lakh crore are likely to be in circulation. Cash shortages and bank queues would have begun to ease well before that

Monday, December 26, 2016

December 30, 2016 marks the end of the "short-term" pain caused by the withdrawal of Rs. 500 and Rs. 1,000 currency notes as legal tender. Or does it?

It's estimated that the Reserve Bank of India (RBI) would have remonetised around Rs. 7.50 lakh crore in new notes by December 30. That would be roughly 50 per cent of the value of old Rs. 500 and Rs. 1,000 notes in circulation before November 8, 2016.

The government's move towards digital payment means that the RBI will not remonetise the full value of old notes, estimated at just over Rs. 15 lakh crore (though an RTI query to the RBI has, oddly enough, revealed a higher figure). 

Nonetheless, by January 31, new notes valued at around Rs. 11.50 lakh crore are likely to be in circulation. Cash shortages and bank queues would have begun to ease well before that.

So much for the short-term pain. What about the gain? 

There are two kinds of likely medium-term gains and one clear long-term gain. In the medium term (six months) a rapid shift to digital payments will make the economy more efficient. The move from cash to online payments has been faster than many expected. In a cash-dominated society like India's the change to a digitised economy will be evolutionary rather than revolutionary but the benefits to consumers in transparency, speed and efficiency will soon be clearly visible.

The second medium-term gain is for the treasury. The country's low tax base will expand significantly. The audit trail left by redepositing old notes valued at close to Rs. 15 lakh crore into the banking system will create new assessees. Apart from the one-time penal tax on disclosed black income, personal income-tax post-demonetisation will rise substantially on a recurring basis.

The long-term benefit will flow to both citizens and the government. An economy less dependent on cash is likely to cut the scope for siphoning off funds by middlemen to farmers, contract labourers and other workers in the unorganised sector.

The cash-to-GDP ratio should reduce to below 10 per cent, making the economy more efficient. In 2015, currency with the Indian public as a ratio of GDP was 13.01 per cent. In Sri Lanka it was 3.47 per cent. Even Pakistan had a lower cash/GDP ratio than India: 9.29 per cent.

Once the Goods and Services Tax (GST) is introduced, digitisation will be further spurred. Indirect tax collection will become seamless. Revenue is likely to rise significantly in a one-nation, one-tax formulation.

It's crucial in this environment that the Finance Minister cuts both personal and corporate tax rates in the Union Budget on 1 February 2017. He had pledged to reduce corporate tax to 25 per cent by 2018-19 so that leaves a narrow time window to implement that commitment. Personal income-tax, given a broader tax base following demonetisation, is set to be reduced by raising tax slabs

Demonetisation has considerable political implications. Prime Minister Narendra Modi knows that the pain of demonetisation can turn into a political liability if normalcy is not re-established soon. 

So far the poor, especially in small towns and villages, have reacted with stoicism to the cash crunch and loss of income. Support for Modi remains strong. Local body electoral results in Maharashtra and Chandigarh underscore that. But public support cannot be taken for granted.

Modi has planned a major rally in Lucknow on 2 January 2017 when he is expected to announce a post-demonitisation road map. With the model code of conduct set to kick in early next year (2017) once the dates for the Punjab, Uttar Pradesh and Goa assembly elections are known, the prime minister will have to move rapidly to turn the demonitisation narrative around into both an electoral and on-ground winner.

Follow@minhazmerchant on twitter

Why Taiwan is China’s soft underbelly — and that's good news for India
With Trump dialling Taipei, it's the right time for Modi to reach out to Beijing’s single greatest adversary.
Monday, December 19, 2016

China regards itself as heir to the United States’ status as the world’s leading superpower. Last week it flexed its maritime muscles, capturing an American sea drone in international waters of the South China Sea.

Washington, busy with the Obama-Trump transition, has taken its eye off the ball. President Barack Obama, who hands over office to president-elect Donald Trump on January 20, 2017, is busy accusing Russia of “interfering” with last month’s US presidential election.

The White House issued a brief statement on the underwater drone, saying Beijing had agreed to return it. China said it would do so after deleting the intelligence the drone’s software had collected.

Obama has weightier concerns. His own eight-year legacy is under serious threat. Obamacare, which has given 20 million uninsured poor (mainly black and Hispanic) Americans access to medical insurance, is likely to be repealed or at least drastically modified under a Trump administration.

Obama’s Middle East policy, meanwhile, lies in tatters. The Syrian government has recaptured most of Aleppo which was under the control of US-supported rebels opposed to president Bashar al-Assad since 2012. The siege of Mosul in Iraq and the retaking of the Islamic State’s de facto capital Raqqa are progressing more slowly than anticipated despite US air power. 

But Obama’s biggest failure is not fixing America’s complex geopolitical relationship with China. Beijing has snubbed Washington across a range of issues. It has imposed its sovereignty in the South China Sea and challenged US sea power in an arc from the Indian Ocean to the East China Sea near Japan.

It is Taiwan, however, which could be the litmus test in 2017 of the edgy Washington-Beijing relationship. Trump’s controversial 10-minute conversation with Taiwan president Tsai Ing-wen was part of a choreographed strategy. Trump knows that the two issues China is most sensitive to are Tibet and Taiwan, the breakaway island-nation Beijing regards as sovereign Chinese territory.

The US embraced the “one-China” policy in 1979. Since then the Taiwan issue has lain dormant. Taiwanese leaders over the past 37 years tactically accepted the one-China policy. Since 1979 no US president or president-elect has spoken to a Taiwanese president  — until Trump this month.

Tsai Ing-wen won the 2016 presidential election to become Taiwan’s first woman president. She has since diluted Taiwan’s commitment to a one-China policy, refusing to accept it on principle after she formally took office on 20 May 2016.

Trump has long indentified China’s hegemonistic ambitions as a threat to world peace. He recognises that military or economic confrontation with China is impractical. Hence, the Taiwan card.

After winning the US presidential election, among the world leaders Trump spoke to was Tsai. The conversation had been carefully planned. The Trump campaign team asked the Taiwanese leader to make the call. The message was directed at China: Taiwan was no longer taboo for the US.

This reverses decades of US foreign policy which recognises the one-China framework. Washington broke diplomatic relations with Taiwan under president Jimmy Carter in 1979. Tsai, however, has been careful not to antagonise Beijing beyond a point. After her call to Trump, Tsai has maintained a diplomatic silence.

Not Trump though. “I don’t know why we have to be bound by a one-China policy,” he grumbled, “unless we make a deal with China over other things like trade.” It was typical “transactional” Trumpspeak.

Playing Hardball
Trump’s hardball tactics with China are of course neither new nor unexpected. He has called Beijing a currency manipulator and threatened to impose penal duties on Chinese imports unless Beijing gives equal tariff treatment to US exports to China.

Indian Prime Minister Narendra Modi is likely watching the Taiwan issue closely. With a mildly anti-China government now in power after decades of pro-Beijing Taiwanese governments, Taiwan presents India an interesting opportunity.

Since India and the US have established a close strategic partnership, there are several options India can now pursue on Taiwan. Establishing closer economic and trade ties is one. Remember: Taiwan makes 80 per cent of the world’s computer networks. It is an emerging technology powerhouse.

While diplomatic relations may not be feasible, Taiwan is also emerging as an attractive destination for tourists. A recent advertisement for Taiwan’s increasingly active tourism bureau in New Delhi targeting Indians said breathlessly: “No trip to Taiwan is complete without its hot springs experience. Ranked among the world’s top 15 hot spring destinations, Taiwan has a great variety of natural springs, including hot springs, cold springs, mud springs and seabed hot springs. Interestingly, a number of resorts offer you the experience in your room itself with hot spring water flowing straight into your bathtub!”

All of this irritates Beijing which barely tolerates the international attention Taiwan has been receiving since the feisty Tsai, a former university professor, took office seven months ago.

The Modi government has very few sharp weapons to combat China’s aggressive position on Jaish-e-Mohammed chief Maulana Masood Azhar, India’s membership of the Nuclear Suppliers Group (NSG) and illegal Chinese-built infrastructure on Indian territory in Pakistan-occupied Kashmir (PoK) and Gilgit-Baltistan.

Taiwan is China’s soft underbelly. With Trump likely to ratchet up economic and diplomatic pressure on Beijing, this is the right time for Modi too to play the Taiwan card.

China has shown no remorse in abetting Pakistan-sponsored terrorism. By blocking the United Nations’ declaration of Masood Azhar as a global terrorist, Beijing has displayed mala fide intent.

China has consistently ignored New Delhi’s warnings on violating Indian sovereignty in PoK. There is no reason India should hesitate to build closer economic and cultural ties with Taiwan.

Meanwhile, those who believe Russia’s recent closeness to Pakistan, including its interest in the China-Pakistan Economic Corridor (CPEC), presages an inimical Russia-China-Pakistan axis are mistaken. Given Western sanctions following its annexation of Crimea, Russia may be dependent on China buying its oil and gas. However, a Putin-friendly Trump presidency will repair US ties with the Kremlin to keep it out of China’s bear hug.

If Modi recalibrates his China diplomacy, using Taiwan judiciously, Beijing will be forced to rethink its cavalier disregard for India’s national interests in PoK and Gilgit-Baltistan.

China is a geopolitical bully. Like all bullies, it will back down only when you stand up to it

Follow@minhazmerchant on twitter

VVIP chopper scam: Does the buck stop at PMO?
Tyagi says every decision on AgustaWestland was vetted and approved by Dr Manmohan Singh’s PMO

Friday, December 16, 2016

How high up the political tree did the bribes in the Rs. 3,564 crore AgustaWestland VVIP chopper deal travel? The short answer: likely to the very top.

Former Air Force Chief, Shashindra Pal Tyagi, currently in CBI custody, has said as much following his arrest. His counsel told the court: “It was not an individual decision. It was a collective decision of which the PMO was also a part. The file moved along so many officers – none of them have been arraigned (in the case) as accused.”

The CBI says Tyagi was appointed chief of air staff on October 31, 2004. He took charge officially on December 31, 2004. These were the early months of the Congress-led UPA government, back in power after a gap of eight years.

The Prime Minister’s Office (PMO) under Dr Manmohan Singh was bustling with energy and ideas. Defence deals, infrastructure projects, work on the Commonwealth Games, planning for a big telecom spectrum sale, coal mine allocations — all jostled for attention.

Ministers, bureaucrats, and Armed Forces officers soon cast a beady eye on the new VVIP chopper deal. The technical specifications for the 12 helicopters were changed to suit one company: AgustaWestland, a subsidiary of the Italian firm Finmeccanica.

The CBI told the court earlier this week: “In a meeting held on April 1, 2005 in which the defence secretary and other stakeholders took part, it was laid down that helicopters should be twin-engine. Later, at the insistence of SP Tyagi, when the OR (operational requirement) was put up, ‘at least’ was added before ‘twin engine’ by the IAF. It got approved. To make the entry possible, ‘at least’ was added. Otherwise AgustaWestland was not eligible to participate.”

No large defence deal in India moves an inch without a nod from the top. There are four tiers of decision-making that make up this pyramid: the armed forces; the bureaucracy in the ministry of defence (MoD); the PMO; and the High Command.

Tyagi says every decision on AgustaWestland was vetted and approved by Dr Manmohan Singh’s PMO. The buck stopped at the PMO after ricocheting off 10 Janpath where UPA chairperson Sonia Gandhi sits imperiously. Little escapes her notice. AgustaWestland, whose choppers were being bought to ferry VVIPs like her, would not have.

When reducing the operational flying height ceiling requirement for the helicopters from 6,000 metres to 4,500 metres, the PMO would have been fully in the loop. The Indian Air Force has a longstanding requirement that such helicopters must be able to fly up to 6,000 metres. Reducing the height to 4,500 metres should have raised an immediate red flag in the PMO.

The CBI is now likely to question Dr Manmohan Singh and former PMO officials, including Dr Singh’s principal secretary TKA Nair and then National Security Advisor (NSA) M.K. Narayanan. The CBI should add Shashi Kant Sharma to the list of those it will interrogate. Sharma was director-general (acquisitions) in the defence ministry during the crucial 2007-10 period when the AgustaWestland deal was finalised. Interestingly, he was given the plum post of Comptroller and Auditor General (CAG) by the UPA government in 2013.

Those who follow the media closely would have noticed a rash of articles and television debates on the AgustaWestland deal. These mushroomed when Italian prosecutors levelled allegations of bribe-giving against senior executives of Finmeccanica in the Indian VVIP chopper deal by its subsidiary AgustaWestland.

When the prosecution of senior executives in Italy became public, the CBI was compelled to register an FIR in 2013 to probe the allegations. These pointed to corruption at the highest levels in India’s political, bureaucratic and military establishment.

The sudden spate of newspaper reports and television debates in April 2016 after an Italian court found top Finmeccanica officials guilty of bribery drew attention to the six million euro (Rs. 45 crore) “media management” budget run by middleman Christian Michel. The money was allegedly used to pay Indian journalists – the infamous “Agusta Patrakars” – to write airbrushed PR-driven stories about the AgustaWestland deal.

Meanwhile what of Dr Manmohan Singh? Whether or not his questioning by the CBI indicts the UPA’s PMO, moral culpability clearly rests with him and the High Command to which he paid obeisance.

“Leaders and governments at no point can abdicate responsibility. Most policy decisions carry risks of unintended consequences. It is important to deftly balance these risks with the potential benefits of such decisions.”

The author of those stirring words? Dr Manmohan Singh in an article in The Hindu last Friday (December 9) criticising the handling of demonetization by his successor, Narendra Modi.

The same words — “Leaders at no point can abdicate responsibility” — will echo loudly in his ears when he negotiates, in silence, with his conscience

Follow@minhazmerchant on twitter

Rajya Sabha is a drain on treasury and needs to be downsized
Like Parliament itself, reforms can no longer be stalled.

Thursday, December 15, 2016

Congress vice-president Rahul Gandhi announced at a news conference on December 14 that he has “explosive” information of personal corruption against Prime Minister Narendra Modi.

Why did Rahul not reveal that information publicly at the press conference yesterday? Because he wants the legal protection parliamentary privilege affords him. This sums up all that’s wrong with our parliamentary system: too much privilege, too little accountability. The rot runs deep. Last Friday the Rajya Sabha was adjourned for lack of quorum. Only 23 MPs were present — 18 from the government and five from the Opposition.

Several MPs were seen chatting outside parliament. Deputy Chairman PJ Kurien rang the quorum alarm twice. A few indolent MP “peeped inside the House”, as one observer reported, but refused to enter the chamber. Kurien finally adjourned the House under the rule that requires a minimum quorum of 10 per cent of the strength of the House (250).

So why does India need the Rajya Sabha? It doesn’t — certainly not without sweeping reforms.

Those reforms should begin with the Lok Sabha. In a country with a population of 125 crore, the Lok Sabha’s 545 MPs (including two nominated MPs) are grossly inadequate. The ratio works out to one MP for roughly 23 lakh citizens. In 1952, when India’s population was just over 38 crore, the Lok Sabha had a strength of 489 — a much better average of one MP for around seven lakh citizens. Britain with a population (6.5 crore) that’s one-20th India’s, has 650 MPs in the House of Commons — an average of one MP for one lakh citizens.

The average size of a constituency in England is 72,000. In Scotland it is 69,000 and in Wales 56,000. In India, constituencies run into tens of lakhs, making them unwieldy and increasingly untenable.

Clearly, several large constituencies need to be broken into smaller bits. Delimitation has changed the contours of some constituencies but sizes have not changed significantly. The key is to increase the number of MPs in the Lok Sabha. After careful constituency-wise evaluation, the number of constituencies can be increased in the first phase to around 700. That would still leave each Lok Sabha MP to deal with an average of over 18 lakh citizens.

Simultaneously, the strength of the Rajya Sabha must be downsized from the present 250 to 100. Unelected MPs are a drain on the treasury. Their increasingly irresponsible behaviour has lowered the image of the Upper House and disrupted legislative business.

The Rajya Sabha enables state assemblies to elect MPs and represent the federal character of the House. But a downsized Rajya Sabha with 100 members can still reflect the plural views of the Union’s states and territories.

Downsizing the number of Rajya Sabha MPs is a necessary but not sufficient reform. The Upper House has far too often been used to stall legislation. It cannot, under present rules, hold up money bills. It should in fact not be allowed to stop legislation of any kind. Like the House of Lords in Britain, it should only be permitted to delay legislation, not reject it. For example, once the House of Commons passes a bill the House of Lords can delay it for a maximum of one year.

The rules governing the conduct of the two Houses need reform as well. While the Lok Sabha can suspend unruly MPs and even marshall them out, the Rajya Sabha cannot. Given the behaviour we have witnessed from MPs in the Upper House in recent weeks that exemption must be removed. If you disrupt either House, you belong outside, not inside, parliament.

In the House of Commons the slightest disruption is dealt with swiftly and ruthlessly by the Speaker. Since 1900 Britain has had less than 50 disruptions, each lasting, on average, less than one hour before the Speaker ensures the House resumes normal business.

In contrast, Indian Speakers are both weak and partisan. Lok Sabha Speaker Sumitra Mahajan has proved particularly ineffectual. Despite senior BJP leader LK Advani’s reprimand directed at her last week, and President Pranab Mukherjee’s admonition of MPs’ conduct (“For God’s Sake, do your job,” he told them, implying the Speaker wasn’t doing hers), Mahajan has failed to control the House.

The chairman of the Rajya Sabha, Vice- President Hamid Ansari, has been equally disappointing. He established his partisan credentials by stalling a vote on the Lokpal bill at the stroke of midnight on December 30, 2011 and adjourning the House sine die. Ever since, his stewardship of the Rajya Sabha has been partisan and anaemic. The Deputy Chairman of the Rajya Sabha, PJ Kurien, has been equally ineffective, though he does make an attempt to appear impartial and firm. He is neither. While the number of Rajya Sabha MPs and their influence over legislation are cut down to size, the really big-ticket reform involves the Lok Sabha: more MPs, smaller constituencies, stricter rules of conduct, and stronger Speakers.

Indian parliamentarians work for fewer days than lawmakers in, for example, the United States. The US Senate (100 members) and the House of Representatives (435) serve a population one-fourth India’s and work 140 days a year. India’s parliamentarians in comparison work only 80 days a year across the winter, Budget and monsoon sessions. And that includes the countless days Parliament is adjourned following disruptions.

Like Parliament itself, reforms can no longer be stalled.

Follow@minhazmerchant on twitter

Women leaders are ultimate heirs to the future
They will be judged on their merit, not gender.
Tuesday, December 13, 2016

If you were a woman and lived in France in 1944, you wouldn't have been allowed to vote. France, the land of Voltaire and liberté, egalité, fraternité, was among the last European countries to give women the right to vote.

Britain wasn't any better: British women got the full vote only in 1928. South America was worse. Women in Chile were not allowed to vote till 1961.

How things have changed. In 2016, 49 countries have elected women heads of government (not counting women monarchs). Since British women won the right to vote 88 years ago, the country has elected two women as prime minister - Margaret Thatcher in 1979 and Theresa May in 2016 (though May was elected through an internal Conservative party poll).

At first glance, South Asia seems a feminist haven: every major country in the region has had an elected woman head of government: Sirimavo Bandaranaike, Indira Gandhi, Benazir Bhutto and, in Bangladesh, both Sheikh Hasina and Begum Khaleda Zia. Sri Lanka in fact holds the distinction of being the first country in the world to elect a woman leader - Sirimavo Bandarnaike - in 1960.

The apparent progressiveness is of course illusory. All four South Asian women leaders have been dynasts, inheriting the position from their father or husband, albeit through democratic elections. The winner here is feudalism not feminism.

And it is the same feudalism we have seen at work in recent days after the death of J Jayalalithaa. She won the mantle from mentor MGR after a bitter tussle with his wife Janaki. In that sense at least, she earned her stripes. Her successor Sasikala, however, by stepping into her shoes, is set to propagate the cult of feudal politics.

Most other state-level women leaders in India owe their positions to family or a male mentor. The BSP's Mayawati and the PDP's Mehbooba Mufti are stereotypical examples though Mayawati to her credit has significantly built on the political base she inherited from her mentor Kanshi Ram.

Interestingly, the United States remains one of the few major western countries to have never elected a woman head of government though Hillary Clinton came close last month.

America has a curious puritanical streak that puts it at odds with countries in Europe and South America where women leaders are now common. The oddly regressive impulse in the US ensured that blacks (men and women) were not allowed to vote in some southern states till as late as 1965 - two years after the death of the moderniser-president John F Kennedy.

President-elect Donald Trump was expected - especially after his outrageous comments on women throughout the presidential campaign - to stuff his cabinet and administration with alpha males. And with the choice of three retired Generals (Michael Flynn, James "Mad Dog" Mattis and John Kelly) he's done just that. But he's also revealed a softer side: nearly 30 per cent of his cabinet and key administration picks so far (six out of 22) are women: Nikki Haley, Betsy deVos, Elaine Chao, Kathleen McFarland, Seema Verma and Linda McMahon.

Interestingly, two of the six women are of Indian origin: Nikki Haley (nominated as US ambassador to the UN) and Seema Verma (picked as head of Medicare and Medicaid). Elain Chao, nominated as transportation secretary, a senior cabinet position, is also of Asian descent.

True to his TV reality-style persona, however, Trump has nominated Linda McMahon to head the Small Business Administration (SBA) department. McMahon is co-founder and ex-CEO of World Wrestling Entertainment (WWE) which, among other things, features bouts between women dressed in lingerie.

Glass ceiling
So where do women leaders go from here? The political glass ceiling may not have been shattered, but it certainly has developed cracks.

In India, while feudal dynasts like Rajasthan chief minister Vasundhara Raje have an easier path to the top, others like West Bengal chief minister Mamata Banerjee have risen on merit - if that is the right word for her rise.

There is in fact a sobering lesson in Mamata's ascendancy. With no mentor or family previously engaged in politics, Mamata has used precisely those tactics to win elections that she decried in male rivals: appeasing minorities, unleashing a cult of violence on political opponents, building a thuggish cadre, and co-opting corrupt legislators.

To get to the top, Mamata has behaved just like the CPM which ruled (and ruined) West Bengal for over three decades.

Jayalalithaa too was a ruthless leader during her four terms as chief minister beginning in 1991 when she was still only 43. In 2004, when she was arguably at the peak of her career, I travelled to Chennai to interview her. We met at the chief minister's office.

I had been warned by my Chennai bureau chief that she preferred a namaste as a greeting. Out of force of habit, however, I proferred by hand as we met and she shook it warmly.

After our hour-long interview was over, as we drove back to the hotel, my Chennai bureau chief said conspiratorially "She rarely shakes journalists' hands, especially after her recent interview with a television anchor."

With us though, Jayalalithaa was both pleasant and professional, answering questions across a range of issues without the aid of notes.

In a patriarchal society like India's, women leaders are increasingly beating men at their own game: politicking.

While Sonia Gandhi, Vasundhara Raje, Mayawati and Mehbooba have overcome patriarchy through family or feudalism, others like Jayalalithaa, Mamata and former Gujarat chief minister Anandiben Patel have risen on the back of performance and, in the case of Anandiben, been sidelined when performance lags.  

As education, demographics and technology level the playing field, women leaders will increasingly be judged on merit, not gender. They represent the future

Follow@minhazmerchant on twitter

Empire Of Babus
Much of the usurious corruption has sprung from the ministry of defence and the ministry of finance. The former controls large defence purchase budget

Thursday, December 8, 2016

When Narendra Modi became Prime Minister, he took two immediate key decisions. One, he disbanded the Groups of Ministers (GoMs) that had mushroomed to more than 20 during the UPA government. Two, he called a meeting of more than 75 senior bureaucrats cutting across ministries.

The message: you now have direct access to me. Work hard and work fast. The intent: to replace India’s notorious red tape with a red carpet — a Modi campaign promise. The outcome: the babus worked hard and fast for several months. Without tedious, interminable and often infructuous GoM meetings the bureaucracy became energised.

It didn’t last. The Indian bureaucracy is a unique animal. Created as the Indian Civil Service (ICS) by the British, it formed what Jawaharlal Nehru called India’s “steel grid”. The ICS morphed after Independence into the IAS but the change in alphabet hid the fact that real changes did not occur. The ICS had served an exploitative empire. The nomenclature it gave its officers gave the game away: for example, District Collectors were principally tasked to collect taxes from the districts.

After Independence, the IAS should have changed not only such honorifics (69 years later, it still hasn’t) but also its mission: to serve, not rule. The steel grid of the civil service has long rusted. Worse, it has been co-opted by unsavoury politicians. Most of the serial corruption scandals since Bofors in 1987 have had a political-bureaucratic nexus.

Much of this usurious corruption has sprung from the Ministry of Defence (MoD) and the Ministry of Finance (MoF). The former controls large defence purchase budgets. Bureaucrats with negligible knowledge of defence technology decide billion-dollar deals.

Extraordinarily, no officer from the army, air force or navy is attached to the MoD. Under a weak defence minister such as A.K. Antony, bureaucrats ruled the roost. The outcome was appalling on two fronts. First, kickbacks. Second, delayed decisions on fighter jets, battleships and even ammunition.

With a virtual war raging on the India-Pakistan border, the lack of ammunition was especially serious. India had to make emergency off-the-shelf purchases of ammunition, firearms, and other defence equipment from Israel and Russia worth over Rs 5,000 crore in September 2016 with delivery schedules ranging from immediate to three months.

Clearly, defence minister Manohar Parrikar must shoulder some responsibility for this appalling state of affairs. He has been in the job for two years and blaming Antony for all such lapses will no longer do.

Worse, MoD bureaucrats have continuously sought to sabotage relations with the armed forces. The latest ploy to downgrade military officer ranks with relation to civil service officers through a letter dated 18 October 2016 was nipped in the bud due to media pressure. The matter is now being resolved by Parrikar whose good intent is often stymied by slow reactions to events in his ministry.

Parrikar was proactive during the OROP imbroglio and passed the file in early 2015 over the heads of MoD officers. However, their colleagues in the MoF sat on the file for four months, fetching the government bad press — and the entirely avoidable distrust of the armed forces. Much the same bureaucrat-inspired shenanigans muddied the waters over rank-linked increments to the armed forces under the Seventh Pay Commission as well as disability compensation.

In each case, Parrikar — with Modi’s full support — had to firefight before righting babu-manufactured wrongs. The suicide of a jawan, Subedar Ramkishan Grewal, over OROP pension payments was quickly seized upon by opposition politicians Rahul Gandhi and Arvind Kejriwal.

The MoF has been a particularly malignant breeding ground for bureaucratic malfeasance. Apart from its role in OROP, disability compensation and the Seventh Pay Commission controversies, it has succeeded in keeping the worst legislation of the UPA government on the statute books: retrospective tax. Like Parrikar, finance minister Arun Jaitley must accept responsibility for not repealing this egregious tax that has diminished India’s global reputation. He has had three Budget opportunities to do so and has fluffed all three. Another Budget arrives in early February 2017. Jaitley should seize the opportunity or shoulder the opprobrium that accompanies the retro tax.

Modi is meanwhile trying to combat the bureaucratic inertia by setting up 10 Groups of Secretaries to conduct a mid-term review in December 2016 of the state of major projects ahead of the Union Budget.

Bureaucrats, of course, aren’t all inert. Some like Amitabh Kant, the CEO of Niti Aayog, have been agents of transformation. Many young IAS officers, posted in Maoist-infested areas, are brave, committed and selfless. The problem arises when Central postings beckon. The lure of the entrenched political-bureaucratic nexus with easy pickings, can tempt the best. Clearly, IAS reforms are essential. Modi’s attempts towards this end have been focused and patient but borne limited results. More drastic reforms must now be his priority as he enters the second half of his five-year term as prime minister.

This is what I wrote on IAS reform: “The second Administrative Reforms Commission (ARC), headed by former law minister Veerappa Moily, has not been implemented. The second ARC’s report is an outstanding document with over 15 closely argued, well-written chapters on reforming the bureaucracy. If implemented, it would transform the IAS and the quality of public services in India. “In the spring of 1964, shortly before his death, Jawaharlal Nehru was asked in private by his closest colleagues what he regarded as his greatest failure as India’s first Prime Minister. Nehru replied: ‘I could not change the administration. It is still a colonial administration and one of the main causes of India’s inability to solve the problem of poverty.’”

One of the reasons India moved up just one place to 130 in the World Bank’s latest index of ease of doing business is the intransigence of the Permit Raj. Despite Modi’s efforts to cut red tape, India is ranked at 185 on getting “construction permits” and at 155 on “starting a business”. In the World Bank survey India does best on three parameters: “protecting minority investors” (13), “getting electricity” (26) and “getting credit” (44). Notably, all three have minimal inputs from bureaucrats. The moral of the story couldn’t be clearer

Follow@minhazmerchant on twitter

Supreme Court must know liberty is supreme, not patriotism
National anthem judgment has taken the law back by a century.
Monday, December 5, 2016

The Supreme Court has once again displayed a poor understanding of individual liberty. As I’ve said before - and it’s worth repeating - your freedom ends where my nose begins.

Individual liberty, within reasonable bounds, lies at the heart of democracy. Compelling citizens to stand up when cinema halls play the national anthem will have precisely the opposite effect from what the Supreme Court intended.

Many will justifiably resent being told by the state what to do, where, and when. It will certainly not engender nationalism. Patriotism can’t be force-fed. 

Most Indians anyway stand up when the national anthem is played. But to play it in cinema halls before every film is itself excessive: the anthem loses its soaring emotive appeal. To further compel people to stand up for the anthem violates individual liberty. And to prevent them from leaving the theatre by locking the exit gates before the anthem begins compounds the folly.

Apart from delivering a judgment that is flawed in principle and impractical to implement, the Supreme Court has taken the law back by a century. This is what the operative part of the judgment says: “It is the sacred obligation of every citizen to abide by the ideals engrafted in the Constitution. And one such ideal is to show respect for the National Anthem and the National Flag.

“Be it stated, a time has come, the citizens of the country must realise that they live in a nation and are duty-bound to show respect to the National Anthem which is the symbol of Constitutional Patriotism and inherent national quality. It does not allow any different notion or the perception of individual rights. The idea is constitutionally impermissible. All the cinema halls in India shall play the National Anthem before the feature film starts and all present in the hall are obliged to stand up to show respect to the National Anthem.”

Note these words in particular: “Constitutional patriotism... does not allow any different notion or the perception of individual rights.”

This must be among the most regressive sentences in a Supreme Court judgment in decades. “Individual rights” are sacrosanct - with only reasonable restrictions. Not standing up during a national anthem may be distasteful but compelling citizens to do so is an unreasonable restriction on individual rights. Being a boor is not a crime.

The phrase “constitutional patriotism…does not allow any different notions or perceptions…” is equally regressive. Democracy is founded on precisely “different notions and perceptions.” Take those differences away and you take away the essence of liberty.

The Supreme Court exists to guarantee fairness and justice and to protect the weak from the strong. This judgment, like several others in recent months, does neither.

The Supreme Court has erred far too frequently in recent years on key issues. It has fought a running battle with the government on the collegium system of picking judges. As Justice Chelameswar, a member of the collegium, said: “I have written a letter (to the CJI) informing him that I will not be participating in the collegium's meetings henceforth. The system of selection of judges is not at all transparent. No reason, no opinion is recorded. Just two people decide the names and come back to the meeting and ask for a yes or no. Can a judge of the SC or HC be selected in such a manner?"

The Supreme Court meanwhile has ducked several important issues: it has not constituted a seven-member bench, as it had pledged, to review its 1995 judgment defining Hindutva as a way of life.

It has not meaningfully pursued contempt proceedings against the Centre and states for defying its 10-year-old order on police reforms that lie at the heart of improving India’s criminal justice system.

The Supreme Court was unable to force its writ on Karnataka in its dispute with Tamil Nadu over sharing an additional allocation of Cauvery waters.

The apex court also mothballed the controversial Ram temple issue for years. It has now finally agreed to schedule day-to-day hearings on Dr Subramanian Swamy’s petition. 

The court though has been justifiably proactive in cleaning up the BCCI. But while it delivered its verdict in July 2016, the BCCI defied the apex court for months before being reined in.

In the US, Supreme Court justices are nominated by the executive branch. The American President chooses judges based on ideology. This is clearly an unacceptable system for India. The executive branch cannot be the sole arbiter: that flies in the face of balance of power between the executive, judiciary and legislature.

But India’s collegium system for selecting judges in the higher judiciary remains deeply flawed. Justice Chelameswar has been unusually blunt about the defects in the collegium. Meanwhile, the stand-off between the government and the Supreme Court continues.

Unless the latest draft of the government’s Memorandum of Procedure (MoP) for selecting judges is accepted by the Supreme Court (which has sat on it for four months), the government is unlikely to relent on clearing the names of judges sent to it by the apex court.

The criminal justice system has failed Indians. It has in particular failed those most needing its protection: the poor. Countless undertrial prisoners rot in jail far beyond the maximum sentence they would have received had they been convicted.

Instead of remedying these injustices, the Supreme Court is intruding into matters that should not be its concern: the national anthem.

Wiser counsel must prevail and the order reviewed. India has many more pressing judicial matters that need the Supreme Court’s undivided attention.

Follow@minhazmerchant on twitter

E-commerce Firms Bleed In Price War
Bigger e-commerce marketplaces like Flipkart and Snapdeal are bleeding far more. In 2015-16, Flipkart recorded a loss or Rs 2,306 crore

Monday, December 5, 2016

Consumers have never had it so good. Online marketplaces, vying for volume, are offering mouth-watering discounts. 

From smartphones to white goods, discounts range all the way down to 50 per cent. Debit and credit card usage has spiked; e-wallets are becoming ubiquitous; even public sector utilities are turning digital-savvy. 

In a curious way, demonetisation has catalysed cashless transactions. Account-linked FASTag stickers on vehicle windscreens using RFID technology are already in use in around half of the countrys 375 toll highways. More toll plazas are expected to go digital with RFID-enabled FASTags and other e-payment options to allow vehicles to drive through without stopping. In the West, nobody pays cash at toll checkpoints. 

A recent survey revealed that due to delays at cash toll booths, Indian truckers cover just 300 km compared to Western truckers who cover 700 km in the same time period.

But while consumers  still struggling with Rs 2,000 denomination notes and limits on cash withdrawals  are enjoying unprecedented online discounts across product categories, e-commerce retailers are bleeding. 

Pepperfry, the online furniture marketplace, doubled its annual loss from Rs 88 crore in 2014-15 to Rs 156 crore in 2015-16. For a relatively small firm that basically aggregates furniture sellers, thats a big hit. 

Even bigger is the loss reported by Quikr, the online classifieds major. In 2014-15, it lost Rs 446 crore. This fiscal its losses have mounted to Rs 534 crore with no daylight in sight at the end of the tunnel. 

Both Pepperfry and Quickr have grown revenue over the previous year  Pepperfry by 400 per cent and Quickr by 60 per cent  but that is cold comfort. 

The more e-commerce firms sell, the greater the loss. Besides, if Quickr, for example, hadnt earned Rs 53 crore from excess venture capital funds it placed in treasury operations (bonds, debentures and mutual funds), its annual balance sheet would have looked even worse with non-treasury annual losses at Rs. 587 crore. 

Bigger e-commerce marketplaces like Flipkart and Snapdeal are bleeding far more. In 2015-16, Flipkart recorded a loss or Rs 2,306 crore. Online retailers make up these humongous losses  which would have long put brick-and-mortar firms out of business  through newer and newer rounds of fund raising. 

That window though is narrowing as valuations dip. Morgan Stanley recently reduced Flipkarts valuation to $5.60 billion  a third of its valuation of $15.2 billion in July 2015. Fighting deep-pocketed US rival Amazon becomes more difficult if liquidity is strained. 

If you lose Rs. 2,306 crore a year by selling goods to happy consumers at way below MRP, youll need funding to match that. At current valuations, that means substantially diluting promoters equity. At a $15.2 billion valuation, Flipkart could dilute 10 per cent equity to investors for $1.5 billion (Rs. 10,000 crore). Today it will have to dilute 30 per cent (of already diluted equity after several funding rounds) to raise the same amount. 

And if losses mount to Rs. 3,000 crore or more a year, the level of dilution can become unsustainable over a three-year period. 

The solution? Cut discounts. Easier said than done. Volumes could drop vertically. Traffic could flee. For e-commerce vendors, their only asset is traffic volume. Lose that, you lose everything. 

The key then is to nudge discounts down and nudge valuations up. How? 

Financial surgery to cauterise the balance sheet is the only way to stop the bleeding. Unless cash discounts fall, losses will climb. Thats not a sustainable business model for what is now essentially a commoditised click-and-deliver logistical play

Follow@minhazmerchant on twitter

Nagrota attack India must make Pakistan cry
Islamabad will be on the mat at Heart of Asia meet in Amritsar following the atrocity on the Indian Army.

Thursday, December 1, 2016

The terror attack in Nagrota calls for a clinical response. Retribution from the Indian Army will follow.

The scale could exceed the surgical strike conducted by special forces after the Uri terror attack. This is necessary but not sufficient.

Parliament must now rapidly pass Rajeev Chandrasekhar's private member's bill to declare Pakistan a state sponsor of terrorism.

Other steps - diplomatic, economic and military - will flow from Parliament's declaration of intent.


Meanwhile, the government must look inwards. Why are our Army camps vulnerable to terror attack after terror attack?

Why did combing operations to flush out the remaining terrorists who struck Nagrota not continue through the night of the attack?

The lack of night vision technology underscores the chronic failure of the defence ministry to equip our forces for counterterrorism operations.

Counterterrorism, ironically, is the principal theme of the Heart of Asia (HoA) conference that begins in Amritsar on December 3.

Prime Minister Narendra Modi and Afghanistan President Ashraf Ghani are co-hosts of the conference. Forty high-level ministerial delegations from around the world will attend.

The HoA initiative, begun in 2011, is Afghanistan-focused. The HoA is a platform to encourage cooperation on security, economic and political concerns that affect Afghanistan and its neighbours.

Pakistan, as the epicentre of regional terrorism - including its decades-long role in creating and nurturing the Taliban in Afghanistan - will be on the mat in Amritsar following the Nagrota atrocity.

Sartaj Aziz, Pakistan's de facto foreign minister, despite Islamabad's pariah status, will be a keen participant in the conference. He has two assets: a thick skin and China.

Pakistan has developed a brazen response to critics of its terror factories: "We too are the victims of terrorism."

It ignores the obvious fact that Pakistan is the victim of home-grown terrorists nurtured over decades.

Like rattlesnakes, some will inevitably turn on their creator. Pakistan's other asset is China. In Amritsar, Beijing can be counted on to provide Islamabad cover with sniper fire.

As it did at the BRICS summit in Goa in October, China will find alibis for Pakistan's terror machine. But Beijing's complicity in jihadi terror is coming under increasing global scrutiny.

The US is a "supporting" member of the HoA process. So are several other Western countries with a security stake in Afghanistan, including NATO member-nations such as Britain and Germany.

China's obstructionist behaviour to defend Pakistan-origin terror finds no sympathisers among them.


Afghanistan, which along with India has borne the brunt of Pakistan-sponsored terrorism, will be keen not to spare Islamabad in Amritsar. President Ghani began his term sympathetic to Pakistan.

After a year in office, he turned a fierce critic. Because it is landlocked and poor, Afghanistan is geostrategically dependent on Pakistan.

The HoA process is designed, at least in principle, to reduce that dependency. India has a crucial role in this.

It already spends billions of dollars in building schools, hospitals, roads and infrastructure in Afghanistan.

The Afghan people are as deeply grateful to India as they are deeply resentful of Pakistan. As one observer said bluntly, "Send a Pakistani military officer alone to any bazaar in Kabul, Kandahar or Herat and he'll be lynched."

For India, the HoA conference on December 3-4 is an opportunity to turn the global spotlight on Pakistan's terror machine.

The beheading of two Indian soldiers in the space of a month underscores the fact that the Pakistani army increasingly behaves like a jihadi army.

It has abandoned all pretence of professional soldiering. India's military response then was strong and swift, forcing the Pakistani DGMO to sue for peace last week by calling the Indian DGMO.

This metaphorical white flag was shown after Indian artillery destroyed Pakistani army posts around Machil where the latest mutilation of an Indian jawan took place.

Beyond retaliatory military strikes, PM Modi has warned Islamabad that India will use its legal rights under the Indus Waters Treaty (IWT) to divert water to Punjab and Jammu & Kashmir.

Six hydroelectric power projects in J&K have already been fast-tracked. Together, Punjab and J&K will now get the share of Indus water they are entitled to under the IWT - a legal allocation India has for decades inexplicably not fully used.

The consequences of India using its legal quota of IWT water will not be pleasant for Pakistan's Punjab.

Under the IWT, India has been allocated water which can potentially generate 18,500MW of power compared to the current 3,500MW. This legally allocated water flow can irrigate 13.4 lakh acres.

Today, a mere eight lakh acres are being irrigated. The PM has given the central electricity authority a December 2016 deadline to finalise a techno-economic appraisal of these plans, including completing several hydroelectric projects on the Chenab.

Speaking at a rally in Bathinda, Modi declared last week: "India has the right to Indus water. It flows into Pakistan. Flowing through Pakistan, the water goes into the sea. That water belongs to Indian farmers. We will do whatever we can to give enough water to our farmers."

Sartaj Aziz will receive a formal but cold reception when he arrives in India on December 4.

What will be more chilling is his realisation that Pakistan after Nagrota is about to pay a heavy price for being a state sponsor of terrorism

Follow@minhazmerchant on twitter

How long will the coalition of the corrupt stand united against Modi
The deadlock will eventually be broken by backroom talks in the well-practised Indian art of jugaad.
Monday, November 28, 2016

With the exception of the JD(U), the cash-deprived Opposition has come together in what some cruelly call a coalition of the corrupt.

Prime Minister Narendra Modi has meanwhile seized the moral high ground in a Them vs. Us binary: you are either corrupt (and oppose demonetisation) or you are clean (and support demonetisation).

The message resonates politically. It is as powerful a message as Indira Gandhi's Garibi Hatao slogan in the early-1970s.

To avoid losing the long-term political battle, as Mrs Gandhi did in the late-1970s, Modi will now have to win the economic and social argument.

First, he will have to quickly - and the timeframe for this is measured in days not weeks - sort out the cash shortage in the unorganised sector where many of the poor work.

High denomination notes valued at around Rs 8 lakh crore out of a total corpus of old Rs 500 and Rs. 1,000 notes valued at Rs 15 lakh crore have so far been deposited into the banking system.

However, only around Rs 4 lakh crore of new notes have been re-circulated (mostly in unwieldy Rs 2,000 denomination).

The resultant cash shortage is causing distress among daily wage labourers, small cash-and-carry retailers and unbanked tribals.

Most are stoic. Independent opinion polls show 80 per cent-plus support for Modi's move against black money. The support cuts across age and income demographics.

But patience can wear thin. Hence the urgency of printing enough new notes (especially of Rs 500 denomination) to replenish liquidity in the unorganised sector.

The Opposition has responded with barely contained fury. Its "bandh" on November 28 disrupted life in cities like Kolkata where Mamata Banerjee's TMC holds sway. It left Mumbai, India's financial capital, unmoved.

Notes with benefits
The economic benefits of demonetisation fall into two categories. First, the value of unclaimed old notes is expected to be nearly Rs 4 lakh crore out of the Rs 15 lakh crore worth of notes rendered illegal tender.

This will allow the government to receive a special dividend from the Reserve Bank of India (RBI). The money can be used to recapitalise banks as well as build infrastructure and enhance public investment in education and health.

The second economic benefit is the increase in the tax base as a large part of black money turns white. If Finance Minister Arun Jaitley delivers a bold Union Budget on February 1, 2017, the economy could rebound from the April-June 2017 quarter onwards.

Armed with a treasury flush with cash, Jaitley can afford deep cuts in personal income tax. This will be politically popular with the middle-class just as the campaign against black money has been popular with the poor.

A cut in personal income tax along with the implementation of GST to replace indirect taxes (service, VAT, excise and customs) could drive a consumption-led boom by mid-2017.

Economic growth, which in the November 2016-March 2017 period may fall from a pre-demonetisation estimate of 7.70 per cent to around 6.80 per cent, could well spurt to over 8 per cent in 2017-18.

This is critical for Modi. If the economy recovers sharply, black transactions reduce, private investment recovers, and consumption through greater digitisation picks up, Modi will be in pole position to win three battles: economic, moral and political.

With several state assembly polls looming in 2017-18, and the Lok Sabha election due in 2019, it is a battle the Opposition knows it cannot afford to lose. Hence the coalition of convenience that makes a Mamata Banerjee offer an electoral alliance to a sworn enemy like the CPM.

Meanwhile, Parliament remains paralysed. The prime minister will not speak in either House till the debate on demonetisation begins. The Opposition will not begin the debate till he speaks.

The deadlock will eventually be broken by backroom talks in the well-practised Indian art of jugaad.

Cashless and witless, the Opposition will pray that Modi trips up on executing demonetisation in the next crucial 30 days of December.

If he doesn't, they should get used to seven-and-a-half more years of PM Modi.

Follow@minhazmerchant on twitter

After Demonetisation, Big Bang Budget
Post-demonetisation, the government must focus its resources (manpower and technology) on higher tax slabs to optimise results and make the tax-collection machinery more cost-efficient

Wednesday, November 23, 2016

Out of a stock of Rs. 14.95 lakh crore in old currency notes of Rs. 500 and Rs. 1,000 denomination, approximately Rs. 10 lakh crore are expected to be turned into banks by December 30, 2016. A trickle will flow into the Reserve Bank of India (RBI) with a declaration form up to March 31, 2017. 

It is estimated that around Rs. 4 lakh crore worth of demonetised notes will end up dead. Their holders prefer to write them off rather than open themselves up to scrutiny by the income-tax department. 

Consider the fiscal impact of these developments. First, the RBIs liabilities on its balance sheet will reduce by Rs. 4 lakh crore on account of the dead notes. This allows it two options: one, increase its dividend to the government; and two, help recapitalise stressed banks. 

The second consequence of demonetisation will be felt on the fiscal deficit. Depending on their provenance, a portion of the Rs. 10 lakh crore expected to be deposited in banks by December 30, 2016 (and into the RBI by March 31, 2017) will be taxable. 

Assuming an average tax rate of 15 per cent across the Rs. 10 lakh corpus (since some of it will not be taxable due to various exemptions), the government will receive a one-time windfall of about Rs. 1.50 lakh crore. 

Total personal income tax collection in 2015-16 was just over Rs. 3 lakh crore so this represents a significant increase of 50 per cent over the base. 

The key lies in ensuring the tax gains recur every year. Conservative estimates put this at a mere Rs. 50,000 crore a year from old and new assessees. More optimistic estimates place the incremental recurring annual figure at Rs. 1 lakh crore. 

Whatever the final number, the fiscal deficit is set to fall. This years gains include 45 per cent tax on Rs. 65,250 crore received from the Income Declaration Scheme (IDS), unbudgeted funds from the incomplete 700 MHz telecom spectrum auction, and now the likely Rs. 1.50 lakh crore tax windfall from demonetisation. 

All these will help reduce the fiscal deficit to well below 3 per cent of GDP even if the gains are spread over two accounting years. Since banks are flush with cash deposits, the RBI is almost certain to cut interest rates by a significant amount in December. Inflation too will remain soft.

More importantly, it gives finance Minister Arun Jaitley elbow room to go for big bang reforms in the next Union Budget due on February 1, 2017. Both income-tax and long-term capital gains tax rates should be key targets. 

A simple, effective personal income tax regime would look like this: 

Zero tax up to Rs. 5 lakh net taxable income; 

Flat 10 per cent tax on taxable income between Rs. 5 lakh and Rs. 10 lakh. No exemptions; 

Flat 20 per cent tax on taxable income above Rs. 10 lakh. No exemptions; 

Corporate tax: flat 25 per cent. No exemptions. 

Such a simplified low-tax structure would actually increase compliance and revenue in the long term.

Post-demonetisation, the government must focus its resources (manpower and technology) on higher tax slabs to optimise results and make the tax-collection machinery more cost-efficient. 

Theres one more tax reform Jaitley can implement in the next Union Budget. Remove long-term capital gains tax on residential premises. The tax garners less than Rs. 100 crore a year. By scrapping it, the housing market, where sentiment and funds have been hit by demonetisation, will receive a fillip. It could also be an election winner. 

A caveat here: the last thing the demonetisation exercise  which has cost many innocent people days of trauma and some their very lives  should end up doing is give tax officers excessive discretionary powers. That would hamper Indias rise in the global index of the Ease of Doing Business. 

The cure would be worse than the disease.

Follow@minhazmerchant on twitter

Suleiman and Anwar join bank queue
Things can’t be that bad if even the cab driver seems happy, Suleiman reflected.
Tuesday, November 22, 2016

Suleiman Khan blinked in the early morning Delhi sun. He took a deep breath. The smog hit him like a dense blanket of smoke.

Anwarbhai was right, he thought to himself, as he maneouvred his luggage trolley out of Indira Gandhi International Airport. Delhi can be injurious to health.

His mobile rang. It was Anwar Sheikh. “Suleiman! Welcome to Delhi. I would have come to pick you up from the airport, but I’m stuck standing in a queue at my bank.” 

“So early in the morning, Anwarbhai?” Suleiman glanced at the imitation Rolex watch he’d bought during his last visit to India. It was 7.45am. “Do banks open this early in India?”

Anwar’s voice crackled hoarsely over the phone. “Suleiman, I’ve queued up at my bank since 6 this morning. The surgical strike our Prime Minister has launched on black money is killing us.”

Suleiman was surprised. "But I heard your finance minister Arun Jaitley saying on TV the other day that the queues were shortening, everything was under control.”

Anwar groaned over the phone: “Look Suleiman, just grab a cab and go over to my place. I’ll join you as soon as I can deposit my old Rs 1,000 notes into my bank account.”

“Okay, Anwarbhai, I’ll go to your house and fix myself a cup of tea. Come soon.”

Suleiman waved a taxi down. He was in India on his annual winter holiday. He had heard back home in Saudi Arabia about the demonetisation of Rs 1,000 and Rs 500 notes. At the airport foreign exchange counter he was careful to exchange his Saudi riyals for the new Rs 2,000 notes.

The cab fare to Anwar’s house in south Delhi came to Rs 400. Luckily, the driver had change in 100 rupee notes which he offered Suleiman with a smile.

Things can’t be that bad if even the cab driver seems happy, Suleiman reflected as he settled down in Anwar’s living room, waiting for his friend to arrive. 

Two hours later Anwar walked in, looking careworn. The two friends hugged and then Anwar launched into a bitter tirade.

“I tell you, Suleiman, this time (Narendra) Modi has gone too far! He’s ruined us!”

“How so, Anwarbhai?” asked Suleiman, bewildered by the mixture of anger, bitterness and weariness in his friend’s voice. “I thought the demonetisation scheme is a success. Bill Gates has praised it. So has Deepak Parekh. Even Narayana Murthy! Short-term pain for long-term gain...”

Anwar cut him off mid-sentence. “That’s all rubbish, Suleiman. Do you know how much my political friends have lost in black? Crores! All gone. Overnight! Some political parties in Delhi, Punjab and Bengal don’t have enough cash to pay voters in state elections and by-polls due very soon.”

“Pay voters?” Suleiman asked, puzzled. “Why would they need to do that?”

Anwar shook his head in mock exasperation. “My dear Suleiman, you’ve been away in Saudi for too long. In India every political party pays voters in cash or kind.”

Suleiman smiled as he thought to himself: in Saudi we don’t have elections so no worries about paying voters.

To Anwar he said aloud: “I hear Arvind Kejriwal and Mamata Banerjee want a rollback and Arun Jaitley has refused point blank.”

Anwar’s eyes narrowed. “Yes, Kejriwal and Mamata are right. This move has hurt the poor and brought the cash economy to a standstill.”

Suleiman turned thoughtful. “I hear though that Pakistan is as upset as some Congress, TMC and AAP leaders seem to be. Their counterfeit notes, which were used to pay stone-pelters in Kashmir, have become worthless overnight.”

Anwar looked quizzically at Suleiman who was now hitting his stride. “I also saw Ghulam Nabi Azad on TV comparing demonetisation to the Pakistani terror strike on Uri which killed 20 of our jawans. The Pakistani media reported Ghulambhai’s statement, made in Parliament, with the same glee they had reported Kejriwal’s doubts over India’s surgical strike on Pakistan’s terror launchpads on September 29.”

Anwar shook his head wearily. “Okay Suleiman, let’s go to my bank tomorrow morning, I need to deposit some more old notes. You’ll see the chaos for yourself. Even our very upright Chief Justice of India has warned of riots if the government doesn’t get its act together.”

Joining the queue
Early next morning, the two friends drove down to Anwar’s bank. Expecting a wait of a few hours in a serpentine queue, both had packed a box of biscuits and a bottle of mineral water.

As they entered the bank, Suleiman nudged Anwar, pointing ahead. “Look Anwarbhai, there’s the queue.”

“It had around ten depositors standing in an orderly line. Within 20 minutes Anwar was at the counter. He deposited Rs 20,000 in old 1,000 rupee notes and turned to look at Suleiman with a trace of embarrassment.

“Today seems an exception,” he said sheepishly. “I believe the queues in villages and small towns are huge. And ATMs routinely run out of cash. Dozens have died waiting for their own money. This move will spell the end of Modi.”

Just then a TV camera crew walked into the bank. The reporter thrust a mike aggressively under the nose of a simply dressed senior citizen standing quietly in the queue: “Sir, do you think the surgical strike on black money is actually a surgical strike on the poor?”

The senior citizen levelled an even gaze at the TV reporter. “Most of the people here in the queue seem happy. They support the move. I don’t know about the villages. There is a problem in implementation despite what the finance minister says. But things are improving gradually.”

The TV reporter seemed disappointed at the response. He spotted Suleiman and thrust the mike towards him. “What do you think , sir?”

Suleiman glanced at Anwar who stood by impassively. “Well, I’m from Saudi Arabia,” Suleiman began tentatively. “If I criticised the ruler there I’d be in jail or get 100 lashes. Here everyone condemns the prime minister, Kejriwal even calls him awful names. If he did that to the ruler in Saudi, he’d lose his head - literally.”

The TV reporter was livid. "Don’t compare us to Saudi. Just tell me what you think of the government’s handling of this so-called war on black money.”

Suleiman looked around the bank. The queue had since shortened to just five people, two of them women. They seemed relaxed. He shrugged at the TV reporter: “It looks as if the war on black money is being won.”

The TV reporter managed a forced smile. It wasn’t what his producer back at the studio wanted to hear.

Anwar put his arm around Suleiman’s shoulder and led him to the bank’s exit door. “You’ll never improve, Suleiman, never,” he smiled good-naturedly. “By the way, that TV reporter is a well-known, highly respected anchor.”

As they left the bank, the smog outside hit them. “Anwarbhai,” Suleiman said, “this is what Kejriwal should fix first.”

Anwar coughed in agreement as the dark haze enveloped them.

Follow@minhazmerchant on twitter

Condemn Islamophobia, accept Hinduphobia Meet India's 'secular' Hindus
They completely misread what real secularism means.

Thursday, November 17, 2016

Despite the chilling brutality of the Islamic State (ISIS), the harsh laws of Sunni Saudi Arabia and the hate speeches of mullahs from Tehran to Islamabad, the more extremist strains of radical Islam receive less criticism than they deserve.

Few want to meet the fate of the journalists and cartoonists of Charlie Hebdo, murdered by Islamist terrorists, or Kamlesh Tiwari, still languishing in jail nearly a year after his allegedly derogatory comments on the Prophet.

Islamophobia is rightly condemned. Hinduphobia though is acceptable in living rooms across upper middle-class urban India where secular poseurs are thick on the ground.

In India it's kosher, even fashionable among the nouveau elite, to be anti-Hindu.

We'll come to the pathology of this curious phenomenon in a bit but first a look at The Economist's story on Muslims in India whom it calls "An Uncertain Community".

The magazine grudgingly concedes that "India's Muslims have not, it is true, been officially persecuted, hounded into exile or systematically targeted by terrorists, as have minorities in other parts of the subcontinent, such as the Ahmadi sect in Pakistan."

The Economist has displayed poor editorial judgment so often (it backed the illegal US invasion of Iraq in 2003 and endorsed Rahul Gandhi as prime minister in 2014) that its insight on secularism in India is predictably myopic.

And yet, the patronising, all-knowing tone it adopts towards India's secular ethos echoes the position of India's Hinduphobes.

Most Indian Hinduphobes are, strangely, Hindus. They call themselves secular but are often not.

Secularism requires religion-neutrality. They lack that. Bias colours their views.

So why are sophisticated, educated Hindus who aspire to be secular so Hinduphobic? Because they misread completely what real secularism means.

As I wrote in my book The New Clash of Civilizations: How The Contest Between America, China, India and Islam Will Shape Our Century, "Influential sections of especially the electronic media, suffused with hearts bleeding from the wrong ventricle, are part of this great fraud played on India's poverty-stricken Muslims - communalism with an engaging secular mask.

The token Muslim is lionised - from business to literature - but the common Muslim languishes in his 69-year-old ghetto.

It is from such ghettos that raw recruits to the banned Students Islamic Movement of India (SIMI) and the Indian Mujaheedin (IM) are most easily found.

"India's religious diversity though is deeply embedded. Six of India's highest constitutional functionaries have recently been Sikh (prime minister), Christian (UPA chairperson), Muslim (chief election commissioner), Parsi (chief justice of India), Dalit (speaker of the Lok Sabha) and Hindu (president).

"There is no other country in the world with such breathtaking plurality at the highest level of leadership.

"Consider Britain: only Protestant (not Catholic) Christians can be monarch. In Saudi Arabia and Pakistan, minorities (including Muslim Ahmadis) have severely restricted rights.

"Unlike burqa banning Western democracies such as France and Belgium, Indian secularism does not separate church from state. It allows them to swim together in a common, if sometimes, chaotic pool."

Politicians are the worst offenders. Bengal chief minister Mamata Banerjee turns a blind eye to atrocities by Muslims against Hindus.

In a brazen exhibition of communal politics, she does so in order to secure Bengal's 27 per cent Muslim electorate that, along with a small slice of the Hindu majority, can guarantee her over 40 per cent of the vote share and a near-landslide in a four-cornered contest with the Left, BJP and frenemy Congress.

This sort of communal polarisation suits the BJP. The rise of majoritarianism has underpinned its success in states like Assam.

The biggest loser has been the Congress, the original communal polariser in the 1985 Shah Bano case. It is now reaping the ill wind.

The rise of Hindu extremist fringe elements is a direct consequence of decades of political parties pandering to minorities in the name of a fraudulent secularism.

Meanwhile, the "mild", everyday Hindu, inured to caste stratification, fatalism, karma and centuries of Islamic and Christian-British subjugation, is an easy target for Hinduphobes.

The Economist's piece on Indian Muslims - "An Uncertain Community" - ends with a quote by a veteran Muslim voice: "'They called it a secular state, which is why many who had a choice at Partition wanted to stay here,' says Saeed Naqvi, a journalist whose recent book, Being The Other, chronicles the growing alienation of India's Muslims. 'But what really happened was that we seamlessly glided from British Raj to Hindu Raj.'"

This is misleading for two reasons. First, it is of course a misnomer to call the British occupation of India the British Raj. That connotes a benign presence which the occupation was not.

Second, India is hardly a "Hindu Raj" given the fact that Muslims, Christians, Parsis and others have their own personal laws and, bar isolated incidents, are safer in India than virtually anywhere else in the world.

While Hinduphobia is a psychological affliction, countering it with Hinduphilia is hardly the answer. The RSS is wrong to call for a Hindu Rashtra.

It should instead work for a Bharat Rashtra. Confine religion to your home. It has no place in public discourse.

Secularism is not top-down but bottom-up. No number of laws can guarantee religious tolerance as the examples of France, Belgium and the United States demonstrate.

It is the inborn secularism of Hindus that makes India secular.

(Courtesy of Mail Today.)

Follow@minhazmerchant on twitter

How Donald Trump's America can create a new global power axis
The US-India-Russia-Japan alliance could emerge as the world's most powerful if its components play their cards well.
Wednesday, November 16, 2016

It is easy to misread Donald Trump's victory in the United States presidential election as a win for nativist forces. Brexit was similarly misread.

Neither presages anti-globalisation. Post Brexit Britain will emerge a stronger international player, not an isolationist island. Initial fears over the British economy sliding into recession have already been allayed by strong growth numbers in the July-September quarter. The pound is recovering.

In America, paranoia over a Trump presidency heralding economic isolationism and racial armageddon has been fed by a discredited, out-of-touch media.

The real takeaway from Trump's win is that it could fashion a new global power axis.

One pivot of that axis will be a burgeoning partnership between the US, India, Japan and Russia on nuclear security, counterterrorism, trade and technology.

The second pivot in this emerging quadrilateral world order is China with its rogue allies North Korea and Pakistan.

The third pivot is Western Europe, sclerotic and ageing but economically advanced and, with the NATO, militarily powerful.

The fourth and most unstable pivot is the Middle East, a breeding ground for Islamist terrorism and despotic governments.

The outcome of the geopolitical contest between these four pivots will determine the winners and losers in the second quarter of this century.

The US-India-Russia-Japan alliance could emerge as the world's most powerful if its components play their cards well.

The Narendra Modi-Shinzo Abe bilateral summit in Tokyo over the weekend is a pointer in this direction. It was reported that "India and Japan agreed to explore the possibility of cooperation in developing the strategic Chabahar port in Iran that will help India access Afghanistan and Central Asia by bypassing Pakistan.

"The Chabahar project's strategic importance is also enhanced by it being seen as a counter to China's development of Gwadar port in Pakistan which is to be linked to the Chinese province of Xinjiang by the China-Pakistan Economic Corridor.

"The decision by India and Japan to deepen their strategic cooperation despite China's unease was further reflected by the reiteration that international law should prevail in settled claims and disputes in the South China Sea.

The reference, which reflects Japan's concerns over China's muscle-flexing, was reciprocated by direct reference to Pakistan in the context of the 26/11 and Pathankot terror attacks.

"Despite China warning India and Japan against any dalliance over the South China Sea, the subject found specific mention in the joint statement issued after PM Narendra Modi's summit meeting with his counterpart Shinzo Abe."

War on ISIS
Trump's major foreign policy challenge meanwhile is the war on ISIS, now entering its decisive phase in Mosul and Raqqa. Mosul is the last major Iraqi city held by ISIS. Its fall will turn US and Russian attention to Raqqa in Syria.

Raqqa is the de facto capital of ISIS. Most of its senior commanders have gathered there to defend the pincer assault from the Syrian army, backed by Russian air strikes, from the south and the surge of Syrian rebels, backed by American air power and Kurdish Peshmerga, from the north.

The other major Syrian city Aleppo, partially held by ISIS, is under attack by the Syrian army and Russian forces. It could fall any day.

According to the Barack Obama doctrine, which Hillary Clinton co-authored as secretary of state in 2011, the priority in Syria was to evict President Bashar al-Assad from power.

Towards this end Syrian rebels fighting Assad were trained, armed and funded by the Central Intelligence Agency (CIA) in flagrant violation of Syria's sovereignty.

By 2014, ISIS had seized a third of Syrian and Iraqi territory, taking advantage of a Syrian army weakened by US air strikes and an Iraqi army similarly devastated by the earlier US invasion of that country.

When Obama's legacy is examined by history, his role in Syria will be seen as among the most pernicious aspects of his eight-year presidency.

Not only did Obama's obsession with removing Assad from power in Syria create space for ISIS, it turned the Middle East into a cauldron of sectarian strife.

Even when ISIS is finally defeated in Mosul and Raqqa, its last two major territorial possessions, Syria will likely never fully regain its sovereignty. The Kurds will carve out the north. The Turks have already occupied a broad swathe of Syrian territory on the border.

New world order
The US-Russian relationship is at its worst since the early phase of the Cold War in the 1950s. The key reason is not only Russia's annexation of Crimea and invasion of eastern Ukraine but conflicting interests in Syria.

Vladimir Putin's Russia backs Assad. Obama's America despises him. That is about to change.

Trump's America will not seek Assad's ouster. The real enemy, as Trump said throughout the presidential campaign, is the Islamic State caliphate of terror, not Assad.

The chances of the US and Russia working together in Syria to defeat ISIS have brightened. It will be Trump's first foreign policy test when he takes office in January 2017.

Where do India and Japan fit in? As a rising regional power, India has excellent relations with the US, Russia and Japan. It now has civil nuclear deals with all three.

Japan is protected by America's nuclear umbrella. Trump may ask Tokyo to bear some of that cost.

But with China emerging as Washington's principal rival, Trump will be careful to keep Tokyo on his side, given Japan's ongoing dispute with Beijing in the East China Sea.

Western Europe, the weakest of the four pivots in an emerging new world order, has been paralysed by its Arab refugee crisis, slow economic growth, ageing population and the threat of lone wolf terror attacks on its cities even after ISIS is evicted from Syria and Iraq.

Next year could prove a geopolitical inflection point. Four of the world's largest economies (the US, Japan, Russia and India) with strong leaders are poised to form a new power axis that could reorder the world in 2017.

Trump, Putin, Modi and Abe form a formidable quartet to take on the threat of Islamist terror on the one hand and the rise of an aggressive China on the other.

Follow@minhazmerchant on twitter

PM Modi is a liberal equaliser
Tuesday, November 15, 2016

Donald Trump’s victory over Hillary Clinton in the United States presidential election has been seen through an ideological prism: Right beats Left. 

It’s more complicated than that. Trump is a closet social liberal but had to wear a mask of a conservative evangelical through the election. That’s where the vote catchment in middle-class, rural and semi-urban white America lies: belief in God, Church, country and family. 

Race, not gender, defined the election. Belying the assumption that misogyny slayed Hillary Clinton, 53 per cent of white women voted for Trump. It was the African-American and Hispanic vote, male and female, that backed Clinton. In the end, they were outnumbered by angry, gender-neutral whites, including many Left-leaning Democrats who had voted for Bernie Sanders in the primaries. 

The “liberal elite” that protested violently across America after Clinton’s defeat is neither liberal nor elite. The same can be said of India’s self-declared Left-liberals. A true-blue liberal is both socially and economically liberal. Leftists are not the latter though they pose as the former. 

An economic liberal believes in free markets, globalisation, privatisation and merit-based employment. That means no opposition to foreign direct investment (FDI), no subsidies to sick public sector units (PSUs), and no quota-based employment. The Left rejects all three. It therefore fails the litmus test of liberalism. 

The Right unfortunately fails the test too. The RSS opposes globalisation and regards foreign direct investment (FDI) as detrimental to Indian industry. That logic would have passed muster in the 1950s. It is as dated as the hula hoop and Ginger Roger movies.  

On social liberalism, the Right fails even more abysmally. It opposes consensual gay relationships (worryingly, so does the Supreme Court which has declined to decriminalise gays by striking down Section 377). It opposes gender equality (the RSS does not admit women and has a separate mahila wing which is a terrible cop-out).

The Right tilts towards swadeshi on education, language and science which would be fine if it weren’t self-defeating. Take the best the world has to offer, don’t close yourself in a delusional ivory tower based on mythology. 

India needs to build an intellectual ecosystem that combines social liberalism with economic liberalism. As I once wrote on these pages: “In India, the BJP regards itself as a right wing party. So do most Indians. They are wrong. A classically right wing party — like the American Republicans or the British Tories — believe in free markets. The BJP’s ideological parent, the RSS, does not. Prime Minister Narendra Modi is an economic liberaliser by instinct. He hews to the right of the ideologues in the RSS on economic reforms. Some in the RSS in fact have more in common with the Left on economic issues. They instinctively distrust FDI. For instance, they oppose FDI in multi-brand retail, arguing that it will kill kirana stores. Successful modern societies globally tend to be those that lean rightwards economically (free markets, open trade) and lean leftwards socially (LGBT rights, gender equality). Many right wing parties do the opposite. They oppose free trade and economic reforms — positions the Neanderthal Left holds. Socially, they abhor gay rights and resist giving women absolute equality in, for example, access to places of worship.”

The Left ecosystem that has dominated India’s intellectual discourse since the Nehruvian era is vastly overrated. Its leading lights expound in turgid, 1,600-word op-eds the equivalent of the fact that the sun rises in the East. 

Brevity and clarity lie at the heart of good writing. In much the same way, they define the liberal intellect.  An ordinary leader makes simple things complicated; a great leader makes complicated things simple.

That’s a lesson for the Right and the Left: the real intellectual centre of gravity lies at the liberal-Centre.

Follow@minhazmerchant on twitter

PM Modi is a liberal equaliser
Overall, a Trump presidency will be better for India than a Clinton presidency. She would have followed Obama’s policy of preaching religious tolerance to India and mollycoddling Pakistan over its two-faced approach to “good” and “bad” terrorists

Monday, November 14, 2016

Donald Trump didn’t win the US presidential election. Hillary Clinton lost it. 

Against a less disliked and distrusted Democratic rival than Clinton (such as Bernie Sanders), Trump would have lost.

The verdict against Hillary had nothing to do with her gender. It had to do with Hillary’s thirty-year record in public life – first as a high-profile lawyer, then as a tough-as-nails First Lady, and finally as a two-term New York senator and one-term secretary of state. 

Through these years of public service, the Clintons amassed extraordinary wealth. The corpus of the Clinton Foundation swelled to $2 billion, much of it during Hillary’s term as secretary of state. 

Conflict of interest lurked around every corner, especially with donations from Saudi Arabia, Qatar and other radical Islamic states. 

As secretary of state, Clinton’s decision to house a private email server in the basement of her residence was a fatal mistake. Clinton’s sense of entitlement in what is still a country founded on the principle of “one law for all” sealed her fate. 

How should India work with a Trump presidency? Prime Minister Narendra Modi was one of the first world leaders to congratulate Trump. India-US relations will benefit in several ways from a Trump presidency. The two leaders have similar approaches to combating terrorism. Trump will be far less accommodating of Pakistan’s state-sponsored jihadi machine than Barack Obama was. 

On trade, Trump will be a pragmatic deal-maker. He has tasted business success as a real estate franchise partner in projects in Mumbai, Pune and Gurgaon. These projects are currently valued at $1.50 billion and will now be handled by his two sons, Eric and Donald Jr, and daughter Ivanka as well as son-in-law Jared Kushner, a budding media entrepreneur. 

Trump will put his business empire in a blind trust. But with his family running it, the arrangement has a distinctly desi feel. No wonder Trump gets India. 

Trump’s anti-immigration rhetoric alarms some Indians. Will he cut down on outsourced jobs as he promised during the election campaign? Unlikely. Trump was appealing to his blue-collar base who have lost jobs to China and other countries. But while Trump will go after China, whom he has called a trade and currency manipulator, he will not target the Indian IT outsourcing industry which helps US Fortune 500 companies cut costs. Trump, if anything, is a realist. 

Overall, a Trump presidency will be better for India than a Clinton presidency. She would have followed Obama’s policy of preaching religious tolerance to India and mollycoddling Pakistan over its two-faced approach to “good” and “bad” terrorists. 

With Clinton, it would have been business as usual. With Trump, it will be just business.

Follow@minhazmerchant on twitter

India must use Dalai Lama's Tawang visit to rattle China
New Delhi must not curtail such peaceful demonstrations against Beijing's depredations in Tibet.
Monday, November 7, 2016

The Indian government's announcement that His Holiness the Dalai Lama will travel to Tawang in Arunachal Pradesh in March 2017 has infuriated Beijing. This will not be the Dalai Lama's first visit to Tawang which China claims as its territory. What is different this time is the timing of the announcement.

India and China are locked in a dispute over designating Jaish-e-Mohammad (JeM) chief Masood Azhar as a global terrorist. The two countries' NSAs met last week to discuss a way forward on this and the other contentious issue of India's membership of the Nuclear Suppliers Group (NSG) that China has blocked as well.

China's 90-day block in the United Nations on Azhar comes to an end shortly. Beijing knows that being seen on the same side as a designated terrorist in order to protect Pakistan diminishes its international reputation. Beyond a point, such grandstanding becomes counter-productive. Beijing, with superpower ambitions, is keenly aware of this.

The Dalai Lama's Arunachal visit therefore comes at an awkward time for the Chinese. Tibet is one of the most sensitive international problems that Beijing wants to put a lid on. It has pressurised global leaders like former British prime minister David Cameron to boycott a meeting with the Dalai Lama by threatening to hold back Chinese investments in the UK.

US President Barack Obama though has shown courage in hosting the Dalai Lama more than once in Washington. Most other world leaders have succumbed to Chinese pressure.

India enraged China in 1959 when it granted asylum to the Dalai Lama who set up a government-in-exile in Dharamsala, now called the Central Tibetan Administration (CTA)). Indian Prime Minister Jawaharlal Nehru's brave decision ended India's entente cordiale with China. Nehru's subsequent aggressive "forward policy" on the India-China border, however, was an unnecessary provocation which led to the 1962 war.

New China policy
It is time to refashion India's China policy. Beijing has a self-centred image as the Middle Kingdom. When Indians were succumbing to rapacious colonial invasions by first the Mughals and then the British, China remained fiercely independent despite the shortlived Japanese invasion of Manchuria. It took the brutal opium wars by the British against nineteenth-century China to colonise tiny Hong Kong in 1842.

Despite its growing economic and military strength, China today has several weaknesses which Indian policymakers can exploit. Tibet is one of the biggest. The Dalai Lama makes no political statements on Indian soil but there is a vibrant community of Free Tibet Chinese activists in India. Give them untrammelled freedom to press their case with seminars and peaceful protests. Global celebrities will join the cause. Many have expressed open support for the Free Tibet movement.

As a democracy, India cannot, and should not, curtail such peaceful demonstrations against China's depredations in Tibet.

Tibet has a long history as an independent nation. In 1950, the People's Republic of China assumed sovereignty over Tibet. It granted the 14th and current Dalai Lama limited autonomy. The Dalai Lama fled to India nine years later, rejecting the sovereignty agreement with China.

An oppressive state
China is a totalitarian and oppressive state. It blocks Facebook, Twitter, Google and other internet sites. Its citizens have few freedoms. Its economy is slowing, its population ageing. Many "wonder towns" built during the boom years are ghost cities with empty buildings and empty roads.

In the northwest province of Xinjiang, China has ruthlessly changed its Muslim-majority demographics over the years by resettling ethnic Hans. Islamist terror attacks - ironically originating in Pakistan-occupied Kashmir (PoK) - have become common.

The Chinese media, which is strictly censored, not only blocks such news but disallows foreign journalists from independent visits to the province. Newspapers like Global Times and the Xinhua news network are shoddily-produced government mouthpieces.

In many ways China's totalitarian government is akin to Pakistan's. The close links between the two countries are therefore not surprising. With the China Pakistan Economic Corridor (CPEC) and One Belt, One Road (OBOR) projects, Pakistan has become China's vassal state. Beijing is gradually replacing the United States as Islamabad's principal rent-payer.

Will India's robust stand on Tibet aggravate matters? When China brazenly (and illegally) builds infrastructure in PoK and Gilgit-Baltistan for the CPEC despite Indian protests, New Delhi should certainly not worry about upsetting Beijing. The Chinese government has the mindset of a hegemon: stand up to it and it will back down. Appease it and it will climb all over you.

India and China have not exchanged a single bullet along the Line of Actual Control (LOAC) since 1987. Beijing does not send terrorists to kill Indians as Pakistan does. But by shielding Pakistani terrorists like Azhar, it is complicit in encouraging terrorism on Indian soil.

The prime minister has embarked on a calibrated policy on China. It is time to ratchet it up. The Dalai Lama's forthcoming visit to Tawang should be widely hailed. The recent visit to Tawang by US ambassador to India Richard Verma was another pointed signal to Beijing.

Free Tibet activists should be allowed to voice their protests around the country in greater numbers even as trade and diplomatic channels with China remain open and robust.

India has good trading links with Taiwan as well. Expand them. Bilateral India-Taiwan trade is now over $6 billion. A visit by Taiwan's first woman prime minister, Tsai ing-Wen, is not untenable despite the lack of official diplomatic relations.

Closer links with Japan, Vietnam, the Philippines and South Korea, all of whom have disputes with Beijing in the South China Sea, should form part of India's new China strategy.

Japan especially wants India to be more assertive with China. "We are encouraging India to speak up on issues related to the South China Sea because maritime security is important," says Yuki Tamura, deputy director of Japan foreign ministry's regional policy division which handles the South China Sea.

Those fond of quoting the legendary Chinese military strategist Sun Tzu should remember what he said: "All warfare is based on deception. Hence to fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy's resistance without fighting."

Follow@minhazmerchant on twitter

Creative intolerance over Modi at Ramnath Goenka awards ceremony
By boycotting the Indian Express event because of the prime minister, Akshaya Mukul has sacrificed journalistic neutrality.
Friday, November 4, 2016

Intolerance has no ideological parent. It infects people across class, culture, gender and nationality. The Left accused the Narendra Modi government of intolerance last year. Dozens of artists, writers, musicians and filmmakers returned their awards during the "award wapsi" season. (Most announced they would but in the end didn’t. Few, if any, returned the cash prize that went with the award.)

Creative people worldwide are Left-leaning. Being anti-Establishment is a badge of honour – as indeed it should be. The right reaction to such protests – however synthetic their intent and ulterior their motive – is to accept them as a part of freedom of expression in a vibrant democracy.

As I’ve often written, you should be free to say and do what you want so long as you don’t break the law.  

At the Ramnath Goenka awards for excellence in journalism on November 2, 2016, one awardee, Akshaya Mukul – boycotted the event. The chief guest was Prime Minister Narendra Modi.

This is why Mukul did not accept the award in person: “I cannot live with the idea of Modi and me in the same frame, smiling at the camera even as he hands over the award to me.”

Mukul was being honoured by the Indian Express for his book Gita Press and the Making of Hindu India. The book criticises the “rise” of right-wing Hindu militancy.   

So far so good. In a democracy everyone should be free to criticise everyone else, the prime minister included. Mukul himself can be called a mediocre author and a biased journalist. He shouldn’t mind. Only the intolerant dislike criticism directed at them.

Modi himself has been the target of not just criticism but vilification by Left-leaning people of Mukul’s ilk. They have called him a murderer, a goon and other impolite things. They have of course rarely criticised the depredations of the Left in West Bengal or the serial corruption of dynastic parties like the Congress SP, RJD and others. But the right to be biased is also a part of democracy.

At the height of the manufactured "award wapsi" campaign in 2015, this is the statement issued by six artists, one photographer and one art critic (Geeta Kapur, Vivan Sundaram, Ram Rahman, Sharmila Samant, Tushar Joag, Atul Bhalla, Gulam Mohammed Sheikh and Nilima Sheikh):

“The remit of social violence and fatal assaults on ordinary citizens (as in Dadri, UP; Udhampur, Jammu & Kashmir) is multiplying. There are numerous incidents of repression by Hindutva forces operating through their goon brigades. The warnings and regrets issued by ruling party ideologues are merely expedient.

“The Sangh Parivar and its cohorts, who form its support base, and the government itself, are complicit in their attempts to impose conformity of thought, belief and practice. And ‘fringe’ elements are in fact the other face of this government’s developmental rhetoric.

“The ideology of the ruling party has revealed its contempt for creative and intellectual work; bigotry and censorship will only grow. As in the past, we must challenge the divisive forces through varied forms of appeal and protest, articulation and refusal. Our demand can be nothing less than that the entire range of constitutional rights and freedoms of the citizens of this country – freedom of expression and speech, right to dissent and exert difference in life choices including culture and religion – be endured.”

I wrote on these pages at the time: “The language used by the artists is instructive: ‘goon brigades’, ‘cohorts’, ‘repression’, ‘contempt’, ‘bigotry’, and ‘social violence’. These sentiments were conspicuously absent during the incidents of communal violence and brazen corruption under the Congress-led UPA government in 2004-14.”

Mukul’s protest of boycotting the Indian Express event because of Modi’s presence is essentially a political statement. And as an individual journalist he has every right to make such a statement. By doing so though, he sacrifices journalistic neutrality – the gold standard of good journalism. But nobody should grudge Mukul the right to diminish himself professionally.

What’s more worrying is the report that senior editors at the Indian Express were unhappy at the choice of Modi being chief guest at the awards ceremony and sought to reverse the decision.

That constitutes institutionalised journalistic bias. It does the Indian Express’ hard-won reputation for fair and fearless journalism no good at all.

Ramnath Goenka, in whose name the awards for excellence in journalism were instituted, would not be pleased.

Follow@minhazmerchant on twitter

Why America gives Pakistan special treatment
The war on terror in Afghanistan following the 9/11 terror attack dramatically changed the Washington-Islamabad dynamic.

Thursday, November 3, 2016

Since 1947, Pakistan has served the US-led West as a geostrategic asset.

Over the decades it has degenerated into a terrorist state. Pakistan's army is an Islamist force that fights in the manner of jihadis.

It ambushes and beheads Indian soldiers instead of fighting them on the battlefield.

The West has suffered enormous casualties as a result of the war on terror by the US-led NATO troops in Afghanistan since 2001. Why then does the West still back Pakistan with money, arms and diplomatic cover?

The US imposed harsh sanctions on Iran for daring to even attempt building a nuclear device.

It imposed sanctions on Russia for annexing Crimea and invading eastern Ukraine, both with strong Russian ethnic ties.

It has designated Sudan, Syria and Iran as "state sponsors of terrorism" for crimes a fraction as malignant as Pakistan's.

Why then does Pakistan receive special treatment? The conventional wisdom is that Pakistan's geostrategic location makes it indispensible.

It is the gateway to both Central Asia and West Asia and controls access to landlocked Afghanistan. Pakistan, moreover, is a bulwark against Russian expansionism from the Caucasus.

These Cold War arguments still carry weight in Washington and London. But they are wearing thin.

The real reason the West continues to back Pakistan is hidden beneath self-serving clichis.

The US foreign policy has long been driven by the military-industrial complex (MIC). America emerged from its decade-long Great Depression in 1939 following World War II.

American factory production, mired in recession, began humming again.

It is war that has sustained US manufacturing growth ever since - Korea (1950-53), Vietnam (1965-75), Iran-Iraq (1980-88), Kuwait (1990-91), the Balkans (1999), Afghanistan (2001-16), Iraq (2003-16) and Syria (2011-16). America thrives on war.

Its defence budget ($570 billion) is larger than the combined defence budgets of China, Russia, France and Britain (the other four permanent members of the United Nations Security Council).

This does not mean the US goes to war merely to feed its military-industrial complex. It does so to preserve its global hegemony.

Washington spent more than 40 years in an eyeball-to-eyeball confrontation with the then Soviet Union.

The US-led NATO forces and the Soviet-led Warsaw Pact powers were locked for decades at flashpoints across Eastern Europe.

With the collapse of the Soviet Union 25 years ago, the Cold War against communism has been replaced in US strategic thinking by a battle against two implacable enemies: Islamist terrorism and the rise of China.

America sees Islamist terrorism as the biggest threat to global security. It is the principal reason it tolerates a terrorist state like Pakistan.

In 1993, President Bill Clinton came within a hair's breadth of declaring Pakistan a terrorist state. Islamabad, which hires the most expensive lobbying firms in Washington, escaped unscathed.

The war on terror in Afghanistan following the 9/11 terror attack dramatically changed the US-Pakistan dynamic.

After President George W Bush threatened President Pervez Musharraf to "bomb Pakistan into the stone age" if it didn't cooperate in hunting down the terrorists who had killed nearly 3,000 Americans in the September 11, 2001, terror attack, Islamabad slipped effortlessly into its new role as a "partner in the war on terror" rather than the perpetrator of terror that it clearly was.

The subterfuge has served both Pakistan and the West. Islamabad's single-point agenda is gaining assymetrical parity with India through proxy terrorism.

Pakistan's economy, just a tenth of India's, won't give it parity: the chasm is too wide and growing. Its overstretched military won't give it parity either. Hence, the periodic nuclear bluster by Pakistani policymakers to feign equivalence.

Pakistan's self-created terror infrastructure has forged a failed state. Its army, like ISIS, has a business model that uses terror to extract revenue.

ISIS extorts taxes and steals oil in the territories it controls in Iraq and Syria. The Pakistani army runs benami businesses in real estate, mining, manufacturing and smuggling.

It uses criminals like Dawood Ibrahim to run some of these illegal businesses and protects them in return.

It allows terrorists like Hafiz Saeed to front charities and schools as a cover while he plans terror strikes in India through Punjab-based jihadi groups.

Despite the fact that the West has lost over 4,000 soldiers in the war on terror in AfPak since 2001 - many to attacks by terrorist groups sponsored by Islamabad - Washington continues to back Pakistan.

Islamabad is the classic example of a renegade gambler holding three aces:

One, Islamist terrorists whom it controls and directs; two, China, whom the West fears will replace it if it antagonises Pakistan; and three, a geostrategic location that keeps a resurgent Russia, Washington's increasingly volatile rival, at bay.

Besides, if Pakistan breaks up into Balochistan, Pashtunistan and Sindh (as it eventually might), leaving the rump of Punjabistan as the new Pakistan with a population of 110 million (half of Uttar Pradesh), Islamist terrorists will be freed from Islamabad's protective embrace.

That, Washington feels, is a cure worse that the disease. Pakistan plays on America's paranoia.

It is confident it can continue chasing with the Haqqani terror hounds and running with the Punjab-based terror hares.

The West though has read the sectarian writing on the walls of Peshawar, Quetta and Karachi.

Pakistan is damaged goods but for the present serves the West's limited purpose as a frontline state to quarantine terror.

The West also knows that when you unleash the terror genie, it's impossible to push it back into the bottle. In the end, it consumes you. Pakistan is nearing that moment.

Follow@minhazmerchant on twitter

Modi At Mid-point
The Government’s recent outreach to the muslim community in Haryana and elsewhere underscores the priority that Modi attaches to communal harmony.

Monday, 31.10.2016

Prime Minister Narendra Modi arrives at the mid-point of his five-year tenure in November. It is a good time to assess the PM and his cabinet’s performance on key parameters across various sectors. 

Foreign policy: This has been the Prime Minister’s strongest suit. He has established a viable strategic partnership with the United States. Whatever the outcome of the US presidential election on November 8, the India-US relationship is set to strengthen. 

Modi has meanwhile reached out to the Middle East in an effort to ringfence India’s vital national interest on terrorism. His visits to Saudi Arabia and the United Arab Emirates (UAE) in particular have tempered the support Pakistan receives. As a result of this ringfencing, Modi has been able to counter the “Islamic card” Pakistan has played for decades to garner support at the United Nations and in the Organisation of Islamic Cooperation (OIC). That support has been noticeably absent from a broad swathe of countries in the Middle East during the recent stand-off with Islamabad.

The Prime Minister has forged close trade links with the European Union (EU) and at the same time pursued a vigorous “Act East” policy in an arc from Myanmar to Vietnam. But the PM’s greatest policy success lies in coalescing South Asia into an India-centric bloc. Following the Uri terror attack and India’s surgical strike in Pakistan-occupied Kashmir (PoK) on September 29, Afghanistan, Bangladesh, Sri Lanka, Bhutan and the Maldives joined India’s boycott of SAARC which was scheduled to be held in November 2016. Summit chair Nepal too issued a strong statement condemning terrorism after announcing the cancellation of the summit. 

This unprecedented display of solidarity has succeeded in isolating Pakistan in the subcontinent. It presents Modi an opportunity to press ahead with BIMSTEC, a grouping comprising Bangladesh, India, Myanmar, Sri Lanka, Thailand, Nepal and Bhutan as an alternative to SAARC which Pakistan has reduced to a farce with its anti-India posturing. 

In the area of foreign policy, Pakistan and China remain Modi’s most serious challenges. The PM’s implacable response to the Uri terror attack with surgical strikes in PoK has rattled Pakistan. Islamabad has turned to China, its toxic ally, and Beijing — despite President Xi Jinping’s relatively cordial relationship with Modi — has revelled in being India’s bête noir. 

In the second half of his term, Modi will need to recalibrate his China policy with a more robust approach. Beijing respects strength. India must display it in its dealings with the Middle Kingdom in the various global fora the two countries share and where Pakistan is absent — especially BRICS and the G-20. 

Economic Policy: Despite three disappointing Union budgets that lacked coherence and vision, India’s economy has turned the corner. The global economy remains soporific but India’s inherent strengths — youthful demographics, a strong services sector and a big, consuming middle class — will ensure GDP growth of 7.5 per cent in 2016-17. 

The success of the black money disclosure scheme, key fiscal reforms and renewed public sector divestment are set to give the economy a fillip. The PM says he spent the first two years of his term fixing the broken economy he inherited from the UPA government. Now though it is his government which will be judged over the next 30 months on how the economy performs. 

Modi’s reputation in rapid project implementation was cemented during his over 12-year tenure as chief minister of Gujarat. This report in a leading daily on 4 October 2016 explains how the PM is replicating the Gujarat model of project execution across the country: “Nearly one and a half years after its launch, Pro-Active Governance and Timely Implementation or Pragati is turning out to be quite a help for the Modi government as it tries to speed up development schemes. Official figures show that the mechanism rolled out on 25 March 2015 has pushed 136 projects involving investments of around Rs 8 lakh crore. While the focus is on infrastructure at a time when the private sector continues to be reluctant to invest, the ambit of Pragati is not limited to power, roads or railways alone.

“Every project or issue taken up at Pragati meetings comes with a deadline, which government agencies have to adhere to. Officials said that with the Prime Minister personally involved, even state governments were complying with the deadline set for projects involving them. There are projects such as the Nangal Dam-Talwara railway line, which has been pending since 1981-82, where the Punjab government has now been advised to speed up handing over the remaining land besides giving forest clearance ‘immediately’. 

“Over the past 18 months, 136 issues have been discussed at the level of the Prime Minister with several projects being of strategic importance such as a transmission system in the Kargil-Drass-Leh area. At times, projects funded by the Indian government in Afghanistan, Myanmar and Bhutan have been discussed. For instance, the parliament project in Afghanistan and hydro-power project in Bhutan were on Pragati’s agenda.” 

Social policy: Modi’s most acute challenge lies in the social sector: health, sanitation, education, skills and community relations. India’s education sector remains moribund. Though new IITs and IIMs are being built, primary education suffers from lack of resources and infrastructure. The government’s ambitious schemes on sanitation and health are meanwhile making a difference but progress is slow. Even the plan to clean the Ganga has moved glacially. 

When the government took office in May 2014, doomsayers predicted “riot after riot”. Despite isolated communal incidents, that prophecy has not been fulfilled. And yet Modi more than anyone else knows that his government will be judged as much on how the country’s secular fabric has fared under a right-of-centre government as on economic and foreign policy successes. The government’s recent outreach to the Muslim community in Haryana and elsewhere underscores the priority that Modi attaches to communal harmony. And yet, sensibly, he has eschewed the old Congress policy of appeasement for the sake of minority votes, stressing rightly the need to empower Muslims.

Encouragingly, Muslims have largely rallied around Modi following his strong response to Pakistan-sponsored terrorism. With elections in key states around the corner, the Prime Minister will soon have to go back to playing a double role: a star campaigner for his party as well as the custodian of a government that in the second half of its tenure must justify the faith the electorate reposed in it by handing it 282 Lok Sabha seats.

In a fractious democracy like India’s, such electoral opportunities don’t knock twice.

This article was published in BW Businessworld issue dated 'Oct. 31, 2016' with cover story titled 'THE YOUNG ENTREPRENEUR AWARDS 2016

Follow@minhazmerchant on twitter

Dangers of confusing nationalism with national interest
Interpret the former liberally and protect the latter uncompromisingly.
Tuesday, October 25.10.2016

Every now and again, the question pops up: is nationalism a bad thing?

It was asked during the Award Wapsi campaign, the Jawaharlal Nehru University (JNU) agitation, and now after the imbroglio over director Karan Johar’s film.

The same question came up during a panel debate at an awards ceremony celebrating excellence in journalism. “Can nationalism have different meanings,” I was asked by the moderator.

Yes, it can, I replied. You can interpret nationalism in different ways. For example, criticising the government doesn’t compromise your nationalism. Being left wing doesn’t. Being right wing doesn’t. Not standing up in a cinema hall when the national anthem is being played doesn’t. (It makes you an insensitive cretin but that’s still not enough to make you anti-national.)

The real issue isn’t nationalism or patriotism which have (and should have) liberal, flexible definitions for different people. In a democracy such differences are not only acceptable but desirable. Plurality of opinion defines a civilised, evolved society.

While nationalism has many perfectly acceptable interpretative definitions, national interest does not. You can still be a patriot and a nationalist when questioning or even condemning the government.

National interest, however, is an entirely different matter. It differs from nationalism in one critical way. National interest is absolute. It has a singular interpretation unlike the plurality afforded by nationalism.

Right to dissent

Dissent is the placebo of democracy. Without it, democracy dies. But when you convert dissent into subversion, national interest can be compromised.

For example, Kanhaiya Kumar, the former JNU president, crossed the line from dissent to subversion. We see that line being crossed in Jammu & Kashmir as well where civilians and soldiers are killed because separatists instigated by Pakistan have subverted the state.

This endangers national security, causes death and destruction, and must obviously be dealt with by the law.

As I’ve written before, however, even subversion must not be conflated with sedition. So the government was wrong to charge Kanhaiya Kumar under the colonial-era Section 124A (which though modified after Independence is still often misused) but right to suspend him. Let the punishment fit the crime or you create a victim out of a culprit.

National interest is intimately tied up with national security and must be protected. Unlike nationalism, it does not have interpretative flexibility.

Left-leaning liberals (whose hectoring is often illiberal) confuse nationalism with national interest. Their narrative thus gets distorted. They deliberately conflate national interest with jingoism. Such ultra-nationalism has nothing to do with national interest.

Because India has had a troubled colonial history, national interest occupies a more central role than it does in other countries. It’s important therefore in India to separate the practical imperative of national interest from the ideological component of nationalism.

Those like Santosh Desai who in The Times of India (October 24) called the recent surgical strike in Pakistan-occupied Kashmir (PoK) a manifestation of “an angry nationalism” miss the point. The strike in PoK, after years of timorous strategic restraint that cost innumerable Indian lives, was a manifestation not of nationalism, angry or otherwise, but an act in preventive counter-terrorism.

It is such woolly-headed logic that allows countries like Pakistan and China to divide the nation’s voice by giving credence to a false equivalence between nationalism and national interest.

In countries like the United States and Britain, the two often get merged because of their particular histories. British Prime Minister Theresa May has signalled that post-Brexit Britain will follow a hard right-wing anti-immigration policy. Governments across Europe, deluged by Middle East refugees, are turning Right on security issues. To them nationalism is a prerequisite to protect national interest.

Nowhere is this more sharply evident than in the US. Republican presidential candidate Donald Trump has based his entire campaign on an anti-immigration plank.

Nationalism in America and Europe, long reviled as an ideology associated with Nazi fascism after World War II, has become respectable again because it is so clearly in these societies’ interest to combat Islamist terrorism.

In India nationalism, embraced during the freedom movement, has in sharp contrast come to acquire negative connotations. It is associated with right-wing majoritarianism. The RSS has fallen into this ideological trap by placing religion at the centre of its discourse. That gives religious bigots of all stripes an opportunity to dissemble.

The RSS must stop its anti-English language drive, admit women to the main organisation (not just the mahila wing) and recognise that Vedic science, whatever its accomplishments (and it is right to acknowledge these) cannot replace modern science.

National interest in the end can only be protected by a modern, forward-looking society in which neither jingoism nor appeasement has a place.

The best way to safeguard and advance national interest is by building a strong economy, rapidly improving the military’s capability with modern weaponry neglected for decades, and harmonising social tensions. Peace comes from strength. India has for too long been a weak state which Pakistan and China have fully exploited. That must end.

The importance of advancing the national interest is lost in the counterfeit argument over nationalism.

The criticism recently levelled by the “liberalati” is that Pakistani actors, writers and artistes are soft targets. But so are Indian women and children targeted daily by Pakistani mortar shelling on border villages.

The same liberalati doesn’t say a word when Indian films like Phantom are banned in Pakistan. This of course still doesn’t make them anti-national – nationalism is a broad tent which accommodates all views, however quasi-liberal, as long as national interest is not compromised.

A country’s security and unity is best protected by allowing widely different interpretations of nationalism within the purview of the law. Plurality of opinion is the best antidote to the real anti-nationals. They seek to subvert the national interest by raising the bogey of nationalism-as-jingoism.

To defeat these anti-nationals, who often hide behind a liberal-secular veil, call their bluff. Draw a distinction between nationalism and national interest. Interpret the former liberally and protect the latter uncompromisingly

Follow@minhazmerchant on twitter

Britain’s Economic Left Turn
The most worrying aspect of Theresa May’s philosophy is the combination of a hard Left turn on the economy and a hard Right turn on social issues. In a liberal society, it should be the exact opposite: Right economically, Left socially

Tuesday, October 25, 2016

When Theresa May took over as British Prime Minister following David Cameron’s resignation over the Brexit referendum result, few knew her economic philosophy.

As Cameron’s Home Secretary from 2010-2016, she had worked mostly under the radar. During the fevered Brexit campaign, she voted to “Remain” though her personal campaign appearances were few and low key. 

May won a shortlived Tory party internal selection contest to become party leader and Prime Minister without facing the electorate. 

It didn’t take her long to reveal her hand: “Brexit is Brexit,” she declared coldly. Those who had expected May, following her pro-Remain stance, to opt for a delayed exit for Britain from the European Union (EU) or at least favour a “soft Brexit” were disappointed. 

May has pointed clearly to a “hard Brexit” which means sacrificing Britain’s privileged trading access to the EU in return for blocking a free flow of immigrants from the EU’s open borders policy. The consequences for the British economy could be severe. The pound has already lost nearly 20 per cent of its value against the dollar. 

Those who have followed May’s six-year record as Home Secretary will, however, not be surprised by her stance. She wanted to cut immigration drastically and sent out buses to immigrant-dominated areas across Britain painted with a sign in effect asking illegal immigrant to leave Britain. 

May has said in reply to a legal challenge over the validity of the Brexit referendum that parliament will vote on it. Those who believe a negative parliamentary vote will reverse Brexit are wrong. Parliament can vote but not override a binding referendum reflecting the will of a majority of the British people. 

Article 50, under which EU member-states negotiate to leave, has a two-year window. May says negotiations on trade, immigration, security, budget contributions and the status of EU citizens currently in Britain as well as British citizens working in the EU, will begin by March 31, 2017. That means Britain could leave the EU by March 31, 2019 though delays are inevitable. 

The next British general election is due only in May 2020. Despite a lacklustre labour leader in Jeremy Corbyn and the Liberal Democrats’ near wipeout in the 2015 election, recent by-election results in Cameron’s constituency in West Oxfordshire and elsewhere point to a revival in both Labour and Lib-Dem prospects. A snap general election, however, can’t be ruled out, given the Conservative party’s overall popularity rating of 47 per cent, its highest in decades.

The most worrying aspect of Theresa May’s philosophy is the combination of a hard Left turn on the economy and a hard Right turn on social issues. In a liberal society, it should be the exact opposite: Right economically, Left socially. 

As The Economist wrote of May’s speech at the Conservative party’s annual conference in early October: “She took aim at liberal politicians and commentators ‘who find your patriotism distasteful, your concerns about immigration parochial, your views about crime illiberal.’ Companies will be made to declare how many of their staff are foreigners, to shame those who do not hire natives. 

“The sheer intellectual swagger of its authoritarianism sets Mrs. May’s speech apart. It is worrying: a systematic rejection of the way the country has been governed, for worse and mostly better, for decades. Like it or not, Britain’s strengths are its open, flexible, mostly urban service economy and its uncommonly mobile and international workforce. That fact cannot simply be wished or legislated away.” 

Britain will now need to sign free trade agreements (FTAs) with each individual EU country who will bargain long and hard. It will also have to reach new trade deals with the United States, China, India and others which were earlier covered under the EU. 

For Britons, May’s economic policy echoes the anti-globalisation rhetoric of a Donald Trump. Her social philosophy mimics the xenophobic anti-immigrant trend that is sweeping Europe. Both symbolise the return of Little England – the shrinking of a once global power. The secession of Scotland from the United Kingdom through a second referendum looms.

For India, a post-Brexit Britain offers new trading opportunities as well as challenges. Indian students and temporary workers will be hardest hit by new stringent immigration rules. 

A silver lining though: even as Pax Britannica retreats, Pax Indica rises in an unfolding new world order

Follow@minhazmerchant on twitter

How Kejriwal can actually help BJP
If the penny hasn't yet dropped for the Congress high command, it should now

Thursday, October 20, 2016

Prime Minister Narendra Modi has an unlikely ally: Arvind Kejriwal. In at least two state Assembly elections due in 2017 - Goa and Gujarat - the Aam Aadmi Party (AAP) will convert a binary BJP-Congress contest into a triangular fight.

The result: the AAP will split the minority vote in both states. It's a vote bank the Congress has so far had a lock on. In Goa, Christians and Muslims comprise 35 per cent of the electorate. In Gujarat, Muslims are just under ten per cent.

The results of the latest India Today-Axis opinion poll seem to bear this out. In Goa, the poll projects the BJP will win 17-21 seats in the 40-seat Goa Assembly with the Congress a close second at 13-16 seats. The AAP is projected to win just one-three seats.

Crucially, most of AAP's 16 per cent vote share would have been cannibalised from the Congress, allowing the BJP to beat anti-incumbency in Goa by a whisker.

To his dismay, Kejriwal would thus have merely played spoiler to help the BJP retain power in a state it hasn't governed particularly well.

Gujarat presents a more complicated picture. Kejriwal has wooed the Patidars to gain a foothold in a state he thinks is ripe for the picking.

After Modi's move to the Centre, lacklustre leadership by former chief minister Anandiben Patel, the Patidar agitation, atrocities on Dalits, and more than 20 years of anti-incumbency have weakened the BJP's traditional hold on Gujarat.

UPA chairperson Sonia Gandhi's political secretary MP Ahmed Patel comes from Bharuch, a city at the mouth of the Narmada river in southern Gujarat. He will be Sonia's eyes and ears in the December 2017 Gujarat Assembly elections.

Patel knows that a BJP defeat in Modi's home state would demoralise the BJP leadership and cadre barely a year before the 2019 Lok Sabha election. But Patel's calculations may be unravelling.

The plan to use Kejriwal to inflame a Patidar revolt against the BJP hasn't gone according to plan.

The upsurge in nationalist sentiment following India's surgical strike on Pakistan Occupied Kashmir (POK) is likely to be most keenly felt in Gujarat where sentiment against Pakistan-sponsored terrorism runs high.

Worse, Kejriwal may, as in Goa, poach more voters in Gujarat from the Congress than from the BJP in a triangular contest.

The Delhi chief minister's recent four-day sweep through Gujarat was poorly timed with much of the attention focused on the BRICS and BIMSTEC summits in Goa and counterterrorism cooperation in the region.

Following India's surgical strike in POK, terrorism from Pakistan-based terror groups has become a default election issue.

It is Kejriwal's weakest suit. His early questioning of India's strikes in POK has drawn sharp criticism. In a border state like Gujarat that could be an electoral millstone around Kejriwal's neck.

Months ago, the BJP would have been pleased to settle for around 100 seats in the 182-seat Gujarat Assembly and just about retain power in 2017 despite anti-incumbency.

Now its ambitions will be set higher, courtesy Kejriwal's disruption of the Congress vote and the Army's action in POK.

Punjab is the other state where Kejriwal could have miscalculated badly. Not long ago AAP's internal surveys claimed it would win over 100 seats in the 117-seat Punjab Assembly.

Missteps have reduced this estimate to less than half in the India Today-Axis opinion poll to 42-46 seats - a close second to the Congress (49-55 seats).

The tainted SAD-BJP alliance is projected to finish a dismal - and fully deserved - third with 17-21 seats.

Kejriwal's biggest mistake in Punjab has been to export his Delhi team to the state. The sacking of veteran leader Chhotepur Singh and the failure to bring Navjot Singh Siddhu on board have compounded AAP's problems.

Reports about misgovernance in Kejriwal's Delhi government too have filtered through to the villages of Punjab.

Reeling from the drug mafia and horrific corruption by Akali leaders, Punjab deserves better. Former chief minister Amarinder Singh has given the Congress a real chance to capture its first major state after three years of the party's retreat around the country.

The Congress has lost not only Assam and Arunachal Pradesh to the BJP but, according to the India Today-Axis opinion poll, could lose Manipur and Uttarakhand as well in 2017.

With Himachal Pradesh likely to be another casualty in late 2017 and the Congress also set to cede misgoverned Karnataka to the BJP in 2018, winning Punjab becomes critical: It could be the only state (bar Meghalaya) with a Congress government ahead of the 2019 Lok Sabha election.

That's not good news for Indian democracy. India needs two strong national parties. None of the regional fronts - JD(U), AAP, TMC, BSP or SP - has been able to step up to the plate.

There's further bad news for the Opposition: the India Today-Axis opinion poll was completed just days after the surgical strike.

The full impact of the Army's action and the Opposition's self-destructive politicisation of the strike have not been factored into the poll.

If the penny hasn't yet dropped for the Congress high command, it should now: to expand beyond Punjab and Meghalaya in India's 36 states and Union territories, it needs to reform the party.

Reform number one? Restore the Congress to a political party by rescuing it from the family business Sonia Gandhi has so diligently converted it into

Follow@minhazmerchant on twitter

Trump, Hillary or media - who's the biggest victim of US Presidential poll
The fourth estate will be there to ensure that the dice doesn't fall into the right slot.
Tuesday, October 18, 2016

The United States presidential election has claimed three victims: Donald Trump, Hillary Clinton and the US news media.

Trump has been shown up as a shallow, licentious braggart. Hillary has been exposed as conniving, dishonest and in the pocket of Wall Street.

But the biggest casualty in the 2016 US presidential election has been the American media.

Whoever enters the White House as the next president, there's little doubt that mainstream US news media has never before been so reviled and distrusted by the American public.

America's legacy newspapers and television networks have had a particularly poor election. Four media outlets stand out for staggering journalistic bias: The New York Times, The Washington Post, CNN and MSNBC.

They have been right to ruthlessly expose Republican presidential candidate Donald Trump's behaviour during the presidential campaign, his treatment of women and his business record. But as more and more respected voices in the US are saying, they have been professionally compromised by not applying those same critical standards to their reportage of Democratic presidential candidate Hillary Clinton.

The establishment media has glossed over her prosecutable breach of national security. As US secretary of state, Clinton used a private server located in the basement of her residence to send top secret classified emails.

Anyone else without her influence would have been prosecuted under America's strict national security laws. Several government officials have been for lesser breaches of security protocols.

While Trump's often outrageous behaviour is partly to blame for the hostile media coverage he has received, this election has severely damaged the credibility of the US news media. One mainstream newspaper finally broke ranks with the establishment media that has wilfully ignored Hillary Clinton's many sins while rightly pummeling Trump for his.

In a widely-read article by Kimberly Strassel on October 13, 2016 that has startled and shamed its mainstream media fraternity, The Wall Street Journal wrote scathingly of the dishonesty and bias that has scarred media coverage of the 2016 US presidential election:

"If average voters turned on the TV for five minutes this week, chances are they know that Donald Trump made lewd remarks a decade ago and now stands accused of groping women. But even if average voters had the TV on 24/7, they still probably haven't heard the news about Hillary Clinton: that the nation now has proof of pretty much everything she has been accused of.

"It comes from hacked emails dumped by WikiLeaks, documents released under the Freedom of Information Act, and accounts from FBI insiders. The media has almost uniformly ignored the flurry of bombshells, preferring to devote its front pages to the Trump story. So let's review what amounts to a devastating case against a Clinton presidency.

"The leaks show that the Clinton Foundation was indeed the nexus of influence and money. The head of the Clinton Health Access Initiative, Ira Magaziner, suggested in a 2011 email that Bill Clinton call Sheikh Mohammed of Saudi Arabia to thank him for offering the use of a plane. In response, a top Clinton Foundation official wrote: 'Unless Sheikh Mo has sent us a $6 million check, this sounds crazy to do.'

"The leaks also show that the press is in Mrs. Clinton's pocket. Donna Brazile, a former Clinton staffer and a TV pundit, sent the exact wording of a coming CNN town hall question to the campaign in advance of the event. Other media allowed the Clinton camp to veto which quotes they used from interviews, worked to maximize her press events and offered campaign advice."

Morning blues
Joe Scarborough is a craggy-faced man who appears every morning at six o'clock to co-host Morning Joe on MSNBC. Scarborough's co-host, Mika Brzezinsky, is an equally grim-faced presence. Together, every morning, they rip apart Donald Trump and sing paeans to Hillary Clinton.

Till five months ago, Trump was a regular guest on Morning Joe. The two men fell out and Trump hasn't come on the show since May 2016. Scarborough ironically is a former Republican member of the House of Representatives who has moved smoothly into a career on morning TV. His hostility to Trump is emblematic of how the Republican party has been torn apart by the billionaire builder.

House Speaker Paul Ryan (a potential Republican candidate for president in 2020) has distanced himself from Trump as the GOP finds its 54-46 majority in the Senate under serious threat in simultaneous "down-ballot" elections this November.

Trump has wounded both down-ballot Republican candidates and his own candidacy with behaviour that belongs to the Howard Stern radio show, not a presidential campaign. He still though has a devoted base of angry white blue-collar men with stagnant wages and deeply conservative evangelical Christians. They are horrified that four more years of Obama-like left-of-centre policies from Hillary Clinton will skew the US Supreme Court for years.

Following the death of Antonin Scalia, the Supreme Court is delicately balanced 4-4 between the Left and Right. Scalia's vacancy will be filled by the next US president.

Unlike India, US Supreme Court justices don't retire at 65. They serve for life. The result is that the US Supreme Court changes ideological character glacially. It also means the average age of the eight serving US Supreme Court justices is nearly 70 with Ruth Ginsburg the oldest at 83.

Trump's base of blue-collar white men and evangelicals isn't large enough to win him more than 45 per cent of the American electorate. Despite the fact that Clinton is distrusted by around 60 per cent of the American people, she is therefore likely - bar a last-minute upset - to be the next US president. Her base of women, college-educated millennials, Latinos and African-Americans has given her a decisive demographic edge in the nastiest, most vicious, media-driven presidential election in US history.

So is it all over bar the shouting for "The Donald", as Democrats and their acolytes mockingly refer to him? Not till the Fat Lady sings - and we won't hear her till November 9, 2016, a day after voting, when all the results are in.

Meanwhile, the last of the three presidential debates on October 19 in Las Vegas will allow Trump a final throw of the dice in America's casino capital. The US mainstream media will be there to ensure that the dice doesn't fall into the right slot

Follow@minhazmerchant on twitter

Getting Tough With China
Beijing respects strength. Prime Minister Narendra Modi must recalibrate his strategy towards China as he has done with Pakistan.

Thursday, October 13, 2016

When Chinese President Xi Jinping sat congenially on a swing with Prime Minister Narendra Modi in Ahmedabad two years ago, India’s relationship with China seemed to be entering a new collaborative orbit – economically and geopolitically.

But it’s not for nothing that the Chinese are called inscrutable. Over the past few months, despite several Modi-Xi meetings at the BRICS, G-20 and other summits, the relationship has noticeably chilled. 

Modi’s bilateral meeting with the Chinese president at the BRICS summit in Goa this weekend is unlikely to change Beijing’s hardline stand on Maulana Masood Azhar, head of the terrorist group Jaish-e-Mohammad (JeM). He remains one of Beijing’s levers to keep the pressure on India.

China has twice blocked a move in the United Nations to designate Azhar a global terrorist. Beijing has used every artifice to defend the indefensible, saying its action is based on technical grounds.

China has been equally bloody-minded over India’s membership of the Nuclear Suppliers Group (NSG). It has blocked India’s entry by advancing the specious argument that Pakistan’s claim to membership should also be considered. As a serial nuclear proliferator and cheat, Pakistan is the last country on earth, bar North Korea, with a claim to NSG membership. 

China has further insisted that only signatories of the Nuclear Non-Proliferation Treaty (NPT) should be allowed into the NSG. Since the NPT is an over 40-year-old discriminatory treaty which India has rightly criticised, this would seem to rule out New Delhi’s early entry into the NSG. 

Fortunately, membership of the NSG is no longer crucial to meet India’s geopolitical and security objectives. The India-US civil nuclear deal has given India most of the waivers on access to nuclear technology and fissile material it needs. NSG membership is therefore not a priority anymore. India’s entry into the Missile Technology Control Regime (MTCR) earlier this year has further reduced the immediate importance of NSG membership. 

China’s stand on Masood Azhar is more galling. Beijing knows he is a globally-designated terrorist. Why is it playing hardball? 

Beijing has been increasingly worried over the strengthening India-US strategic partnership. It sees the partnership as a long-term threat to its hegemonistic aims in the arc from the Indian Ocean to the South China Sea. China has no compunctions in using a terrorist-sponsoring nation like Pakistan to slow India’s global rise and hence dilute the impact of a powerful future India-US geopolitical axis.

By 2030, the combined GDPs of India and the US will exceed the GDP of China. With the European Union (EU) beset by economic and political sclerosis, Japan mired in stagflation and Britain isolated by Brexit, China see itself replacing the US as the world’s principal superpower over the next two decades. 

Its defence budget ($146 billion) is already the world’s second largest and a quarter of America’s ($570 billion). With a sharply higher growth rate in defence spending (while America’s defence budget shrinks), China could achieve military parity with the US in two decades. 

India remains the obstacle. A rising India can help compensate Washington’s relative decline. Hence China’s aggressive realpolitik with New Delhi. 

India has many options to deal with China’s aggression. Tibet and Xinjiang (where Islamist terrorism is a growing concern for Beijing) are China’s soft underbellies. India must leverage them. Beijing’s tensions with Japan, Vietnam and the Philippines over maritime sovereignty in the South China Sea provide India another opportunity to isolate China diplomatically. Beijing respects strength. Modi must recalibrate his strategy towards China as he has done with Pakistan. 

The days of wooing Xi Jinping on an Indian jhoola are over. India has a large consumer market that a slowing Chinese economy needs. Modi must use every economic and political lever, including Tibet and Xinjiang, to deliver this weekend in Goa an uncompromising message that China will hear and in a language it will understand.

Follow@minhazmerchant on twitter

How brave Muslim women are leading a quiet revolution to reform Islamic law
Like the abolition of triple talaq, the right of women to worship in a place of worship must be absolute.
Wednesday, October 12, 2016

Maria Alam Umar is a social activist in Aligarh. She represents the brave new voice of Muslim women fighting to abolish the medieval practice of triple talaq.

Unafraid of the backlash from conservative Islamic clergy, Maria says not only should triple talaq be abolished but the All India Muslim Personal Law Board (AIMPLB) should be abolished as well for its "pro-male stand on almost every aspect of Muslim life."

Shazia Siddiqui is an entrepreneur. Also from Aligarh, she is as forthright as Maria Umar about gender reform in Islam: "The practice is discriminatory and should be abolished. How can someone have the right to end a marriage and ruin a womans life by uttering three words. In fact, some Islamic countries have banned the practice of triple talaq."

Women like Maria Umar and Shazia Siddiqui are leading a quiet revolution to reform Islamic law. Their initial battle is against triple talaq. But other women are seeking reforms across a range of social and religious issues, including the right of women to pray unfettered in shrines, cutting across religions, like the Haji Ali dargah and the Sabarimala temple.

Voices like Maria Umars and Shazia Siddiquis have in the past been drowned out by the clergy. With the Indian government last Friday (October 7, 2016) for the first time filing an affidavit in the Supreme Court calling for an end to triple talaq, those voices will now gain strength and support.

Heres what the governments affidavit says: "Women must be equal participants in the development and advancement of the worlds largest democracy and any practice (triple talaq and polygamy) which denudes the status of a citizen of India merely by virtue of the religion she happens to profess is an impediment to that larger goal.

"Even theocratic states have undergone reform in this area of law and therefore in a secular republic like India, there is no reason to deny the rights available under the Constitution. The fact that Muslim countries where Islam is the State Religion have undergone extensive reforms goes to establish that the practices in question cannot be regarded as integral to practices of Islam.

"Secularlism being a hallmark of Indian democracy, no part of its citizenry ought to be denied access to fundamental rights, much less can a section of secular society be worse off than its counterparts in theocratic countries, many of which have undergone reform. Even though it may be true that only some women are directly and actually affected by the practices of triple talaq and polygamy, the fact remains that every woman to whom the law applies lives under the threat, fear or prospect of being subjected to these practices, which in turn impacts her status and her right to live with confidence and dignity.

"The practice of polygamy was regarded as progressive and path-breaking centuries ago but with the evolution of women and the principle of gender justice, these required serious reconsideration. Even an affidavit by the Muslim Personal Law Board has referred to those practices as undesirable, which cannot be elevated to essential religious practice, much less one that forms the substratum of religion."

The Supreme Court will hear the matter early next week.

A secular UCC
In a perverse definition of secularism, India since Independence has allowed each religion to practise its own personal law rather than follow a genuinely secular Uniform Civil Code (UCC).

In matters of marriage, divorce, maintenance, adoption and succession, different religious personal laws apply. Hindu personal law has seen significant reform since the 1950s  though more reform is needed in financial and tax constructs such as the Hindu Undivided Family (HUF) and much else. 

But it is Muslim personal law that remains stuck in a pre-Quranic era. As Maria Alam Umar points out, the Quran actually gives Muslim women equal rights, including divorcing a husband (khulla).

The Muslim Personal Law Boards response to the Supreme Court in its affidavit reveals the regressive mindset that governs this atavistic body: "If there develops serious discord between the couple, and the husband does not at all want to live with her, legal compulsions of time-consuming separation proceedings and expenses may deter him from taking the legal course. In such instances, he may resort to illegal, criminal ways of murdering or burning her alive." (Emphasis mine.)

Coincidentally, on the same day (October 7) that the government filed its affidavit against triple talaq in the Supreme Court, the Law Commission sought the publics views on triple talaq and a uniform civil code over the next 45 days.

Muslim organisations  and even some Hindu bodies  have long opposed UCC. Successive governments in India have treated UCC like a tinderbox that could blow up in their face.

Even as the Law Commission seeks a public debate on UCC, Muslim clerics have warned of riots should UCC be implemented. The government should pay no heed to such threats. The clergy has declining support in the Muslim community which recognises that the path to jobs and prosperity runs through modern education, not madrasas.

On October 7, again coincidentally, the Supreme Court dealt with another sensitive issue: the entry of women into the inner sanctum of the Haji Ali dargah in Mumbai. It advised the Haji Ali Dargah Trust to "take a progressive stand. Nothing regressive should be suggested." The Trust told the court it would indeed take a progressive stand.

Extending the interim stay on the Bombay High Court order allowing women to enter the inner sanctum, the Supreme Court will consider the Haji Ali Dargah Trusts "progressive" response on October 17.

Like Maria Alam Umar and Shazia Suiddiqui, another brave woman, Noorjehan Safia Niaz, is leading the campaign for gender equality in the Haji Ali dargah.

Co-founder of the Bharatiya Muslim Mahila Andolan which petitioned the Bombay High Court against the Haji Ali Dargah Trusts ban on women entering the inner sanctum, Noorjehan says implacably: "We are against the ban on womens entry to the shrines sanctum sanctorum. We hope by progressive stand the Haji Ali Trust means it will restore the rights of womens entry to the spot inside the tomb, where only men are allowed."

Like the abolition of triple talaq, the right of women to worship in a place of worship  mosque, dargah, temple or church  must be absolute

Follow@minhazmerchant on twitter

How America can help India inflict pain on Pakistan
US lawmakers have given their citizens a powerful legal weapon to hold to account a sovereign nation that is complicit in terrorism.
Thursday, October 6, 2016

For Pakistan's army, the terrorists it breeds are expendable. India's surgical strike last week killed scores of jihadis assembled at launch pads in the Pakistan Occupied Kashmir (POK).

The strike caused the Pakistani army international humiliation. But till Pakistan's top generals feel the pain, they will not change. Terrorism against India will not stop.

There is now a new path to inflict that pain. The US Congress has just passed into law the Justice Against Sponsors of Terrorism Act (JASTA).

The Act will allow relatives of American victims of the 9/11 terror attack 15 years ago to directly sue Saudi Arabia for any role it may have played in the 9/11 plot.

President Barack Obama had vetoed the Bill, arguing that it would jeopardise the US government for the acts of its military or intelligence personnel accused of war crimes abroad.

For the first time in Obama's eight-year presidency, both the Senate and the House of Representatives voted to override the presidential veto.

The snub was unprecedented and for Obama personally galling because it was bipartisan: Virtually every Democrat and Republican voted to override the presidential veto.

In the Senate, the vote was 97-1; in the House of Representatives, it was 348-77. The new law, among other strictures, allows US courts to seize the assets of a terrorist-sponsoring nation.

US lawmakers have given their citizens a powerful legal weapon to hold to account a sovereign nation like Saudi Arabia or Pakistan that is complicit in terrorism and other war crimes.

The law may well be tweaked during the "lame duck" session of Congress in November (when the transition from Obama to the new president-designate begins) to introduce safeguards against prosecution of US interests abroad.

But the basic law and its uncompromising clauses against terror-sponsoring entities (including sovereign nations) and individuals will stand.

The Saudis have reacted with fury to JASTA. For months they lobbied with US lawmakers against the Act.

But the intense campaign by the relatives of American citizens who died in the 9/11 terror attack prevailed over the Saudis' clout.

The development represents a dramatic change from what transpired in December 2012. Relatives of US citizens killed in the 26/11 Mumbai terror attack in November 2008 had sued general Shuja Pasha, then head of the Inter-Services Intelligence (ISI), in a federal court in New York.

The US administration, however, told the court that Pasha had immunity from prosecution for the Mumbai attack because "the ISI was part of a foreign state within the meaning of the Foreign Sovereign Immunity Act (FSIA)."

There was outrage at this decision among the kin of US citizens who died in the Mumbai attack. But the UPA government did not file a protest with the US government and the ISI's Pasha escaped prosecution.

Not for much longer. Depending on the interpretation of the newly-legislated JASTA, Pasha, Gen Parvez Kayani and even Gen Pervez Musharraf, who were all allegedly complicit in planning the Mumbai attack from 2006 onwards, could face prosecution.

There are other precedents for prosecuting political and military leaders for war crimes - and state-sponsored terrorism against citizens of another country qualifies as a war crime.

In March 2016, the Serbian strongman Radovan Karadzic was found guilty of war crimes in Srebrencia by the International Criminal Tribunal for the former Yugoslavia (ICTY) and sentenced to 40 years in prison.

Earlier Slobodan Milosevic, the former president of Serbia, was prosecuted by the ICTY and kept in a prison cell in the Hague. He died in March 2006 before a verdict could be reached in his trial for war crimes and genocide in the Balkans.

The Pakistani army and the ISI have been responsible for waging an undeclared war on India through proxy terrorism for decades. They have been accused of genocide in Balochistan.

Surgical strikes and other measures are necessary to impose a cost for such acts of state terrorism.

But the generals in Rawalpindi who mastermind the terror war on India do not pay a price. And unless they do, proxy terrorism from Pakistan will not end. It may pause, but not stop.

A first step in prosecuting Pakistan's top generals - including Musharraf, Kayani, Pasha and Raheel Sharif - is for the Indian government to implead itself in a fresh case in the US under the new Justice Against Sponsors of Terrorism Act along with the relatives of US citizens killed in the November 2008 Mumbai terror attack.

The case in the US should include a call for imposition of travel sanctions on the prosecuted generals and freezing of their illegal foreign bank accounts.

Pakistan's army generals have built personal fortunes over the years. The army is one of Pakistan's biggest landowners.

The military's top brass owns up to a third of Pakistan's business corporations directly or through a maze of benami firms.

To impose a cost on Pakistan for terrorism, the strategic response we have seen in recent days is necessary but not sufficient.

The real culprits responsible for the death of thousands of Indian soldiers and citizens over the years are at the top of Pakistan's military food chain.

Only when they experience the pain of prosecution for war crimes under the new US JASTA and are slapped with punitive travel and financial sanctions even as they stand trial, as Milosevic and Karadzic did, will the battle against terrorism be won

Follow@minhazmerchant on twitter

Making Pakistan bleed by a thousand cuts
India must now step up, not ease up, its multi-pronged strategy against terrorism.
Monday, October 3, 2016

The hit-and-run terrorist attack in Baramulla on October 2 left one BSF jawan dead and another critically injured. Following India’s precision surgical strike in Pakistan-occupied Kashmir (PoK) on September 29, ceasefire violations along the Line of Control (LoC) have risen sharply.

India must now step up, not ease up, its multi-pronged strategy against Pakistan-sponsored terrorism.

Strategic restraint as an anti-terrorism doctrine has been given a quiet burial. Two issues stand out. First, further Pakistani retaliation: what form it will take and how to neutralise it. Second, India’s unfolding counter-terrorism strategy.

Renewed Pakistani retaliation could take two forms. One, attacking soft targets like malls, theatres, markets and other populated urban areas by activating sleeper cells and terrorists who had crossed over into India before the Uri terror attack.

Two, more hit-and-run attacks by Pakistani terrorists on Indian border posts and increased LoC shelling.

India must be prepared for both forms of retaliation by a Pakistani army humiliated by India’s precision surgical strike.

Meanwhile, the multi-pronged strategy to counter Pakistan-sponsored terrorism can be broken up into four broad areas:

India’s covert strike on September 20/21 (not officially acknowledged) reportedly killed around 20 terrorists. The surgical strike on September 29 killed an estimated 40 to 55 terrorists, though the actual figure could be higher.

More than the damage inflicted on Pakistan’s terror machine, India’s political will to strike and its military capability to do so have been clinically established.

Doubting Thomases in India abound. Some said the surgical strike was a routine affair. Others bemoaned the dangerous path India had embarked on. A few said economic growth would suffer.

The government should ignore these perennial naysayers. Vested interests in India are sometimes more beholden to Pakistan’s national interest than India’s. That is the nature of a subverted ecosystem. It will unravel in the fullness of time.

Implement the full ambit of the Indus Waters Treaty. India must optimise the water it is legally entitled to under the treaty. Pakistan can object only to abrogation of the treaty, not its full legal implementation.

As a result, Jammu and Kashmir will receive more water and generate an extra 15,000MW of hydroelectric power. All India needs to do to achieve this without violating the treaty is to build barrages and water storage facilities in J&K.

The Tulbul project (dubbed the Wullar barrage by Pakistan) is a good start. China’s move to block part of the Brahmaputra’s flow into Assam and Arunachal Pradesh should not deter India.

Pakistan will pay in two ways.

On one hand, it will receive progressively less water under the legally incontestable provisions of the Indus treaty. On the other, the principal beneficiary will be the people of J&K. The political capital this can deliver to the J&K government is incalculable.

Simultaneously, Most Favoured Nation (MFN) status granted to Pakistan in 1996 on the principle of reciprocity (a principle brazenly flouted by Islamabad and meekly accepted by Delhi for 20 years) must go. 

Official trade between the two countries is low ($2 billion). Unofficial border trade is higher ($15 billion). All this misses the point. You cannot isolate a terror state by retaining its most favoured nation status. The messaging gets blurred, the outcome compromised.

Isolate Pakistan both internationally and regionally. Admonitory statements from the United States, Russia and other major powers directed at Pakistan after India’s surgical strike have made it clear that the world’s patience with Islamabad has run out. The winter session of Parliament will present an opportunity to pass a resolution to declare Pakistan a state sponsor of terrorism.

Meanwhile, the cancellation of the SAARC summit has isolated Pakistan regionally. Bangladesh, Afghanistan, Sri Lanka, the Maldives and Bhutan have made common cause with India by pointing to Pakistan as the repository of terrorism.

The BIMSTEC forum is the obvious replacement for SAARC. It brings together a group of countries in South Asia and Southeast Asia. Dubbed the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation, BIMSTEC comprises Bangladesh, India, Myanmar, Sri Lanka, Thailand, Bhutan and Nepal.

Five BIMSTEC members are also members of SAARC which comprises eight countries. If Afghanistan and the Maldives (both part of SAARC) are invited as observers in BIMSTEC, the grouping will give India an even wider geopolitical footprint across Asia. Pakistan, the eighth SAARC country, will be isolated.

Concomitantly, China’s move to block Maulana Masood Azhar as a UN-designated terrorist can be used to shame China internationally as a protector of global terror. It will not be easy for an aspiring global power like China to live that down.

Grant Baloch dissidents asylum in India and allow them to establish a government-in-exile. The "Free Balochistan" movement will keep Pakistan off balance.

Meanwhile, India must shift its strategic goalposts on J&K. The LoC is no longer sacrosanct. PoK is Indian territory, as a parliamentary resolution in 1994 underlined. The only issue now to be resolved in the "dispute" over Kashmir should be Pakistan’s vacation of PoK.

The Manmohan-Vajpayee doctrine recognised that a dialogue with Pakistan was necessary to demilitarise J&K, thus indirectly legitimising Pakistan’s claim on a part of Kashmir that is in India’s possession.

That argument has now shifted decisively. The only area in dispute and open to dialogue is the part of Kashmir illegally occupied by Pakistan.

This represents a paradigm shift in India’s stand on J&K. More that last week’s surgical strike, it is this shift and its long-term implications that has rattled Pakistan the most.

Meanwhile, banish three myths that invariably surface when Pakistan is under pressure as it is today. One, that "we are the same people". We are not.

Two, that "the people of Pakistan do not support terrorism against India". Most do. The antipathy towards Indians amongst ordinary Pakistanis is far stronger than most Indians recognise.

Three, "Both India and Pakistan are victims of terrorism". This false equivalence has infected the vocabulary of peace professionals in India. The difference of course is India does not send gangs of terrorists to Lahore and Islamabad to kill ordinary Pakistanis.

This fraudulent equivalence on terror victimhood is a narrative that, like strategic restraint, must be buried forever

Follow@minhazmerchant on twitter

Who Won Clinton-Trump Debate
Trump and Clinton are the two most disliked presidential candidates in US history. Each has an unfavourability rating of around 60 per cent. Trump though is disliked slightly more than Hillary. That could decide the presidency

Tuesday, September 27, 2016

Broadcast live to over 100 million Americans and millions more worldwide, the first US presidential debate between Hillary Clinton and Donald Trump smashed primetime records.

Who won? Tough to say. Clinton was calm, assured but defensive. Trump was, well, Trump.

How will the debate change the trajectory of the race? With nearly six weeks to go before polling day on November 8, Hillary leads Trump in opinion polls by an average of 2 per cent nationally. Barring gaffes in the remaining two presidential debates on October 9 and October 19, that should see Hillary through to the White House.

And yet, it's not as simple as that. Popular national vote doesn't decide US presidential winners - "electoral college" votes do.

There are a total of 538 electoral college votes apportioned to states based on population. California with 55 votes has the highest number of electoral college votes followed by Texas (38) and New York (29).

It's possible to win the presidential election even if you lose the popular national votes. President George W. Bush lost the popular vote to Al Gore in 2000 but still won with 271 electoral college votes to Gore's 266 (one abstention).

The Clinton-Trump race this year could be as close. Hillary can count on a secure 200 electoral college votes while Trump has 164 in his bag. These are states that traditionally vote blue (Democrat) or red (Republican) more or less regardless of whose standing for president from their party. 

That leaves 174 "toss-ups" - votes that could go either way in battleground states.

Hillary (200) has a seductively simple path to the White House, needing just 70 more votes to win the presidency.

Trump (164) needs 106 votes but the momentum in the toss-up states has lately swung in his favour. Nonetheless Trump has a much narrower path to victory than Hillary. But that path has visibly widened over the past two weeks.

Here are the nine battleground states Trump needs to get past 270 votes from his base of 164: 

1.    Florida        29
2.    Ohio        18
3.    Iowa         6
4.    Nevada          6
5.    Arizona     11
6.    Georgia        16
7.    N. Carolina    15
8.    Maine CD2     1
9.    Colorado     9

If he wins these nine toss-up states, Trump with 275 electoral college votes (164 secure + 111 toss-ups) will be the next US president. Thus Trump can afford to lose Pennsylvania (20), Wisconsin (10), Virginia (13), New Hampshire (4) and Michigan (16) - and yet win.

Three states - North Carolina, Colorado and Florida - are the Democratic firewalls. The other six toss-up states among the nine listed above are firmly in Trump's corner. If Hillary wins even one of these three states, she'll win the presidency. Trump has to win all the three states - he has zero margin of error.

So the US presidential elections may boil down to three states: Florida, North Carolina and Colorado. The silver lining for Trump is that he's currently competitive in all three.

The Latino turnout in Florida could decide the outcome. While Trump is unpopular with Hispanics over his pledge to build a wall on the Mexican border, Marco Rubio, the charismatic senator from Florida, will campaign with Trump and could tilt the race in his favour with his own strong Latino support.

Meanwhile, North Carolina, following the horrific racial riots in Charlotte over police shootings last week, is tilting towards Trump. Colorado is too close to call but a recent poll showed Trump ahead by 2 per cent. The race remains dynamic with Trump making gains in even 'blue' states like Pennsylvania and Minnesota.

In the end though, Hillary's ground game and infrastructure (she has a core campaign team of 2,000 staff against Trump's skeleton 300) could win the day.

Trump and Clinton are the two most disliked presidential candidates in US history. Each has an unfavourability rating of around 60 per cent. Trump though is disliked slightly more than Hillary. That could decide the presidency.

Follow@minhazmerchant on twitter

Pakistan by a thousand cuts
Modi's nuanced speech has been misread by both supporters and critics.
Monday, September 26, 2016

Prime Minister Narendra Modi’s two back-to-back speeches in Kerala over the weekend were warmly received by India’s peace professionals. They said in delighted unison that Modi was finally advocating the sensible line they had been recommending for years: “strategic restraint ”. 

What precisely is strategic restraint? In essence, it means responding to Pakistan-sponsored terrorism without serious military or economic retaliation. The benefit to India from such restraint? Uninterrupted economic growth.

This of course is nonsense. The US, Israel and France – to cite just three examples – have shown that economic growth and military action against terrorism are not mutually exclusive.

Meanwhile, those disappointed with the PM's nuanced speech, though filled with duality of intent, had expected Modi to deliver a tough, unambiguous message to Pakistan that enough was enough. Red lines have been crossed. Pakistan must be taught a lesson.

They regard Modi’s direct call to the Pakistani people to fight a “war on poverty and unemployment” as a cop-out. They expect direct military action for the Uri attack, not a homily on poverty and unemployment. That reminds them of ten years' of Manmohan Singh and his apologetic statement on Balochistan at a summit in the Egyptian resort of Sharm el-Sheikh.

Modi’s speech has, of course, been widely misread. The first 95 per cent of his address strongly condemns Pakistan’s abetment of terrorism. It was the closing five per cent of his address, when he spoke of competing with Pakistan in the war on poverty and unemployment, that India’s small but influential community of peaceniks seized upon as an expression of strategic restraint.

Clarity of objectives
So how should India tackle Pakistani-instigated terrorism? There must first be absolute clarity on what Pakistan’s objective of “bleeding India by a thousand cuts” is predicated on.

Islamabad’s strategic aim is to wound, not kill. Kashmir is a pretext. The Pakistani army is a professional terrorist-sponsoring force as well as a multinational business corporation.

Its Generals control roughly one-third of Pakistan’s total corporate revenue. The last thing Rawalpindi GHQ wants is an all-out war with India which it will lose and cause significant damage to its business interests.

Between war and strategic paralysis, India has several options which together will bleed Pakistan by a thousand cuts and impose a severe cost on its sponsorship of terrorism:

One, fully back the Free Balochistan movement. Balochistan lies at the heart of the $46-billion China Pakistan Economic Corridor (CPEC). Unrest there will cripple progress on the CPEC. Grant asylum to Brahumdagh Bugti and other Baloch living in exile abroad. Allow them to set up a Balochistan government-in-exile in India. There is a precedent: in 1959 Nehru allowed a Free Tibet government-in-exile to be established in Dharamsala.

Two, support dissidents in Pakistan-occupied Kashmir (PoK) and Gilgit-Baltistan which is legally Indian territory. Its people are constitutionally Indian citizens. The CPEC passes through Gilgit-Baltistan – a violation of Indian sovereignty by Pakistan and China which can be challenged in international fora.

Three, review (not abrogate) the Indus Waters Treaty (IWT). Regulating water flow into Pakistan from Indian territory provides considerable leverage.

Uttam Sinha of the Institute of Defence Studies and Analyses (IDSA) said recently: “We should use this option legitimately. It is India’s right under the treaty. Pakistan cannot challenge this as it knows India can use water of the western rivers under the specified clauses of the treaty. If India exercises this option, it would be enough to put Pakistan under extreme pressure.”

Himanshu Thakkar of the South Asia Network on Dams, Rivers and People (SANDRP) said in an interview to a daily that India has been permitted to construct storage of water on the western rivers up to 3.6 million acre feet (MAF) for various purposes. The country, however, has not developed any storage facility.

He added: “We have never exercised our rights under the treaty as we have not created infrastructure on our side to use water of the western rivers. We must, therefore, concentrate on building barrages and other storage facilities to use the water.”

This now is exactly what the government proposes to do following the PM's meeting with senior officials on September 26. The decision will provide Jammu and Kashmir an additional 15,000 MW of hydroelectric power by reducing the flow of water – legally – to Pakistan.

Four, pass the private members’ Bill (already submitted by MP Rajeev Chandrashekar to the Rajya Sabha) to declare Pakistan a terrorist state. Other legislatures like America’s Congress have done the same to designate Pakistan a state sponsor of terrorism. Once so designated, wide-ranging economic and travel sanctions on Pakistan and its top leaders will kick in.

Five, withdraw Most Favoured Nation (MFN) status to Pakistan. The trade affected will be small but the step is symbolic of Indian intent and resolve. If India retains MFN status for Pakistan, it will dilute that resolve.

Six, provide moral support (as Pakistan pretends to do in Kashmir while actually instigating and funding terror) to the people of Sindh and to the Pashtuns. Both want an independent homeland free of Pakistan’s gunboots. The PM pointedly mentioned both Sindh and Pashtunistan in his speech apart from Afghanistan and Bangladesh – both victims of Pakistan-sponsored terror.

By thus pointing out Pakistan’s vulnerabilities, Modi was signalling that the option of covert military operations by Indian special forces remains part of his multi-pronged approach. A combination of these actions will impose a heavy cost on Pakistan. Until India makes Pakistan pay, it will not stop terrorism on Indian soil.

What about China? Will it stay silent as India bleeds Pakistan?

China has its own vulnerabilities. These include Tibet, Taiwan, Xinjiang and a slowing economy. Beijing will help Pakistan rattle a sabre or two but knows that the Indian market for Chinese products – the world’s largest outside America and China – is too big to alienate.

Consider Beijing’s four geopolitical vulnerabilities: first, China’s terror-prone northwest province of Xinjiang, through which the CPEC passes; second, Beijing’s problems with the new anti-China government in Taiwan, third, the perennial global opprobrium it receives over oppression in Tibet; and four, its festering disputes with Japan, the Philippines, Vietnam and others in the South China Sea.

All of these give India multiple levers to discourage Chinese support of Islamabad beyond a point when India retaliates against Pakistan’s proxy terrorism.

The PM knows this. Hence the strategic duality in his speech so gleefully, but mistakenly, seized upon by India’s febrile Pakistan-nurtured lobby.

Follow@minhazmerchant on twitter

Northeast to South Rise of BJP is imminent
Rahul Gandhi would do well to refocus his attention on central India well before the 2019 General Election rolls along.

Wednesday, September 22, 2016

The mass defection of Arunachal Pradesh MLAs from the Congress to the BJP's new political platform, the North East Democratic Alliance (NEDA), has long-term strategic implications.

If the experiment works, it could be replicated elsewhere. A southern strategy dubbed the SEDA, patterned on NEDA, is already in the works.


Congress vice-president Rahul Gandhi made a politically fatal mistake by alienating the party's Assam leader Himanta Biswa Sarma earlier this year, driving him into a grateful BJP's arms. The Congress rout in the Assam Assembly election followed.

Appointing Sarma convener of NEDA was a masterstroke by the BJP. The disaster that has since befallen the Congress in Arunachal is a direct result of the BJP's new strategic paradigm following its chastening defeats in Delhi and Bihar.

I've been a vocal critic of the BJP's decision to form an alliance government in Jammu and Kashmir with a soft-separatist party like the PDP.

The clock on that experiment has started ticking. But in the Northeast, the BJP has got it right. Singed by the Supreme Court ruling in July reinstating the Congress government in Arunachal, the BJP employed a two-track strategy.

One, it kept open lines of communication with chief minister Pema Khandu on an almost daily basis. Two days after being sworn in as Congress CM in Arunachal, Khandu sought an appointment with party vice-president Rahul Gandhi.

He was made to wait for three days. "I got an appointment with Prime Minister Narendra Modi within 15 minutes," Khandu reveals.

Two, the BJP used Arunachal's urgent need for central funds to prise open the door. The mass MLA defection from its ranks may have stunned the Congress but it had been under planning for weeks.

The BJP's top interlocutors kept the prime minister closely informed. Sarma executed the plan with clinical efficiency along with Assam chief minister Sarbananda Sonowal.

Losing Sarma to the BJP will come to haunt Rahul Gandhi for a long time. Sarma has cleaved open a path for the BJP in the Northeast with Assam and Arunachal in the bag.

The NEDA can now target Congress-ruled Meghalaya and Manipur. Even Tripura, secure in the Left's grasp, could prove vulnerable if a classical domino effect plays out during the 2018 Assembly electoral cycle.

More worrying for the Congress than even the likelihood of losing the entire Northeast to the BJP is the threat of a NEDA-like thrust in the South.

By using a satellite platform like NEDA, the BJP can firewall its Hindutva agenda from potential allies. In the northeast, with its preponderance of minorities, the Sarma-led NEDA is seen as a more centrist partner than a direct BJP alliance.

The same policy can be used in, for example, Kerala with its 45 per cent minority population.

Kerala and TDP-ruled Andhra Pradesh could then conceivably, along with putative local SEDA satellite allies, penetrate bastions like Telangana.

The SEDA could even make inroads into Tamil Nadu as an era beyond Jayalalithaa and Karunanidhi unfolds. Karnataka is likely to fall to the BJP in 2018, giving the party another southern beachhead.


More Congress states may follow, including Uttarakhand and Himachal Pradesh, leaving the Congress, if it loses Meghalaya and Manipur as well, with virtually no presence in any state across the country. That is a proposition unthinkable even three years ago.

But the BJP should not be complacent. It faces a stiff challenge in Uttar Pradesh where Mayawati is the clear frontrunner.

A post-poll BSP-Congress alliance, if the BSP falls short of an absolute majority, can't be ruled out. That would give the Congress a toe-hold in India's largest state and spark a mini-revival.

Punjab could be next. The fractious Aam Aadmi Party (AAP) and Navjot Singh Sidhu's new political formation will make the election a four-cornered battle. Monumental misgovernance by the BJP-SAD alliance will cost it heavily - as it should.

The best the alliance can hope for is a hung house and some horse trading with factions of various smaller parties. But the main contest will be between the Congress and AAP.

With AAP in self-destructive mode, the Congress could begin its national resurrection in Punjab.


Meanwhile, the BJP will be hard pressed to defend Goa in 2017. Paradoxically, a three-way fight with the Congress and AAP might divide Goa's large minority vote and help the BJP - undeservedly - to cling to power.

The state's dispute with the local RSS unit bodes ill. It could prove costly for the BJP. Finally, Gujarat. Here too danger lurks.

The AAP is playing spoiler but again may unwittingly help split the Congress vote. Hardik Patel's exile from Gujarat ends in January.

He will have an entire year to create anarchy at the behest of his Congress benefactors. Will the Congress win back Gujarat after a gap of over 20 years?

Unlikely, despite its machinations, because of the triangular math. As the country heads towards the 2019 Lok Sabha election, the Congress may be left with just Punjab (not a certainty though) and one or two pockets in the Northeast (again not a certainty).

Does that mean the BJP will suffer no significant reverses of its own? Not necessarily. Challenges lie ahead in Madhya Pradesh (2018) and Chhattisgarh (also 2018).

Both will face anti-incumbency in a binary contest with the Congress. Rahul would do well to refocus his attention on central India well before the 2019 General Election rolls along.

Follow@minhazmerchant on twitter

India’s $20-trillion Economy
Indian literacy remains abysmal — technically just over 75 per cent but in effect considerably lower. It is the single biggest impediment to social and economic progress

Thursday, September 22, 2016

Prime Minister Narendra Modi was roundly criticised for claiming during an overseas trip that India’s current GDP was $7.50 trillion and could reach $20 trillion by 2030. He was right on both counts. His critics got their math wrong. 

The Prime Minister was obviously referring to India’s GDP in 2015 by purchasing power parity (PPP), a measure routinely used by both the International Monetary Fund (IMF) and the World Bank (India’s nominal GDP, at current exchange rates, is $2.20 trillion). 

The world’s ten largest economies in PPP terms, updated as per the IMF’s latest figures for 2016, are: 

Indian GDP growth in the April-June 2016 quarter dipped to 7.1 per cent but the year is likely to end with overall growth of 7.5 per cent, retaining India’s position as the world’s fastest growing large economy, ahead of China. If India sustains an average annual GDP growth rate of 7 per cent for the next 10 years, the economy will double to $15 trillion in 2026. Assuming a slightly lower growth rate of 6.5 per cent over the next four years between 2026 and 2030, Indian GDP will rise further to just under $20 trillion.

Keeping in mind that these projections are based on PPP, India’s per capita income, assuming a population of 1.40 billion in 2030, would be around $14,000. (In nominal terms, at the prevailing exchange rate, that figure would be closer to $5,000.) 

Around 21 per cent (265 million) Indians currently live below the poverty line, according to the Suresh Tendulkar BPL methodology. To ensure that India’s economic growth between 2016 and 2030 lifts as many of these Indians out of dehumanising poverty as possible, economic growth must be inclusive. To achieve that the government must fully implement the various schemes it has innovated: Make in India, Digital India, Jan Dhan Yojana, Swachh Bharat, Skill India and many others. 

Four areas are critical. First, modernising the agricultural sector where 60 per cent of Indians earn a living. Second, using technology to improve productivity across sectors. Third, invigorating governance to reduce institutionalised corruption and the lethargy of India’s vast central and state bureaucracy. Fourth, ensuring universal adult literacy. Each of these four key tasks needs careful attention. 

Agriculture accounts for just 14 per cent of India’s GDP but over half of India’s population lives off agriculture. With a good monsoon, agriculture growth in 2016-17 should top 4 per cent. India’s total foodgrain output is still only 265 million tonnes. In contrast China’s food-grain production is over 600 million tonnes. On a per capita basis, China’s agricultural economy is therefore twice as productive as India’s. 

Despite the government’s efforts to cut out middlemen, the farm-to-fork scheme hasn’t worked. The gap between the price at which a farmer sells his produce and the price a retail consumer pays is wide. To modernise India’s agricultural economy, the price differential between farmers and consumers must narrow. This can only be done if political patronage is withdrawn to the cartel of middlemen who control prices between the farmer and the fork. 

As Mint reported recently: “On 14 April, Prime Minister Narendra Modi launched the electronic national agriculture market, or e-NAM, as a key initiative to improve farm incomes, but till 20 August the platform had managed trading turnover of just Rs 166 crore. “More importantly, electronic trading has been limited to respective mandis (registered markets) within a state — meaning farmers cannot yet access sellers outside the mandi, be it within the state or across the country. This is in stark contrast to what was promised to small farmers, who currently have a limited choice of selling their produce.” 

The use of better technology is crucial to raise yields per acre which remain well below Chinese levels. If the current experiment in genetically modified (GM) crops is successful, it must be deployed across crops in a graded manner. 

An article in the website Problems in India emphasises the need for innovation to boost agricultural productivity: “Attention should be given to climate-flexible agriculture. In low rain and dry type farming areas, innovations such as rainwater harvesting and storage, watershed management, improvement of soil physics and microbiology need to be promoted widely. The use of fertiliser trees can enrich soil fertility and help to improve soil carbon sequestration and storage and can be promoted under the Green India Mission and also MGNREGA. A minimal number of fertiliser trees and a biogas plant in every field will help to improve enormously the productivity and profitability of farming of lands which are dry.” 

The second factor to achieve sustainable GDP growth of 8 per cent is deploying technological innovation across both manufacturing and services sectors. India is developing one of the world’s most exciting startup ecosystems using technology as an enabler — from account-free mobile banking to artificial intelligence. Encouraging innovation in manufacturing can make India an export hub and kickstart a still-sluggish industrial sector

The third key factor in establishing a high-growth economy is good governance. Corruption and sloth erode productivity. Bad politics leads to bad economics. Building independent institutions of governance is vital to protect a growing economy. 

One of the most crucial elements in China’s rapid economic growth from the 1980s onwards was not just Deng Xiaoping’s reforms but Mao Tse-tung’s campaign two decades earlier to achieve universal literacy. It is education that has underpinned China’s transformation from an agricultural to an urbanised society. Deng gets the credit for economic reforms in the 1980s and Mao the brickbats for his brutal methods in the Cultural Revolution in the 1960s. But it was Mao’s campaign for universal literacy that enabled Deng’s economic reforms to bear fruit. 

Indian literacy remains abysmal — technically just over 75 per cent but in effect considerably lower. It is the single biggest impediment to social and economic progress. 

India needs to fix these four key areas — modernising agriculture, deploying innovative technology, institutionalising good governance, and achieving universal literacy — in order to transform itself into a $20-trillion (PPP) economy by 2030.

Follow@minhazmerchant on twitter

Uri attack Let guns now talk with Pakistan
Political will is now needed to give the Indian Army a free hand.
Monday, September 19, 2016

The time for talking is over.

This is what I wrote here a year ago after a series of Pakistani proxy terror attacks: "National security advisor (NSA) Ajit Doval will host his Pakistani counterpart Sartaj Aziz in New Delhi for talks on August 23, 2015. When he meets Aziz, Doval should stop exchanging dossiers. His message should be short and sharp: 'Last chance. After this, our guns will do the talking.'"

That time has arrived.

In January 2016, India's resolve was tested again with the Pathankot terror attack. Instead of executing a proactive strategy following that attack, India blundered. We invited a joint investigation team (JIT) from Pakistan that included Inter-Services intelligence (ISI) officers to probe the Pathankot strike.

That's akin to inviting Chhota Shakeel to probe Dawood Ibrahim's 1993 Mumbai serial blasts.

After the terror strike on an Army camp in Uri on September 18 that killed 20 Indian soldiers (with several critically injured jawans still in hospital), there are signs that - finally - an inflection point has been reached.

India's strategic security triumvirate - national security advisor Ajit Doval, defence minister Manohar Parrikar and home minister Rajnath Singh - knows that Uri- and Pathankot-type terror strikes will continue till a significant cost is imposed on Pakistan for sponsoring terrorism.

Proxy terrorism is a low-cost, low-risk strategy for Pakistan. It loses none of its regular army soldiers. Instead suicide bombers drawn from young radicalised men in poor families are used as fodder.

The rewards are many for a Pakistan that is an economic also-ran with a GDP one-tenth of India's. Its Punjabi-led military is tied up fighting multiple insurgencies within Pakistan. Proxy terror allows Islamabad to keep India off-balance with minimum effort and at minimum cost to itself.

Historically India has never retaliated militarily against Pakistan-sponsored terrorism. Islamabad rattles its nuclear sabre periodically to ensure that India's political and military establishment is silenced after every terror strike on Indian soil. The country's "peace constituency", including Track 2 regulars, has long been subverted by ISI largesse.

Islamabad's nuclear threat is of course bogus as my article here on September 4, 2015, pointed out. Pakistan has gamed Washington for 15 years, and India for much longer, with its nuclear bluff. After Uri, this charade must end.

As I wrote on these pages and in Mail Today, "Pakistan has proved that terrorism pays. It extracts billions of dollars from the United States even as it funds terrorist groups that kill American soldiers. India is the biggest victim of this toxic US-Pakistan axis of convenience. America will always stop short of declaring Pakistan an outlaw state. Rawalpindi is thus emboldened to use jihad as an inexpensive means to counter India's conventional military superiority.

"Talking about terrorism, won't stop terrorism. Only imposing an unacceptable cost on Pakistan will. India imposed such a cost on cross-border mortar shelling. It has reduced dramatically over the past year. Proxy terrorism is obviously a more complex challenge, but the same basic principle of deterrence and inflicting pain applies. Peace through strength has worked on the border. It can work on proxy terrorism if a clear-eyed policy on Pakistan is applied consistently."

The Indian Army has borne the brunt of Pakistan-sponsored terror attacks for years. Political will is now needed to give the Army a free hand. Lightning cross-border raids can inflict punishment on Pakistani terror assets with manageable risk of escalation.

There will be outrage in Rawalpindi and threats of a nuclear conflict. Ignore the bluster. Short, sharp military strikes by the Indian Army will impose costs on Pakistan with no credible possibility of a wider conflict. Just as India silenced Pakistani mortars on the LoC by imposing 10x level of casualties on its Rangers, inflicting pain is the only way to deal with a terror state.

Talk less, act fast

Following the Uri terror strike, home minister Rajnath Singh said: "Pakistan should be indentified as a terrorist state." In a meeting held by the prime minister with key ministers, the NSA and the Army chief on September 19, it was decided to "isolate Pakistan in every diplomatic forum."

For the rest of the world to take that intent seriously, an immediate downgrading of Pakistan's diplomatic status is necessary. Countries don't have full diplomatic relations with terrorist states.

Downgrade the Pakistan high commission in Delhi to consular status. Expel high commissioner Abdul Basit. Recall India's high commissioner in Islamabad. International precedents for such actions abound.

Withdraw Most Favoured Nation (MFN) status to Pakistan: you can't call for a country to be designated a terrorist state and still retain MFN status for it.

Meanwhile, build up our covert operations capabilities. Ajit Doval has had 28 months to do this. The clock is ticking. These must supplement the short, sharp surgical strikes that should be launched in Pakistan-occupied Kashmir (PoK) which is legally Indian territory.

Most Laskhar-e-Taiba (LeT) and Jaish-e-Mohammad (JeM) terrorists are trained in PoK. India's cross-border military raids should focus on destroying terror infrastructure, however mobile and temporary, on what is Indian soil.

It can't be business as usual. If India lapses into the usual rhetoric and inertia after a few days of outrage, another Uri lies just around the corner.

Follow@minhazmerchant on twitter

The cultural fault line.
Saturday, September 17, 2016

A simple tweet I sent out recently drew unexpected ire. “Just as Muslim majoritarian Kashmir is unacceptable, so is Hindu majoritarian India,” I wrote.

The criticism was sharp. The Kashmir Valley should of course be plural, I was told. But India, being a naturally Hindu majority country, should be majoritarian.

Pray why? Because, the tweeple said, Hindus are tolerant and can be trusted to look after minorities. As evidence they pointed to the (relative) peace in which 180 million Muslims live in India. They comprise the largest Muslim minority in the world. Only Indonesia has more Muslims (Pakistan comes a close third).

Muslims in India retain their personal laws, their festivals and their minority educational institutions. But Kashmir, the argument goes, is different. After centuries of pluralism in the Valley where Muslims and Hindus lived side by side in harmony, Pakistan has tried to spread a dangerous strain of Salafi Islam.

Hindus have been driven out of the Valley. At Independence, Hindus made up around 10 per cent of the total population in the Kashmir Valley. Muslims comprised 90 per cent. Today Hindus comprise just one per cent of the population in the Valley and Muslims 99 per cent.

Meanwhile, as the deluge of tweets on my timeline affirmed, the population of Muslims in India has increased from 9.80 per cent of the total population in the 1951 census to 14.23 per cent in the 2011 census.

These statistics, the argument goes, underscore how tolerant Hindu majoritarianism is – and how intolerant Muslim majoritarianism in the Valley has proved to be.

Globally Islam has been hijacked by medieval thinking. The repository of Islam’s holiest shrines, Saudi Arabia, instead of being a progressive leader of Islam worldwide, has set the worst possible example. Its Wahhabi version of Islam forbids women to drive or vote. It outsources jihad to terror outfits like the Islamic State (ISIS), which it initially funded, and al-Qaeda.

Turkey, Indonesia and Malaysia, three large non-Arab Muslim-majority countries, have all regressed into semi-autocracies. Apart from Tunisia, where the Arab Spring brought some reform, the entire Arab world and non-Arab Iran have descended into sectarian conflict, civil strife or religious obscurantism. What is wrong with contemporary Islam? The answer lies partly in its rigid theological interpretation by Islamic clergy and partly in the shadow of history.

Islam began violently. The Sunni-Shia conflict is over 1,300 years old. The sword rather than the book has been used to settle internal differences as well as proselytise.

Despite the violence, Islam was civilisationally advanced till the 13th century. But just when medieval Christianity in Europe was reforming itself by setting up universities (Oxford, Cambridge, Heidelberg and the Sorbonne) in the 13th century, Islam took the wrong fork in the road.

For the next five hundred years, till the 18th century, it leaned on the sword. Its all-conquering armies reached the gates of Venice in Austria before being driven back in 1716 in the Battle of Petrovaradin.

Islam had previously conquered vast swathes of south-eastern Europe (today’s Albania and Bosnia), southern Spain and the Central Asian Republics. The Indian subcontinent was an afterthought, invaded by the Mughals led by the failed Turko-Mongol warlord Babur.

The death-knell of global Islam came in 1918 when it was defeated by the Allies in World War I. Its lands were taken away. Pliable Arab dictators, remote controlled by the United States, Britain and France, were installed. The centuries-old Ottoman caliphate was dissolved on March 3, 1924.

A century later, the rise of ISIS and its self-declared caliphate in Syria and Iraq is the result of a hundred years of resentment and anger in the Middle East. America’s illegal invasion of Iraq in 2003, the thousands of innocent civilians killed in US air strikes and the millennium-old Sunni-Shia conflict forms a deadly, combustible mix. From it emerged, first, al-Qaeda and then ISIS.

Radical Islam poses a global threat. It is fungible and exportable. Pakistan is already its epicentre, a predicament brought about by Islamabad’s abetment of terrorism in India, especially Kashmir.

The terror group Hizbul Mujahideen is a Pakistani proxy to spread Salafi Islam in the Valley. The violence in Kashmir is instigated by Islamabad. It can only be defeated if the Narendra Modi government stops being soft on the Hurriyat terrorists, removes their perks, allowances and security and reads them the riot act. Syed Ali Shah Geelani and his cohorts, like all paid agents, have neither courage nor a mind of their own. The more you indulge them, the more trouble they will foment. Indian politicians like Sitaram Yechuri, D Raja, Asaduddin Owaisi and others are not a part of Kashmir’s solution. They are a part of the problem with their desire to appease separatists for their own shrinking political constituencies.

Hindus though must not assume that because Muslims have made Kashmir a majoritarian state, India should follow that example. Hinduism is a tolerant and absorptive religion that embraces other faiths.

I have long admired Hinduism’s many subtleties. As I once wrote: “India is secular because Hindus are innately secular. Of the world’s major religions, Hinduism is the only one without a prophet. No one ‘founded’ Hinduism – unlike Christ, Mohammad, Zoroaster, Abraham, Confucius, Mahavira, Buddha and Guru Nanak. Hinduism, or Sanatana Dharma, evolved organically. The Vedas (circa 1800 BC) predate the second oldest religious text, Judaism’s Torah (circa 1300 BC), by several hundred years. Sanatana Dharma is the world’s oldest organised religious philosophy.”

India must remain the plural, tolerant and diverse society it is and has historically been. We should be proud that we are not a majoritarian Hindu country despite 80 per cent of Indians being Hindus.

We should, of course, never make the mistake of drawing a false equivalence between Islamist terrorism and fringe Hindu groups. Both are unacceptable but the difference lies in scale: as wide as between a tsunami and a ripple.

Hinduism, despite its evolved philosophy, needs to reform too. It has too many superstitions. The caste system is cruel. It must go. And the ethos of Hindu fatalism must be set aside.

But in the end, every Indian – Hindu, Muslim, Christian or Jew – is, first, a Hindustani civilisationally and everything else second. That should be the guiding principle of India, not majoritarianism.

Follow@minhazmerchant on twitter

Start-ups 2.0
India’s Silicon Valley, Bengaluru, has been hit by Cauvery-linked violence that has disrupted many start-ups. Big Basket reportedly lost several crores and has a huge delivery backlog. Clearly, the start-up ecosystem needs law and order to achieve peak efficiency

Thursday, September 15, 2016

After a brief lull, money is again beginning to pour into start-ups. There’s a sharp dichotomy now though. Big e-commerce players like Flipkart and Snapdeal have seen a dip in their valuations despite a slight uptick in recent weeks. 

Neither is getting much new funding due to valuation issues. Luckily both have full treasuries. Despite a cash burn of over Rs. 100 crore a month, they won’t need too much new money for at least another six quarters. 

Snapdeal has a new red box logo. Flipkart is getting its delivery logistics sorted out. Both are gearing up for bumper festival-week sales. 

They might be disappointed. In 2015, e-commerce sites sold products worth $13 billion (Rs. 88,000 crore). In the first six months of 2016 (Jan-June), sales are down an average of 15 per cent. Will Diwali turn the tide? 

In the United States meanwhile, big start-ups are booming. Despite giving up on the Chinese market by merging with local ride-hailing taxi firm Didi, Uber (which now has a 20 per cent stake in Didi) is valued at over $70 billion (Rs. 4.80 lakh crore). 

The real action though is happening at the other end of the start-up spectrum. Small start-ups are mushrooming. Many are getting angel funding of between $100,000 and $2 million – small beer by the standards of the e-commerce Goliaths. 

Angels like Ratan Tata are typically investing as little as $1,00,000 (Rs. 68 lakh) in tiny start-ups. Others like Mohandas Pai and Nandan Nilekani are putting in larger amounts. 

Data analytics, artificial intelligence and logistical services are drawing large funding. Interestingly, listings – from domestic help to laundry services – are attracting significant investment. 

Tata group head Cyrus Mistry is also focusing on digital plays. He announced recently on the Tata website: “Tata CLiQ, our e-commerce platform, is an omni- channel marketplace with curated products that deliver value to our customers. It is quite a unique positioning we have chosen. We also have Tata iQ, our big data play which effectively uses data analytics to connect the dots with respect to our many consumers so as to ensure we have a more holistic picture of their needs. And finally, with Tata Digital Health, we are creating a platform where we are experimenting with different business models to build the de facto platform for healthcare in India.” 

There’s a cautionary tale though: India’s Silicon Valley, Bengaluru, has been hit by Cauvery-linked violence that has disrupted many start-ups. Big Basket reportedly lost several crores and has a huge delivery backlog. Clearly, the start-up ecosystem needs law and order to achieve peak efficiency.

While the big boys of e-commerce, draw big dollars, small entrepreneurs are creating their own Start-up 2.0 universe.

So if you have a great new idea, will the money-tap magically open? Not quite. VCs and angels (including individuals like Ratan Tata) fund on average just one out of every 10 business plans they receive.

What do they typically look for in a start-up entrepreneur?

One, a committed team.

Two, a scalable business model.

Three, a clear path to profitability. 

Four, and most important, founders with passion for the product or service they’re offering. 

So if you are an entrepreneur-in-waiting, what are the hottest sectors in today’s start-up ecosystem? 

Machine intelligence; automation; data analytics; video-based content; healthcare; online education; last-mile logistics; home design. 

The big verticals like fashion, real estate and travel are saturated though niches in jewellery, luxury, beauty and specialised localised services have potential. 

But remember: if you don’t love what you’re doing, chances are your customers won’t either. So the key to successful entrepreneurship is passion. 

I should know – I’ve been doing start-ups, some successful, some not – since I was 25

Follow@minhazmerchant on twitter

How Lalu-Nitish's doomed alliance has cut the Bihar story short
The release of underworld don Mohammad Shahabuddin has all but put paid to Nitish's prime ministerial ambitions.
Wednesday, September 14, 2016

When Nitish Kumar stitched together a mahagathbandhan for the 2015 Bihar Assembly election, he had one overriding goal: to defeat his former alliance partner, the BJP.

Two tertiary ambitions drove Nitish into the arms of his decades-old rival Lalu Prasad Yadav. First, an obsessive desire to cut Narendra Modi down to size. Second, leading a national mahagathbandhan to victory in the May 2019 Lok Sabha election and dethroning Modi as prime minister.

Nitish achieved his primary goal last year by leading the JD(U)-RJD alliance to a landslide win and retaining the chief ministership.

Lalu, out on bail following his conviction in the 1996 fodder case, was disqualified from contesting the Bihar election but promptly installed one of his sons (26-year-old Tejashwi) as deputy chief minister and another son (28-year-old Tej) as health minister.

A visibly uncomfortable Nitish could only offer a weak smile during the swearing-in ceremony at this naked display of nepotism. The Bihar mahagathbandhan government was doomed from that moment onwards.

To recover a semblance of authority, Nitish moved quickly to fulfil his election manifesto promise by introducing prohibition.

Banning alcohol has failed in every state it has been imposed. Gujarat is a prime example. Liquor has gone underground; bootleggers are profiteering; excise revenue has fallen; funding for social welfare schemes has become scarce.

The same scenario is unfolding in Bihar. Annual revenue is estimated to fall this year by over Rs 4,500 crore. For an impoverished state like Bihar where barely 20 per cent of households have indoor toilets, that spells bad news.

Gujarat has over the decades managed to make up for lost excise revenue from prohibition with rapid industrialisation. It has high GDP growth on a large economic base and is relatively urbanised. For Bihar, though, prohibition could be fiscal suicide.

Meanwhile, Nitish's two tertiary ambitions that led him to forge an alliance with Lalu in Bihar lie in tatters. He has neither been able to cut Modi down to size nor is his dream of leading a national mahagathbandhan in 2019 likely to be realised.

The Don cometh

The release of underworld don Mohammad Shahabuddin on September 10, 2016 all but put paid to Nitish's prime ministerial ambitions. As he swaggered out of jail after 11 years of incarceration, Shahabuddin mocked Nitish as a "CM of circumstances".

RJD leaders were equally dismissive of Nitish. Raghuvansh Yadav said: "Lalu Prasad is our leader and there cannot be a debate on this. The leaders of the alliance partners decided on making Nitish Kumar the chief minister (even before the election). I didn't favour it."

Mortified in private, but putting up a brave face in public, Nitish said: "I don't care what people think - let then say what they want. Everyone knows whom people have given the mandate. I have never reacted to such things." To reassert himself, Nitish has pledged to oppose Shahabuddin's bail order.

The future of Bihar though is grim. Lalu's court conviction rules him out as chief minister if Nitish decides to lead a national mahagathbandhan against Modi in the 2019 Lok Sabha poll. If he wins, the electorate knows he will have to hand Bihar over to Lalu's sons, assorted uncles - and Shahabuddin.

Jungle Raj will then acquire an even more sinister meaning. With lawlessness and fiscal crisis overwhelming Bihar, Nitish's credentials as a national leader will suffer in the run-up to 2019.

To make matters worse, intra-mahagathbandhan competition lurks. Rahul Gandhi and Arvind Kejriwal fancy themselves as future prime ministers. Both will be nearly 50 years old in 2019. Neither has a chance of getting the top job.

Kejriwal has character flaws. According to AAP's former Maharashtra leader Mayank Gandhi, Kejriwal surrounds himself with mediocre people because he is insecure. Several AAP leaders face criminal charges. In Punjab, AAP is a divided house. It is diluting its already weak Delhi governance by spreading its limited talent pool to Goa and Gujarat.

Meanwhile, Rahul Gandhi's Uttar Pradesh kisan yatra may deliver little by way of electoral returns. The Congress's singleminded aim is to ensure the BJP does not come to power in UP in 2017. If the BJP wins in UP, it would smoothen the path to Modi's re-election bid in 2019.

That, in turn, would dismantle the Nehruvian ecosystem carefully constructed over half-a-century of "grace and favour" blandishments given to loyalists in the media, bureaucracy, and elsewhere. Another five years in the wilderness through to 2024 would damage the Congress, and the mini-dynasties that feed off it, beyond repair.

Battle for survival

Rahul and Sonia Gandhi, therefore, regard the 2019 Lok Sabha election as an existential battle. They would support any version of a mahagathbandhan as long as it keeps the BJP (and specifically Modi) out of power for another five years.

With Nitish unravelling and Kejriwal imploding, Rahul is looking at Akhilesh Yadav and Mayawati afresh. An SP-Congress pre-poll alliance in UP is unlikely given the bitter feud in Mulayam Singh Yadav's family. Post-poll though, all bets are off. In order to keep the BJP out of power in what may be a hung UP Assembly, the Congress is willing to offer support from outside.

An ageing, visibly tired but steadfastly loyal, Sheila Dikshit is being ferried around UP to slice the BJP's Brahmin votes. Even if the BJP emerges as the single largest party, the aim is to keep it to below 150 seats in the 404-seat UP Assembly. A Bihar-style mahagathbandan (though post-poll) would then allow, for example, Mayawati to take charge as chief minister with outside Congress support.

While these machinations may or may not come unstuck, Rahul's chances of replicating them in the 2019 Lok Sabha poll are remote.

That leaves Modi in pole position for 2019. But he will have to do better in the second half of his tenure than he has in his first half. As he told a television channel in a recent interview, he was shocked (but had so far remained silent) on the broken state of the economy he inherited from the Congress-led UPA in 2014.

Modi hinted at fudged figures in past UPA Union Budgets. It has taken over two years to set things right.

The prime minister has another two years to turn the economy around before campaigning for the May 2019 general election against a determined Opposition overtakes him.

Follow@minhazmerchant on twitter

Would we ever know the secrets of Proxima Centauri b?
The chances of receiving signals from the planet that would prove the existence of life on it are slim. But they are not entirely unrealistic.
Friday, September 9, 2016

Last week scientists got an early Christmas present. After decades of peering at the universe through increasingly sophisticated giant telescopes, astronomers discovered a planet that could possibly harbour life.

The excitement is palpable. The newly discovered planet is in the Proxima Centauri solar system, the sun’s closest star neighbour.

The good news: the planet is roughly the same size as earth. The bad news: it’s four light years away from us.

Light travels at 3,00,000 km per second. A spacecraft travelling at 30,000 km per hour or 8.33 km per second (30 times faster than a passenger jet) could cover the distance from Mumbai to Delhi in three minutes flat. The same spacecraft would take nearly 1,00,000 years to reach Proxima Centauri b (as the planet has been dubbed).

Of course, new technology could slingshot advanced hyper-spacecraft to travel at accelerated speeds in outer space where gravitational drag is virtually zero.

A future spacecraft travelling at one per cent of the speed of light (3,000 km per second) would cover the distance from Delhi to London in three seconds and yet take 400 years to reach Proxima Centauri b.

The planet though presents a delicious challenge. It is the nearest earth-size planet out of the dozen-plus habitable planets discovered so far. It could have water and an atmosphere. Life could exist on it.

Proxima Centauri b orbits its mother star Proxima Centauri, a red dwarf, every 11 days. Its year is short because it is so close to its sun. The reason it doesn’t get fried is because its sun is a cooled-off red dwarf.

While sending a space probe to Proxima Centauri b’s surface is not possible with today’s technology, observing it through giant telescopes can reveal fascinating secrets of the universe and how it was created.

The existence of oxygen and methane on the surface of Proxima Centauri b would dramatically increase the chances of life in some form having existed - or currently existing - on the planet.

A common mistake we make is to assume “life” should be “as we know it ”. Non-oxygen-hydrogen life, plasmoid life, and life in forms we can neither imagine nor even conjecture today may exist in wholly different conditions from the earth.

How will we ever know? According to The Economist: “Another way to look for life on Proxima Centauri b would be to search for radio signals. Life in general does not generate radiation at radio frequencies. But intelligent life does - at least it does on earth. And that earth-bound life also puts a tiny bit of effort into looking for such emissions from elsewhere, an endeavour known as the search for extraterrestrial intelligence, or SETI.

“There have been SETI studies of Proxima Centauri (the star, not its newly discovered planet) in past decades, but they have not been particularly sensitive. If the inhabitants of Proxima Centauri b were beaming powerful transmissions at the earth all day and night, they would have been heard; if they were merely using radio for their own ends, in the way that broadcasters and radar systems do on earth, they would not.”

The European Southern Observatory (ESO) in Chile is building a 39-metre European Extremely Large Telescope (E-ELT). The chances of receiving signals from Proxima Centauri b that would prove the existence of life on the planet are slim. But they are not entirely unrealistic.

Infinite universe

There are an estimated 200-400 billion stars in our galaxy, the Milky Way. And there are over 100 billion galaxies in the observable universe. The nearest galaxy is Andromeda, 2.5 million light years from earth.

The chance of “life” - defining the word in the broadest non-Earth-centric terms - evolving on other planets is a mathematical certainty.

The only reason we haven’t yet made contact with other forms of life in outer space - many unimaginably more advanced than us and therefore probably unrecognisable to us - is the enormous, almost unfathomable, vastness of space and time.

Leroy Chiao, a NASA astronaut, has been on four missions into space. Here’s what he wrote on on September 2, 2016: “I have had the privilege of flying to space, and I have gazed down at our home planet, marvelled at the moon and peered out at the universe beyond.

“I believe there is life all over our universe, since it would be the height of arrogance to think that we are alone. Moreover, I believe that at some point, life on earth will die out, either from natural causes, or from our own doing.

“Life is always starting in some parts of the universe at the same time that it is dying out in others. We don't know about each other, simply because the distances are so vast.”

According to Einstein’s theory of special relativity, as an object approaches the speed of light, its mass increases and time, relative to a stationary observer, slows. The theory has largely stood the test of time over a century since Einstein proposed it in 1905.

And yet it is certain that the laws of physics that we take for granted today - including Einstein’s special and general theories of relativity - will eventually break down in extra-solar conditions.

A new physics will build on today’s physics just as Galileo, Newton, Kepler, Einstein and Hawking did in their time. The more we know, as a wise scientist once said, the less we know.

Meanwhile, Proxima Centauri b, with its bevy of secrets, beckons

Follow@minhazmerchant on twitter

Why India is looking stronger in Greater Asia more than ever
New Delhi has many aces up its sleeve.

Thursday, September 8, 2016

Three recent developments have transformed the region's geopolitics.

First, United States secretary of state John Kerry in Delhi last week announced a US-India-Afghanistan trilateral axis to protect regional security. Pakistan was pointedly left out.

Second, the Indian government reaffirmed its clear-sighted new policy on Balochistan and Pakistan-occupied Kashmir (POK). A firm but nuanced policy on Balochistan, which comprises 44 per cent of Pakistan's territory, will yield strategic dividends.

Third, the G-20 meeting in Hangzhou, China, earlier this week re-emphasised India's pivotal role in "Greater Asia".

From Egypt to Vietnam, India's geopolitical arc of influence now rises up from the Middle East to the Central Asian Republics, dips through the Indian Ocean, and sweeps across the South China Sea.

US support

The US is fully on board with this strategy of Greater Asia and India's pivotal role. Washington has little choice. China presents a growing threat to US economic and military hegemony.

China's GDP is already larger than America's in Purchasing Power Parity (PPP) terms. Even at current exchange rates, China's economy is well over half of America's and will surpass it within the next decade.

China's defence budget ($146 billion) is dwarfed by America's $600 billion annual military spending but Beijing is catching up fast. Washington needs a strong counter to China in Greater Asia.

India alone fits the bill. That is why Kerry repeated President Barack Obama's homily in Delhi: "The India-US relationship is the defining partnership of the 21st century."

China is relatively isolated. Its neighbours distrust it. That is a predicament it shares with Pakistan. Islamabad is distrusted by virtually all its neighbours:

Iran, Afghanistan, India and, though it doesn't share a border, Bangladesh. China is similarly distrusted by its neighbours: Vietnam, Japan, the Philippines and other littoral states.

Beijing's cavalier disregard of the award against it by the Permanent Court of Arbitration (PCA) based in the Hague, Netherlands, in its maritime dispute with the Philippines shows the contempt with which it treats international law.

China's rhetoric against the award under the United Nations Convention on the Law of the Sea (UNCLOS) has damaged its international reputation.

In Pakistan, it has a like-minded ally. Countering the China-Pakistan axis needs a calibrated strategy by Indian policymakers.

The first step was to ring fence and neutralise traditional Pakistan allies like Saudi Arabia and the United Arab Emirates (UAE) following Prime Minister Narendra Modi's visits to both counties.

The unity of the Organisation of Islamic Cooperation (OIC) over Kashmir too has been broken. Syria recently rejected the OIC line favouring Pakistan and publicly declared that India should solve "Kashmir in any way it wants".

This was the outcome of a successful visit to Damascus by the minister of state for external affairs, MJ Akbar.

Anxious Pak

The visit of Egyptian President Abdel Fateh el-Sisi to India on his way to the G-20 summit in China last week demonstrates the success the Indian government has had in eroding the support Pakistan traditionally sought and received from the Middle East over Kashmir.

Pakistan is anxious that the lifeline to its economy, the $46-billion China-Pakistan Economic Corridor (CPEC), goes through without a hitch.

But there are two problems.

The first is the mounting insurgency in Balochistan where the CPEC begins at Gwadar port and traverses through several hundred miles of hostile Baloch territory.

Pakistan has committed 10,000 security personnel to guard the corridor in Balochistan to allay Chinese fears of terror attacks by the Taliban.

Over 8,100 of these men are already in place guarding an estimated 9,000 Chinese working on CPEC projects in Balochistan.

The second problem is Gilgit-Baltistan, formerly known as the Northern Areas. It is six times larger than the rest of POK. Its people are constitutionally citizens of India.

The CPEC passes through Gilgit-Baltistan on its way to Xinjiang, China's large restive province. The people of Gilgit-Baltistan have been protesting the appalling conditions in which they live. They have little infrastructure and no freedom.

China concern

The Chinese are hyper-sensitive about Islamist terrorism being exported to Xinjiang which has a significant Muslim population.

China has warned Islamabad that most of the terrorists infiltrating into Xinjiang are trained in POK and receive sanctuaries there.

Foreign secretary S Jaishankar (a former ambassador to China and the US) has recognised the need to recalibrate India's foreign policy.

The Prime Minister's Office has endorsed a proactive strategy on Balochistan, POK and Gilgit-Baltistan. Pressure on China can now be built in two ways:

One, from the rapidly evolving India-US strategic partnership; and two, from India's growing influence with littoral countries in the South China Sea, especially Vietnam, which the PM pointedly visited a day before the G-20 Summit in China.

India has many other aces up its sleeve, including building closer economic ties with the first anti-Beijing government in Taiwan since the mid-1990s (led by the country's first woman prime minister, Tsai Ing-wen) as well as hosting more free-Tibet conferences in India.

Pakistan, as a vendor state with terrorism as its principal regional export, and China, as a violator of international legal strictures, form a natural axis.

It is an axis that is both brittle and disruptive. A sophisticated counter-strategy must fully use that brittleness to enhance India's pivotal role in shaping Greater Asia.

(Courtesy of Mail Today.)

Follow@minhazmerchant on twitter

What Modi government's new blueprint for Kashmir must look like
An economically prosperous Valley serves as the best antidote to Islamism by contrasting it with the misery of PoK.
Wednesday, August 31, 2016

There is a silver lining amid the dark clouds looming over the Kashmir Valley. Despite the continuing violence, the historically plural character of ordinary Kashmiris hasn’t been subverted – yet.

What then should be the Indian government’s strategy in the Valley as home minister Rajnath Singh leads an all-party delegation to Srinagar on September 4?

First, it must constitute an all-faith group of Kashmiris to be its voice. There must be representation from Jammu and Ladakh. They will not be interlocutors in the mould of a tried (and failed) move in 2010, nor will they mimic the home minister’s all-party group.

Rather, as Kashmiris, they will spread a credible counter-narrative to demolish the separatists’ narrative that holds sway with many in the Valley. Their message: just as a majoritarian Hindu India is unacceptable, so is a majoritarian Muslim Kashmir.

Second, the government must deal fairly but firmly with protestors. No state can allow violence to continue unabated without losing the authority to govern.

Third, the government must delegate more powers to local authorities. Decentralisation isn’t tantamount to autonomy. It builds confidence and trust.

Fourth, and most importantly, the government must focus on development, development and development. Start by releasing the promised funds for flood relief. Make Kashmir an economic hub so that its people have a stake in India’s own growth story.

An economically prosperous Valley serves as the best antidote to Islamism by contrasting it with the misery of Kashmiris living in Pakistan-occupied Kashmir (PoK).

Development, dialogue and decentralisation – along with zero tolerance to violence – are the keys to defeating the separatists’ narrative.

Hardening stand
Jammu and Kashmir chief minister Mehbooba Mufti, known to blow hot and cold, last week hardened her stand against stone pelters. The violence, she said, is instigated by Pakistan, adding angrily: "A handful of people are deliberately keeping the Valley on the boil while 95 per cent are peace-loving and should not be punished for the fault of 5 per cent."

Calling the 5 per cent "anti-nationals", Mehbooba said: "You have to differentiate between people who want a dialogue and those who exploit young people to throw stones."

What explains Mehbooba’s sudden show of steel?

The chief minister is caught in a cleft stick. If she softens her stand against violence, the BJP could well walk out of the alliance government. In fresh Assembly elections, Mehbooba’s PDP will be trounced.

The BJP has little to lose by taking a hard line. In a mid-term election, after a spell of governor’s rule, it will win Jammu and Ladakh. As a corollary benefit, it will boost its electoral stock across the country. There will be a ripple effect in key Assembly elections in 2017, as well as in the 2019 Lok Sabha poll.

I have consistently criticised the PDP-BJP alliance on these pages over the past 18 months. It is not merely a marriage of convenience, but one of political opportunism.

A divorce, I argued here on January 12, 2016, would actually help the Narendra Modi government electorally in the rest of the country. A good divorce is better than a bad marriage. 

But, even if the BJP is now mentally prepared to walk out of the government rather than compromise on its tough new policy on Pakistan and Pakistan-occupied Kashmir, both of which resonate strongly in the Kashmir Valley, Mehbooba won’t let go of power easily. 

When she asked Kashmiris last week to give her "one more chance" and pleaded with the Hurriyat’s Syed Ali Shah Geelani to "treat me like your daughter", she betrayed her dilemma. If she toed partner BJP’s hard line, she would further erode her voter base. If she went soft on the instigators, the BJP could cut her adrift. That would mean political oblivion for the PDP for the next six years.

The BJP, meanwhile, is caught in a dilemma of its own. It has belatedly realised that being in power in J&K is akin to drinking from a poisoned chalice. Whatever it does, the BJP will be reviled in the Valley.

If it softens its stand on the violence, it will lose votes in Jammu and go back to being a marginal player in J&K. If it stays tough, the alliance government will anyway eventually collapse under the weight of its own ideological contradictions.

A new Kashmir policy
Before crafting a new blueprint for Kashmir, it’s important to remember the few positives that still pervade the Valley.

Salafi and Wahhabi Islam remain alien to Kashmiri Muslims. Had they taken root, Kashmiri boys would not be throwing stones at jawans, but instead blowing themselves up near Army bunkers as suicide bombers.

The Islamic State (ISIS) and Taliban brand of radical Islam has not seeped into the Valley despite Islamabad’s concerted and venal efforts.

The reason is Kashmir’s long history of a plural Sufi culture. Muslims with surnames like Shah and Bhat abound in the Valley. They point to Kashmir’s Dogra past. It is a centuries-old heritage and will reject radical Islam. 

As I wrote in The Times of India on October 7, 2011:

"Kashmir is historically a plural land: Islam became its majority religion only in the thirteenth century. Su? Islam and the gentle rishi tradition of the Valley’s Hindus were complementary. Pandits and Muslims prayed at the same shrines. Later rulers were a mixed brew: Sikhs, Britons and Dogras. The key moment in the region’s history came when the British sold Kashmir, which it had annexed from the Sikhs in 1846 after the ?rst Anglo-Sikh war, for Rs 75 lakh to Gulab Singh, the Dogra Raja of Jammu and the great-grandfather of Maharaja Hari Singh, who a century later would sign the instrument of accession of J&K to India.

"By the early-1900s, the Dogra rulers had become unpopular across the region. J&K at the time had a population of 3.2 million – 2.5 million Muslims and 0.7 million Hindus. Today, the state’s population is around 11 million, with Muslims comprising 7.50 million (67 per cent) and Hindus 3.40 million (31 per cent) of the total – a demography that has remained relatively unchanged for over 100 years except for the near-elimination of Hindus from the Valley.”

Talk – but to whom?
Mehbooba said last week: "Talks can be held only with those who want to talk. I feel those who are right now provoking youths to attack army camps and police stations are not interested in talks. They want bloodshed. For them, it is business, thriving on the trade of getting children killed, wounded. But those who want to talk, irrespective of believing in another ideology, should be approached with all seriousness."

Talking to Hurriyat separatists, however, will prove fruitless. They have no interest in elections or in peace. Under instructions from Pakistan, their mission is to keep the Valley on the boil, and India on the back foot.

Pakistan and its agents in the Valley are doing everything they can to replace the Valley’s historic Sufi culture with an intolerant Salafi theocracy.

The next few days and weeks will test Mehbooba’s resolve. If she wilts, the countdown on her term as chief minister will have begun.

Follow@minhazmerchant on twitter

Why Pakistan's nuclear threat is nothing but hot air
India's muscular policy on PoK and Balochistan will make Islamabad resort to empty sabre-rattling.
Friday, August 26, 2016

If you think Indian media is biased, take a look at American media: it's leagues ahead in prejudice.

A flashback is necessary. India had just tested a nuclear device at Pokhran in May 1998. We were on holiday with the children in New York.

The news of the Pokhran nuclear test came in that afternoon, US time. Surfing the news channels, I was shocked at the tone of the reportage. On CNN, ABC, CBS, NBC and Fox, anchors hectored India for this unpardonable sin. How dare India, a non-NPT member, test a nuclear device?

The Indian point of view was totally absent. American nuclear experts, security officials and defence hawks all came together on TV to denounce India.

President Bill Clinton was urged to impose immediate economic and technology sanctions on India (which he did days later).

Annoyed by the one-sided coverage, I called CNN. "Get an Indian version on your programme," I said to someone in the newsroom.

They had no idea whom to contact. "Talk to the Indian ambassador Naresh Chandra in Washington," I suggested. "You need balance in your story."

Eventually the network did get Chandra and other Indian viewpoints on air but the coverage remained skewed.

While president Clinton was a friend of India, Atal Bihari Vajpayee had been prime minister for just two months. The two leaders hadn't yet developed a rapport.

Indian diplomacy was lacklustre and defensive. In Washington, India lacked clout.

American newspapers were as biased as the TV networks. The New York Times and The Washington Post harangued India over the nuclear test. The tone was febrile.

Having spent a few days persuading the networks to broadcast the Indian view (and doing some of my own haranguing to make sure they did), we returned to India. The children's school holidays were over and I had to get back to work.

Back home, the reaction to the nuclear test was euphoric. But there was bitterness over the hostile reaction in the West, especially in the US and Britain.

And yet, like our diplomats, Indian media remained defensive. Even the US economic sanctions evoked only tepid criticism.

I called the editor-in-chief of The Times of India under whom I had trained years ago. He told me to quickly write a strong op-ed on the Indian nuclear test and the West's reaction to it which he agreed smacked of hypocrisy and arrogance.

Here's what I wrote in The Times on June 16, 1998 in an op-ed titled "The NPT game is up - India must set the agenda now":

"India's nuclear test has shaken the edifice of nuclear hegemony carefully constructed by the five 'original' nuclear weapon powers (the P-5). Their duplicity in denying the same right to other countries - a responsible nuclear weapons programme - that they arrogate to themselves stands exposed in the glare of international debate that will now increasingly focus on the P-5's double standards. "By testing its nuclear device, India broke no laws, domestic or international. It is the P-5 nations who have been in consistent breach of the law by reneging on two of their legal obligations under the nuclear non-proliferation treaty (NPT). First that they would not abet the transfer of nuclear technology to a third country (China did so clandestinely to Pakistan, Iran and North Korea). And second that they would work towards eliminating their own nuclear arsenals.

"Strategically, India was absolutely justified in pursuing its nuclear option to a logical end - testing and eventual weaponisation."

Eighteen years later, in 2016, India is an acknowledged nuclear weapons power. NSG membership remains under negotiation but the US, so viscerally opposed to the Indian nuclear test in 1998, is at the forefront pushing India's case.

But back in 1998, opinion in the US was hostile to an extraordinary degree. Even Shashi Tharoor, then executive assistant to UN secretary-general Kofi Annan, was opposed to India's nuclear test. At a private lunch meeting with me in Mumbai shortly after the Pokhran test, Shashi argued passionately against India's nuclear adventurism. It took all of two hours to successfully counter his arguments.

As expected, the direct consequence of Pokhran-II was Pakistan's own nuclear test a month later. Today with its conventional army fighting insurgencies on several fronts, Pakistan rattles the nuclear sabre, calling it Islamabad's weapon of last resort.

And yet, it is an empty threat - a bluff as I wrote on these pages on September 4, 2015: "In a statement issued last week, Pakistan's national security advisor Sartaj Aziz said India shouldn't take his country for granted. Pakistan, he added grimly, has nuclear weapons. Other members of the Pakistani establishment have made similar statements in the recent past. But as Pakistan's army chief General Raheel Sharif knows perfectly well, Islamabad cannot use its nuclear stockpile - not even the small tactical battlefield nuclear weapons Pakistan is developing. The reason is simple: a retaliatory nuclear strike by India would cripple Pakistan. The Americans know this. So do the Russians and the British. And of course, so does Pakistan."

Farooq Abdullah, the former chief minister of Jammu and Kashmir, had this to say about Sartaj Aziz's nuclear threat in an interview: "When a senior diplomat, a former foreign minister, talks about nuclear weapons, it's crazy. May I remind Sartaj Aziz about Hiroshima and Nagasaki? Does he want to bomb Jammu and Kashmir? India also has a bomb. When I went to Pokhran after the tests were conducted, I remember Vajpayee's words. He said we aren't the ones to use this first, we have this as a deterrence, only to tell people don't take us for granted. We can defend ourselves. I want to tell Aziz, don't think of the bomb because innocents will die. Sartaj Aziz saab, you too will die if the bomb falls."

As India's policy on Pakistan-occupied Kashmir (PoK) and Balochistan acquires new muscularity, rejecting talks with Islamabad except on cross-border terrorism, Pakistan is certain to resort to more terror strikes in Jammu and Kashmir and even nuclear bluster. But remember, it is empty bluster and Rawalpindi knows it.

Follow@minhazmerchant on twitter

America’s Social Blacklist

Friday, August 26, 2016

If you support Donald Trump in America you’re dead meat – socially. Hollywood actor Antonio Sabato Jr. felt the full fury of social and professional ostracism after he spoke at the Republican National convention (RNC) in Cleveland, Ohio, last month. 

When he returned to Los Angeles, he found the film projects he had been working on had suddenly been cancelled. In a television interview last week, Sabato said many of his old Hollywood friends shunned him. How dare he support a bigot like Trump? Not only did Sabato (star of several movies and television shows) commit the social crime of endorsing Trump, he spoke at length at the RNC backing his economic policies.

Here’s what astonished Sabato about Hollywood’s angry reaction: “I’ve had fantastic directors who have said officially to my agents and managers they will never hire me again. They will never even see me for projects. That’s unfair. It’s just like Communism.  You’re supposed to be hired based on your talent and abilities, not because of how you feel about politics or religion. But that’s how they do things. It’s not just me. I know a lot of people in the industry who are in the same boat. The reality is if you’re associated with the Republican Party, the casting directors and producers already blacklist you based on that. I know people that just showed up (at the RNC), they didn’t speak – and they are not getting work because of it.”

Another actor, Stacey Dash, faced a similar backlash from the ‘social mafia’: “My acting opportunities have ceased because of my political beliefs. I’m being persecuted in Hollywood. I’ve been blacklisted,” Dash recently told Clint Eastwood too became a victim of social opprobrium when he came out in support of Trump. 

American pollsters are now beginning to ask how many respondents who are Trump supporters lie to them on their voting preference because supporting Trump is seen as socially and politically unacceptable. A new pedagogy has developed over the phenomenon. 

An article in The Nation analysed how this could affect both the outcome of the US presidential election in November and the accuracy of opinion polls leading up to it: “Political science tells us Hillary Clinton will win the election – the poll numbers are so clearly in her favour. As of this moment, the authoritative FiveThirtyEight forecast says Clinton’s chance of beating Trump is 86.6 percent. But polling is an inexact science, and a lot of pundits are asking: Could the polls be wrong this time? The first problem they point to is that some Trump voters might be lying to the pollsters. ‘How Many People Support Trump but Don’t Want to Admit It?’ Thomas Edsall asked in a recent op-ed. Some voters don’t want to tell a live interviewer that they back a candidate who has been so offensive and outrageous. The pollsters call this ‘social desirability bias’ — the desire of respondents to avoid embarrassment in speaking with interviewers.” 

Trump has become a synonym for bigotry and crudity in the US. His supporters are reviled and mocked. Like Sabato, many are blacklisted professionally and shunned socially. Trump hasn’t helped his cause by acting like a bully who can’t take criticism. He has attacked America’s mainstream media for its pro-Hillary Clinton bias. The establishment media has hit back with equal venom. 

In an op-ed in The New York Times, an enraged Tom Friedman wrote: “People are playing with fire here, and there is no bigger flamethrower than Donald Trump. Forget politics; he is a disgusting human being. His children should be ashamed of him. I only pray that he is not simply defeated, but that he loses all 50 states so that the message goes out across the land — unambiguously, loud and clear: The likes of you should never come this way again.”

Harsh? Possibly. But it highlights the febrile opposition Trump faces from the US establishment of which the mainstream media is an integral part. Here’s what the former Mayor of New York, Rudy Giuliani, had to say about the anti-Trump bias in the US media during a tough back-and-forth interview with CNN’s Chris Cuomo: “You don’t give him a fair shot. You take his words and you parse them and you take them apart,” Giuliani told Cuomo. “I don’t think that the overwhelming majority of your profession is fair.”
In a speech last week, Trump seemed to suggest that the US Second Amendment, commonly referred to as 2A, which guarantees Americans the right to bear arms (though with conditions), could be endangered by Clinton. He went on to say that 2A supporters (gun owners) could do something about this. The hyperbolic anti-Trump media immediately interpreted that as a call to “assassinate” Clinton.

Instead of backtracking, Trump raised the stakes. He mocked President Barack Obama and Hillary Clinton as the “founder and co-founder of ISIS”. He meant of course that the President and his former secretary of state had through their misguided Middle East policy created a fertile environment for the creation of ISIS. Deliberately, Trump refused to make this clarification in order to appeal to his middle-America voter base. 

Oddly, the demonisation of Trump may work to strengthen him. After falling to a 10 per cent deficit against Clinton in opinion polls, Trump has clawed back into contention. A new Bloomberg poll puts him 6 per cent behind Clinton. A Rasmussen poll places the race even closer with Trump (40 per cent) trailing Clinton (43 per cent)  by just three per cent – well within the poll’s margin of error. 

The odds are obviously on a Clinton win in November. Despite the FBI charge of “extreme carelessness” over her classified emails, the allegations of conflict of interest with the Clinton Foundation during her tenure as secretary of state in 2009-13, and increasing worries about her physical health, Clinton remains a formidable competitor. 

She may be regarded as “dishonest” by 64 per cent of American voters, according to several recent opinion polls. But Donald Trump is regarded as “dangerous to national security” by an even greater proportion of the American electorate.

The difference is this: supporting Trump may get you blacklisted; supporting Clinton may get you an invitation to the White House

Follow@minhazmerchant on twitter

Amnesty India is openly biased. But don't confuse it with sedition If the Bangalore event caused a disruption of public order, it deserves to be prosecuted not under 124A, but the relevant sections of the CrPC.

Thursday, August 25, 2016

India's sedition law (Section 124A) is draconian. It must go.

Treasonable offences should be treated under a new law that recognises the freedom to dissent but draws a red line where dissent crosses into incitement to violence.

Having been charged in a sedition case that lasted over 25 years for publishing a cover story that - ironically - condemned terrorism, I know how foolishly, recklessly and damagingly Section 124A is deployed.

That doesn't mean Amnesty India International, on whom sedition charges have been filed, is innocent.

It abetted a disruptive event in Bangalore on August 13. But chanting anti-India slogans should not attract a charge of sedition. In a democracy, you must have the freedom to criticise your own country as long as you don't incite violence.


Supreme Court justice Santosh Hegde (retd) said Amnesty provided a platform for those who advocate violence to "free" the Kashmir Valley from "Indian occupation".

Did Amnesty's event in Bangalore therefore amount to incitement to violence? Only a full investigation can answer that question.

However, the fact that the sole anti-secessionist voice at the event, RK Matoo, was not given equal time to speak about human rights violations against Kashmiri Pandits reveals the intent of the organisers.

Much meanwhile has been made of Amnesty's links with Islamist groups.

Gita Sahgal, former head of Amnesty International's gender unit, left the organisation in 2010 after accusing it of being too closely linked to a "pro-jihadi group".

Novelist Nayantara Sahgal's daughter and Jawaharlal Nehru's greatniece, Sahgal red-flagged Amnesty's links with Moazzam Begg, a former prisoner at Guantanamo Bay, whom she called "Britain's most famous supporter of the Taliban".

Amnesty International subsequently withdrew its engagement with Begg's "Cage (Prisoners)" group.

In 2015, Amnesty International was accused of having "private links" with Egypt's Muslim Brotherhood which is regarded as a terrorist group by several countries.

Amnesty's director of faith and human rights, Yasmin Hussein, stayed overnight at the home of a Muslim Brotherhood advisor.

More seriously, as The National's Vita Bekker reported, "Amnesty International admitted working with a Swiss-based human rights group whose Qatari cofounder has been accused of financing al-Qaeda.

The US treasury department said it would impose sanctions on Abdul Rahman Bin Umair Al Nuaimi, a history professor in Qatar and president of Al Karama, for raising funds for al-Qaeda and its affiliates in Syria, Iraq, Somalia and Yemen that at times had amounted to millions of dollars per month.

Amnesty International acknowledged in an email that Al Karama has helped it in the past with information on cases of human rights abuse and added that it was "unable to confirm" the accuracy of the US allegations."


A pattern clearly emerges. Amnesty says it has written several letters to the Pakistan government (where it doesn't have an office) expressing concern over human rights violations in Balochistan.

But it hasn't held significant events with Baloch refugees in India, confining its anguish over Balochistan to writing letters.

It applies a wholly different standard to Kashmir, giving an empathetic platform to secessionists while sidelining victims of Pakistan-instigated violence in Kashmir - Pandits, police and soldiers.

In an op-ed in Hindustan Times on August 20, Champa Patel, South Asia director of Amnesty International, defended her organisation.

She concluded by saying: "Amnesty International always and absolutely opposes attacks by armed groups against civilians around the world. Over recent months, amid a wave of horrific and unconscionable violence, we have condemned attacks by armed groups in Afghanistan, Pakistan, Bangladesh, France, Belgium, Iraq, Syria, Jordan, Nigeria, Cameroon, Thailand and other countries." (Delicately, the op-ed does not mention the Islamic State even once.)

Patel adds that Amnesty "pointed out how the Kashmiri Pandit community has "witnessed a number of attacks by armed opposition groups that led to 'hundreds of thousands fleeing the Valley'."

But again, has Amnesty organised major events to highlight the appalling conditions in which tens of thousands of Kashmiri Pandits live in refugee camps in Jammu and Delhi 26 years after they were forced out of their homes in the Valley at gunpoint?


In 1951 India's first Prime Minister Jawaharlal Nehru, amended Article 19(2) of the Constitution, restricting the same freedom of expression and India's history of plurality that Amnesty's Champa Patel lauds.

Nehru's amendment bill says: "The citizen's right to freedom of speech and expression has been held by some courts to be so comprehensive as not to render a person culpable even if he advocates murder and crimes of violence. In other countries with written constitutions, freedom of speech and of the press is not regarded as debarring the state from punishing or preventing abuse of this freedom."

One of the red flags in Nehru's amendment bill was disruption of "public order".

Did Amnesty India's Bangalore event meet Nehru's definition of causing a disruption of public order? If it did, Amnesty India deserves to be prosecuted under not 124A but the relevant sections of the Criminal Procedure Code (CrPC).

Having fought and won a long drawn out sedition case brought by the home ministry against my group of publications, I don't believe NGOs like Amnesty International should be victimised despite their demonstrable bias.

A robust democracy must take in its stride criticism and even vilification as long as these don't incite violence or disrupt public order.

When they do, prosecute them under the CrPC, not 124A. India's penal code has enough teeth to deal with organisations of every stripe.

(Courtesy of Mail Today.)

Follow@minhazmerchant on twitter

Hillary, Trump & India A Trump presidency would actually be good for India-US trade which is currently under $70 billion – lower even than India’s trade with China

Wednesday, August 24, 2016

Who’ll be better for India? President Hillary Clinton or President Donald Trump? The two are locked in a fierce contest that will culminate on November 8. The new United States president will be sworn in on 20 January 2017. 

There are three broad areas that define the India-US relationship: trade, terrorism and technology. 

On trade, Trump is perceived as anti-globalisation. He has pledged to pull the US out of the Trans-Pacific Partnership agreement that is currently under negotiation. He wants the United States to set up reciprocal tariff barriers against Chinese imports. Most controversially, he wants to cut down on outsourcing so that Americans get back the jobs they’ve lost over the decades to Asian information technology services companies. 

At first blush that looks grim for India. TCS, Infosys and Wipro might be in Trump’s firing line. H-IB visas could be the first casualty. But look closer. Trump has repeated several times during his presidential campaign that he wants to increase trade with India. His targets are China, Japan and Mexico who have large trade surpluses with America. 

A Trump presidency would actually be good for India-US trade which is currently under $70 billion – lower even than India’s trade with China. Trump has built luxury properties in India and knows his way around the Indian system. He gets it. 

Does Hillary? A Hillary Clinton presidency would be good for India-US trade as well. But Hillary has veered sharply to the left-of-centre during the presidential campaign to thwart the challenge of socialist Bernie Sanders and appease his voter base. The Vermont senator’s young supporters form the Democratic party’s hard left. They won’t vote for Hillary in November if she does not include tough trade deals with countries like India in her manifesto. 

Many disillusioned Sanders supporters have said they will cross party lines and vote for Trump who shares their views on issues like spurning the Trans-Pacific Partnership (TTP). Hillary too is against the TTP though her mentor President Barack Obama strongly supports it. Sanders’ acolytes are also wary of the Clinton Foundation which has received millions of dollars from countries like Saudi Arabia and Hillary’s own cosy ties with Wall Street.

The Terror Card 

On terrorism, Trump will align himself with India’s interests. Pakistan will not get the wink-and-nudge treatment it has received from President Barack Obama. While drone attacks in AfPak have recently created a rift between Washington and Islamabad, Obama has turned a blind eye to the Pakistan state’s lethal support to Punjab-based terrorist groups like the Lashkar-e-Taiba (LeT) and Jaish-e-Mohammed (JeM) as well as to the Pakistan army’s massacres in Balochistan. 

A Hillary Clinton presidency will continue to lean towards Pakistan on security issues, especially in Afghanistan. Depsite her admonitory “rattlesnakes in the backyard” comment directed at Pakistan, Hillary has a soft corner for Islamabad. Radical Islam are two words that stick in her throat. She almost never utters them. Her closest aide Huma Abedin, whose father Syed Zainul is of Indian origin and mother Saleha Mahmood of Pakistani origin, spent 16 years in Saudi Arabia (from the age of 2 to 18 when she enrolled in college in the US). Now 40, she is a powerful influence on Hillary who often refers to Huma as her “second daughter”. 

In contrast, Trump has controversially declared that as president he would “secure” Pakistan’s nuclear weapons” – whatever that means. He has pledged much tougher action against the Islamic State (ISIS). Hillary, for her part, will continue Obama’s cautious policy in dealing with ISIS in Syria and Iraq. She will treat evicting Syrian president Bashar al-Assad as a bigger priority that defeating ISIS – a prescription fraught with danger and a replay of George W. Bush’s disastrous regime change strategy by killing Saddam Hussein in Iraq. 

Tech Edge

The third key area in the India-US relationship is t echnology. Hillary and Trump will both encourage greater technological cooperation between the two countries. But there is a caveat. Trump will be more amenable to transferring advanced military technology to India. The Republicans, since the George W. Bush presidency, have sought closer technological cooperation, including on nuclear technology, with India. It was Bush who pushed the India-US nuclear civil agreement through US Congress. The Democrats under Obama have been dragging their feet over operationalising the agreement, especially over the liability clause. Hillary will hew to the traditionally cautious Democratic line on technology transfer, especially military. Trump will go further than even Bush did.

Both Hillary and Trump recognise that the India-US relationship is set to be the defining strategic partnership of the 21st century. Trump has said so in so many words. Hillary, more circumspect, has implied it as well. 

Whoever wins the US presidency in November, the elephant in the room will remain China. The US wants India to be a regional counter to China. In return, India wants the US to be a buffer against terrorist threats in South Asia and to help slingshot it into the orbit of a global power. Indian and American interests therefore converge on all three broad areas of trade, terrorism and technology irrespective of who occupies the White House next. 

Trump’s bombast puts many off. He has deliberately set himself up as a redneck politician to appeal to America’s blue-collar whites left out of the American dream as middle-class wages stagnate. Playing the tough cowboy gets him the Rust Belt vote.

Hillary is part of the traditional Washington elite: smooth as silk. Yet over 60 per cent of Americans polled recently found her untrustworthy and dishonest. The classified email scandal and her dismal record in the Middle-East as secretary of state during 2009-13 weigh heavily against her. 

Trump and Hillary have a combined age of 138 years (Trump is 70, Hillary 68), making them the oldest presidential candidates in recent US history. The latest opinion polls in this contest between two deeply polarizing candidates give Hillary a comfortable lead as the November 2016 presidential election draws near. But if a week is a long time in politics, as former British Prime Minister Harold Wilson said, three months is an eternity

Follow@minhazmerchant on twitter

Balancing Environment With Growth The West has polluted the world since the industrial revolution in the 18th century and can afford tough green standards. India needs a more holistic balance between industry and the environment. That is the challenge the Modi government must take head-on

Tuesday, August 23, 2016

A key objective of Prime Minister Narendra Modi’s last cabinet reshuffle was revamping the environment and HRD portfolios. HRD minister Smriti Irani went to Textiles. Environment minister Prakash Javadekar took over HRD. The outcomes in these two pivotal portfolios are yet to be determined. 

However, it’s important to examine Javadekar’s record in the environment ministry for two reasons. First, the infamous “Jayanthi tax” had stalled nearly 200 projects during the UPA-2 government. 

Environment minister Jayanthi Natarajan was accused of keeping files in abeyance for months. She defended herself in an impassioned letter to UPA chairperson Sonia Gandhi in January 2015. Few were convinced. 

Let’s examine the evidence of the past two years when Javadekar was environment minister. Did he unlock the logjam? 

According to one report, the environment ministry gave clearances to 1,049 projects in the NDA government’s first two years in office – more specifically between May 26, 2014 and March 31, 2016. The total value of these projects was Rs. 7.39 lakh crore. The ministry’s report claims these projects created 2,70,325 jobs. 

Mint reported that the sectoral break-up showed “398 of these clearances went to industry, 264 to non-coal mining, 255 to infrastructure, coastal and construction projects, 85 to coal mining, 27 to thermal power projects, 17 to river valley projects and three to nuclear and defence projects.” 

More importantly, the ministry brought down delays in clearances from 600 days to 192 days. 

One of the major criticisms faced by the environment ministry in UPA-2 was using “green” objections to stall projects. This was often a pretext to subvert industrial progress at the behest of the green lobby. It also opened up an avenue for potential corruption. 

Obviously, there needs to be a balance between industrial projects and environmental protection. In India that balance in the past has worked against the environment with indiscriminate use of pollutants, cutting of trees and damaging biodiversity. 

However, over the past decade, the balance has shifted towards enhanced environmental protection, often at the cost of industry. During the UPA-2 government, green lobbies assumed centrestage, resulting in a slowdown of several large projects. Posco was one of the most high-profile victims. Several other projects were stymied. 

The consequences of stalled or lost projects can be significant. Last week mining giant Rio Tinto announced it was closing its Rs. 2,200-crore diamond mining project in Madhya Pradesh. According to one report, the National Tiger Conservation Authority said the project “has potential to disrupt tiger dispersal around Panna landscape.” 

Rio Tinto confirmed in a statement mailed to The Indian Express: “As part of its ongoing efforts to drive shareholder value by conserving cash and cutting costs further, Rio Tinto has decided to not proceed with development of its Bunder project in India. Accordingly, we will be seeking to close all project infrastructure by the end of year 2016.” 

Have Javadekar and his successor as environment minister, Anil Dave, succeeded in redressing the balance between protecting the ecology and catalysing industrial growth in the first 27 months of the Modi government? The empirical data suggests they have. And yet, as the Posco and Rio Tinto cases show, much more needs to be done. 

Critical decisions will soon be taken on India’s position on capping carbon emissions. The prime minister has committed India to meeting by 2030 norms of carbon emissions that were agreed upon at the Paris conference last Novermber. He has emphasised though to world leaders that as a developing economy India cannot sacrifice industrial growth to achieve green targets at the same pace the West can. 

The West has polluted the world since the industrial revolution in the 18th century and can afford tough green standards. India needs a more holistic balance between industry and the environment. That is the challenge the Modi government must take head-on

Follow@minhazmerchant on twitter

Trump or Hillary Two friends hit US presidential campaign trail Suleiman's friends in Saudi said it would be exciting to see Islam-baiting Trump trounced
Wednesday, August 17, 2016

"She looks so tiny, so frail!" Suleiman Khan said, nudging his friend.

Anwar Sheikh shook his head impatiently "Suleiman, size doesn’t matter. Hillary Clinton is going to be the next president of the United States. Ladbrokes in London has even stopped taking bets on the US presidential election. It’s over. Donald Trump is finished. It’s over, Suleiman."

Suleiman glanced at his friend quizzically. "But Trump’s trailing by only 6 per cent in the latest opinion polls. And there are still 80 days to go for the election with three presidential debates to come in September and October. Things can change pretty fast you know, Anwarbhai…"

Just then a roar engulfed the crowd as it broke into a chant: "Hillary! Hillary!"

The two friends were at a Democratic party campaign rally in Pennsylvania, a big swing state. Hillary was speaking to a crowd of over 5,000 people carrying "Hillary Clinton for President" banners and draped in red-blue stars and stripes shirts.

Also read: Even Hillary Clinton and Melania Trump haven't been spared from misogyny

Suleiman had taken a month’s leave from his job in Riyadh, Saudi Arabia. He asked Anwar to join him on a quick trip to the US to witness the presidential campaign first hand. His friends in Saudi said it would be exciting to see Islam-baiting Trump trounced by Hillary.

Anwar wrapped up work in Delhi and flew to join Suleiman in Riyadh. The two friends took an overnight flight to New York via a short London stopover before boarding a Greyhound bus to Scranton, Pennsylvania.

"And we will defeat Donald Trump to make America safe again!" Hillary Clinton screamed into the mike, driving the crowd into a frenzy. Suleiman frowned. Something in Hillary’s voice bothered him. "She’s not looking that well," he whispered to Anwar. "Her voice pitch is a bit strange."

Anwar rolled his eyes. "She’s fine, Suleiman. Look, she’s 69, she’s had a blood clot in her leg, another in the brain, she’s been put on blood thinners for life. She had a fall and broke her elbow a few years ago. She’s also had a concussion. But all things considered, she’s doing just fine."

Suleiman was startled. "Concussion? Blood clot in the brain? Has she submitted her medical records for public scrutiny? How come the American media never talks about that?"

Anwar put an arm around his friend’s shoulder as they threaded their way through the dispersing crowd. He smiled: "Suleiman, Donald Trump hasn’t even submitted his tax returns. Hillary’s revealed her tax returns going back 38 years. So what if she’s not submitted her medical records?"

A look of surprise flitted over Suleiman’s face. "In Saudi Arabia, Anwarbhai, we are given a medical check-up every year and have to submit those reports to the company. It’s not even an option for us. She’s running for president of the United States and yet –"

Anwar cut him short. "Look Suleiman, forget all that. Hillary’s a shoo-in for president. But just for a bit of fun, let’s go to one of Trump’s rallies. He’s campaigning in Wisconsin tomorrow."

Suleiman nodded. "Yes, Anwarbhai, that should be interesting. I’ve always wanted to see Trump in person."

Also read: Why Trump as US president will benefit India

Anwar shot him a strange look but said nothing.

As they left the Clinton rally venue, Anwar suddenly exclaimed: "Look, Suleiman!" He pointed to a tall, elegant woman holding Hillary by the elbow as she walked past the crowd. "That’s Huma Abedin, Hillary’s closest advisor. Isn’t she terrific?"

Suleiman nodded. "Yes, I’ve heard about her. Huma joined Hillary as a 20-year-old intern in 1996 and hasn’t left her side since. In Riyadh my office colleagues talk a lot about her family. Huma lived in Saudi Arabia for 16 years, from the age of 2 to 18 when she went to the US for higher studies. Her father is an Indian and her mother a Pakistani. Both are both highly respected academics."

Anwar nodded. "And once Hillary is president, Huma Abedin will run the White House. They are that close.

Suleiman suddenly turned thoughtful. "Pakistan will be especially pleased – Hillary and Huma have a cordial relationship with the generals in Rawalpindi," he murmured, half to himself. "No wonder my Pakistani friends in Saudi Arabia are rooting for Hillary to beat Trump."

"Let’s go, Suleiman," said Anwar, cutting short his friend’s reverie.

Early next morning the two men hired a car and drove up to Milwaukee, Wisconsin, where Trump was scheduled to address a large campaign rally. People were beginning to stream into the venue. Security was tight. Secret service agents in dark suits, sun glasses and expressionless faces escorted Trump as he moved up to the stage to acknowledge the crowd’s roar.

Also read: Is Trump fighting to lose US elections?

"Why does he have so much security?" Suleiman asked Anwar. "Much more than Hillary. I thought he was the one telling gun owners to assassinate Hillary."

Anwar’s reply was drowned out by the crowd’s raucous chant, "Trump! Trump! Trump!" The crowd was substantially larger than the one at Hillary’s campaign rally. They wore red baseball caps with the slogan "Make America Great Again" emblazoned in white on the front.

As Trump began to speak, Suleiman again nudged his friend. "Anwarbhai, didn’t he say the other day that Obama founded ISIS and Hillary co-founded it? Isn’t that crazy?"

Anwar nodded. "Yes completely crazy. Obama and Hillary have done more for Middle East peace than anyone else. Trump was just trash-talking."

Suleiman was puzzled. "But Anwarbhai, I’ve been living in Saudi for over ten years and the Middle East is more violent than ever before. Iraq, Syria, Yemen, Libya – and now ISIS. It’s all happened on Obama’s watch. And Hillary was his secretary of state till 2013! "

Anwar changed the subject as Trump began to wrap up his speech. "Did you hear what he said about the Khans?"

Suleiman nodded, "Yes, that was very wrong. The Khan family’s son, Humayun, died a hero in Iraq  in 2004. But Trump was right about one thing. Humayun would have been alive today if America hadn’t invaded Iraq in 2003."

Anwar buried his face in his hands. "Suleiman!" he exclaimed in mock anger. "You are impossible. I’ve had enough of Trump for one evening. Come, let’s go back to the hotel and watch Hillary’s speech on CNN."

Suleiman smiled innocently. "Ah, you mean the one Trump calls Clinton News Network.

Follow@minhazmerchant on twitter

What Parliament failed to address about Kashmir unrest The BJP must build a counter-narrative in the Valley by focusing relentlessly on development.

Thursday, August 11, 2016

Within the mesmerising beauty of the Kashmir Valley lie layers of deception. For decades, the Valley has been used and abused.

It has amassed fortunes for many: Pakistani generals, Hurriyat separatists, political dynasts and local bureaucrats.

The only people who haven't benefited from Kashmir are Kashmiris.

Parliament on Wednesday debated the violence in the Valley but fell short of unpeeling the layers of cause and effect of this great betrayal.

Breaking his long silence, Prime Minister Narendra Modi said that young Kashmiris who should be holding books and laptops in their hands were instead given stones to hurl.


Just as India has azadi, the prime minister added, so does Kashmir. He used the word azadi, which resonates strongly in the Valley, as a metaphor: Kashmiris are as free as other Indians.

It was a call to all Kashmiris to join the Indian mainstream and reject the false narrative of those who wish to damage the plural and pacifist Sufi culture in which Kashmir has for centuries been immersed.

When I first visited Kashmir in the summer of 1978, the Valley was still a paradise on earth.

We stayed in a houseboat on Dal Lake and went on gentle rides in shikaras rowed by silent but smiling local Kashmiris.

The lake today has shrivelled to nearly half its size. The shikaras are often empty, their owners surly.

Development has passed Kashmir by.

In 2004, I interviewed then chief minister Mufti Mohammad Sayeed at his home. The roads were as narrow as they are today, the security as omniscient.

An unsmiling Mehbooba joined us for lunch in the Mufti's modest living room. The uneasy 2002-08 PDP-Congress alliance government was already under strain. Ghulam Nabi Azad would soon take over as rotating chief minister.

But neither the Mufti nor Azad did much for Kashmir's infrastructure, development or jobs.

Militancy was on the rise. In 2010 under Omar Abdullah's chief ministership, the Valley came to a boil. Over 110 people died in stone-pelting fury.

Four principal players have ensured that the Valley stays backward and violence-prone: the Pakistan army, Hurriyat separatists, political dynasts and local officials.

The Hurriyat was created by the Pakistan ISI in the early 1990s to be the voice of the Kashmiri people. It was of course a fraud.

The Pakistani ISI pays the Hurriyat separatists in cash every month. The Hurriyat separatists use Kashmir as commerce.

They have rapidly become wealthy landowners, moving into large bungalows and making a lucrative career out of damaging the centuries-old plural character of Kashmir.

Pakistan has no interest in Kashmir beyond fulfilling two objectives.

First, to wage a proxy war against New Delhi with Kashmir as a pretext to slow down India's rise as a global power.

Second, to use the "dispute" over Kashmir to prise billions of dollars from the United States.

If Pakistan cared about the Kashmiri people, it would have made Pakistan-occupied Kashmir (POK) a heaven rather than the hell it is.

POK has few airports or railway stations. Its people have no freedoms or voice.


The Hurriyat separatists use Kashmir as an ATM.

Paid agents of Pakistan, they have enriched themselves while causing misery and suffering to fellow Kashmiris.

Their children study in universities in the US and Europe while they instigate impoverished Kashmiri boys to wage jihad in the Valley.

Over 55 young Kashmiris have died in the recent violence. Hurriyat separatists stay far away in the safety of their opulent bungalows. Kashmir to them is about commerce, not ideology.

The third culprit in this quadrilateral of deceit are the political dynasts who have controlled Kashmir's governance for nearly 70 years.

The Abdullahs for three generations and the Muftis for two have played poker with the people of Kashmir.

Sheikh Abdullah had a tempestuous relationship with Jawaharlal Nehru.

Farooq Abdullah enjoyed a quieter one with Rajiv Gandhi, though the rigged 1987 J&K Assembly election is a taint on both.

Omar Abdullah and the two generations of Muftis, the late Mohammad Sayeed and Mehbooba, have more recently flirted with the Congress and the BJP, in the state and at the Centre.

All through this period, Kashmir has remained as backward as ever, kept afloat by an annual grant of nearly Rs 25,000 crore from New Delhi.

That amounts to Rs 1 lakh a year for each of J&K's 25 lakh families (assuming five members per family in the state's population of 125 lakh).


The fourth angle in Kashmir's quadrilateral of deceit is the cabal of local officials. They are often corrupt. Misgovernance is rampant.

Violence instigated by separatists ensures little or no accountability in the local bureaucracy.

On a visit to the Valley, I asked a senior executive of a mobile telecom firm why the private sector doesn't invest in the Valley.

BPOs, IT services companies and infrastructure firms, he said, have tried but the local administration is corrupt and incompetent. And there is the ever-present threat of violence.

Beyond parliamentary debates, farsighted governance is needed to pull the Kashmir Valley out of its self-perpetuating cycle of violence.

The BJP must build a counter-narrative in the Valley by focusing relentlessly on development.

Without lifting Kashmir out of its economic isolation and integrating it fully into a rapidly modernising India, insaniyat will remain a noble but hollow concept.

The Hurriyat and Pakistan have a single-point agenda: instigate terrorism in the Valley.

Insaniyat is the last thing on their fevered minds.

(Courtesy of Mail Today)

Follow@minhazmerchant on twitter

Is Trump fighting to lose US elections 'He knows deep down he isnt equipped to be president.'

Monday, August 8, 2016

The American mainstream media is viscerally hostile to Republican presidential candidate Donald Trump.

In turn, Trump publicly and frequently denounces American journalists as among "the most dishonest people I know".

The latest theory floated by a section of the US media is that Trump, consciously or subconsciously, wants to lose the presidential election.

The thesis was first articulated by Carl M Cannon, the Washington bureau chief of the popular website RealClearPolitics.

Here's what Cannon wrote: "I believe Donald Trump, the man who famously disparages 'losers', knows deep down he isn't equipped to be president. Let's call this more reflective subconscious entity 'Don Trump'.

"Donald Trump loves winning and hates losing, while 'Don Trump' knows that running a smart campaign and beating Hillary Clinton means he'd inherit a job he has neither the qualifications nor the temperament to perform successfully. 'Don Trump' wants to lose. He wants this campaign to be over so Donald Trump can go back to doing what he's good at: promoting his personal brand and counting his money."

The theme was picked up by others last week.

Joe Scarborough, who hosts the Morning Joe show on MSNBC, claims he has spoken to multiple sources who are "extraordinarily close" to Trump.

They told him the dream scenario for Trump is to "lose the November presidential election to Democratic candidate Hillary Clinton by a narrow margin and then claim the election was rigged".

Trump first hinted that the election could be rigged at a campaign rally on August 1.

He has repeated that several times in subsequent rallies. It has since become a consistent theme of his campaign.

The Washington-New York "establishment" media says Trump's "rigged election" comment may be an escape chute if his bad poll numbers hold up and he does lose big.

But why would Trump go through all the trouble of running for president when all he wanted to do, as Scarborough says, was make the headlines?

Robert Kagan of Brookings Institute gave this explanation in The Washington Post on August 1, 2016:

"One wonders if Republican leaders have begun to realise that they may have hitched their fate and the fate of their party to a man with a disordered personality. We can leave it to the professionals to determine exactly what to call it. Trump is, in this respect, unlike a normal politician. A normal politician knows that no matter how much criticism gets under the skin, the thing to do is to smile and wave it off. You don't have to mean it. You don't even have to appear to mean it. But it is what you do, if only to avoid compounding the damage. Trump cannot make this simple self-serving calculation. He must attack everyone who opposes him.

"It's not really politically incorrect to say that a prisoner of war is not a hero because he got captured. It's just a way of saying, I don't care if you're a war hero. You criticised me and now I've got to hit you. Trump's insults are scattershot - only sometimes touching the raw racist and xenophobic nerves in society. The most important fact is that he is unable to control his responses to criticism. He must double down every time, even if it means digging himself deeper and deeper into the hole."

The accidental candidate

Trump didn't expect to knock out a field of 16 Republican candidates in the primaries, including Jeb Bush, Marco Rubio and Ted Cruz. But he did.

Suddenly he found himself in a head-to-head with Hillary Clinton.

Subconsciously or consciously, according to the US mainstream media narrative - a narrative that has been strenuously contested by the Trump campaign - the mercurial billionaire now began to sabotage his own campaign.

He insulted Mexican-heritage federal judge Gonzalo Curiel, blaming the judge's ethnic background for his "unfair" handling of a case on Trump University.

There was widespread condemnation over the offensive remark.

But Trump had by now tapped into a deep well of anger among middle-class whites, especially men, who had been left behind in America's stop-start economy.

The genie was out of the bottle. Trump couldn't push it back in. For every insult he heaped on Muslims, Mexicans, the differently-abled, African-Americans, his own Republican critics and the media, his white middle-class support only grew.

Till Trump picked a fight with Khizr Khan whose son Humayun had died a hero in 2004 serving with the US army in Iraq. Trump's poll numbers now began to sink.

Undeterred, he then belittled co-Republican and House speaker Paul Ryan by holding back support to his bid for re-election to the House of Representatives.

To add to this litany of bizarre behaviour, he obliquely suggested Russia hack into Hillary Clinton's missing classified emails and that the US could use nuclear weapons in Europe.

Trump finally endorsed Ryan on August 5 to begin healing the open wound in the Republican party.

Then, pulling a rare rabbit out of a hat, he announced last week that he had raised $82 million in July, nearly as much as Hillary Clinton's well-oiled campaign machinery.

An unusual election

Where does that leave the US presidential election three months from polling day on November 8?

Hillary's lead in opinion polls is widening rapidly. It currently stands at an average of 7 per cent.

Trump, though, has vowed to fight to the end, especially in swing states like Florida, Pennsylvania and Ohio.

Meanwhile, the latest theory put out by CNN (which Trump mocks as Clinton News Network) is that, with his poll numbers plummeting, the billionaire Republican candidate could either quit the race or be eased out by fellow-Republicans. That's wishful thinking.

As for Hillary, if she wins in November, she will rank among the most disliked presidents in US history.

Nearly 65 per cent of Americans polled regard her as "untrustworthy" and "dishonest".

It would be unwise to write off Trump entirely. He has a core voter base of 40 per cent disaffected Americans.

Hillary's own core vote base is around 45 per cent. There are another 15 per cent undecided independent voters.

They will decide the election

Follow@minhazmerchant on twitter

Muslims, Dalits And The Economy India is poised on the cusp of rapid economic growth. Core sector output is sharply up. Green shoots are visible as the year’s excellent monsoon spreads cheer to drought-hit regions across the country.

Friday, August 5, 2016

The recent spike in attacks on Dalits and Muslims carries messages across three pathologies: political, economic and social.

But first some numbers. Muslims make up 14.2 per cent of India’s population. More interesting is the age-population graph. Muslims between ages 0 and 4 form as much as 17.29 per cent of India’s population. Those aged 5 to 9 form 16.97 per cent of the population and those between 10 and 14 form 16.20 per cent. 

As Muslims age, their ratio falls. Those aged between 55 and 59 make up just 11.04 per cent of India’s population. And Muslims between the ages of 75 and 79 comprise a mere 9.40 per cent of the country’s population. (This data is sourced from the 2011 Indian Census.) 

As an article in Mint pointed out: “It is more likely that this age-based decline in the Muslim share (of population) has less to do with death and more to do with birth: a construct of their overall population share increasing over the decades.”

More startling figures emerge, again from the 2011 Census. An extraordinary 24.9 per cent of Indian beggars are Muslims. As The Indian Express reported while analysing these figures: “Activists claim that the data — released last month — on the religious orientation of those deemed ‘non-workers’ in Census 2011, highlights, once again, the limited or unequal access that certain communities or groups of citizens have to government schemes and services, which pushes them to destitution.” 

The Sachar Committee and Mishra Commission reports both confirmed that Muslims as a community are poorer than even Dalits. All of this is relevant to the unfolding politics in three key states that go to the polls in 2017: Punjab (January 2017), Uttar Pradesh (March-April 2017) and Gujarat (December 2017).

Punjab has a large Dalit population of over 31 per cent. In Uttar Pradesh Dalits and Muslims together comprise around 40 per cent of the electorate. Gujarat has relatively fewer Dalits (7 per cent) and Muslims (9 per cent). 

The attacks on Dalits and Muslims by cow vigilantes could polarise all three states. The resignation of Gujarat chief minister Anandiben Patel underscores how seriously the BJP takes next year’s assembly elections in Prime Minister Narendra Modi’s home state. 

Polarisation cuts both ways. The Hindu vote may well coalesce around the BJP but there are two caveats. First, the attacks on Dalits could upend the careful BJP strategy in UP to create a rainbow coalition of Brahmins (its traditional vote bank), OBCs and Dalits. Second, Congress chief ministerial candidate Sheila Dikshit, a Brahmin by marriage, could skim upper caste votes away from the BJP. 

Socially and economically, the impact of Dalit-Muslim consolidation could be far-reaching. The Prime Minister has rightly emphasised the need for social harmony but has been mostly silent on the recent atrocities on these two groups. 

The situation though isn’t entirely bleak. India now has 8.70 million Dalit entrepreneurs, according to Milind Kamble, founder of the Dalit Indian Chamber of Commerce and Industry (DICCI). Muslim entrepreneurs, especially in the MSME sector, are also thriving. 

India is poised on the cusp of rapid economic growth. Core sector output is sharply up. Green shoots are visible as the year’s excellent monsoon spreads cheer to drought-hit regions across the country. 

It is especially vital therefore that vested interests who seek political advantage on either side of the ideological fence do not vitiate the atmosphere. 

Few countries in the world have succeeded in integrating a 180-million strong population of Muslims, many of them very poor, with relatively little radicalisation. The challenge is to preserve social harmony and keep policymakers’ attention fixed firmly on what matters most to everyone in our plural democracy: the economy

Follow@minhazmerchant on twitter

Rajnath's trip to Pakistan for SAARC summit will help Islamabad not India At the end of the conference, New Delhi will only look like a pleading supplicant.
Monday, August 1, 2016

Should Union home minister Rajnath Singh lead India's delegation at the SAARC home/interior ministers' meeting in Islamabad on August 3-4? The short answer: no.

Pakistan has everything to gain from Rajnath's visit. It gives Islamabad credibility. It allows Islamabad to accept the dossier on Pathankot that Rajnath will bring and days later dismiss it as "more literature".

The Indians say they will hand over "additional proof" of Pakistan's involvement in the Pathankot terror attack. It is astonishing, after seven decades of dealing with a renegade country which treats incontrovertible evidence with cavalier disregard, that Indian politicians still expect Islamabad to act on such evidence.

The 26/11 terror attack on multiple locations in Mumbai, including the Taj Mahal Hotel, took place nearly eight years ago.

Irrefutable evidence of direct complicity of the Pakistani army has been given to Islamabad by both Indian and American investigating agencies. (Several US citizens were killed in the Mumbai attack. Under US law it is obligatory for Washington to deliver justice for every citizen killed in a terror attack.)

Rajnath is an honourable man. But he is hopelessly outmatched in the dark arts that the Pakistani establishment practises. He will receive a cordial welcome when he arrives in Islamabad on August 3.

The Pakistanis will assure him of their intent to act against terrorism. They will deny any involvement in the Pathankot terror attack and ask for more evidence - just as they have been doing for eight years over the 26/11 Mumbai attack.

They will deflect Rajnath's insistence on a National Investigation Agency (NIA) team visiting Pakistan to probe the Pathankot attackers - a promise Pakistan made but never intended to keep.

At the end of two days of a largely meaningless SAARC summit on South Asian security, Pakistan's role as a haven for terrorists will be sidestepped. High sounding resolutions will be passed enjoining SAARC member nations to combat terrorism "in all its forms and from wherever it emanates".

Pakistan's slick ISI-trained media and PR machinery will repeat the lie that Pakistan too is a victim of terrorism, without adding the obvious caveat that it is the victim of its own terrorism.

India, in sharp contrast, is the victim of Pakistani proxy terrorism. The equivalence that Pakistan always attempts to draw is a false equivalence but few, even in the Indian media, call Islamabad out on that lie.

Rajnath's voice, even if he says all that he should say as robustly as he can, will be drowned in the cacophony Islamabad will engineer.

At the end of the SAARC summit, India will look like a pleading supplicant, Pakistan the patient victim waging war against the Taliban and other (non-Punjabi) terror groups.

Does this mean Rajnath should not go to Islamabad for the SAARC summit? Yes. Does it mean India shouldn't be represented? No.

India should be represented at this multilateral forum by home secretary Rajiv Mehrishi. This would deliver a clear message to Islamabad which takes India's woolly-headedness for granted and exploits it to the hilt.

That message is simple: stop terror; conclude the Pathankot and other probes; only then will we talk to you at the ministerial level.

Prime Minister Narendra Modi's Pakistan policy lacks both coherence and clarity. His early overtures were well-founded. Even the impromptu Lahore drop-in last Christmas on Nawaz Sharif's birthday could be justified - just about.

But inviting a Pakistani joint investigative team (JIT) to "probe" Pathankot was a strategic error. It gave the Pakistanis the precedent they wanted: joint investigations for all future ISI terror attacks on India will now be de rigueur.

It's like asking Dawood Ibrahim to send Chhota Shakeel to help the Mumbai Police "jointly" investigate the 1993 Mumbai serial blasts. This is where the prime minister and national security advisor (NSA) Ajit Doval's Pakistan policy has descended from the sublime to the ridiculous.

And sublime it was for a while. The mortar-for-mortar retaliatory fire by the BSF has silenced Pakistani Ranger guns across the line of control (LoC) and international border (IB) since September 2015.

Cornered and out-gunned, Pakistan has changed its tactics: infiltration. The spike in attacks in the Kashmir Valley in recent months points to this strategic shift.

While Kashmiris resent the Armed Forces (Special Powers) Act (AFSPA) and a heavy Army presence in the Valley, the attempt by Punjab-based Lashkar-e-Taiba (LeT) and Jaish-e-Mohammed (JeM) and their thuggish leaders Hafiz Saeed and Maulana Masood Azhar respectively have failed to radicalise ordinary Kashmiri Muslims.

The Hurriyat, which was created by the ISI in the early-1990s to foment trouble in the Valley, and Punjab-based militants are the two weapons Pakistan deploys in Kashmir. The Hurriyat is fraudulently projected by Islamabad as the political voice of the Kashmiris. The Punjab-based terrorist groups complement this with violence to intimidate and indoctrinate ordinary Kashmiris.

The Kashmiri youth are used as cannon fodder. They hurl stones at the security forces. Their women and children are placed in front by ISI handlers to face pellets and bullets and form a shield for the cowardly militants behind them.

Splintering Pakistan

Pakistan is meanwhile being torn apart by the same demons it has tried to unleash on India. Balochistan and Sindh are in revolt. Pashtuns on both sides of the Durand Line are in ferment. Afghanistan and Iran have turned hostile to Pakistan. So has Bangladesh.

It is only the rump of west Punjab comprising 110 million Pakistanis (roughly the population of Bihar and half of Uttar Pradesh) that remains locked in its schizoid proxy war against India.

The generals of the Pakistani army are nearly all Punjabi. They harbour a deep grudge against India over military losses in Bangladesh and Kargil - and their own failed State.

They are corrupt and use Kashmir as an excuse to prolong their low intensity proxy war against India. They want this war to continue interminably for only then will their US/Chinese funds and their own relevance in Pakistan be protected.

If Kashmir is resolved, the generals will pick another issue to fight India over - water treaties, for example. They have no interest in the welfare of the people of Kashmir as the dismal status of the residents of Pakistan-occupied Kashmir (PoK) demonstrates.

What should India do? The prime minister has only to replay an interview he gave to a television channel in April 2014. When asked about talking to Pakistan, he said coldly: "You can't hear each other over the sound of gunfire."

Talk, yes. But not at senior levels till the terror stops. That is why not Rajnath but his home secretary should be in Islamabad on August 3-4

Follow@minhazmerchant on twitter

Holding on to Gujarat is more important for BJP than even winning UP
It is in the Anandiben Patel-ruled state that the Opposition senses a real opportunity to embarrass PM Modi.
Friday, July 29, 2016

There are nearly 400 million Muslims and Dalits in India. According to the 2011 census, Muslims comprise 14.2 per cent of the population, Dalits 16.6 per cent. Every third Indian is therefore Muslim or Dalit.

For politicians a Dalit-Muslim combination forms an electoral juggernaut. In Uttar Pradesh, which has 20.5 per cent of India's total Dalit population (over 40 million out of the country's 210 million Dalits) and another 40 million Muslims, the combination could prove decisive.

Mayawati has regained lost momentum after a series of atrocities on Dalits in recent weeks and the crude personal remark by BJP Uttar Pradesh vice-president Dayashankar Singh, expelled last week from the party and arrested on July 29. The Samajwadi Party's misgovernance could also nudge a part of its Muslim base to vote strategically for the BSP in order to keep the BJP at bay.

With eight months to go for the 2017 Uttar Pradesh Assembly elections, much can change on the ground. Polarisation could recur with the BJP and SP playing choreographed but complementary roles.

Mayawati's alleged corruption in ticket distribution could blight her bid. And the Congress, with its line-up of entitled dynasts (Sheila Dikshit, Rahul Gandhi, Priyanka Vadra, Sanjay Singh, et al), might play spoiler, splitting the vote in a four-cornered contest.

Asaduddin Owaisi's MIM, a small player in Uttar Pradesh, is nevertheless another potential vote-splitter in what is one of the three most important state elections in 2017 before the 2019 Lok Sabha polls.

The most important Assembly election of course is Gujarat, due in December 2017. (Punjab, which goes to the polls early next year, is the third key Assembly election in 2017.)

It is Gujarat, however, where the Opposition senses a real opportunity to embarrass Prime Minister Narendra Modi. For the BJP holding on to Gujarat is more important than even winning Uttar Pradesh. A loss in Uttar Pradesh can be absorbed two years before the next Lok Sabha polls. Losing Gujarat just 16 months before the Lok Sabha elections would be devastating.

That explains why Rahul Gandhi, Arvind Kejriwal, Brinda Karat and others made a beeline for the state. One eye was fixed on the Dalit victims of cow vigilantism. The other was fixed even more firmly on the 2017 Gujarat elections. That too is why the Opposition has ignored similar recent cow vigilantism against Dalits in friendly Bihar.

Fortunately for the BJP, the Opposition might be overplaying its hand. The AAP could ironically cut into the Congress vote in Gujarat, helping the BJP eke out a slender majority in the 182-seat Assembly next December.

The BJP, however, faces three big red flags in Gujarat. The first is the Dalit backlash. The second is the Patidar agitation led by Hardik Patel. The third is the ineffective governance by chief minister Anandiben Patel.

Patel is set to be replaced as chief minister before the Assembly elections. Prime Minister Modi and party president Amit Shah will need to campaign relentlessly across Gujarat soon after the Uttar Pradesh polls to reverse popular disaffection.

The Patidar agitation is more complex. It is being fanned by Opposition leaders and will need dexterous handling by the BJP to contain it. Patidars form over 20 per cent of Gujarat's population. They are a powerful community of landowners who have not adjusted to new economic challenges.

Dalits comprise just seven per cent of Gujarat's population. The violent incidents against them may, however, drive them towards the Congress and tip the balance in a close election.

Muslims make up less than ten per cent of Gujarat's electorate. The Dalit-Muslim juggernaut thus has less potency in Gujarat than it does in Uttar Pradesh. But it nonetheless poses a threat to the BJP.

The picture for the 2019 Lok Sabha elections is even grimmer. Around 47 per cent of India's Dalits live in just four states: Uttar Pradesh (20.5 per cent), West Bengal (10.7 per cent), Bihar (8.2 per cent) and Tamil Nadu (7.2 per cent). In 2014, the BJP won 93 of its 282 Lok Sabha seats in just two states: Uttar Pradesh and Bihar.

Erosion in the national Dalit vote, which swung away from Mayawati in the 2014 Lok Sabha elections giving her a humiliating tally of zero seats in the current Lok Sabha, could cost the BJP dear in Uttar Pradesh in both the 2017 state Assembly polls and the 2019 general elections. Modi may still be re-elected in 2019 but Uttar Pradesh will decide the margin of victory.

Gujarat gave the BJP 26 out of 26 Lok Sabha seats in 2014. With a population of 63 million, Gujarat has five per cent of India's population.

According to a recent Right to Information (RTI) reply, the state recorded 1,052 atrocities on Dalits in 2015. It is little consolation that Uttar Pradesh recorded 8,946 and Bihar 7,893 atrocities against Dalits during the same period - several times Gujarat's figures and disproportionately high even when the states' respective population figures are factored in.

Worse, the conviction rate for crimes against scheduled castes was just 2.5 per cent (in 2013) against a national conviction rate of 23.8 per cent according to the National Crime Records Bureau (NCRB).

For the BJP, the national electoral math is stark. In 2014, seven states gave it 204 seats out of its tally of 282 Lok Sabha seats: Uttar Pradesh (71), Bihar (22), Maharashtra (23), Rajasthan (25), Madhya Pradesh (27), Chhattisgarh (10) and Gujarat (26).

The road to Delhi in 2019 will thus pass not only through Lucknow but Ahmedabad as well. That is why the anti-Modi Opposition spent much of last week on the prime minister's terra firma.

Follow@minhazmerchant on twitter

What cost must Kashmir bear for BJP to make this marriage work with PDP
Opposites don't attract, not in politics.
Thursday, July 28, 2016

Some marriages are doomed at the altar. The "alliance of governance", stitched together between the BJP and PDP after two months of tortuous courting, was based on the myth that opposites attract.

They don't - not in politics. The argument was deceptively seductive: the December 2014 J&K Assembly election delivered a split mandate. The Valley voted for the PDP. Jammu voted for the BJP.

By coming together in government, they would be respecting the will of the people of both Jammu and Kashmir. There would be healing. The chasm between "Muslim" Kashmir and "Hindu" Jammu would be bridged.

Also read - India needs a referendum more than Kashmiris do

They were wrong. The soft separatist sentiment the PDP represents resented the alliance with the BJP from the beginning. The PDP workers showed their anger by boycotting Mufti Mohammad Sayeed's funeral in January 2016.

His daughter Mehbooba is cut from different cloth. She has never hidden her desire to make Hurriyat separatists stakeholders in any "settlement" over Jammu and Kashmir.

With the Valley simmering, Mehbooba last week made a tactically shrewd move by, for the first time, blaming Pakistan for the violence.

While backing CBMs with Pakistan and advocating the withdrawal of the AFSPA, Mehbooba said of Islamabad: "Pakistan shouldn't tell our children that if you take up guns and die, we will salute you. I think this is hypocrisy. Every day, we get to know that infiltration is going on unabated along the borders."

The PDP and the National Conference have a history of ambivalence towards separatists. Both speak with forked tongues.

Both want a "political" solution to J&K without specifying what that solution is.

In a series of television interviews and newspaper columns, former home minister P Chidambaram has laid out his own prescription of what a political solution to J&K could mean: "As long as J&K remains an integral part of the Union of India, there is ample political and legal space to try out new ideas that will reassure the people of J&K that the government of India will honour the grand bargain of the accession. There are other steps that can be taken to retrieve the ground that has been lost since the advent of the PDP-BJP government, but this requires courage."

It is again a seductive argument in a Brexit world where Scotland could seek (and win) a second referendum to leave the United Kingdom.

But India lives in a more dangerous world. Kashmir is not Scotland: the Scots don't have a neighbour that sends gangs of terrorists to maim and kill its citizens.

Greater autonomy and the calibrated lifting of the AFSPA will certainly quieten Kashmiri tempers. It can, however, also give separatists and their Pakistani pay masters ever-easier access to the Valley. The poison this spreads can have the opposite effect to Chidambaram's prognosis.

External affairs minister Sushma Swaraj's statement last week that India will not allow "a heaven to become a terrorist haven" is an indication of the Modi government's realisation that its Pakistan policy so far has been inconsistent and counterproductive.

An autonomous, quasi-"independent" Kashmir would rapidly become a Pakistan-run frontline jihadi-infested state like Afghanistan.

Pak plan
Besides, Pakistan has no real desire to settle the Kashmir issue.

It serves to justify Pakistan's mountainous defence budget, much of which is siphoned off to lubricate military officers' lavish lifestyle.

Were the Kashmir dispute to be resolved, the Army would lose its primacy in Pakistan and put an end to the tidy fortunes its top brass makes.

The fault for the failure of India's Kashmir policy lies with the Indian government as well - past and present.

Also read - Mehbooba Mufti's divorce with BJP may work well for Modi

The rigged J&K Assembly election of 1987 on Farooq Abdullah's and Rajiv Gandhi's watch led to the first flush of militancy in the Valley in 1989.

It was followed by decades of misrule by the Abdullahs and Muftis.

The PDP-BJP alliance government was meant to be a fresh start for J&K.

It was always a false hope. The PDP has ideological symmetry, among national parties, with the Congress. It has none with the BJP. It was delusional for the BJP to think that the PDP could somehow be weaned away from its separatist roots.

And yet the BJP will continue its efforts to keep the J&K alliance government going.

The BJP's mild deputy chief minister Nirmal Singh appears to have little say in the Valley's governance. Central cabinet ministers remain distracted.

Home minister Rajnath Singh visited the Valley over the weekend - a full fortnight after the terrorist Burhan Wani's death.

The Rs 80,000-crore flood relief package hasn't been delivered. This mixture of wilful neglect by the central government and directionless governance by the PDP-BJP state government further emboldens separatists and Pakistan-funded terrorists.

The PDP and BJP, like an unhappy couple, are stuck together because a midterm poll would be electorally disastrous for both.

For the BJP though, it is better to lose a state upholding a principle than lose a nation abandoning it.

(Courtesy of Mail Today.)

Follow@minhazmerchant on twitter

Solar Powers India
For India, achieving a fine balance between industrial development and clean energy can help it meet the carbon emission targets formulated at last year's Paris conference on climate change

Tuesday, July 26, 2016

If there's one thing that excites Prime Minister Narendra Modi, it's the promise of solar power as a source of clean and plentiful energy.

Other Modi schemes - Swachh Bharat, Make in India, Digital India - may get more media acreage but solar power is what drives Modi's energy vision. Power Minister Piyush Goyal too regards renewables as a key portfolio and solar is the principal component along with wind and nuclear power.

A new report published by Bloomberg New Energy Finance (BNEF) - titled New Energy Outlook (NEO) 2016 - is a vindication of India's focus on solar energy. Total global installed power capacity is slated to rise from 6,418 gigawatts (GW) today to 13,464 GW in 2040. But the real eye-opener is the dramatic transformation in the ratio of solar power compared to other forms of energy.

Today coal, gas and hydro account for 75 per cent of global installed capacity (see table). Solar accounts for a mere 4 per cent. Within 25 years, solar power will cater to 29 per cent of global energy needs.

Individually, coal will fall from 31 per cent today to 16 per cent in 2040. Gas will decline from 26 per cent to 15 per cent and hydro from 18 per cent to 12 per cent.

At 29 per cent, solar will thus be the biggest - and among the cheapest - sources of energy. India is well equipped to take advantage of this shift. We have plentiful sunshine and solar costs are falling. Per unit costs for solar power in India are edging down towards Rs. 4 per unit.

India presently has only 7 GW of installed solar capacity. With prices for solar in other global markets in the Middle East and Africa falling to around Rs 2 per unit, the potential for growth is huge. Solar power is not only cheap. It's clean.

Wind power is another source of clean energy India should increasingly tap. Windy Britain is doing this successfully though costs are still high. Nonetheless, Bloomberg's New Energy Outlook 2016 projects that wind power will account for 13 per cent of total global installed capacity by 2040, up from the current 7 per cent.

All together, clean and renewable energy sources will account for nearly 50 per cent of global power capacity by 2040 compared to just 16 per cent today. Coal, gas and hydro will fall collectively from 75 per cent to 43 per cent.

For India, achieving a fine balance between industrial development and clean energy can help it meet the carbon emission targets formulated at last year's Paris conference on climate change.

Solar is the key that could unlock India's future under the sun.

Follow@minhazmerchant on twitter

A toxic retro tax is dragging India's global image down
Cairn Energy,one of the victims of this legislation, has claimed Rs 37,700 crore from the government as compensation.
Monday, July 25, 2016

Among the worst decisions of the Narendra Modi government is not repealing the retrospective tax legislation.

Finance minister Arun Jaitley has had three opportunities to take this regressive law off the statute books. He has ignored all three.

Now Britains Cairn Energy, one of the victims of the retrospective tax legislation, has claimed $5.6 billion (Rs 37,700 crore) from the Indian government as compensation.

Cairn has filed a 160-page statement of claim with an international arbitration panel. India may eventually not have to pay Cairn a penny  a settlement will be engineered  but the affair will dent the governments reputation for fair play.

Heres what Cairn says: "International arbitration proceedings, under the UK-India investment Treaty, have commenced to settle the retrospective tax which has been ongoing with the Government of India (GoI) since January 2014. Cairn has filed its Statement of Claim to the International arbitration panel."

The company was recently slapped with a new Rs 29,047 crore tax demand, including interest and penalties, relating to a decade-old reorganisation of the companys India unit, Cairn India.

In the 2016-17 Union Budget, Jaitley outlined a dispute resolution mechanism to deal with cases such as Cairn and Vodafone, the other high-profile litigant caught up in the retrospective legislative web. The deadline expires on December 31, 2016. The mechanism has found no takers and is unlikely to do so before its expiry.

The retrospective law was passed in 2012 by then finance minister Pranab Mukherjee to override a Supreme Court order in favour of Vodafone against a contentious cross-border transaction tax demand.

It remains the most oppressive and thoughtless legislation in recent years, allowing tax authorities to re-examine cases retrospectively to 1961-62. It is astonishing that Jaitley has not yet repealed it.

Instead the government has been forced to go through expensive litigation and arbitration (in which only lawyers and their cronies reap rewards) over unjustified tax claims. The Supreme Courts ruling, which Mukherjee overruled with the retrospective tax law, underscored how legally untenable the cross-border tax claims were.

Regressive law
The initial tax notice to Vodafone demanded a sum of just under Rs 12,000 crore. In its judgment delivered in January 2012, the Supreme Court ruled in favour of Vodafone.

Heres what Justice KS Radhakrishnan said in his order: "The demand of nearly Rs 12,000 crore by way of capital gains tax, in my view, would amount to imposing capital punishment since it lacks authority of law and, therefore, stands quashed."

That should have sealed the matter in favour of Vodafone. It should also have set a rock-solid precedent for future cases involving Cairn, Shell and other domestic and foreign companies.

Governments rarely overrule Supreme Court verdicts except in politically sensitive cases.

In 1986 then Prime Minister Rajiv Gandhi had used his overwhelming parliamentary majority to overturn the Supreme Courts 1985 judgment on Shah Bano. But even then the decision to do so took nearly a year: Rajiv consulted widely before bowing to clerics demand.

In the Vodafone case, Mukherjee was in unseemly haste. Within weeks of the Supreme Courts judgment, he amended the Income-Tax Act, 1961, to allow retrospective taxation and override the apex court.

In one stroke he eroded global confidence in the independence of Indias judiciary and the fairness of Indian governance. Investment began drying up. Between 2012 and 2014 the Indian economy faltered, struck by policy paralysis caused at least partly by the finance ministrys caprice.

By not repealing the retrospective tax, Jaitley has forced the prime minister to frequently and personally assure foreign investors that the regressive law would never be applied to fresh cases.

It is inexplicable why then such a draconian piece of legislation is allowed to remain in force. It is testament to the inherent strength of the Indian economy that, despite this regressive tax law, FDI has hit new highs, clocking over $55 billion in 2015. The figure could have been even higher had the Modi government repealed the law, as it should have, two years ago.

Quite apart from the bloody-mindedness of such a retrospective tax law, the damage it does to Indias reputation as a place to do business in is incalculable.

While the prime minister promotes Make in India and foreign direct investment (FDI), the finance ministry, by not repealing the retrospective tax legislation, is undermining that effort.

Article 3 of the 1994 India-UK Investment Treaty, under which Cairn has now sought international arbitration on the dispute, is unequivocal: "Investments made from the contracting party will be accorded fair and equitable treatment and enjoy full protection and security in the territory of the other contracting party."

Cairn said in a recent statement: "Cairn has had robust legal advice that the action of the government in seeking to apply tax retrospectively to the internal group reorganization in 2006, and in freezing Cairns assets in India, are a breach of the treaty, which protects against expropriation and ensures a fair and equitable investment environment for British investors in India."

Jailtleys contention is that pending tax cases inherited from the UPA governments 2012 retrospective tax legislation such as Cairn, Vodafone and Shell must be allowed to wind down.

In the meantime, while they wind down, lawyers will make money, Indias global reputation will suffer and its global ranking in the ease of doing business will sag. That makes it three own goals.

Such self-inflicted wounds are unworthy of a nation which wants to set standards, not lower them.

Follow@minhazmerchant on twitter

FDI Needs India
Foreign investors aren’t flocking to india because they love India. They regard India as the last big underdeveloped market opportunity to extract the high returns that are no longer possible in Europe, America and Japan

Thursday, July 21, 2016

India has emerged as one of the world’s most attractive investment destinations. Several factors have come together to create a sweet spot for the country.

The first is China’s slowing economy. Highly leveraged Chinese banks are a heartbeat away from a debt trap. Real estate and stocks present a picture of turbulence.

As Ruchir Sharma writes in his new book, The Rise and Fall of Nations: “It will be difficult for any country to grow as rapidly as 6 per cent, and all but impossible for China. Nevertheless, in an effort to exceed that target, Beijing is pumping debt into wasteful projects, and digging itself into a hole. The economy is now slowing and will decelerate further when the country is forced to reduce its debt burden, as inevitably it will be. The next step could be a deeper slowdown or even a financial crisis, which will have global repercussions because seven years of heavy stimulus have turned the world’s second largest economy into a bloated giant.

“In Beijing, confidence has given way to a case of nerves. Local residents often sense trouble coming before foreign investors and are the first to flee before a crisis. Chinese moved a record $675 billion out of the country in 2015, some of it for purchases of foreign real estate. If China were eating America’s lunch, its people would not be rushing to buy safe-haven apartments in New York or San Francisco. Far from conspiring to cheapen its currency, as Mr. Trump charges, Beijing is struggling to keep the weakening renminbi from falling more, which would further erode local confidence and make a crisis more likely.”

The second favourable factor is India’s recent uptick in reforms. Foreign direct investment (FDI) has been liberalised across sectors. Red tape may not have quite been transformed into the red carpet Prime Minister Narendra Modi promised in his 2014 Lok Sabha election campaign, but the ease of doing business in India has risen several notches.

India On Investors’ Radar
Global investors are noticing. As Dominic Barton, CEO of McKinsey, said recently: “People had given up on India. They felt India is too complicated and it was difficult to get anything done. It had dropped in the last five years on people’s priority (list). I think it has gone right back up, people are interested, obviously people are going to want to see action but I think the feeling is they will, because this government seems serious. I was not (advising clients to come to India) two years ago because it was complicated... and companies and clients were deeply frustrated with the bureaucracy, no decisions getting made. Companies were saying... let us go to Africa, let us go to Nigeria, let us go to Indonesia, let us just go to the US, but that has changed. I think because if you look at the trends that are going on in the world, India is right in the centre.”

The third factor driving investment into India is a conflation of domestic events. The Seventh Pay Commission will put an extra Rs 1.02 lakh crore a year in the hands of nearly one crore government employees. That’s over Rs one lakh per employee per year. Some of those additional funds will go into consumption, the rest into savings. On cue, the stocks of consumer durable, automobile and FMCG companies have risen. A good monsoon will spur rural demand as well. Agricultural growth will rebound.

In A Bright Spot
In this benign environment, the Indian economy, as McKinsey’s Barton says, is a bright spot. Europe remains sclerotic. Brexit will keep British growth subdued for years till it rebalances its economy. The US economy is turning sluggish with growth slowing. In eight Obama years, US GDP has not once grown annually at a rate higher than the historic long-term average of 3.30 per cent.

No wonder American, Chinese and European companies are lining up to do business in India. Apple will likely start its own stores in India following tweaks in the recently liberalised FDI policy. Alibaba is investing heavily in Indian e-commerce startups. Uber and Amazon have pledged billions of dollars to ramp up operations in the Indian market to take on domestic players like Ola and Flipkart.

Some Niggles Remain
And yet India is far from being a perfect marketplace. There are two principal shortcomings that need to be fixed.

First, the legal and judicial system. Commercial disputes take far too long to resolve. Vodafone’s debut IPO in India has been delayed at least partly because of legal wrangles over tax claims.

Second, certainty of the tax regime. The retrospective tax introduced by then finance minister Pranab Mukerjee — and inexplicably not repealed by the current finance minister Arun Jaitley — has done more harm to India’s business credibility than any other misstep. Investors, domestic and foreign, want certitude of tax laws. India’s tax system carries the detritus of the UPA regime. Jaitley and the bureaucrats of the finance ministry have been unable — or unwilling — to clear up the debris. Prime Minister Modi must step in to remove this hurdle. The cabinet reshuffle, with two new ministers of state inducted into the finance ministry, is a move in the right direction.

Last Big Opportunity
Foreign investors aren’t flocking to India because they love India. They regard India as the last big underdeveloped market opportunity to extract the high returns that are no longer possible in Europe, America and Japan. But India can’t afford complacency. Africa, with roughly India’s population of 1.25 billion but spread over 54 sovereign nations, increasingly beckons. Despite endemic corruption and civil wars it will almost certainly emerge as the next big investment destination. Chinese, European, American and Indian companies (like Bharti Airtel and Vedanta) are already in Africa. More will follow.

India’s federal system is a huge advantage. Once the Goods and Services Tax (GST) Bill is passed in Parliament, that federal structure will gain added lustre. Foreign investors need India as much as India needs them. But India must shed its bureaucratic somnolence and embrace the sort of technocratic mindset that Niti Aayog CEO Amitabh Kant has displayed. That must be the Modi government’s priority as the second half of the Prime Minister’s term unfolds.

This article was published in BW Businessworld issue dated 'Aug. 8, 2016' with cover story titled 'Desi Vs Foreign'

Follow@minhazmerchant on twitter

The Right liberal impulse
Wednesday, July 20, 2016

The PM needs to steer India towards social liberalism and economic liberalisation

The fierce ideological battle being fought amidst the 2016 United States presidential election finds particular resonance in Britain, continental Europe and India. Right wing parties are on the rise across northern and central Europe — for example in France, the Netherlands, Poland and Hungary.

In Britain, the Left is in retreat. The Labour party has imploded. Its implacably socialist leader Jeremy Corbyn refuses to go. He has vowed to fight again for the party leadership if an election is held among Labour grass-roots members. Britain’s new prime minister, Theresa May, is clinically right wing. As home secretary for six years, she fought grimly but unsuccessfully to keep immigration down to less than 1,00,000 a year.

In India, the BJP regards itself as a right wing party. So do most Indians. They are wrong. A classically right wing party — like the American Republicans or the British Tories — believe in free markets. The BJP’s ideological parent, the RSS, does not. Prime Minister Narendra Modi is an economic liberaliser by instinct. He hews to the right of the ideologues in the RSS on economic reforms. Some in the RSS in fact have more in common with the Left on economic issues. They instinctively distrust foreign direct investment (FDI). For instance, they oppose FDI in multi-brand retail, arguing that it will kill kirana stores.

The prime minister has had to walk on egg shells to balance his natural inclination for economic liberalisation with the party’s ideologues who confuse economic nationalism with economic common sense.

Successful modern societies globally tend to be those that lean rightwards economically (free markets, open trade) and lean leftwards socially (LGBT rights, gender equality). Many “right wing” parties in fact do the opposite.

They oppose free trade and economic reforms — positions the classical Left holds. Socially, they abhor gay rights and resist giving women absolute equality in, for example, access to places of worship.

The challenge is to be both an economic liberal and a social liberal. Right wing parties are often neither. They are economically close-minded and socially illiberal. Prime Minister Modi has managed to steer the BJP towards relative economic liberalism. But on social liberalism, he has made little headway. Article 377 criminalising the LGBT community is a disgrace to civilised society. It puts India in the unseemly company of countries like Saudi Arabia and Pakistan.

The BJP though has a natural ally in the US Republican party. The GOP is economically liberal but socially conservative. Many sections of the party — and like the BJP the Republicans have several ideological shades — are virulently against liberal values such as same sex marriage and giving women free choice over abortion.

The presumptive Republican presidential nominee Donald Trump is a closet social liberal but pretends for the sake of the party’s largely conservative electoral base to be a borderline born-again Christian. He needs to woo the evangelical core of the party’s hard right. Trump is a free marketeer who built a global business empire but now preaches anti-globalisation. He wants to scrap the North American Free Trade Agreement (NAFTA) and has pledged to take America out of the Trans-Pacific Partnership (TFP) that is currently under negotiation.

In classical terms, a liberal must be both economically and socially liberal. By that definition, few right wing parties globally would qualify as being truly liberal. Left-leaning parties would of course fail the test entirely. As the world tilts to the Right, it’s important to remember that such ideological monikers have lost much of their relevance. Communist China, for example, is more capitalist than some “socialist” democracies in Europe.

The political theorist Francis Fukuyama wrote in his book The Origins of Political Order: “Modern democracy was born when rulers acceded to formal rules limiting their power and subordinating their sovereignty to the will of the larger population as expressed through elections. Political institutions came (about) in societies that now take them for granted. The three categories of institutions in question are: 1) The state; 2) the rule of law; 3) accountable government.

“The fact that there are countries capable of achieving this balance constitutes the miracle of modern politics, since it is not obvious that they can be combined. The state, after all, concentrates and uses power, to bring about compliance with its laws on the part of its citizens and to defend itself against other states and threats. The rule of law and accountable government, on the other hand, limit the state’s power, first by forcing it to use its power according to certain public and transparent rules, and then by ensuring that it is subordinate to the will of the people.”

The Congress under Indira Gandhi used socialism to win elections along with an illiberal dose of populism. As a result, between 1966 and 1984, India’s GDP crawled at an average annual rate of less than 3.50 per cent. The rest of Asia — Malaysia, Thailand, Singapore, Indonesia, Taiwan – cruised at over seven per cent a year.

Had India embraced in those two crucial decades both economic liberalism and accountable governance as Fukuyama suggests, the country’s GDP would have been roughly double of today’s $2.15 trillion (Rs145 lakh crore). Per capita income too would be double at over $3,000. It would have halved the number of Indians living below the poverty line from 260 million today (by Professor Suresh Tendulkar’s BPL methodology) to perhaps just over 100 million.

Going forward, the prime minister must pivot the BJP further to the right economically. There are still too many controls on economic activity. Tax and labour laws are outdated. Public sector divestment is crucial. The PM though is not an enthusiast. He believes in a strong public sector. But for the government to hold equity in an airline (Air-India), telecom companies (BSNL and MTNL) and hotels (ITDC) is poor economic strategy. Fixing bank debts, recapitalising power discoms and PSU divestment are an inseparable part of economic reforms. The liberalisation process begun in 1991 must be taken to its logical conclusion.

Socially, the task will prove even trickier. The BJP’s swadeshi mindset is good in principle, unwieldy in practice. To build a modern society, social liberalism must move lockstep with economic liberalisation. It is a challenge the US and other industrialised democracies share with India.

Follow@minhazmerchant on twitter

Flipkart-Snapdeal Merger Bad Idea
What about Alibaba? The Chinese giant is already a stakeholder in Snapdeal so a Flipkart-Snapdeal merger will in effect mean an Alibaba-Amazon duopoly in India

Tuesday, July 19, 2016

In a provocative article in Bloomberg on July 14, 2016 titled India's Inevitable Merger, Tim Culpan writes that Flipkart and Snapdeal, India's two leading e-commerce marketplaces, should consider joining hands.

Here's the crux of Culpan's argument: "Shall we name it Snapkart or Flipdeal? Perhaps either Snapflip or Flipsnap. Whatever the moniker, a merger between India's Flipkart and Snapdeal needs to happen. The two e-commerce companies are burning through cash and it doesn't look like the flames of competition are going to die down while they're being fanned by that 800-pound American gorilla called Amazon and its $15.9 billion war chest.

"But although a joining of Snapdeal and Flipkart is the most logical strategy for both companies to take on Amazon -- and a possible entry by Alibaba -- such a move won't happen for another six months at least, said Arvind Singhal, chairman of Indian consultancy Technopak. For one, management teams will likely be given more time by investors to attempt a turnaround. Snapdeal is already making the right noises, with CEO and co-founder Kunal Bahl telling Mint he's focused on revenue instead of gross merchandise value, which tracks how much product is transacted on a marketplace. Flipkart's changes have been more drastic. At least four senior executives are reported to have left in recent months, and the company has swapped CEOs, from co-founder Sachin Bansal to co-founder Binny Bansal.

"Yet, such changes are unlikely to bring a fast turnaround on their own. With profitability being another two years away, both startups are going to need more cash and you can bet investors will be less keen to hand it over under the shadow of Amazon, which has already committed $5 billion to its Indian operations and has more to spare."

Culpan's thesis fails on several counts. First, India needs more competition, not less. Monopolies help cartels, hurt consumers. The last thing India needs is a monopoly, or even a duopoly, between a merged Flipkart and Snapdeal on the one hand and an all-devouring Amazon on the other.

What about Alibaba? The Chinese giant is already a stakeholder in Snapdeal so a Flipkart-Snapdeal merger will in effect mean an Alibaba-Amazon duopoly in India. That may be what foreign companies want. It's not what Indian consumers need.

There's a second reason why a Flipkart-Snapdeal merger is a non-starter: the promoters won't play ball. Snapdeal's Kunal Bahl, CEO of the smaller of the two firms, will have to make way for the Bansals (Sachin and Binny) in the event of a merger, an unappetising prospect for him.

The underlying reason for all the speculation is the plunging market valuation of Flipkart and Snapdeal. Both have fallen by around a third from their valuations a year ago. Both have reacted by stating the obvious: the focus must shift from gross merchandise value (GMV) - an utterly misleading metric - to cash profits.

Alas, profitability is some distance away. Like Amazon, Flipkart and Snapdeal have prospered on discounts. They used venture capitalists' largesse to fund huge discounts and snare customers. Who wouldn't want a Rs. 50,000 LCD TV for Rs. 25,000 or a Rs. 20,000 mobile phone for Rs. 10,000?

But once the discounts go, will customers follow? Bahl and the Bansals are betting they won't. The discounts though will have to go sooner rather than later. VC money is not limitless. Nor is its patience.

Flipkart made a loss of Rs. 2,000 crore for the year ending March 31, 2015. (Results for FY 2016 have not yet been declared.) Snapdeal lost Rs. 1,350 crore during the same period. Such losses are not sustainable.

Future rounds of VC funding will eventually dry up. Existing VCs will seek an exit. For that profits are essential. But with same-day deliveries and the ability to vault over infrastructure hurdles (bad roads, clogged traffic, last mile connectivity), e-commerce companies have an exciting future even in the post-discount era.

The Indian online market is large and growing exponentially. That's why Amazon is here. Alibaba will soon be too. Contrary to what Bloomberg's Tim Culpan says, India needs more, not less, competition.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house

Follow@minhazmerchant on twitter

Did Nehru refuse Kennedy’s nuclear weapons technology offer
It would have made India one of the founders of the NSG rather than the supplicant it is today.
Friday, July 15, 2016

Former foreign secretary Maharajkrishna Rasgotra’s new book A Life in Diplomacy deserves more attention that it has received.

Now a sprightly 90, Rasgotra served as foreign secretary in Prime Minister Rajiv Gandhi’s administration.

Rasgotra joined the Indian Foreign Service (IFS) in 1949 and had a bird’s eye view of not only India’s diplomacy in the Indira Gandhi and Rajiv Gandhi years but also during the Jawaharlal Nehru years when he was a rising IFS officer.

Disclosure: Rasgotra was one of the senior diplomats I interviewed at length while writing Rajiv Gandhi’s biography. He was courteous, knowledgeable and frank.

Seated in his compact home in a quiet, leafy area of Delhi, Rasgotra said to me at the time: "In the three months I worked with Mr Rajiv Gandhi as his foreign secretary, I did not have to wait for a decision longer than was necessary. There was never any piling up of my ministry’s papers in the PM’s office. The prime minister was learning fast: he would consult a variety of opinions and on difficult issues he would float one of his own, sometimes a decoy, to invite the opposite view so that he could weigh its merits and demerits more exhaustively."

But it is Rasgotra’s views on Jawaharlal Nehru in his new book that have stirred debate.

Two specific questions need to be answered: One, did Washington offer India a United Nations Security Council (UNSC) seat in 1950 by unseating communist China – an offer Nehru reportedly declined?

Two, did US President John F Kennedy in 1961 offer India nuclear weapons technology which would have made India a nuclear power before China exploded its first nuclear device in 1964 – again an offer Nehru turned down?

Anton Harder, a PhD student in the International History Department of the London School of Economics, did his dissertation on Sino-Indian relations for the period between 1949 and 1962.

Writing for the (Woodrow) Wilson Centre in 2015, here’s what his research has unravelled:

"The issue of India’s right to a seat on the United Nations Security Council (UNSC) is a controversial one in India today, but it is not new. The historical controversy has centered on the culpability of independent India’s first Prime Minister, Jawaharlal Nehru, in not seizing several alleged opportunities for India to join the UNSC as a permanent member in the 1950s. Nehru’s critics, then and now, accuse him of sacrificing India’s national interest on dubious grounds of international morality. The question, however, goes beyond Nehru’s reputation, as it provides rare insights into India’s relations with the United States and the People’s Republic of China (PRC) at the beginning of the Cold War.

"New evidence of an offer by the US in August 1950 to assist India in assuming a permanent seat at the UNSC has recently emerged. Nehru’s rejection of the US offer underlined the consistency of his conviction that China’s legitimate interests must be acknowledged in order to reduce international tensions. Integrating China into the international community by conceding its right to the Chinese seat at the Security Council was in fact a central pillar of Nehru’s foreign policy. Nehru’s scepticism about accepting this offer, and thereby disrupting the dynamics of the UN, revealed the reverence he had for the international organization, despite its flaws. Nehru’s sense that India deserved recognition as a great country was made plain, although this was qualified by his refusal to compromise core principles to gain such recognition.

"What was the context of the US offer for India to join the UN Security Council? Nehru’s reference to the US’s offer is frustratingly vague with no hint of the circumstances or timing in which it was made. However, research done in the correspondence of Mrs Vijaya Lakshmi Pandit, Nehru’s sister, and holder of various major diplomatic positions in the late 1940s and early 1950s, illuminates the subject. In late August 1950, Pandit wrote to her brother from Washington, DC, where she was then posted as India’s Ambassador to the United States."

'One matter that is being cooked up in the State Department should be known to you. This is the unseating of China as a Permanent Member in the Security Council and of India being put in her place. I have just seen Reuter’s report of your answer to the same question. Last week I had interviews with [John Foster] Dulles and [Philip] Jessup, reports of which I have sent to Bajpai. Both brought up this question and Dulles seemed particularly anxious that a move in this direction should be started. Last night I heard from Marquis Childs, an influential columnist of Washington, that Dulles has asked him on behalf of the State Department to build up public opinion along these lines. I told him our attitude and advised him to go slow in the matter as it would not be received with any warmth in India.'

Anton Harder writes that Nehru’s response within the week was unequivocal:

'In your letter you mention that the State Department is trying to unseat China as a Permanent Member of the Security Council and to put India in her place. So far as we are concerned, we are not going to countenance it. That would be bad from every point of view. It would be a clear affront to China and it would mean some kind of a break between us and China. I suppose the state department would not like that, but we have no intention of following that course. We shall go on pressing for China’s admission in the UN and the Security Council. I suppose that a crisis will come during the next sessions of the General Assembly of the UN on this issue. The people’s government of China is sending a full delegation there. If they fail to get in there will be trouble which might even result in the USSR and some other countries finally quitting the UN. That may please the State Department, but it would mean the end of the UN as we have known it. That would also mean a further drift towards war. India, because of many factors, is certainly entitled to a permanent seat in the Security Council. But we are not going in at the cost of China.'

Harder adds in his research paper: "Nehru’s determined rejection of the US plan to place India in China’s seat at the UN Security Council reflected the particular reverence and centrality placed on the UN by what one might call a 'Nehruvian' foreign policy. The UN was important to Nehru because he regarded it as the venue for the resolution of international conflict on the basis of sustained dialogue and attempts at internationalism; to keep this effort up was to forestall war."

Nehru’s generosity to China in 1950 did not of course forestall war twelve years later.

The second narrative around Nehru is President Kennedy’s offer to make India a nuclear weapons power as early as in 1961.

Rasgotra writes in his new book: "United States President John F Kennedy made an extraordinary gesture towards India. American intelligence had learnt that China’s nuclear programme was progressing towards a weapons’ detonation in 1963. Kennedy, who was an admirer of India’s democracy and held its leader Jawaharlal Nehru in very high esteem, felt that democratic India, not communist China, should be the first Asian country to conduct a nuclear test. So, it is said, that the President sent a letter, written in his own hand, to Nehru offering help to India to conduct a nuclear test, and that accompanying the Kennedy letter was a technical note from the chairman of the US Atomic Energy Commission setting out the assistance his organization would provide to Indian nuclear scientists to detonate an American device from a top of a tower in the Rajasthan desert.

"A detailed paper on this subject was circulated at a meeting which I chaired in 2014 to honour G Parthasarathy on his 100th birth anniversary by his son, Ashok Parthasarathy. According to Ashok, Nehru shared the letter with only two persons, G Parthasarathy (GP), who had returned from China on completion of his tenure as India’s ambassador on the very day Ambassador Galbraith had personally handed Kennedy’s letter to Nehru, and Dr Homi Bhabha, whom Nehru had urgently summoned from Bombay to discuss Kennedy’s offer. In his letter Kennedy had said that he and the American establishment were aware of Nehru’s strong views against nuclear tests and nuclear weapons, but emphasized the political and security threat China’s test would spell for Nehru’s government and India’s security. 'Nothing,' Kennedy’s letter emphasised, 'is more important than national security.'

"Ashok’s paper also stated that Bhabha was for immediate acceptance of Kennedy’s offer, and Nehru himself was not disinclined to it; for he promptly instructed Bhabha to ‘work out a plan of action on a most urgent basis, should we finally accept Kennedy’s offer’. GP, on the other hand, wanted a couple of days to mull over all the various implications of the offer, and he utilized the time for long talks with Galbraith and BM Mullick, India’s pretentious intelligence chief, but ignored their advice favouring acceptance of the offer. In the end what he told Nehru was in line with Nehru’s own convictions and perhaps also what Nehru wanted to hear. So, Kennedy’s well-meaning offer of a lifetime was gently and thankfully turned down.

course, all this is hindsight wisdom, but one thing is certain: India’s acceptance of Kennedy’s offer would have deterred China from launching its war of 1962 and even imparted a note of caution to Field Marshal Ayub Khan’s plans for war in 1965. Nothing deters an aggressor more than a couple of big bombs in the armoury of the target of his hostility."

There is a twist in this story. Ashok Parthasarthy, GP Parthasarthy’s son and a former scientific advisor to Indira Gandhi, told The Hindu last month that Rasgotra accessed the information on Kennedy’s offer to Nehru from what was "part of a committee to bring out a centenary volume on Mr Parthasarathi’s father".

He added: "No one else apart from me knew about President Kennedy’s offer to Pandit Nehru which was narrated to me by my father. Mr Rasgotra lifted this information which was shared with him exclusively for the purpose of the book which I am editing and will be published soon."

According to The Hindu report, "Mr Rasgotra however narrated in the 'Notes' section of the book that he had personally seen 'no evidence' of the Kennedy offer and he read the paper by Prof (Ashok) Parthasarathi which he accessed while chairing a committee which planned the centenary celebration for GP. He had demanded to see the letter from Ashok Parthasarathi who owns all the papers related to G Parthasarathi. However Ashok Parthasarathi had told him that the Kennedy letter was lost."

Nehru was a man of great talent, vision and patriotism. But the path to perdition, to amend an old metaphor, is paved with good intentions.

Rasgotra’s measured analysis needs wider debate – of Nehru, the UNSC seat and Kennedy’s offer to help India become a nuclear power ahead of China.

That would have made India one of the founders of the Nuclear Suppliers Group (NSG) rather than the supplicant it is today.

Follow@minhazmerchant on twitter

Dynasty politics is like poison ivy for India
There is a chicken-and-egg relationship between dynasty and poverty.

Thursday, July 14, 2016

Will the Congress party's gamble of launching Priyanka Gandhi in Uttar Pradesh pay off or backfire?

More importantly, does the move serve democracy or damage it? Empirical studies show dynasty begets poverty. The most successful countries in the world are those that have long rejected dynastic politics.


Look first at the empirical evidence. Researchers at the Asian Institute of Management (AIM) Policy Center in Manila set out to test the "casual" relationship between dynastic politics and poverty in the Philippines. Their findings are significant.

As I noted in an op-ed, the AIM Policy Centre found that constituencies in the Philippines with dynastic candidates were 26 per cent poorer than those with non-dynastic candidates.

Nearly 68 per cent of national legislators in the Philippines parliament are dynasts. In sharp contrast, only six per cent of senators in the United States Congress are dynasts.

The per capita income of the Philippines (a former US colony) and the US are respectively $3,000 and $55,000. In India, according to the author Patrick French, 28 per cent of MPs across party lines in the 2009-2014 Lok Sabha were hereditary.

Worryingly, 38 per cent of the Congress's Lok Sabha MPs were dynasts (compared to 19 per cent of the BJP's). But low per capita income is not the only reason for the high incidence of hereditary politicians in a country.

The AIM Policy Center researchers say that Asia's sociocultural mores favour political dynasties. In contrast, Anglo-Saxon and Gallic countries like Britain, Germany and France (and their colonial derivatives - the US, Canada and Australia) have a culture of egalitarianism.

One of the ways political dynasts hold sway over a poor, feudal electorate is by appeasing it with subsidies.

A recent study by Krishnamurthy Subramanian and Abhishek Bharadwaj found dynasty damages democracy subtly but cruelly. "It's a legacy of retaining power through reckless populism," they wrote.

"The numbers depict a key narrative: Building a mountain of subsidies without worrying about its disastrous economic consequences."

Like poison ivy, dynasty spreads its tentacles slowly, inexorably, till it tightens its grip over its unsuspecting victims, many immersed in poverty and a feudal culture. The consequences go beyond economic damage.

As researchers at the Manila Policy Center discovered, there is a chicken-and-egg relationship between dynasty and poverty.


If India wants to create a just, prosperous society, we need to break this vicious cycle. Recent examples in the United States and Britain are educative.

Despite his storied family, Jeb Bush was dumped by Republican voters at the early stages of the primaries.

Hillary Clinton, another famous political name, finally won a bruising yearlong battle with the hitherto unknown Bernie Sanders to become the presumptive Democratic presidential nominee.

But the Clinton name is proving a liability, not an asset, in America's egalitarian politics. She is regarded as untrustworthy by a majority of the American electorate. Her "unfavourability" ratings in opinion polls are almost a bad as Donald Trump's.

Clinton was publicly branded last week as "very careless" by James Comey, the upright FBI director who spent ten minutes telling the assembled American and international media that Hillary "lied" in at least four of her public statements over the past year.


In Britain, dynasty receives scant respect. The last British family to produce more than one prime minister was over 200 years ago (William Pitt "The Elder" in 1766-68 and William Pitt "The Younger" in 1804-06).

Virtually the entire "younger" generation of Congress politicians are dynasts: Jyotiraditya Scindia, Sachin Pilot, Milind Deora, Jitin Prasada and Deepender Hooda.

Even in the BJP, dynasty pops its head up every now and again though Prime Minister Narendra Modi is vehemently opposed to it. Varun Gandhi, apart from being pretentious and self-regarding, has a surname he fancies.

But if he thought that would give him a dynastic short cut to power, as it did cousin Rahul Gandhi in the Congress, he chose the wrong party.

The bottomline? Political dynasties flourish in poor, feudal societies. The malnutrition and poverty in dynast-led constituencies like Amethi, Rae Bareli, Sultanpur and Guna tell their own story.

In non-feudal societies, the incumbent dynast in these underdeveloped constituencies would have been voted out of power years ago.

Instead we will see the spectacle of a bevy of dynasts led by Rahul Gandhi and Priyanka Gandhi descending on Uttar Pradesh as if it were their birthright.

(Courtesy of Mail Today.)

Follow@minhazmerchant on twitter

What ISIS achieves by striking terror at heart of Medina
The attack on the Prophets mosque in Medina in particular marks a new phase for Islamic State.
Tuesday, July 5, 2016

The terror attacks on three targets in Saudi Arabia this week signal a shift in the Islamic State's strategy. The strike on the mosque in Medina where Prophet Muhammad is buried killed four security guards and injured several others.

Saudi Arabia funded and armed the early version of ISIS which morphed from al-Qaeda. Qatar was a willing accomplice in creating a lethal Sunni terror group to counter the Shia axis in Iran, Iraq and Syria.

ISIS filled the vacuum left by the premature withdrawal of American troops from Iraq in 2011. It was one of US President Barack Obama's biggest strategic blunders.

The Iraqi army was in disarray following the ill-advised US invasion of Iraq in 2003. The Iraqi bureaucracy had been disbanded by the Americans. It was in this lawless environment that ISIS made lightning territorial advances in June 2014, reaching the outskirts of Baghdad.

Saudi Arabia and Qatar watched this unfolding scene with quiet satisfaction. They gave ISIS the arms and money it needed to capture nearly a third of Iraq's territory including Mosul, Iraq's second largest city.

Further north, as Obama followed a cynical strategy of overthrowing Syrian president Bashar al-Assad (an Alawite, a Shia-affiliated sect), Saudi funding and arms enabled ISIS to seize Raqqa and Aleppo. Sunni Turkey was another willing accomplice.

The turning point came on September 30, 2015 when Russia entered the conflict. Since then ISIS has lost roughly 20 per cent of its territory in Syria.

An emboldened, resurgent Iraqi army, bolstered by Shia fighters from Iran and renewed US air power, has meanwhile retaken Fallujah, a short drive to the west of Baghdad.

The Saudi economy has been hit by the plunge in oil prices from $115 in 2014 to $50 today. Its army is bogged down in Yemen fighting the Houthi rebels, a Shia sect.

ISIS has now predictably turned on its progenitor. Sections of ISIS always wanted to overthrow the feudal royals of Saudi Arabia. The triple attacks in Saudi cities this week are symbolic. The attack on the Prophet's mosque in Medina in particular marks a new phase for ISIS.

The disintegrating Islamic "caliphate" knows it will eventually lose Raqqa and Mosul. It is therefore preparing for a franchise future.

The Dhaka attack was a typical franchised, outsourced strike with no direct ISIS role. The Orlando attack was also part of the franchise model in which lone wolf terror attacks are not directed by ISIS but inspired by its venal ideology.

Similar outsourced terror attacks have taken place this week in Malaysia and Indonesia. The Dhaka attack also demonstrates how radical Islamist ideology has penetrated socio-economic barriers: the attackers were wealthy, young and educated.

The terror attack on the Prophet's mosque in Medina strikes at the very heart of the Saudi kingdom. Just as Pakistan is being devoured by the Taliban which it helped create, Saudi Arabia will increasingly be consumed by Islamic state terrorists as they are driven out of Iraq and Syria and into the arms of their creator.

Follow@minhazmerchant on twitter

How India can stop being bullied by China
Blocking NSG bid is only a small part of Beijing's strategy. A larger part is to encourage a renegade nation like Pakistan to keep New Delhi off-balance.

Thursday, June 30, 2016

Blocking India's bid for membership of the Nuclear Suppliers Group (NSG) is part of China's long-term strategic impulse.

Beijing sees India as the third pivot in an emerging tripolar world.

The United States and China will contest the first half of the 21st century just as Britain and Germany contested the first half of the 20th century.

India, poorer and weaker than both the US and China, will nevertheless be the balancing force in this triangular geopolitical relationship.

It will have the world's third largest economy and military within the next 20 years.


Beijing knows this. So does Washington. For America, India is a bulwark against a rising China.

For China, India needs to be kept in check. It does not want to confront two powerful democracies, India and America, at once. India, therefore, must be shown its place.

Blocking India's NSG membership is only a small part of Beijing's India-specific strategy. A larger part is to encourage a renegade nation like Pakistan to keep India off-balance.

China's illegal occupation of swathes of Pakistan-occupied Kashmir (PoK) through which the Pakistan-China economic corridor will pass is a key element of this strategy.

India's China policy has traditionally been anaemic and poorly thought-through.

India's first PM Jawaharlal Nehru gifted to China the permanent seat in the United Nations Security Council (UNSC) India was offered as former foreign secretary MK Rasgotra confirms in his excellent new book, A Life in Diplomacy.

Nehru followed it up with a provocative "forward policy" on the Chinese border that drew a strong response from Beijing, leading to India's humiliating defeat in the 1962 War.

Over the next 50 years, India's China policy oscillated between strong words and weak action.

Prime Minister Narendra Modi and national security adviser Ajit Doval have tried to change the grammar of that policy. After two years, however, not much has changed.

China is a bully. It has alienated almost every east Asian country with its aggressive manoeuvres in the South China Sea. It has territorial disputes (over the Senkaku islands) with Japan. It fought, and lost, a short war with tiny, plucky Vietnam in 1979.

Few Asian countries have cordial relations with China. Just as Pakistan is distrusted by its neighbours - Afghanistan, Iran, Bangladesh and India - China is distrusted by its east Asian neighbours.

India though has four important levers. It must use each with calibrated robustness.

First, Tibet. Nehru was right to give refuge in Dharamsala to the Dalai Lama and his followers in 1959. While the Dalai Lama is barred from making political statements as part of this agreement, India is not.

Tibet has international resonance. India must leverage this. Despite Chinese protests, US President Barack Obama has met the Dalai Lama thrice in his term so far.

Delhi must host more conferences for free-Tibet activists. Key Uyghur dissidents were recently denied visas at a conference in Dharamsala on Tibet and Xinjiang due to Interpol's red corner notices against them.

However, free-Tibet activism should now receive enthusiastic Indian support.

China's appalling human rights record in Tibet and Xinjiang must be highlighted.


The second lever is Taiwan. The new government in Taipei is anti-Beijing. Previous Taiwanese governments were in regular talks with Beijing, largely agreeing on the sensitive "one-China" concept.

The new Taiwanese president, Tsai Ing Wen, took office in May 2016 after a landslide win and has suspended rapprochement talks with China.

According to one report, "Beijing is highly suspicious of Tsai, whose Democratic Progressive Party (DPP), which replaced the Beijing-friendly Kuomintang (KMT) party in government, is traditionally pro-independence, and has warned her against any attempt at a breakaway."

India must deepen its ties with Taiwan despite not having formal diplomatic relations with it.

The US, too, has no diplomatic relations with Taiwan.

However, it legislated a Taiwan Relations Act through which it has developed close economic, security, cultural and political ties with Taipei.

an anti-China government now in place in Taiwan for the first time in two decades, this is the right time to strengthen India's relationship with Taipei as part of its "Act East" policy. This must also embrace the littoral states of the South China Sea, especially China's bête noire Vietnam.


Third, with China's economy slowing, Beijing can no longer be a profligate bankroller of Pakistan's proxy terrorism. As Ruchir Sharma writes in his new book, The Rise and Fall of Nations, China is staring a banking and real estate crisis in the face.

The Chinese growth story will be further eroded as the country greys and ages, triggering a ticking demographic time bomb.

Fourth, China's Muslim-dominated province Xinjiang has a population of restive Uyghurs. They are the principal source of terrorism in China.

Uyghurs recently met in India to press their case for autonomy in Xinjiang. India can offer them moral support just as China provides such support to Pakistan in PoK.

These four elements - Tibet, Taiwan, China's faltering economy and Xinjiang - provide enough leverage to India to keep China off-balance in the same way Beijing does India.

China exploits the weak but respects the strong. PM Modi must jettison decades of India's traditional appease-China diplomacy.

It hasn't worked, as events at the NSG plenary in Seoul showed, and it won't work in the future either. The time for playing nice with President Xi Jinping is over. It's time to play a game Beijing understands: hardball.

(Courtesy of Mail Today.)

Follow@minhazmerchant on twitter

Donald Trump US Infra 'Third World'
Between 1992 and 2013, the US spent an annual average of 2.5 per cent of GDP on infrastructure while China spent an average of 8.6 per cent of GDP every year.

Wednesday, June 29, 2016

A recurring complaint by United States Republican party presumptive presidential nominee Donald Trump is that US infrastructure is increasingly “third world”.

Anyone who has boarded flights out of John F. Kennedy, LaGuardia or Newark airports will agree. Asian airport infrastructure, from Singapore to Dubai, is far superior.

US roads and bridges are also in a state of disrepair. The American railway network, Amtrak, is a shambles. Bullet trains in the world’s largest economy are unheard of. The New York subway is shambolic as well.

Now the McKinsey Global Institute (MGI) has shed light on the reasons for this sorry state of affairs. According to the firm’s report published recently, “China spends more on economic infrastructure annually than North America and Western Europe combined.”

Infrastructure spending is, in fact, falling across the industrialised world: the US, Britain, Australia and Italy. The exceptions are Japan, Germany and China.

Let’s mine the data. In the 21-year period between 1992 and 2013 China spent an average of 8.6 per cent of GDP every year on infrastructure. India did relatively well with an average annual expenditure on infrastructure of 4.9 per cent of GDP.

This was during the post-1991 economic reforms period when liberalisation encouraged foreign direct investment (FDI) in infrastructure. Public private partnerships (PPP) also took off, especially in highways and other civic projects.

In contrast, the US spent an annual average of 2.5 per cent of GDP on infrastructure during this 21-year period – less than a third of China’s average spend. (America’s larger economy though obviously made absolute expenditure in the US higher.) Western Europe and Latin America too spent just 2.5 per cent and 2.4 per cent of GDP respectively on average every year on infrastructure.

The downside of China’s infra splurge is the phalanx of overbuilt infrastructure – empty buildings, closed malls and entire ghost towns. With the Chinese economy in trouble, a banking and real estate crisis looms. Infra spending is likely to slow as demand catches up only gradually with supply.

The McKinsey report suggests greater private investment in infra-deficit countries like India. That is exactly what Transport Minister Nitin Gadkari is doing. His ministry is currently building 27 km of roads and highways a day. The target is 30-35 km a day by 2017.

India’s new FDI liberalisation norms in the aviation sector will boost both brownfield and greenfield airports. Private investment in airports in Mumbai, New Delhi and Hyderabad over the past few years has transformed travellers’ experiences and boosted tourism.

Trump is right to bemoan JFK airport’s crumbling terminals. America needs to play catch-up with Asia across a swathe of infra sectors. De-industrialisation has hit America hard. Cities like Detroit, once the nerve centre of the American automobile industry, have lost over half their population during the last two decades. Jobs in industry are shrinking. Downtown areas in many US cities present a picture of desolation and crime.

It is this angst among America’s middle-class that Trump is tapping into. It could impact the forthcoming US presidential election in unpredictable ways.

Follow @minhazmerchant on Twitter

Follow@minhazmerchant on twitter

Why EU will unravel after Brexit
The European Union as an economic and currency union was a bad idea and bad ideas eventually die or morph.
Monday, June 27, 2016

The European Union’s economic and single currency project was pre-programmed to fail. The union’s initial objective in 1958, following the Treaty of Rome, was to give France, humiliated in World War II, a forum to regain lost global influence and prestige. Germany, battered and disgraced by the war, was a willing partner.

The bloc was at first a trading community as its initial name suggested: European Economic Community (EEC). By binding the initial six members (France, Germany, Italy, Belgium, the Netherlands and Luxembourg) to trade, Europe sought to banish war that had blighted the continent for centuries.

Britain, sniffily, stayed away. It had won WW II and did not need a European forum to wield global power.

French president Charles de Gaulle didn’t want Britain to join the EEC either. That would have diluted the French object of restoring national pride though the official explanation was Britain could be an American Trojan Horse.

As the British economy withered in the early-1970s, however, it joined the queue. France, now richer and less insecure, dropped its objections. Britain became a member in 1973.

But as France continued to use the EEC as a global platform to project French influence, the trading bloc morphed into the European Union (EU) in 1993 following the Maastricht Treaty.

The Brussels bureaucracy now took over. Just as the United Nations has become a bloated organisation with unaccountable, overpaid international civil servants, the EU, headquartered in Brussels, is a bureaucratic monolith.

The EU lost its way even further by expanding membership to 28 countries. What began as a Franco-German device to regain lost salience after World War II had grown into an unwieldy agglomeration of over two dozen sovereign nations. Most were bound by a single currency, the euro. Britain wisely stayed out of the euro which dispatched the Deutsche mark, the French franc and the Italian lira into oblivion.

When countries have different fiscal policies and face different economic challenges, tying them up into a single currency with key decisions made by the European Central Bank (ECB) is a particularly bad idea.

Greece was the first red flag that underscored how flawed a single currency was for dozens of countries with different economic and fiscal trajectories.

The Eurozone crisis is not over. Greece and other economically vulnerable (and fiscally indisciplined) countries like Portugal, Italy and Spain remain a festering sore at the heart of the EU.

The crisis has been buried beneath a mountain of euros printed by the ECB’s governor Mario Draghi to stabilise (temporarily) these faltering economies.

The EEC’s original trading mission has long been jettisoned. Open, porous borders in the EU have allowed unrestricted migrant flows. The Middle East crisis has deepened the problem.

ASEAN is an example of a trading bloc that works. It has sensibly confined itself to trade. Imagine a single currency tying up sovereign nations like Malaysia, Thailand, Laos, Cambodia, Indonesia, Myanmar, the Philippines, Vietnam and Singapore. Economic disaster would have come calling very quickly.

What next for the EU and for Britain?

Despite anti-Brexit moves, the EU will gradually unravel. Stronger EU economies like the Netherlands and Denmark could leave first. Weaker nations in Eastern Europe like Romania and Hungary which joined the EU in the last decade will stay on longer in the hope of benefiting from the EU’s generous budget contributions from richer nations like Germany and France which are shared by other members.

The EU will ultimately have to go back to being what it was always meant to be – a trading bloc and not an economic and currency union.

What about Britain?

There will be short term pain. Scotland will demand a second referendum and likely secede from the United Kingdom. Britain’s population and economy will shrink by roughly 10 per cent.

But the benefits of Brexit will eventually kick in: new Free Trade Agreements (FTAs) with Canada, India, China and others will be signed. A leaner British economy will emerge.

England and Scotland were separate sovereign nations till 1707 when the Act of Union created "Great Britain". The English-Scottish project did well for 250 years: colonisation, the Atlantic slave trade, invasive settlements in Australia and South Africa, the industrial revolution and booming maritime trade.

In the 1850s Britain was the world’s largest economy. London became the world’s financial and banking centre, relying on its global footprint to set the rules. It is no surprise that London polled the highest anti-Brexit vote percentage on June 23.

But all is not lost for Britain or London. A weaker pound will bring in more tourists and students and make British exports more competitive.

Oligarchs from Russia, China and India will invest in real estate in and around London at benign prices. The pound will slowly recover.

A leaner England and Wales will rewind to their pre-1707 roots.

England is a Germanic nation. Its people are of Angle, Saxon and Jute stock (all German tribes that invaded post-Roman England in the sixth century).

England’s monarchy is German as well. Till a hundred years ago, English kings spoke better German than English.

The British royal family’s real name is Saxe-Coburg-Gotha, not Windsor. The name was changed quietly in 1917, at the height of World War I when anger against Germany ran high, with an inconspicuous notice in The Times, London.

Hitler attacked the Soviet Union rather than Britain (whose people he regarded as kin) in 1941 when Britain was down and out post-Dunkirk.

The Brexit bottomline?

The EU will gently unwind. Britain and London will do just fine. Scotland will go its own way – the union with England is well past its sell-by date.

Will referendums rear their heads outside Europe?

Not necessarily. The EU as an economic and currency union was a bad idea and bad ideas eventually die or morph. They don’t necessarily travel to more "diverse" nations (code for India) as some warn darkly.

Will England become less multicultural, vibrant and diverse?

Unlikely. London is already 40 per cent non-white and irreversibly cosmopolitan. Fewer Hungarians and Slovaks may find jobs in London after Brexit but more Indians, West Indians and Africans will.

Besides, Britain will maintain trade links with continental Europe, so the downside of Brexit is limited even for London’s crucial banking and financial sector. Britain as a whole is 87 per cent white (the United States in comparision is 75 per cent white) so Brexit could actually make England more racially diverse.

The Brexit vote is a vote against entitlement and elitism. Leaders who don’t pay close attention to that message should prepare themselves for more surprises.

Follow@minhazmerchant on twitter

Raining Good News
A bigger priority should be to implement a range of tax and labour reforms. As figures released by the income-tax department have shown, far too many resources are expended on taxing assessees with taxable income below Rs 5 lakh

Friday, June 24, 2016

A good monsoon could deliver just the kickstart the economy needs to breach the 8 per cent GDP growth mark in 2016-17. Statisticians are conservative folk but R.B. Barman, the new chairperson of the National Statistical Commission (NSC), says India’s economic growth exceeding 8 per cent this year is “a distinct possibility”.

Other indications are positive as well. According to CRISIL, sales of 642 listed companies in the January-March 2016 quarter rose 6.1 per cent year on year. Ebitda (earnings before interest, tax, depreciation and amortisation) was up by a healthy 15.2 per cent during the same period. Net profit of these 642 companies soared 39.9 per cent. (CRISIL’s analysis excludes banks, NBFCs, oil companies, TCS and Vedanta to eliminate one-off statistical anomalies.) Indirect tax collections too rose 36.7 per cent in April-May 2016 over the same period last year, indicating a surge in business activity.

Private investment should now pick up. Banks have taken a large chunk of NPAs off their balance sheets. The write-offs will help them start lending again. An above-average monsoon will increase disposable incomes in the farm sector where over 60 per cent of Indians work. This could set off a virtuous cycle of consumption-led demand and growth.

Public sector units (PSUs) are likely to invest an estimated Rs 1,35,000 crore in 2016-17, adding further impetus to the recovery. A Confederation of Indian Industries (CII) survey is especially bullish on the economy. It expects GDP growth this fiscal to “easily cross 8 per cent” on the back of a good monsoon.

So what could go wrong?
For a start, oil prices. Crude has already doubled to more than $50 per barrel from its January 2016 lows. An increase of every dollar in the price of oil increases India’s import bill by Rs 9,126 crore, according to Finance Minister Arun Jaitley. India imported 202.10 million tonnes of crude oil in 2015-16 at a total cost of $64.40 billion (Rs 4.35 lakh crore — nearly equal to the fiscal deficit). The average price basket through the last fiscal was around $40 a barrel; a $10 hike to $50 will therefore raise the import bill this year by around Rs 1,00,000 crore. That could have a significant impact on inflation and the trade deficit.

One of Prime Minister Narendra Modi’s stated aims is to increase domestic oil production which has declined gradually over the past two decades. If the current dependence on crude oil imports is brought down from 80 per cent to 70 per cent, it will lower India’s import bill by Rs 65,000 crore at a price of $50 per barrel and an average exchange rate of Rs 67 per dollar.

The second cause for possible worry is inflation. While the wholesale price index (WPI) remains subdued, the consumer price index (CPI) has risen above 5.5 per cent. Food inflation is a particular concern. A good monsoon though should moderate the CPI. It is likely that this year’s southwest monsoon will extend well into October as the EI Nino factor fades by July and the La Nina phenomenon emerges around September. La Nina has appeared around 23 times in the past 125 years — roughly once every five years. It brings copious rain just as El Nino causes dry spells. Both American and Australian observatories have forecast a 96 per cent probability of La Nina by this September, pointing to an extended and bountiful monsoon.

A third reason to worry is a deepening global slowdown spurred by problems in China. The World Bank has cut its global GDP growth forecast from 2.9 per cent to 2.4 per cent and projects Indian economic growth in 2016-17 at 7.6 per cent. That though could be overly pessimistic.

Meanwhile, the stock and currency markets await news of Reserve Bank of India (RBI) governor Raghuram Rajan’s plans after his term ends on September 4. The debate is largely academic. On Rajan’s watch the rupee has depreciated gently against the dollar from Rs 58 to Rs 67 (15.5 per cent over three years). Other Asian currencies (except China’s yuan) have fallen more dramatically.

But Rajan’s record on bank NPAs is mixed. In a column in The Economic Times, Mythili Bhusnurmath assessed his tenure well: “The reality is that Rajan, like any mortal, has had his share of successes and failures. His biggest success has been on the inflation front, partly aided by the collapse in oil prices. His biggest failure has been on the banking front. The governor’s crackdown on large corporate defaulters has won him kudos and captured the public imagination. But like an oncologist, whose pursuit of rogue cancer cells (read: wilful defaulters) leads him to administer an aggressive dose of chemo that results in the destruction of both rogue and healthy cells (read: all defaulters, wilful or otherwise) and, tragically, leads to the death of his patient, the governor’s failure to think through the logical consequences of his actions, coupled with unrealistic timelines for clean-up of bank balance sheets, has knocked the bottom out of bank lending. Today, banks are either unwilling or unable to lend. And with no alternative source of funds in sight, the economy is severely crippled.”

Rajan has been part of India’s financial system since 2007. He served as honorary economic advisor to then Prime Minister Manmohan Singh from November 2008 and was appointed chief economic advisor to the Ministry of Finance in August 2012. In between he chaired the Indian government’s committee on financial sector reforms in 2007-2008. Rajan has therefore functioned as an integral component of India’s economic management for nearly a decade. His departure or continuation as RBI governor will have limited impact on the economy and the rupee.

A bigger priority for the government should be to implement a range of tax and labour reforms. As figures recently released by the income-tax department have shown, far too many resources are expended on taxing assessees with taxable income below Rs 5 lakh. Reforming the way India’s tax policy is managed will yield significant future dividends. So will labour reforms despite strong recent opposition from sangh parivar affiliated trade unions

Meanwhile, as the southwest monsoon spreads its bounty across India, the PM and his cabinet need to ensure they extract every drop of advantage for India’s economy, which is poised on the cusp of a new orbit of growth.

Follow@minhazmerchant on twitter

How Obama has got radical Islam wrong
The US president prefers to use the neutral term 'violent extremism' for incidents like the Orlando attack.
Wednesday, June 23, 2016

Will United States President Barack Obama be remembered merely as the first African-American president in US history? Or as the president whose wilfully naïve military strategy in Syria and Iraq led to the rise of the Islamic State (ISIS)?

Obama was driven last week to defend his Middle East policy. He seethed during a recent speech at the innuendo by Republican party presumptive presidential nominee Donald Trump that he was soft on Islamist terrorism.

Many commentators on both the Right and Left in the US have criticised Obama for not using the term "radical Islam" to describe the motivation behind the Orlando terror attack.

Obama says phrases like radical Islam mean little and do nothing to address the problem. He prefers to use the neutral term "violent extremism" for incidents like the Orlando attack.

Charles Krauthammer, the well-known columnist, upbraided the president, saying in a recent television interview: "By choosing not to use the term 'radical Islamic terrorism', thereby downplaying the connection between various terrorist attacks, the president has gone out of his way to avoid using the phrase that is obviously the most descriptive of the enemy. Violent extremism is a completely empty phrase. No one has ever strapped on a suicide vest in the name of extremism. Nobody dies in the name of extremism.

"Obama is deliberately trying to deny, or to hide or to disguise the connection between all of these disparate attacks and groups. And if you want to mobilise a country behind you, you need to tell them who the enemy is, why it's doing what it is. FDR (Roosevelt) did not say the day after Pearl Harbor, 'We were attacked by violent extremists.'"

Beyond language lies policy.

In recent days, the word is out that Obama wants to prove his critics wrong by driving ISIS out of four key cities: Fallujah, Raqqa, Aleppo and Mosul. Iraqi forces aided by American air power have already seized control from ISIS of parts of Fallujah, which lies an hour’s drive from Baghdad.

Meanwhile Raqqa, the de facto capital of ISIS, is caught in a pincer move between US-backed Kurdish fighters from the north and the Russian-backed Syrian army from the south working in a rare coordinated campaign.

A fierce counter-attack by ISIS fighters on June 20 drove the army back – showing once again how potent a terrorist force ISIS remains despite recent territorial setbacks.

Aleppo is the next target. Mosul, Iraq’s second largest city and ISIS’s revenue honey pot, however poses the toughest challenge. It has a large civilian population and well-entrenched ISIS fighters. The Iraqi army, trained by US military advisors, is preparing the campaign to liberate Mosul with the help of Iranian Shi’ite fighters.

Whether or not Obama’s suddenly muscular policy to "destroy ISIS", as he recently put it, is a direct consequence of growing criticism of his Middle East policy remains an open question.

There’s little doubt, however, that Obama has erred on Syria and Iraq. He learnt nothing from former president George W Bush’s blunder of invading Iraq in 2003. That set off a chain of events leading to Sunni-Shia conflict in the destabilised Middle East and the eventual birth of ISIS.

Obama has made exactly the same mistake in Syria. The US armed and funded rebel terrorist groups opposed to Syrian president Bashar al-Assad. In the ensuing five-year-long civil war, more than 2,50,000 people have died. Millions have become refugees, fleeing the war zone to Europe. Thousands have drowned in the Mediterranean sea during the perilous crossing from north Africa to Italy and Greece.

Europe has taken in millions of Arab refugees. Some of them are hardened terrorists who played a role in terror attacks in France and Belgium.

Meanwhile, in northern Syria’s power vacuum, ISIS seized territory at lightning speed – until Russia stepped in on September 30, 2015. Russian air power has over the past few weeks struck what could prove fatal blows to ISIS in northern Syria. It has also forced the US to recalibrate its Syria policy.

A recently leaked confidential "dissent" note by more than 50 US State Department officials called for the ouster of Assad with stronger US military action. Obama has turned down the demand. He has belatedly realised that ISIS presents a far bigger threat to the world than the Syrian president, however brutal his treatment of his own people, especially the alleged use of the chemical weapon Sarin on civilians.

The tantalising question though remains: why does Obama not condemn radical Islam in the unambiguous way even Hillary Clinton has now been compelled to do?

Obama says you cannot demonise a whole religion because of ISIS. That’s disingenuous. Nobody wants to demonise Islam. Sensible people want to reform Islam.

Radical Islam in fact demonises an entire community. For that reason alone, it needs to be called out as a subversion of Islam.

As Obama prepares to demit office, he has visibly greyed. The clean-cut 47-year-old Chicago attorney of 2008 has aged into an often angry, bitter and defensive president.

Watch this video of Obama in happier days when he and first lady Michelle invited Memphis soul’s greatest musicians to perform at the White House.

The mood in the White House today is a lot more sombre as the president struggles to reclaim his legacy.

Follow@minhazmerchant on twitter

Reforming India’s Tax Regime
Raise the exemption limit to Rs 5 lakh and free up that army of 42,000 tax officials to chase assessees in higher slabs which account for 86 per cent of annual tax collections.

Thursday, June 23, 2016

The latest figures released by the income-tax department hide more than they reveal. But even the little they reveal is worrying.

Last week Prime Minister Narendra Modi urged a conclave of tax administrators to double India’s tax base to “10 crore assessees from the present 5.4 crore.”

The very next day revenue secretary Hasmukh Adhia said expanding the tax base to 10 crore assessees was “impossible” and the prime minister’s statement was simply a “benchmark or target.”

The number of income-tax returns filed for the assessment year 2014-15, according to the government’s recently released data, was only 2.9 crore. Of these 1.6 crore were zero-tax returns. Another 1.2 crore were in the tax slab up to Rs. 5 lakh.

So the number of tax returns filed in the tax slabs between zero and Rs. 5 lakh comprised 2.8 crore out of a total of Rs. 2.9 crore returns.

The number of returns in the remaining slabs was as follows:

Interestingly, the total tax collected in the slabs below Rs. 5 lakh was a mere Rs. 49,728 crore at an average of Rs. 41,440 per taxpayer (1.2 crore taxpayers x Rs. 41,440 per taxpayer).

In sharp contrast, total tax collected from the slabs above Rs. 5 lakh was as follows:

Rs.5-10 lakh: Rs. 1.63 lakh crore.

Rs10-25 lakh: Rs. 1.65 lakh crore.

Rs. 25 lakh-Rs. 1 crore: Rs. 17,726 crore.

Rs. 50 crore-Rs. 100 core: Rs. 590 crore.

Over Rs. 100 crore: Rs. 437 crore.

The conclusion?

Out of around Rs. 3.56 lakh crore personal income-tax collected annually from individual assessees, only Rs. 49,728 crore (or around 14 per cent) comes from those in the tax slabs below Rs. 5 lakh.

Besides, as the prime minister pointed out during the tax administrators conference last week, 92 per cent of all direct tax collections come from TDS, self-assessment and advance tax payments. Yet an army of 42,000 tax officials chases, as the prime minister said, the remaining 8 per cent of tax collections.

Clearly, the tax system is inefficient. The key problem is too much of the income-tax department’s resources is wasted following up and monitoring 2.8 crore out of 2.9 crore tax assessees below the Rs. 5 lakh slab who contribute less than Rs. 50,000 crore individual tax collections from a total of over Rs. 3.50 lakh crore – a mere 14 per cent.

The solution?

One, raise the exemption limit to Rs. 5 lakh and free up that army of 42,000 tax officials to chase assessees in higher slabs which account for 86 per cent of annual tax collections. The Rs. 50,000 crore lost in the newly exempted Rs. 5 lakh slab could be easily made up. Moreover, it will put money in the pockets of middle-class earners to spur economic activity.

Two, rationalise tax rates in higher slabs as well and remove exemptions. The simpler and flatter the tax regime, the wider the tax base.

A target of 10 crore assessees may be a stretch but even an increase in the tax base to, say, seven crore assessees will help raise personal tax collections from just over Rs. 3.5 lakh crore today to well over Rs. 5 lakh crore if the extra 2 crore assessees in higher tax slabs pay an average of as little as Rs. 1 lakh each in taxes every year (2 crore x Rs. 1 lakh = Rs. 2 lakh crore).

It is a target well within the reach of a leaner, more proactive tax department.

Follow@minhazmerchant on twitter

Why Muslims have it better in India
Had we been living in a majoritarian country, the outdated personal laws would have been reformed.

Thursday, June 16, 2016

India remains an island of pluralism in a world driven by bigotry. That thought will astonish The New York Times. It will also make India's self-styled secular cabal apoplectic.

India in the jaundiced view of Western newspapers took a sharp right turn when the Narendra Modi government assumed office. They made dire predictions: there will be communal riots. Muslims and Christians will be persecuted. The country will go up in sectarian flames. Two years later, The New York Times and the equally sanctimonious Jeff Bezos-owned Washington Post have enough egg on their face to make an omelette.

Facts are no longer sacrosanct for some newspapers. They fix the narrative and then mould the "facts" to fit that narrative. In good old-fashioned terms, it's called agenda-driven journalism.


So what are the facts? Incidents of communal violence actually declined in 2015 (630 incidents) over 2013 (694 incidents). Ah, but there was Dadri, wasn't there? There was and it shamed the Hindu mob who lynched Akhlaq - an act of criminalilty whether or not he was eating, storing or selling beef.

But one Dadri does not make a majoritarian state. Muslims in India remain the most pampered minority anywhere in the world. In Europe, Muslims face a vicious backlash over refugees.

In the United States, the Republican party's presumptive presidential nominee, Donald Trump, has demonised Muslims.

In India, in sharp contrast, Muslims are allowed to keep their personal laws, including triple talaq, banned even in most Muslim-majority countries like the Middle East and East Asia.

Muslims pray unhindered in mosques across India, often on public pathways. The Hindu majority goes quietly about its business, respectful of the pious, especially in this holy month of Ramzan.

Of course there are wrinkles in this story: in Uttar Pradesh, Jammu & Kashmir, West Bengal and elsewhere communal tension simmers.

Most of it is driven by politicians whipping up emotions to polarise communities.

And yet, Muslims in India enjoy privileges minorities in other countries can only dream of. They have their own subsidised universities. Former Prime Minister Manmohan Singh declared that Muslims have first rights over India's natural resources. Muslims set the agenda in electoral politics in several states.

Parties like the Trinamool Congress treat West Bengal's 28 per cent Muslim "minority" with kid gloves, offering sops and even Ramzan food packs.

The Samajwadi Party mollycoddles its 19 per cent Muslim minority, looking the other way when they riot.

The Congress regards Muslims with particular benevolence. Its liberal, secular mission is to "protect" minorities from big, bad majoritarian India.

The result of 60 years of such protection? Muslims are India's poorest, most backward group - worse off than even scheduled castes, according to both the Sachar Committee and Mishra Commission reports. All of this has made India a "minoritarian", not a majoritarian country.


But isn't the BJP reversing 60 years of poverty-inducing minoritism with soft and hard Hindutva? Haven't Sadhvi Prachi and Yogi Adityanath demonised Muslims in the same way as Trump has in America? Of course they have.

But just as Trump's irresponsible rhetoric doesn't make the United States a majoritarian country, the rantings of Sadhvi Prachi and Yogi Adityanath don't make India a majoritarian country either.

Muslims in India don't need the paternalistic protection of the Congress, TMC, SP, RJD, AAP and other parties that preach liberal secularism but practice a dishonest minoritism that does nothing to raise Muslims from the economic and social morass they have been stuck in for decades.

The warm embrace of parties practising counterfeit secularism has kept then trapped in that morass.

In a majoritarian country, laws discriminate against minorities. In India they don't. Quite the contrary, they often end up discriminating against the majority community in states like Jammu and Kashmir and West Bengal.

In a majoritarian country, minorities face persecution not just from the state but from the majority community. In India, they don't - and when they do it is the exception, not the rule.


When a Shabana Azmi is refused a flat in Mumbai or Muslim boys are unjustly locked up without trial, it reflects on India's flawed cultural tradition of segregated housing on the one hand and an antiquated criminal justice system on the other, not majoritarianism.

Does that mean the BJP is innocent of practising majoritarianism in the past? Obviously not. The BJP rode to power in 1998 on the back of LK Advani's rath yatra in 1990 and the demolition of the Babri Masjid in 1992.

Polarisation of majority votes was a central electoral strategy that catapulted it from two MPs in 1984 (when the party was just four years old) to 182 MPs in 1998.

But now that it is in office with 282 MPs, it must abandon the impulses of the past. A new generation of Indians born in the 1990s want development, jobs and growth. They are religious but not communal.

If Shaira Bano, who is fighting a triple talaq case against her husband Rizwan Ahmed, lived in Turkey (which, like 21 other Muslim countries, has abolished triple talaq), she'd have got secular justice by now.

In India, she is reduced to pleading for Muslim personal law to be reformed to give women like her equal rights.

Had India been a majoritarian country, outdated Muslim personal laws would have been reformed despite protests from influential Muslims.

In minoritarian India, even the BJP doesn't dare do that and give Shaira Bano justice.

Follow@minhazmerchant on twitter

Orlando shooting can damage US presidential elections
Fears of Islamic terror could revive Donald Trump's floundering campaign and topple Hillary Clinton's.
Tuesday, June 14, 2016

The horrific terror attack on a gay club in Orlando, Florida, could cast a dark shadow over the 2016 US presidential election.

If the shooter's links to Islamist terrorism are confirmed beyond doubt, the attack could revive Donald Trump's floundering campaign and damage Hillary Clinton's.

Clinton is set to become the official Democratic Party nominee on Tuesday, June 14. That's when the last primary of the season in Washington, District of Columbia, gets over. In a choregraphed sequence, rival Bernie Sanders will concede defeat on the evening of June 14 and withdraw his candidature.

Anticipating these events, President Barack Obama on June 5 had already filmed a long emotive ad endorsing Hillary. It was aired though only after the California primary results on June 7. Sanders was given a back-patting visit to the White House the same day. An official statement of endorsement for Hillary by Obama followed hours later.

All this choreography took place on the afternoon Prime Minister Narendra Modi lunched with Obama at the White House after their joint statement and a day before Modi's speech to the joint session of Congress on June 8.

Meanwhile Donald Trump, the Republican party's presumptive nominee, is using the Orlando terror attack to burnish his tough-on-radical-Islam credentials.

But his campaign is under stress. Trump made an error that could diminish his chances of winning the presidency this November.

He attacked a federal judge, Gonzalo Curiel, hearing a class action suit over allegations of fraud against Trump University. The ethnic slur has already led to a meltdown in Trump's poll numbers.

A Fox TV opinion poll three weeks ago had Trump leading Clinton 45-42 per cent in a head-to-head for the presidency. A new Fox TV poll released on Thursday, June 9, showed Trump slumping to 39 per cent while Hillary stayed steady at 42 per cent.

In America, a politician can get away with a lot of things, as Trump has done, but casting a racial slur isn't one of them. Senior Republican leaders who had endorsed him are withdrawing their endorsements - unprecedented in a presidential race.

House speaker Paul Ryan, who escorted Modi at his speech to Congress on June 8, has disavowed Trump's slur against Judge Curiel but protocol has compelled him to continue supporting his candidature.

All this could change in the coming days if Florida mass shooter Omar Mateen is proved to have had close links with Islamist terrorism. That would fit right into Trump's playbook.

Meanwhile, the real estate tycoon could face more troubling allegations. In an investigative story published by USA Today late last week, hundreds of firms, contractors and even attorneys went on record to state that Trump regularly reneges on payments.

Daughter Ivanka Trump, who looks after the company's day-to-day affairs, dismisses the charges as irrelevant because the Trump organisation "cuts thousands of cheques every month" and only holds back payments when work done by contractors - or even legal firms - is unsatisfactory.

All of this should play into Hillary's hands. Unfortunately for Clinton, she is disliked by even more voters than Trump.

Clinton's "unfavourable" rating in opinion polls is 61 per cent compared to Trump's 56 per cent. She is particularly disliked by middle-class white Americans, especially women, who regard her as untrustworthy.

Clinton is blamed for dereliction of duty in Benghazi, Libya, where terrorists killed US ambassador J Christopher Stevens on her watch as secretary of state in September 2012.

She is also held responsible for America's muddled Middle East policy during her tenure in 2009-13 which led to the rise of the Islamic State (ISIS).

If elected as president though, will Hillary be good or bad for India? She will continue most of Obama's foreign policies. The US has been complicit for decades with Pakistan over terrorism.

It has given billion of dollars in aid to Islamabad since 2001 and sold it advanced weaponry, ostensibly to fight terrorists but turning a blind eye when it is used by Pakistan to bolster its conventional military arsenal against India.

It's only in recent months that the US Congress has blocked subsidised sales of F-16 fighter jets to Islamabad and withheld financial aid.

The Obama administration though continues treating India as frontline fodder: terrorist attacks on Indians by Punjab-based Laskhar-e-Taiba (LeT) and Jaish-e-Mohammad (JeM) are tolerated.

Attacks by the Taliban on the US and NATO are not.

The Florida terror attack, the most lethal on American soil since 9/11, could however prove an inflection point in the way Washington deals with "good" and "bad" terrorists.

Hillary's warning to Pakistan that if you keep rattlesnakes in your backyard they'll eventually bite you has been largely ignored by Islamabad which revels in its rogue status - as nations that are beyond the pale tend to do.

Clinton will need to walk her rattlesnake talk with Pakistan or India's rapidly evolving relationship with the US on trade, technology, defence, cybersecurity and nuclear commerce will remain incomplete.

Polarised election

The polarised US presidential election has driven Clinton to the centre-left. However, if she wins the presidency in November, she will likely shift back to the centre.

How good will her chemistry be with Modi compared to the Obama-Modi bonhomie?

Contrary to public perception, a certain formality has crept into the Obama-Modi relationship. The turning point came on January 27, 2015 when Obama made gratuitous remarks about religious tolerance in India just before he left Delhi for Saudi Arabia after Republic Day.

Hillary has many skeletons in the cupboard that puts her on the defensive when dealing with foreign leaders. The FBI investigation into her classified emails is one.

Another particularly troublesome skeleton is allegations that swirl around large donations made by shady companies to the Clinton Foundation.

Modi will need to employ a nuanced approach with her - of the kind he used with the US Congress last week: India and the United States are natural partners, but don't take us for granted.

If, however, the tide turns and Trump recovers lost ground over Islamist terror fears that validate some of his rhetoric, he could pull off an upset win over Clinton.

Follow @minhazmerchant on Twitte

Follow@minhazmerchant on twitter

SC's verdict on criminal defamation is a mistake
A balance must be found between an individual's right to not be unfairly attacked and the public good such an act may perform.
Tuesday, June 7, 2016

It's not often you get Subramanian Swamy, Arvind Kejriwal and Rahul Gandhi to agree on something. The three men were on the same side in a petition to make defamation a civil not criminal offence.

The Supreme Court disagreed. The law of criminal defamation stays. It is another error in a litany of questionable decisions by the apex court over the past few years.

Liberal societies have a simple rule to deal with defamation. Freedom of expression is not absolute. It is subject to reasonable restraints. But those restraints must pass the "smell" test: your freedom ends where my nose begins. Offending is fine. Dissent is fine. Lampooning is fine. Caricaturing is fine. Tastelessness is fine. What's not fine is violence, threatening violence, inciting hatred and abusing with intent to cause harm.

All these are covered under several sections of the Indian Penal Code (IPC) and the Criminal Procedure Code (CrPC). Defamation needs a different red line. Once that red line is crossed, defamation becomes criminal intimidation. The CrPC is equipped to deal with it using an array of criminal charges.

But defamation, written or spoken, is not criminal intimidation till it crosses the red line of violence, the threat of violence, incitement to hatred or abuse with intent to cause mental or physical harm.

Defamation that does not cross these red lines is a civil offence. If it is not - and the Supreme Court says it is not - it can make "reasonable restrictions" to free speech envisioned in the Constitution unreasonable restrictions to free speech.

No liberal democracy can accept such a low standard of the definition of free speech. The media is often the first victim. The fear of a criminal defamation case can act as a silent censor. The threat of a criminal suit can be a bigger threat to freedom of expression than the often exaggerated threat defamation poses to individual reputations.

If liberal society has to err, it must err on the side of openness to, and tolerance of, criticism. The larger public good supersedes the "defamed" individual's right not to be defamed because he still retains the right to civil court action. By "criminalising" defamation, the court has sided with the lesser, not the larger, public good.

The growth of social media has been a boon for free speech. Voiceless people now have a platform. The potential for abuse obviously exists but it has to be dealt with at the level of the platform - as Twitter has done with its new policy of taking quick action against abusers. Much more needs to be done to check online abuse, especially of women, but that cannot be a pretext for imposing "unreasonable restrictions" on free speech, verbal or written.

In a cover story titled "Free Speech Under Attack" in its issue dated June 4, 2016, The Economist argues: "In America the White House asked Google, which owns YouTube, to 'review' whether (the video) 'The Innocence of Muslims' violated YouTube's guidelines against hate speech. The company decided that it did not, since it attacked a religion (ie, a set of ideas) rather that the people who held those beliefs. The White House did not force Google to censor the video; indeed, thanks to America's Constitutional guarantee of free speech, it had no legal power to do so.

"Many countries have introduced or revived laws against 'hate speech' that are often broad and vague. In France, Brigitte Bardot, an actress, has been convicted five times of incitement to racial hatred because, as an animal lover, she complains about halal slaughter methods. In India, section 153A of the criminal code, which was introduced under British rule, punishes with up to three years in jail those who promote disharmony 'on grounds of religion, race, place of birth, residence, language, caste or community or any other ground whatsoever'.

"Such laws are handy tools for those in power to harass their enemies. And far from promoting harmony between different groups, they encourage them to file charges against each other. This is especially dangerous when cynical politicians get involved. Those who rely on votes from a certain group often find it useful to demand the punishment of someone who has allegedly insulted its members, especially just before an election. For example, when an Indian intellectual called Ashis Nandy made a subtle point about lower castes and corruption at a literary festival in 2013, local politicians professed outrage and he was charged under India's Prevention of Atrocities Act."

Countries like China, Russia, Turkey and Saudi Arabia have harsh laws that curtail free speech. Activists are imprisoned for criticising the government. Bloggers in Bangladesh meet an even grimmer fate.

The apex court must revisit its decision on allowing defamation to remain a criminal offence. A balance must be found between an individual's right to not be unfairly attacked by written or spoken word and the public good such an act may perform.

That balance today tilts heavily in favour of the "defamed" individual who may, for example, be guilty of corruption, but uses the law of criminal defamation to ward off public scrutiny. The balance must shift in favour of what is clearly the larger good: public interest. That is best served by decriminalising defamation.

Follow @minhazmerchant on Twitte

Follow@minhazmerchant on twitter

Prashant Kishor's Gandhi gambit in UP could backfire
Quite the contrary to what the master strategist imagines, dynasty can be toxic.

Thursday, June 02, 2016

Prashant Kishor has acquired a winning reputation. He helped strategise the BJP's victory in the Lok Sabha election in May 2014 along with his Citizens for Accountable Governance (CAG) group, teeming with bright-eyed young IIT/IIM graduates.

Looking forward to playing a key role in Prime Minister Narendra Modi's administration, Kishor famously asked the BJP's top brass: after May, what? The bland reply: June.

Off went an aggrieved Kishor to Nitish Kumar, offering his services ahead of the 2015 Bihar Assembly election.


The landslide win for the JD(U)-RJD-Congress alliance cemented his reputation.

The Congress was quick to recruit him for its Punjab and Uttar Pradesh campaigns in 2017.

Kishor's big challenge of course is Uttar Pradesh. The Congress has 26 MLAs in the state Assembly of 403. So what is Kishor's strategy? He has reportedly told the Congress leadership (code for Sonia Gandhi and Rahul) that unless a "disruptive strategy" is adopted, the Congress will be stuck at 20-odd MLAs. And if a disruptive strategy is adopted? Kishor reportedly says winning 200 seats is possible.

The disruption Kishor has in mind is Priyanka Gandhi. He first told Rahul that he should be the CM face in the UP election.

Suitably shocked, Rahul politely declined after taking a few days pretending to think it over. No Gandhi (except Indira in 1964 when dynasty was not yet an Indian political disease) has served even as a Union cabinet minister under a non-Gandhi Congress PM.

But Kishor is made of sterner stuff: he doesn't give up easily. He asked Rahul, how about Priyanka then? Studied silence has descended over 10, Janpath since.

The family is not amused. And yet Kishor persisted: Priyanka must at least lead the Uttar Pradesh poll campaign - not just in the ten Assembly segments in the Amethi and Raebareli constituencies. Congress workers are thrilled with Kishor's idea.

They know that Uttar Pradesh is a lost cause. Anything to give the Congress a fighting chance is welcome.

Unfortunately, the Gandhi family too knows that UP is a lost cause.


The last thing it wants to do, after losing Assam to the BJP, is lose Uttar Pradesh while projecting Rahul as a CM candidate or using Priyanka to campaign all over UP, diluting her residual political brand equity in the face of near-certain defeat.

So why is Kishor, the master strategist, so keen on Rahul and Priyanka? Partly at least because he believes Indian voters love dynasts. Do they?

Perhaps. But perhaps not. Check the winners of the four recent state elections.

Mamata Banerjee is not a dynasty. J Jayalalithaa, despite her association with MGR, is hardly a dynasty either. Nor is Sarbananda Sonowal or Pinarayi Vijayan.

Quite the contrary to what Kishor imagines, dynasty can be toxic. The Gogoi dynasty lost in Assam. The Karunanidhi dynasty lost in Tamil Nadu. The Gandhi dynasty lost in both Kerala and West Bengal.

In the US, the Bush dynasty (Jeb Bush) was defeated in the early stages of the Republican primaries for the 2016 US presidential election. The other dynasty, Hillary Clinton, is being put through the wringer by 74-year-old Bernie Sanders who joined the party a year ago.


For those who still point to the Kennedys, Bushes and Clintons as a validation of dynastic politics, here's what I wrote in my recent book: "Over 225 years and through 44 US presidents, only thrice has a single family produced more than one US president: John Adams (1797-1801) and his son John Quincy Adams (1825-1829); William Harrison (who died in office after serving for just a month in 1841) and his grandson Benjamin Harrison (1889-1893); and of course, most recently, the two George Bushes - exceptions who prove the centuries-old rule of American politics: dynasties don't work."

One can't blame Kishor for trying though. India has political dynasts crawling out of every nook and cranny. So what should Kishor do if Priyanka declines a larger role in the UP elections?

First, he should be relieved. Priyanka's baggage, Robert Vadra, does not travel well outside the Gandhi pocket burroughs of Amethi and Raebareli.

Second, he should get over his obsession with caste and religion. He reportedly wants to craft a Muslim-Dalit alliance in UP and project a Brahmin face as CM.

What has the Congress brought to the table in 60 years? Check out Amethi and Raebareli where a Gandhi has been in charge since Feroze Gandhi won in Rae Bareli in 1952. What is their human development index? Infant mortality rate? Infrastructure? Healthcare? Schools? Kishor will come away with statistics that could change his thinking about dynasty.

Follow @minhazmerchant on Twitte

Follow@minhazmerchant on twitter

Why an anti-Modi front won't succeed in 2019
The math could erase the smiles from some of the faces assembled at Mamata Banerjee's swearing-in.

Tuesday, May 31, 2016

There was much excitement at West Bengal chief minister Mamata Banerjee’s oath taking ceremony in Kolkata on May 27. The assemblage represented one half of TATA (There Are Two Alternatives).

These comprised regional satraps, hope shining brightly in beady eyes: Nitish Kumar, Akhilesh Yadav, Lalu Prasad Yadav and Arvind Kejriwal.

Also read: Nitish Kumar as PM? Not quite and definitely not yet

Together with Mamata as the new standard bearer, they hope to forge an anti-Modi front ahead of the 2019 Lok Sabha election and disprove the notion of TINA (There Is No Alternative).

How many seats can this national mahagathbandhan realistically hope to win in 2019? The math could erase the smiles from some of the faces assembled in Kolkata.

Consider the cold, hard facts: In the current Lok Sabha, Mamata’s TMC, Nitish’s JD(U), Kejriwal’s AAP, Lalu’s RJD and Mulayam’s SP hold a grand total of 48 seats.

Of these, Mamata has the most: 34. (The rest are in low single digits.) West Bengal offers 42 Lok Sabha seats so the headroom from that state in 2019 is limited.

Also read: Mamata Banerjee looks the strongest candidate to take on Modi in 2019

Now take Nitish. The JD(U) currently has two seats in the Lok Sabha. Bihar offers a total of 40 seats. With the RJD and Congress as alliance partners, Nitish could increase his tally in 2019 but there is, unfortunately for the Bihar chief minister, a large caveat.

Jungle Raj may not have yet returned to the state but lawlessness abounds. Will the Bihar electorate, after another three years of such brazen misgovernance, still give Nitish its support in the 2019 Lok Sabha poll?

Take Kejriwal. AAP has four Lok Sabha MPs of whom two are suspended. AAP will likely win the Punjab state elections in 2017 but lose in Goa. With Delhi, Punjab and Goa offering a total of just 22 Lok Sabha seats, Kejriwal’s contribution to the national mahagathbandhan in 2019 will, however, be tiny. 

Also read: Can a mega anti-BJP alliance win against Modi in Lok Sabha 2019?

Mulayam, meanwhile, will be locked in a multi-cornered fight in Uttar Pradesh in 2017. Given chief minister Akhilesh Yadav’s insipid governance record, the SP is unlikely to return to office in the state or win more than 20 Lok Sabha seats in 2019. It currently has five.

The core national mahagathbandhan’s likely grand total in 2019: just over 90 Lok Sabha seats.

That brings us to the second alternative limb in TATA – the Congress-led UPA. Conspicuously absent at Mamata’s swearing-in, Sonia Gandhi and Rahul Gandhi may not want to play second fiddle in a national mahagathbandhan. But if the Congress and its shrunken UPA allies (NCP, DMK, NC and others) cannot muster the numbers to form a government in 2019, they may, as in 1996, support the mahagathbandhan from outside just to keep the BJP out.

However, for both TATA alternatives, the math doesn’t add up – even if they join hands. Between them, the core anti-Modi grouping of Mamata, Nitish, Mulayam and Kejriwal, even if it sweeps its respective states (West Bengal, Bihar, Uttar Pradesh, Punjab and Delhi) can at best muster 90 seats in the 2019 Lok Sabha poll.

Also read: 10 reasons Congress may not last till 2019 polls

In last week’s ABP News opinion poll, the emaciated Congress-led UPA, was projected to win just 66 Lok Sabha seats. The Mamata/Nitish-led national mahagathbandhan plus the UPA would thus struggle to cross 150 Lok Sabha seats.

Five "neutral" regionals hold the balance of power: Jayalalithaa’s AIADMK, Naveen Patnaik’s BJD, KC Rao’s TRS, Mayawati’s BSP and Yechury’s Left Front. (None of the five were present at Mamata’s coronation.) Between them they could win around 100 Lok Sabha seats in 2019 (they currently hold a combined total of 78 seats.)

But the BSP and the Left will not do business with a front containing the SP and the TMC respectively, even if it means just lending outside support. The BJD, AIADMK and TRS lean towards the BJP though there is a question mark over the TRS. Jayalalithaa is unpredictable while Naveen likes to sit on the fence.

The BJP-led NDA is projected by the new ABP News opinion poll to win 342 Lok Sabha seats which should mute talk of TATA and bring back the idea of TINA.

Not so fast. The BJP in 2019 will likely lose seats in Gujarat, Rajasthan, Madhya Pradesh, Chhattisgarh, Maharashtra, UP and Bihar. In 2014, it won 204 of its 282 seats in these seven big states.

A fall of even 20 per cent from its current tally, especially in UP (71), Bihar (22), Chhattisgarh (10), Rajasthan (25), Maharashtra (23), MP (27) and Gujarat (26), could wipe out 40 or more seats from its total. There is clearly no room for complacency.

The BJP has another, even bigger, problem brewing with its allies. The Shiv Sena is destructive and malignant; the Shiromani Akali Dal is corrupt and incompetent; the TDP is alienated and unsettled; the PDP is unreliable and unmoored; the LJP is disillusioned and listless.

The BJP and its allies have three years to get their act together or the dreaded "160 Club" within the BJP will start licking its lips. If the BJP falls significantly short of 272 seats in 2019, some of the NDA allies could, the "160 Club" hopes, seek a change in the prime ministership.

There are Lutyenised contenders in the BJP to whom disgruntled NDA allies, the shrunken UPA and regional satraps will willingly lend support. It will be back to the good old days of mutual bonhomie and a scam-a-month.

Fortunately, the chances of that happening are disappearingly slim. TINA, in all likelihood, will trump TATA in 2019.

Follow @minhazmerchant on Twitte

Follow@minhazmerchant on twitter

Future of the Car
Electric cars will certainly replace petrol and diesel cars over the next 20 years. But to predict a driverless future is hazardous

Friday, April 29,2016

Ten years down the road, Apple may be better known for its cars than its phones. It has been testing driverless cars for years. So is Google. In California, Googles driverless cars have notched up over 100,000 miles in testing in moderate traffic on the states freeways with few accidents.

Meanwhile, Tesla has begun taking pre-orders for its Model 3 electric car. The response has been overwhelming: nearly 2,00,000 pre-bookings poured in within the first 24 hours at a deposit of $1,000 per car (priced at $35,000), putting over $200 million in Teslas bank account.

With a battery range of 344 km per charge, the Tesla may need to be recharged by most people no more than once a week. Tesla founder Elon Musk tweeted after receiving a flood of pre-orders in the first 24 hours: Model 3 orders at 180,000 in 24 hours. Selling price w/avg option mix prob $42k, so $7.5B in a day. Future of electric cars looking bright!

Within another two hours, the orders had climbed to 2,32,000, putting $232 million in the bank. At $42,000 per fully loaded car, Musk expects to collect over $8 billion in revenue on just these pre-orders when the cars are delivered.

The Tesla M3 will be ready for delivery in 18 months. Indian enthusiasts like VVS Mani, creator of Indias first electric car, the Reva (now owned by Mahindra), were among the early bookers.

Plenty of other high-profile Indians are excited. Paytm founder Vijay Shekhar Sharma tweeted that he wants to order a red Tesla. Serial entrepreneur Mahesh Murthy booked a Tesla on day one. Amit Bhawani of PhoneRadarBlog is another early booker.

According to a report in Business Standard, the move towards electric cars is rapidly gathering momentum: In India, there is an increased push for electric vehicles. The governments of Delhi and Karnataka have already eliminated all local taxes on electric vehicles. Further, under the National Electric Mobility Mission plan, the central government is planning to offer subsidies on electric vehicles with a target of having seven million electric and hybrid vehicles in India by 2020. The government has also created a working group under transport minister Nitin Gadkari which is evaluating the possibility of switching entirely to electric vehicles by 2030.

So is the future of the car likely to be radically different? Not quite  and not in India. Tesla needs charging stations. India has very few. Once the infrastructure of charging stations is in place, electric cars, which cause negligible pollution, will gradually replace petrol and diesel cars.

Driverless cars are even further in the future. But both Apple and Google are confident that their prototypes will be in commercial use in selected areas in the next few years.

The BJP though shouldn't exult too soon. It faces challenges of its own in 2017. It could lose Punjab (in alliance with the Shiromani Akali Dal). In Gujarat it will be lucky to hold on to power. The Patidar revolt and anti-incumbency could make Prime Minister Narendra Modi's home state Assembly election in December 2017 the real semi-final before the Lok Sabha poll in May 2019.

Uber meanwhile says the days of two-car ownership are over. Its moving towards an era when owning even one car will be an oddity. Uber taxis will be so ubiquitous, easy to call and inexpensive to ride that car ownership will dwindle.

Its tough to tell the future. Robots, predicted 10 years ago to take over our lives, are still largely factory-bound. Electric cars will certainly replace petrol and diesel cars over the next 20 years. But to predict a driverless future is hazardous.

What is certain is this: just as General Motors, Ford and Toyota dominated cars in the twentieth century, Tesla, Apple and Google will be the brands increasingly seen on the cars we drive  and those that drive themselves.

Follow@minhazmerchant on twitter

Is The Tide Turning
Much more needs to be done before we can say the tide has turned and the broken economy the NDA government inherited from the UPA regime has been fixed

Wednesday, April 27, 2016

Good economic news is finally trickling in. As the Narendra Modi government completes two years in office on May 26, India has overtaken the United States and China as the world's largest recipient of foreign direct investment (FDI).

During calendar 2015, India attracted $63 billion in FDI. The US drew $59.6 billion in the same period. China received $56.6 billion.

This is a significant achievement, predictably downplayed by the mainstream media. Reason? Gujarat has emerged as the leading FDI destination among Indian states. It attracted $12.40 billion in 2015, ahead of Maharashtra's $8.30 billion.

More good news: The trade deficit for 2015-16 has shrunk to $118 billion, down from $138 billion in 2014-15, despite a sharp fall in exports.

Low oil prices have obviously helped. So have declining gold imports. Exports are down year-on-year by over 17 per cent but then the exports of virtually every major country plummeted in 2015-16. China reversed its own steep export downslide only in March this year.

The coal sector is the harbinger of more good tidings. As The Times of India reported, "India's all-time high coal production of 637 million tonnes hides another feat - acquisition of a staggering 10,000 hectares of land in the past two years for coal projects even as private enterprises complained about hurdles posed by the new land law. Critical factors in the turnaround story that transformed the coal scenario from scarcity to surplus are Coal India's effort to rev-up land acquisition manifold and the public sector company's success in getting stage-II forest clearance for over 3,500 hectares. As mines go into production, average fuel availability at the thermal power generation plants is 27 days, a far cry from the 'critical' and 'super critical' supply scenarios that were the norm in the past. Last year, production grew around 9% on the back of a 6.7% rise in 2014-15 as Coal India and private players mined more coal than ever before."

The good news doesn't end there. The index of industrial production rose 2 per cent in February 2016 after being in negative territory for three months (from November 2015 to January 2016).

Inflation remains under control and GDP growth in 2016-17 is likely to exceed the target of 7.5 per cent on the back of a good monsoon which will spur rural consumer spending. That's good news for FMCG companies like Hindustan Unilever, Dabur, Marico and ITC.

Even the usually grim RBI governor Raghuram Rajan said recently at the Singapore Symposium that India was poised for a "leap in production". He added: "I suspect we are on the verge of a revolution here. I do believe that we should allow our enterprises to find their way. We have almost everything for the leap in production; whether it is manufacturing or services, we can take the step forward."

According to the International Monetary Fund (IMF), the world economy is estimated to grow at 3.5 per cent in 2017. India will again top the charts with 7.5 per cent GDP growth according to the IMF. It estimates Chinese GDP growth at 6.2 per cent in 2017, US growth at 2.5 per cent, the Euro area at 1.5 per cent and Japan at (-) 0.1 per cent.

The last thing this should do is create complacency in the Modi government. Much more needs to be done before we can say the tide has turned and the broken economy the NDA government inherited from the UPA regime has been fixed.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house

Follow@minhazmerchant on twitter

Subverting Samjhauta Express blast and Ishrat probes
In both cases, CBI and SIT in 2013 did precisely what their Pakistani counterparts have done since 2008 to stall the 26/11 trial.
Tuesday, April 26, 2016

Subversion has its boundaries. Not though apparently in India during a critical period between 2008 and 2014. Let's examine how investigations by the Central Bureau of Investigation (CBI) and the Special Investigation Team (SIT) into the terror attack on the Samjhauta Express and the gunning down of Ishrat Jahan were subverted - and by whom.

First, the Samjhauta Express. As India Today's story uncovered last week, the investigation into the Samjhauta terror strike was turned on its head. On July 1, 2009, the United States treasury and the United Nations Security Council (UNSC) named Arif Qasmani as the principal accused in the Samjhauta attack. Both concluded the terror strike originated in Pakistan. The UNSC placed a travel ban on Qasmani and froze his assets.

The Maharashtra Anti-Terrorism Squad (ATS) and the CBI ignored the UNSC's findings. Instead, it blamed fringe right wing Hindu groups for the attack.

Meanwhile, colonel Prasad Shrikant Purohit, allegedly a part of a fringe Hindu group, was arrested in November 2008 in the Malegaon blast case. He has been in jail for nearly eight years. No charge sheet has been filed. Sadhvi Pragya Thakur, another accused, has been in jail for over seven years without a charge sheet.

The ATS and CBI used these arrests to construct a narrative of "Hindu terror" that played through the May 2009 Lok Sabha election. The CBI and ATS wilfully ignored advice from US authorities that Pakistan-based terrorists were responsible for the Samjhauta Express blast. They also ignored the UNSC's conclusion naming Qasmani as the principal accused in the Samjhauta case. Instead, they arrested a clutch of Hindu right wing groups.

This narrative has now been turned upside down. Dozens of witnesses in the Samjhauta blast have turned hostile. Let's focus on two of the most important. The first is Dr RP Singh, an endocrinologist. He had initially told the Maharashtra ATS that he attended meetings when plots to "avenge jihadi terror attacks" were discussed by Purohit, Pragya Thakur, Aseemanand and others.

Dr Singh says he was tortured by the Maharahstra ATS to make the statement framing the accused. Here's what Dr Singh, consulting endocrinologist with a well-known private hospital, testified on April 6, 2016, before a judicial magistrate: "I was tortured by Maharashtra ATS to give a statement earlier against Abhinav Bharat and its members."

To back his claim that he was not present at the meeting as alleged by the ATS, Dr Singh produced authenticated travel documents and witnesses to prove that he was elsewhere on the relevant day and had not travelled to Bhopal or Nashik where the "Hindu terror" meetings took place.

The second key witness among the 40-odd witnesses who have turned hostile is Yashpal Bhadana. He too has claimed he was coerced by the ATS into making an incriminating statement against the accused. Both Dr Singh and Bhadana have recorded affidavits in front of a judicial magistrate under Section 164 of the CrPC, retracting their earlier statements made to the Maharashtra ATS allegedly under duress and stating under oath the facts of the case.

Who were the real perpetrators of the Samjhauta blast? The trail leads directly to Pakistan. According to the US and UNSC findings, Qasmani is the principal accused in the Samjhauta blast. Operatives of the banned Students Islamic Movement of India (SIMI) and the Indian Mujahideen (IM) were trained in Pakistan. They received explosives and detailed instructions in Pakistan just before the attack.

Yet the ATS and CBI ignored all this evidence. Instead, they allegedly coerced witnesses like Dr Singh and Bhadana to implicate Pragya Thakur and others to develop a narrative of "Hindu terror".

Rahul Gandhi adopted this narrative when he told a United States envoy, according to WikiLeaks (a report not explicitly denied by Rahul), that "saffron terror" was more dangerous to India than Islamist terror.

That narrative has come to an abrupt end with the latest revelations. The Maharashtra ATS stands discredited. The CBI has lived up to its reputation as a caged parrot. The National Investigation Agency (NIA) must now take the 2007 Samjhauta case to its logical conclusion. The director-general of the NIA, Sharad Kumar, has promised to file a final report on the Samjhauta case in the next six weeks.

Ishrat Jahan

Meanwhile, the Ishrat Jahan case has got murkier. It has striking similarities to the Samjhauta case. Here too the evidence was seemingly subverted. The opinions of three credible officials in the UPA government and three key organisations were ignored.

The former national security adviser (NSA) MK Narayanan wrote an article in The Hindu on February 18, 2016. The article indicated that Ishrat was an LeT terrorist, who was killed in a controlled counterterrorism operation along with two Pakistani nationals (Zeeshan Johar and Amjad Ali) and an Indian (Javed Sheikh) who had made several trips to Pakistan.

Narayanan's view on Ishrat's LeT links as well as the nature of the encounter was echoed by former home secretary GK Pillai and former Intelligence Bureau (IB) chief Asif Ibrahim. Both indicated that it was a legitimate counterterrorism operation.

During the politically malignant period of 2008-14, the narrative on Ishrat was reflected in the two infamously contradictory affidavits dated August 6, 2009, and September 30, 2009. Both bear then home minister P Chidambaram's signature. He has now denied that he signed either affidavit.

The CBI and the court-appointed SIT once again ignored written evidence from the US Federal Bureau of Investigation (FBI), the NIA and the legal attachi in the Indian embassy in the US that a) Ishrat was an LeT terrorist and b) her module was planning an imminent attack on a top political leader in Gujarat.

All this evidence was dismissed as hearsay by the SIT and CBI. Using third-degree methods on home ministry and IB officials like RVS Mani and Rajinder Kumar in order to force them to toe the "Ishrat-as-innocent-college-girl" line, the SIT allegedly subverted the investigation and misled the court.

What now? The NIA must complete its investigation, file its final report and present the true facts to the Gujarat High Court where the Ishrat case is being heard. The court will then be able to pass judgment based on all, not some, of the facts.

Congress defence

Congress leaders point out that the Ahmedabad Metropolitan Court in 2009 held that Ishrat was killed in a fake encounter. The CBI charge sheet in 2011 said the same. The SIT appointed by the Gujarat High Court arrived at the same conclusion.

As has now emerged, the CBI and SIT presented incomplete and misleading evidence to the metropolitan court. The FBI, NIA and the US legal attachi's written evidence that Ishrat was part of an LeT terror module planning an imminent political assassination in Gujarat was dismissed by both the CBI and SIT in 2011 and 2013.

POLITICS | 7-minute read | 26-04-2016
Minhaz MerchantMINHAZ MERCHANT @minhazmerchant
Total Shares
Subversion has its boundaries. Not though apparently in India during a critical period between 2008 and 2014. Let's examine how investigations by the Central Bureau of Investigation (CBI) and the Special Investigation Team (SIT) into the terror attack on the Samjhauta Express and the gunning down of Ishrat Jahan were subverted - and by whom.

First, the Samjhauta Express. As India Today's story uncovered last week, the investigation into the Samjhauta terror strike was turned on its head. On July 1, 2009, the United States treasury and the United Nations Security Council (UNSC) named Arif Qasmani as the principal accused in the Samjhauta attack. Both concluded the terror strike originated in Pakistan. The UNSC placed a travel ban on Qasmani and froze his assets.

The Maharashtra Anti-Terrorism Squad (ATS) and the CBI ignored the UNSC's findings. Instead, it blamed fringe right wing Hindu groups for the attack.

Also read - Malegaon blast accuseds wife on why shes still proud of him

Meanwhile, colonel Prasad Shrikant Purohit, allegedly a part of a fringe Hindu group, was arrested in November 2008 in the Malegaon blast case. He has been in jail for nearly eight years. No charge sheet has been filed. Sadhvi Pragya Thakur, another accused, has been in jail for over seven years without a charge sheet.

The ATS and CBI used these arrests to construct a narrative of "Hindu terror" that played through the May 2009 Lok Sabha election. The CBI and ATS wilfully ignored advice from US authorities that Pakistan-based terrorists were responsible for the Samjhauta Express blast. They also ignored the UNSC's conclusion naming Qasmani as the principal accused in the Samjhauta case. Instead, they arrested a clutch of Hindu right wing groups.

This narrative has now been turned upside down. Dozens of witnesses in the Samjhauta blast have turned hostile. Let's focus on two of the most important. The first is Dr RP Singh, an endocrinologist. He had initially told the Maharashtra ATS that he attended meetings when plots to "avenge jihadi terror attacks" were discussed by Purohit, Pragya Thakur, Aseemanand and others.

Also read - Free NIA. It's become a 'caged parrot' like CBI

Dr Singh says he was tortured by the Maharahstra ATS to make the statement framing the accused. Here's what Dr Singh, consulting endocrinologist with a well-known private hospital, testified on April 6, 2016, before a judicial magistrate: "I was tortured by Maharashtra ATS to give a statement earlier against Abhinav Bharat and its members."

To back his claim that he was not present at the meeting as alleged by the ATS, Dr Singh produced authenticated travel documents and witnesses to prove that he was elsewhere on the relevant day and had not travelled to Bhopal or Nashik where the "Hindu terror" meetings took place.

The second key witness among the 40-odd witnesses who have turned hostile is Yashpal Bhadana. He too has claimed he was coerced by the ATS into making an incriminating statement against the accused. Both Dr Singh and Bhadana have recorded affidavits in front of a judicial magistrate under Section 164 of the CrPC, retracting their earlier statements made to the Maharashtra ATS allegedly under duress and stating under oath the facts of the case.

Also read - Prison hunger strikes are part of struggle for azadi and democracy

Who were the real perpetrators of the Samjhauta blast? The trail leads directly to Pakistan. According to the US and UNSC findings, Qasmani is the principal accused in the Samjhauta blast. Operatives of the banned Students Islamic Movement of India (SIMI) and the Indian Mujahideen (IM) were trained in Pakistan. They received explosives and detailed instructions in Pakistan just before the attack.

Yet the ATS and CBI ignored all this evidence. Instead, they allegedly coerced witnesses like Dr Singh and Bhadana to implicate Pragya Thakur and others to develop a narrative of "Hindu terror".

Rahul Gandhi adopted this narrative when he told a United States envoy, according to WikiLeaks (a report not explicitly denied by Rahul), that "saffron terror" was more dangerous to India than Islamist terror.

That narrative has come to an abrupt end with the latest revelations. The Maharashtra ATS stands discredited. The CBI has lived up to its reputation as a caged parrot. The National Investigation Agency (NIA) must now take the 2007 Samjhauta case to its logical conclusion. The director-general of the NIA, Sharad Kumar, has promised to file a final report on the Samjhauta case in the next six weeks.

Ishrat Jahan

Meanwhile, the Ishrat Jahan case has got murkier. It has striking similarities to the Samjhauta case. Here too the evidence was seemingly subverted. The opinions of three credible officials in the UPA government and three key organisations were ignored.

The former national security adviser (NSA) MK Narayanan wrote an article in The Hindu on February 18, 2016. The article indicated that Ishrat was an LeT terrorist, who was killed in a controlled counterterrorism operation along with two Pakistani nationals (Zeeshan Johar and Amjad Ali) and an Indian (Javed Sheikh) who had made several trips to Pakistan.

Ishrat Jahan.
Narayanan's view on Ishrat's LeT links as well as the nature of the encounter was echoed by former home secretary GK Pillai and former Intelligence Bureau (IB) chief Asif Ibrahim. Both indicated that it was a legitimate counterterrorism operation.

During the politically malignant period of 2008-14, the narrative on Ishrat was reflected in the two infamously contradictory affidavits dated August 6, 2009, and September 30, 2009. Both bear then home minister P Chidambaram's signature. He has now denied that he signed either affidavit

Also read - Was Modi LeT's target?

The CBI and the court-appointed SIT once again ignored written evidence from the US Federal Bureau of Investigation (FBI), the NIA and the legal attachi in the Indian embassy in the US that a) Ishrat was an LeT terrorist and b) her module was planning an imminent attack on a top political leader in Gujarat.

All this evidence was dismissed as hearsay by the SIT and CBI. Using third-degree methods on home ministry and IB officials like RVS Mani and Rajinder Kumar in order to force them to toe the "Ishrat-as-innocent-college-girl" line, the SIT allegedly subverted the investigation and misled the court.

What now? The NIA must complete its investigation, file its final report and present the true facts to the Gujarat High Court where the Ishrat case is being heard. The court will then be able to pass judgment based on all, not some, of the facts.

Congress defence

Congress leaders point out that the Ahmedabad Metropolitan Court in 2009 held that Ishrat was killed in a fake encounter. The CBI charge sheet in 2011 said the same. The SIT appointed by the Gujarat High Court arrived at the same conclusion.

As has now emerged, the CBI and SIT presented incomplete and misleading evidence to the metropolitan court. The FBI, NIA and the US legal attachi's written evidence that Ishrat was part of an LeT terror module planning an imminent political assassination in Gujarat was dismissed by both the CBI and SIT in 2011 and 2013

Also read - Pardon to David Headley in 26/11 trial is travesty of justice

In doing so, they followed the exact pattern of the Pakistani investigation into the 26/11 Mumbai terror attack. The Pakistani special court was given incomplete and misleading evidence against Zaki-ur-Rehman Lakhvi and Hafiz Saeed. The 26/11 case, as a result, is now virtually dead. Courts can only pass judgment based on the evidence presented to them

In both the Samjhauta and Ishrat cases, the CBI and SIT in 2013 did precisely what their Pakistani counterparts have done since 2008 to stall the 26/11 trial. That is a severe and telling indictment.

Follow@minhazmerchant on twitter

Warning signs BJP can't ignore as Nitish Kumar sounds poll bugle
For Modi government, the only antidote is solid economic performance – and better, far better, communications.

Wednesday, April 20, 2016

A JD(U)-led mahagathbandhan swept the Bihar Assembly election last year. Can a national mahagathbandhan do a repeat in the 2019 Lok Sabha election? Bihar Chief Minister Nitish Kumar clearly thinks so. After anointing himself president of the JD(U) on April 10, Nitish has set his sights firmly on Delhi. His new slogan: “Sangh-mukt Bharat.”

Should Prime Minister Narendra Modi be worried? A united opposition would present a formidable challenge to the BJP. But uniting non-BJP parties under the JD(U)’s patchwork umbrella will prove a lot harder than forging a mahagathbandhan in Bihar.


Nitish has begun to build his regional party as a national centripetal force ranged against the BJP. The Congress has reacted coolly to the idea though it is open to state-wise coalitions in 2019. AICC general secretary Shakeel Ahmad said: “Certainly, India should be freed of the RSS and BJP. But when it comes to the question of alliances, they are state-specific. That’s because a particular party which has presence in one state does not have much presence in the neighbouring states. So parties go for state-specific alliances.”

Three political “federations” will contest the next general election. First, the BJP-led NDA. Second, the JD(U)-UPA mahagathbandhan. And third, neutral regional parties which will not align with either front.

The "secular" mahagathbandhan would comprise a loose assembly of anti-BJP forces. Among them: the JD(U), Congress, DMK, RJD, NCP, AAP, NC, the Left Front and a host of small regional parties. The problem for Nitish is that the big regional parties will likely remain aloof from the mahagathbandhan: BSP, SP, TMC, BJD, TRS and AIADMK.

Among themselves, these powerful regional satraps hold over 100 seats in the current Lok Sabha.

They will individually support either the Modi-led NDA or the Nitish-UPA front depending on the numbers the 2019 Lok Sabha election throws up.

Several states will see a straight battle between the BJP and the Congress. These include Gujarat, Madhya Pradesh, Rajasthan, Chhattisgarh, Haryana, Uttarakhand and Himachal Pradesh.

Here Nitish’s mahagathbandhan will not work. Even in states where there are multiple players, the index of opposition unity (IOU) will wear thin. For example, in UP, the vote will be split five ways between the BJP, Congress, SP, BSP and MIM.

In the south and east too, the JD(U)’s “secular” alliance could be snubbed by regional parties.


The ongoing state elections in Assam, Kerala, West Bengal and Tamil Nadu as well as the Punjab, Uttar Pradesh and Gujarat Assembly elections in 2017 and the Karnataka poll in 2018 will reveal some clues.

Before doing the 2019 Lok Sabha math, some assumptions: the BJP wins Assam, Gujarat and Karnataka. Mamata and Jayalalithaa retain West Bengal and Tamil Nadu respectively. The Left Front retakes Kerala. AAP wins Punjab. Mayawati regains UP.

Let’s look more closely at the numbers of the three principal alliances. An analysis of vote share and seats in the last five Lok Sabha elections between 1998 and 2014 reveals that a party needs a national vote share of over 30 per cent to win more than 250 seats. In 2014, the BJP won 282 seats with a vote share of 31 per cent. In 2009, the Congress won 206 seats with a vote share of 28.55 per cent.

To form a government at the Centre, the mahagathbandhan will need the support of virtually all the regional parties. With the TMC unlikely to join a front comprising the Left, and the SP and BSP rabidly antithetical to each other, the possibility of a Nitish-led coalition government in 2019 could dissolve in a clash of egos.

To complicate matters, Rahul Gandhi will support such a coalition only from outside in much the same way the Congress supported (and brought down) the United Front governments of HD Deve Gowda and Inder Gujral in 1997 and 1998.


The BJP-led NDA is also likely to fall short of an absolute majority. The NDA may need a regional party like the AIADMK or the BJD — and several independents — to form a government with a wafer-thin majority in 2019.

Much of course can happen in the next three years. The BJP’s electoral planks going forward will be nationalism and development in place of the 2014 planks of Hindutva and parivartan. Hindutva has fading appeal.

Parivartan has proved a false hope. The silver lining for the BJP is that if it defeats the Congress in Assembly elections in Assam, Karnataka, Uttarakhand and Himachal Pradesh, the NDA’s Rajya Sabha numbers will climb to well over 100 seats, giving it flexibility to pass legislation in the Upper House. But if the economy doesn’t prosper and if nationalism doesn’t coalesce the “Hindu” vote behind it, the BJP’s math may come unstuck.

There are several warning signs the BJP can ignore at its peril. The Patidar agitation in Gujarat could tilt the balance of power in Modi’s home state.

The irascible Shiv Sena’s support for the BJP in Maharashtra could crumble. Disaffection with Modi’s reluctance to act against UPA-era scams, especially those involving the Gandhis and Robert Vadra, might alienate the BJP’s core support base.

Internal machinations by the party’s old “160 club” could be revived to sabotage a second Modi term.

For the Modi government the only antidote to all of these is solid economic performance – and better, far better, communications.

Follow@minhazmerchant on twitter

Best way to encourage India's entrepreneurs is to stay out of their way
Is the current slowdown in the sector a mere blip, or a precursor of grimmer tidings?
Tuesday, April 19, 2016

The folks at Flipkart are worried. Six months ago they began tapping new investors in the United States at an enterprise valuation of $15.20 billion (Rs 1,02,000 crore). To their dismay, no one bought in. Morgan Stanley, an early investor, last month wrote down the value of its investment in Flipkart by 27 per cent. That values India's leading e-commerce marketplace at around $11 billion. Rival Snapdeal faces similar problems. Its $6.5 billion valuation is under pressure.

This begs a larger question: is the current slowdown in start-ups a mere blip, or a precursor of grimmer tidings?

According to a report by KPMG and CB Insights, venture capitalists (VCs) and private equity (PE) firms invested $1.15 billion in Indian start-ups in January-March 2016. That's a steep fall of 24 per cent on the amount invested in October-December 2015.

Rewind to 2014 to get a sense of the decline. In the 12 months of that year, VCs and PEs poured $9 billion into Indian start-ups. At the January-March 2016 quarterly run rate of $1.15 billion, and assuming no further quarterly declines, the total investment in start-ups this year could be half of 2014.

That doesn't spell Armageddon for start-ups. It's just that valuations in 2014-'15 ran ahead of business models. Flipkart lost Rs 2,000 crore in 2014-'15. (The figures for 2015-'16 will be out only later this year.) Snapdeal lost Rs 1,328 crore.

Both e-commerce players have a discount business model. They sell products way below the maximum retail price (MRP). The hope is that once enough buyers are sucked into their universe, discounts can be steadily reduced to zero - and customers will still buy.

The bad news is that in urban India they might not. Brick-and-mortar stores are making a comeback and there are plenty of them around.

The good news is that in small-town India, customers will be stickier. They have fewer mall options; many none at all. Infrastructure is terrible. If you live in a small town in Uttar Pradesh and want a reasonably priced pair of designer shoes, Flipkart or Snapdeal will deliver them to your doorstep.

Sure, there are logistical problems. Customers complain of slow delivery or no-delivery. But even at MRP, hinterland India's lack of consumer infrastructure will help Indian e-commerce companies retain customers even as they eventually phase out discounts.

Most start-ups are already cutting costs. Till now investor funds paid for their losses. That era could be coming to an end. In the real world, full-paying customers, not investors, provide revenue. Start-ups are unique in using "free" equity capital from VCs and PEs as surrogate revenue. That play can't go on forever. Uber was among the first start-ups to recognise that. Valued now at $62.50 billion (Rs 4,22,000 crore), it will record a profit in its US/Canada operations in the April-June 2016 quarter. Uber earns 25 per cent per ride. In India it's still losing money but runs a tight ship. It doesn't waste money even on a customer helpline. All complaints are dealt with by email. (Sources reveal a customer care helpline in India could become operational soon).

Flipkart, meanwhile, is said to have $1 billion (Rs 6,650 crore) in the bank. It is trying to cut losses. A cash burn rate of over Rs 2,000 crore that it suffered in 2014-'15 is clearly not sustainable.

State governments aren't helping. The Karnataka government on April 2 banned Uber's surge pricing. Delhi followed suit. Anyone who has used Uber during evening rush hour knows the pain of paying up to 350 per cent more than the standard rate.

More worrying though is the new tax on inter-state e-commerce transactions. The Gujarat government passed a bill on March 30 levying an "entry tax" on e-commerce transactions.

National Association of Software and Services Companies (Nasscom), the software industry body, was rightly upset. In a statement, president R Chandrashekar said: "Such tax structures will lead to an additional burden on SME (small and medium enterprise) traders, increase litigation and also reduce business efficiencies. It will also restrict the choice of the customer. The e-commerce sector aspires to unify the country digitally into a single entity. Providing unrestricted cross-border access to sellers as well as buyers is the prerogative of the government and it's an important driver towards creating an ease of doing business."

Nasscom called the tax "flawed", saying it was similar to introducing trade barriers to free inter-state trade, thereby restricting market access within the country."

The tax is bad for two other reasons.

One, the Uttarakhand and West Bengal governments tried to levy a similar tax which has been stayed by the courts. The Gujarat entry tax will likely meet the same fate, as will similar attempts by Assam, Rajasthan, Odisha and Mizoram. Two, the implementation of the goods and services tax (GST) will anyway make such entry taxes invalid.

The Central government has tried to encourage entrepreneurship with schemes like Start-up India. The best way to encourage entrepreneurs though is to stay out of their way.

Follow@minhazmerchant on twitter

America can't be trusted Lessons from Ashton Carter’s India visit
The US defence secretary made the usual polite gestures, but Washington remains heavily 'invested' in Pakistan
Tuesday, April 12, 2016

Can the United States be trusted? Yes and no. Yes, if you're part of the Anglosphere comprising America, Britain, Canada, Australia and New Zealand

The US shares sensitive intelligence only with its Anglo-Saxon allies. For the rest, Washington is at best a tactical friend.

US defence secretary Ashton Carter's three-day visit to India, which ended on April 12, did nothing to change the basics of the India-US strategic partnership.

Carter made the usual polite gestures. He described India as a "very influential and powerful player" in the Asia-Pacific. Note the Asia-Pacific caveat - for the US, India is not a particularly influential and powerful player beyond the Asia-Pacific.

Carter added a soothing aside: "We are long past the point in US policymaking where we look at the India-Pakistan (relationship) as the whole story for either one of them. We have much more to do with India today than (we have) to do with Pakistan. There is important business with respect to Pakistan, but we have much more, a whole global agenda with India, an agenda that covers all kinds of issues."

This was taken by US and Indian analysts to mean, for the umpteenth time, that America has dehyphenated India from Pakistan. Nothing could be further from the truth.

The US remains heavily "invested" in Pakistan. It needs Pakistan as a buffer state. Washington knows exactly what Islamabad's game is: extract money and weapons from the US, continue to fund jihadi groups like the Lashkar-e-Taiba (LeT) against India, and fight anti-Pakistan factions of the Taliban while sheltering those which launch terror attacks on India.

Pakistan in return for its duplicity receives blood money from Washington. To appease India, the US meanwhile makes periodic concessions: it scolds Pakistan after every terror attack on India, warnings which Islamabad ignores.

Washington then, in practised fashion, urges India and Pakistan to resume talks, as if admonishing two recalcitrant adolescents. Equivalence with India, which Pakistan craves, is thus established. Indian diplomacy is no match for this US-Pakistan axis of deception.

Our talented Indian Foreign Service (IFS) officers are schooled in the gentlemanly art of diplomacy. They struggle to make an impression on hard-nosed American diplomats who have a ruthless notion of US self-interest.

Even Pakistan's foreign policy machinery is slicker than India's. High commissioner Abdul Basit has New Delhi's foreign correspondents eating out of his hand. He hosts Hurriyat separatists, announces "suspension" of talks with India, and is still feted by Delhi's gullible chattering classes.

The Americans caught on to the weakness of Indian diplomacy decades ago. They treated Jawaharlal Nehru and Indira Gandhi with polite deference but had no hesitation sending the Seventh Fleet to the Bay of Bengal to silently threaten the Indian Army during the 1971 Bangladesh liberation war.

The insouciance hasn't changed much. Carter and his boss, President Barack Obama, doff their hats in recognition to India's growing consumer markets and military footprint, but remain focused on self-interest.

The US continues to sell not only F-16 fighter jets to Pakistan (knowing fully well they will be used in a future conflict with India, never on the Taliban), but attack helicopters as well.

As The Times of India reported last week: "The Obama administration on Monday awarded a $170 million contract to Bell Helicopter of Texas to manufacture and deliver nine AH-1Z Viper attack helicopters to Pakistan, continuing the US policy of arming a country that many of its lawmakers say is two-faced about fighting terrorism. The American reward for Pakistan came even as Islamabad continued to protect Masood Azhar, leader of the terrorist outfit Jaish-e-Mohammad, with Chinese support, while subverting New Delhi's efforts to bring to justice Pakistani perpetrators of terrorist attacks in India."

This duplicitous policy comes down directly from a man with whom Prime Minister Narendra Modi has supposedly developed a special rapport: President Obama.

It is Obama who makes it a point to lecture India on talking to Pakistan after every jihadi terror attack on Indian soil sponsored by Islamabad. And it is Obama who hyphenates India with Pakistan in public statements.

For Obama, Indian lives matter less than America's overwhelming interest in rewarding Pakistan as a "frontier state" against the Taliban - notwithstanding that Punjab-based terrorist groups like the LeT continue to receive arms, training and money from the Pakistani army and ISI.

In an anodyne op-ed in The Times of India on Monday, April 11, Ashton Carter wrote solemnly: "The United States and India also have a shared vision for peace, stability and prosperity in the Asia-Pacific region, as outlined in the Joint Strategic Vision President Barack Obama and Prime Minister Narendra Modi released last January. The United States and India will work together to maintain the progress and stability, that combined have helped so many nations in the region, including India, to rise and prosper. We share a commitment to important principles, including peaceful resolution of disputes, freedom of navigation and overflight, countering terrorism and a belief that countries should make their own security and economic choices free from coercion and intimidation."

Washington is well aware of Pakistan's internal problems. The country faces a growing insurgency in Balochistan. Sindh separatists too are beginning to agitate for independence. The Pashtuns on both sides of the Durand line, in Pakistan and Afghanistan, seek a separate Pashtunistan.

The US fears that a Yugoslavia-type Balkanisation of Pakistan will bring chaos to a region which Russia continues to cast a baleful eye on. In this geopolitical replica of the 19th century Great Game, India - nice, gentlemanly India - suffers the most.

Modi has deferred to Obama over the past two years. He has received little in return. A curtain must be drawn on a counter-terrorism strategy, midwifed by Washington, that hasn't worked. Nice countries, like nice guys, finish last.

Follow@minhazmerchant on twitter

Losing states will collapse Congress party from within
BJP, too, must fight to regain prominence.

Tuesday, April 07, 2016

Election season has kicked off. Opinion polls project a Left front (LDF) win over the incumbent Congress-led United Democratic Front (UDF) in Kerala. That would deprive the Congress of a government in all five southern states bar Karnataka.

Beset by corruption and sloth, chief minister Siddaramaiah's Karnataka may also fall at the next Assembly poll due in 2018. The news from Tamil Nadu isn't much better. Opinion polls project chief minister J Jayalalithaa's AIADMK defying anti-incumbency to break Tamil Nadu's historic electoral cycle of alternating between the two major Dravidian parties every five years. As the DMK's alliance partner in the state, the Congress is set to remain in political wilderness in Tamil Nadu.


In West Bengal, the Congress' fair-weather partner, the Left front, is projected to do better than in 2011 but will likely still lose to the Teflon-coated Mamata Banerjee. The Trinamool Congress, despite facing serious charges of corruption, could win a second term, though with a reduced majority.

Losing Kerala and being on the losing side in Tamil Nadu and West Bengal may not be the end of the Congress' problems. It faces a strong challenge from the BJP in Assam. Opinion polls differ widely on the outcome. An ABP TV poll projects a comfortable win for the BJP. Other polls show the BJP and the Congress neck and neck, with the AIUDF likely to play kingmaker.

If the Congress loses Kerala and Assam and is on the receiving end in Tamil Nadu and West Bengal along with its alliance partners, the party's national footprint will shrink significantly. With Arunachal Pradesh in the hands of rebel Congress chief minister Kalikho Pul and the Harish Rawat-led Congress government in Uttarakhand awaiting benediction by the court, that footprint could shrink further. Himachal Pradesh might be next in line.

The Enforcement Directorate (ED) has new incriminating evidence of corruption against Congress chief minister Virbhadra Singh. Unrest too is bubbling in Manipur. The outcome of these small and large political fires could leave the Congress singed and electorally neutered.

Consider a likely scenario in 2018 following a potential defeat in Karnataka, rebellion in Manipur and setbacks in Uttarakhand and Himachal Pradesh.

The Congress would then be left without a single major state government. Of India's 29 states and seven Union Territories, it would be in government (on its own or in alliance with a partner) in just Meghalaya and Mizoram.

The BJP though shouldn't exult too soon. It faces challenges of its own in 2017. It could lose Punjab (in alliance with the Shiromani Akali Dal). In Gujarat it will be lucky to hold on to power. The Patidar revolt and anti-incumbency could make Prime Minister Narendra Modi's home state Assembly election in December 2017 the real semi-final before the Lok Sabha poll in May 2019.


Before that will be the other semi-final in Uttar Pradesh. Despite its social engineering, and chief minister Akhilesh Yadav's lawless and feckless governance, the BJP is unlikely to make much headway. Mayawati's BSP is set to be the main beneficiary and could win a comfortable majority. The BJP's victory in 71 out of 80 parliamentary seats in the 2014 Lok Sabha election will count for nothing in an Assembly poll.

Despite a five-cornered fight (and Asaduddin Owaisi's vote-splitting entry), the BJP will struggle to match the SP for second place. The Congress will be relegated to an also-ran.

Trouble could be brewing for the BJP in Maharashtra as well. Ally Shiv Sena may go it alone in the 2017 BMC civic poll. Depending on the outcome, a mid-term poll in Maharashtra can't be ruled out.

However, the real possibility that by 2018 the Congress could have governments in just two states, Meghalaya and Mizoram, means that Sonia Gandhi would have succeeded in reducing the party to a tiny rump in her 20 years as Congress president.

Why have things come to such a pass? The short answer: dynastic politics. When you pass power from mother to son, feudalism trumps merit. Sonia and Rahul Gandhi should examine the leaders who win elections in today's India.


Not one of them promotes dynasty. Narendra Modi has no children. Nor do Jayalalithaa, Mayawati or Mamata. In contrast, those who build

mini-dynasties in states patterned on the Congress model are likely to be shown the door in Himachal (Virbhadra), Uttarakhand (Rawat), Uttar Pradesh (Akhilesh) and Assam (Gogoi).

Any attempt by Rajasthan chief minister Vasundhara Raje to foist her son on the electorate will also rebound. The same applies to Gujarat chief minister Anandiben Patel and her ambitious daughter Anar. In Madhya Pradesh, Chhattisgarh and other BJP-governed states, the slightest hint of dynasty and nepotism will be met with future electoral defeat.

Modi has rightly sidelined Varun Gandhi. One Gandhi (Maneka) in the Cabinet is enough. He must resist pressure to allow dynasty to creep into the middle ranks of the BJP.

The scramble for Rajya Sabha seats by the children of Lalu Prasad and the continuing patronage by DMK leader M Karunanidhi of his son Stalin as a future chief minister will bring diminishing returns.

As the Congress shrinks, so will its funds. The Gandhis themselves may not be personally short of money (quite the contrary) but the party's ability to fund elections is already under strain.

It is not only the Gandhi name but the family's ability to rustle up funds that has kept Congress leaders glued to the party. As the glue comes unstuck, there will be a stampede for the door.

(Courtesy of Mail Today.)

Follow@minhazmerchant on twitter

Modi must stop Jaitley from punishing honest taxpayers
The Union finance minister must do away with intrusive, suspicious school masterish governance.
Tuesday, April 5, 2016

If you earn more than Rs 50 lakh a year, get ready to reveal all: land, gold, silver, jewellery, cash, cars, yachts.

New income tax rules will apply from the current financial year. The bureaucrats in the finance ministry, many of them hand-me-downs from the UPA government, say soothingly that only 1,50,000 "ultra-rich" Indians will be affected by the new rules.

The idea behind this intrusive new income tax return (ITR) form is to weed out black money. It won't do that for the simple reason that most of the 1,50,000 ultra-rich Indians with taxable income above Rs 50 lakh a year are highly-paid professionals who rarely fudge on taxes and own yachts.

Those who do fudge are traders, brokers and businessmen who often don't pay tax at all. The new tax rules will do nothing to deter them.

The latest brainwave of the finance ministry is, like many of its previous brainwaves, going to end up making honest professionals fill up interminable forms. As one business daily reported: "While professionals who earned above Rs 50 lakh per annum would declare their wealth, others might not. There remains a doubt how many will disclose apart from working professionals. There will be strict penalties and prosecution involved. So, enforcement remains a challenge."

The larger question is: are we witnessing the return of the nanny state? Minimum government, maximum governance means clean and transparent administration, not intrusive, suspicious school masterish governance.

To be fair, many ministries in the Modi government have followed the principle of non-intrusive but proactive and transparent governance.

The power ministry under Piyush Goyal, for example, has innovated a mechanism to allow citizens to monitor online in real time the progress of village electrification. Reacting to reports that some villages were not fully electrified as claimed online, Goyal has now initiated a verification process. An independent audit could follow. This is non-intrusive, proactive, transparent governance.

Similarly, the transport ministry under Nitin Gadkari is building over 18km of highways a day and sharing progress reports on a regular basis along with long-term projections.

The external affairs, railway and petroleum ministers too have put in place mechanisms to share with the public key developments in their ministries. External affairs minister Sushma Swaraj and railway minister Suresh Prabhu are especially active on social media to address everyday concerns.

Even the defence ministry under Manohar Parrikar, after initial missteps, has begun issuing cogent periodic statements on equipment procurement, new weapons technologies, and foreign collaborations with India's private and public sector for new-generation fighter jets, submarines, tanks and missiles.

The finance ministry alas remains as opaque as ever. Many of its senior officials hark back to the dark days of former finance ministers in the UPA government: P Chidambaram and Pranab Mukherjee. Finance minister Arun Jaitley recommended to Prime Minister Narendra Modi in late-2014 the appointment of Arvind Subramanian as chief economic advisor. The choice would have pleased Chidambaram (whose choice he actually was) but not many others.

The finance minister alienated the salaried middle-class in the 2016 Union Budget by imposing a tax on a part of an employee's provident fund withdrawal. He was forced to roll back the tax following public and media outrage. Many of the edicts from the finance ministry over the past two years have smacked of bureaucratic pettiness, bereft of real vision.

Most of the innovations that have struck a chord - Jan Dhan Yojna, Make in India, Digital India, Start-Up India, crop insurance for farmers, pension reforms - have originated from the prime minister's office (PMO), not the ministry of finance (MoF).

Even when it does liberalise, as it did last month by allowing 100 per cent FDI in e-commerce marketplaces, the government imposes nanny-state conditionalities. In an editorial last week, Mint correctly pointed out: "The National Democratic Alliance (NDA) government's policy regarding foreign direct investment (FDI) in business to consumer e-tail, announced on Tuesday, has made a virtue of necessity. Unfortunately, it has hedged the mildly progressive move with conditions that undercut it and illuminate the shortfalls of the NDA's stance on FDI in the broader e-commerce and organized retail space. Among the riders attached to the policy, no vendor can account for more than 25 per cent of the sales of a marketplace e-commerce entity. And such entities are barred from influencing the prices of goods sold via its platform - by, say, remunerating vendors for discounts on sticker prices. This is an egregious display of micromanagement."

Micromanagement is not what this government should be doing. The sooner PM Modi delivers that message to his finance minister the better. Otherwise the buck for a regressive nanny state will stop at the doorstep of 7, Race Course Road.

Follow@minhazmerchant on twitter

Foreign Money, Indian benefit
It is an opportune moment for policymakers to change their mindset and relentlessly use foreign money for India’s benefit just as the reverse occurred during British colonial rule.

Friday, April 01, 2016

For decades India shunned foreign investment. Scarred by colonialism, prime minister after prime minister barred a significant Western role in the economy.

Jawaharlal Nehru recognised at independence that Britain had left India with inadequate infrastructure, a rudimentary industrial base and low literacy. The nation had an economic and social mountain to climb. His solution was to follow the Soviet model of a centrally planned economy.

Some of this was justified. Few in the private sector, bar the Tatas and Birlas, had the capacity at Independence to build large industrial plants. Hence Nehru’s relentless focus on the public sector – SAIL, BHEL, HAL – as well as on publicly funded IITs and IIMs.

But by 1966, when his daughter Indira Gandhi took office as prime minister, the Soviet model had clearly run its course. While the rest of Asia embraced free markets, Indira sought refuge in populist socialism. She nationalised banks, raised taxes to over 90 per cent and closed the economy even further to foreign investment.

The liberalized, privatized economies of Asian “tigers” like Singapore, South Korea, Malaysia and Thailand grew at an average of over eight per cent a year during this period while India’s economy crawled at the Nehruvian (wrongly dubbed “Hindu”) growth rate of three per cent.

In the process India lost an entire generation to a socialist, low-growth economy. Had India grown at the rate of the rest of Asia between 1966 and 1984, its GDP and per capita income would have been double today’s and poverty significantly lower. (The annual growth rate differential of five per cent over 18 years, when compounded, is more than 100 per cent.)

Fast forward to the present. In the first term of the UPA government, solid economic policies led to near-eight per cent GDP growth. Inexplicably, in UPA-2, from 2009 to 2014, the Manmohan Singh government backtracked on economic reforms, catering again to Indira Gandhi’s povertarian economies. Growth slowed, due partly to emerging financial scams in telecom spectrum and coal, as well as the post-2008 global economic recession.

The Narendra Modi government offered a whiff of hope in May 2014. His Gujarat model was an economic, if not entirely a social, success. Yet after nearly two years in office, Modi’s liberalization impetus has not gathered the momentum it should have. The responsibility for this must be shared between the prime minister and his finance minister, Arun Jaitley, who has delivered three uninspiring Budgets.

Despite this, there are bright spots in the economy. Foreign direct investment (FDI) is up year-on-year. Net FII inflows in March 2016 (up to March 28) hit a record $2.74 billion. This is a sharp recovery after several months of net outflows due to worries leading up to the US Federal Reserve’s December 2015 interest rate cut.

For two centuries the British used Indian money and labour for their benefit. Nehru was right in initially following a centrally planned economic model to build India’s economy, denuded by decades of rapacious foreign exploitation.

But his successors, especially Indira Gandhi, did great economic damage by not liberalizing the economy 25 years earlier, in 1966. They eventually did so in 1991. It is a burden India still carries.

However, with India now emerging as the world’s fastest-growing large economy, it is an opportune moment for policymakers to change their mindset and relentlessly use foreign money for India’s benefit just as the reverse occurred during British colonial rule.

On March 29, 2016, the government finally bit the bullet. It allowed 100 per cent FDI in e-commerce marketplaces like Amazon, Flipkart, Snapdeal, Paytm and ShopClues. There are minor conditions attached but overall e-commerce retailers can now hope to achieve global scale and investment.

Foreign direct investment (FDI) in infrastructure is especially vital. Roads, railways, bridges, waterways, airports, factories, sea terminals, housing – let foreign money pour in, whether through debt (at historically low rates) or equity.

India’s leaders let India’s poor down for decades. They have finally recognised that only when the economic pie grows bigger can it be distributed more widely and fairly to reduce poverty. To achieve that the prime minister has two more years to recharge – and reorder – the economy.

The fifth year of his term will be hostage to electoral populism as the Lok Sabha election of 2019 bears down on him. The time to act is now.

Follow@minhazmerchant on twitter

World will blame Obama for ISIS
The outgoing US president's obsession with evicting Bashar al-Assad conflicts with the more vital mission of evicting terror from Syria and Iraq.
Friday, April 1, 2016

In a riveting new book, Blood Year: Islamic State and the Failures of the War on Terror, author David Kilcullen unpeels several layers off the world's most lethal terror group.

Islamic State (IS) was created by a confluence of strategic errors. The first was (then) United States President George W Bush's decision to invade Iraq in 2003. Two years earlier, in December 2001, Bush had inexplicably halted America's shock-and-awe bombing of Afghanistan following the 9/11 terror attack on the World Trade Centre.

Osama bin Laden was allowed to escape into the caves in the Tora Bora mountains. He would later be given sanctuary in Abbottabad by the Pakistani army before eventually being killed by US navy seals after another decade.

The Soviet invasion of Afghanistan in 1979 at the height of the Cold War laid the groundwork for global jihadism. The US used Pakistani, Afghan and foreign militants to fight the Soviets. Once the Soviet Union retreated from Afghanistan in 1989, battle-hardened jihadis filled the vacuum.

Also read - How Obama allowed ISIS to grow into the monster it has become

America had unleashed the terror-genie from the bottle. Through the 1990s it grew steadily. After the September 2001 attack on the US, jihadi terrorism acquired critical mass.

As Kilcullen writes, the US invasion of Iraq put into place the conditions for the future rise of ISIS. Between 2003 and 2007, the US disbanded the well-trained Iraqi army, dismembered the ruling Ba'ath party and sacked the country's vast bureaucracy. Iraq, rendered defenceless, was a prize ready to be plucked.

President Barack Obama compounded Bush's errors. After taking office in January 2009, Obama set a timetable for the US troops' withdrawal from Iraq. By 2011, most US troops had left Iraq. Terrorist groups like al Qaeda had been marginalised in the US troop surge between 2007 and 2009. But now, as the US troops began to leave, they regrouped rapidly.

Parts of al-Qaeda merged with Iraq's Sunni minority, disaffected by President Nouri al-Maliki's pro-Shia bias. By 2013, the group had acquired significant manpower and resources. Islamic State of Iraq and Syria (ISIS) was born. Within a year, in 2014, ISIS declared a caliphate across Iraq and Syria. In months, it swept through northern and central Iraq, capturing Mosul, Iraq's second largest city, and advancing within 30km of Baghdad.

It was pushed back by a Shia coalition of Iranian and Hezbollah fighters.

Also read - America's Syrian misadventure is a blot on Obama's legacy

Meanwhile, ISIS took over large swathes of territory in Syria and established the caliphate's "capital" in Raqqa.

The untold story of America's manic effort to rid Syria of President Bashar al-Assad demonstrates the extent to which the US defies international law to dismember states. A Wikileaks document, purported to be from Hillary Clinton's recently declassified email (for which she is under the FBI investigation), lays bare America's "destroy Syria" policy that collaterally helped ISIS grow into the monster it is.

The Syrian civil war and resultant migrant crisis allowed ISIS to prosper through choreographed brutality: beheadings, rape and torture. It dealt in fear. With revenue from oilfields and "taxes" from citizens in territories it controlled, it attracted fighters from Chechnya and Bosnia to Algeria and Morocco.

When ISIS's territorial advance was finally halted in 2015, it turned to targeted terror attacks in Europe. The terror strikes in Paris in November 2015 and in Brussels in March 2016 revealed both ISIS's strengths and weaknesses. It showed it still had the resilience and resources to mount lethal, coordinated attacks in the heart of Europe.

But a measure of desperation was also felt on its part. The US and Russian airstrikes have degraded the ISIS's capabilities. Its top leaders are being assassinated one by one. Last week ISIS leader Abu Bakr al-Baghdadi's second-in-command, Haji Imam, was killed by the US special forces. Two weeks earlier, another top ISIS commander, Abu Omar al-Shishani, was assassinated in US airstrikes. The Russian forces have meanwhile destroyed ISIS ammunition dumps, oil tankers, pipelines, supply centres and artillery.

After the Brussels terror attack, in which four American citizens were killed, the US has stepped up airstrikes and drone attacks on ISIS targets. The newly retrained Iraqi army, aided by Iran and Hezbollah as well as Kurdish Peshmerga fighters, is preparing an assault on Mosul later this year. The next target would be Raqqa where al-Baghdadi is holed up. For that though, US-led ground troops or a large contingent of special forces may be necessary.

Obama, however, may not have learnt from his mistakes in 2009-2015. His half-hearted approach has allowed ISIS to expand to lawless Libya with little US intervention. Obama's obsession with evicting President al-Assad conflicts with the more vital mission of evicting ISIS from Syria and Iraq.

ISIS exploited America's loathing of al-Assad to keep the Syrian army at bay. Russia's intervention has now put paid to that: Palmyra, a vital ancient desert city, fell to the Syrian army last week. Aleppo has been encircled. Only Raqqa remains.

Kilcullen's book is a reminder of how poorly Bush, and now Obama, have handled the crisis in Iraq, Syria and Libya. Two consequences have flowed from this.

One, terrorism is the "new normal" for Europe. Whether or not ISIS is eventually destroyed - which it will be - other terrorist groups will take its place. Bush and Obama - and their early ally, British Prime Minister Tony Blair - are accountable. They will be judged by history.

Blair conceded in an interview with the Sunday Times in London on March 27, 2016: "(IS) does not seek dialogue but dominance. It cannot therefore be contained. It has to be defeated. (It needs) active on-the-ground military support."

The second consequence of Obama's Middle East policy is the impact ISIS will likely have on the outcome of the 2016 US presidential election. For every terror attack it unleashes in Europe and elsewhere, ISIS adds to controversial front-runner Donald Trump's chances of winning the Republican nomination - and possibly the presidential election in November.

It is a prospect al-Baghdadi, ensconced in his Raqqa hideout, will not relish.

Follow@minhazmerchant on twitter

Modi must make Pakistan pay
Islamabad has no intention of prosecuting JeM chief Masood Azhar for the Pathankot attack.

Tuesday, March 29, 2016

Pakistan has proved that terrorism pays. It extracts billions of dollars from the United States even as it funds terrorist groups that kill American soldiers. Washington raps Islamabad on the knuckles every now and then but eventually gives in: it needs Pakistan as a client-state while the West fights the Islamic State (ISIS) in Paris and Brussels.

India is the biggest victim of the toxic US-Pakistan axis of convenience. America will not declare Pakistan an outlaw state. It will also not stop military aid to Pakistan even though Washington knows its F-16 fighter jets will not be used by Islamabad against Taliban terrorists but to attempt military parity with India.


Former Pakistani diplomat Husain Haqqani, now living in exile in the US, writes in his recently updated book, Pakistan: Between Mosque and Military that the Pakistani army continues to view India as "enemy number one". Rawalpindi regards jihad as an inexpensive means to counter India's conventional military superiority.

It is in this backdrop that Prime Minister Narendra Modi's Pakistan policy must be viewed. Modi's bullet-for-bullet, mortar-for-mortar policy on the line of control (LoC) and the international border (IB) has succeeded. Over the past few months, border violations have fallen dramatically.

Pakistan's Rangers suffered heavy casualties on the LoC and IB from Indian retaliatory firing in 2014 and the first half of 2015. Since then both borders have been relatively quiet.

Modi and national security adviser Ajit Doval have learnt one lesson from this: peace with Pakistan can be achieved only by demonstrating strength. And yet the Modi-Doval doctrine has not defanged Pakistan's proxy terrorism. That has instead spread beyond Jammu & Kashmir to Punjab. Out-gunned on the border and unable to quite fathom Modi, the Pakistani army has switched to more intensive proxy terror attacks, along with sugar-coated diplomacy.

Last week's talks in Nepal between external affairs minister Sushma Swaraj and her Pakistani counterpart Sartaj Aziz laid the groundwork for "investigating" the Pathankot attack. The terror strike was carried out by the Jaish-e-Mohammad. But Pakistan's six-member joint investigation team (JIT), replete with the ISI spooks, which arrived in Delhi on March 27, will use every trick in the book to ensure its "probe" pins the blame for the attack on Indian insiders.

In the accusations and counter-accusations that will inevitably follow, the role of the JeM will be diluted. That is the whole intent behind the Pakistani army proposing a JIT. Only defence minister Manohar Parrikar has argued against the JIT's Pathankot visit. He reflects the Indian Army's view.

But in the face of pressure from the external affairs ministry and the prime minister's office (PMO) he has had to back down. Modi's blow-hot, blow-cold policy on Pakistan has been called inconsistent.

The criticism is justified. The test of any foreign policy - especially when dealing with a country that sponsors terrorism as state policy - lies in its outcome. Modi's policy of "peace through strength" on the LoC and IB has been a success because it sent a clear, tough message to the Pakistan army: desist or die.

That clarity and toughness is absent in Modi's policy on Pakistan's proxy terrorism. Talking about terrorism, which Sushma Swaraj justified last week, won't stop terrorism. Only imposing an unacceptable cost on Pakistan will. India imposed such a cost on cross-border firing.

It reduced significantly. Proxy terrorism is obviously a more complex challenge but the same basic principle of deterrence and cost applies.


Pakistan's guile was evident when, in "an unprecedented move", its NSA Naseer Janjua informed Ajit Doval that ten terrorists had infiltrated into Gujarat for an attack during Mahashivratri.

The Indian government rushed 160 NSG commandos to Gujarat in what turned out to be a wild goose chase. The subsequent report that three of the ten "terrorists" had been killed also turned out to be false. The men caught (not killed) were petty ATM thieves. Nearly a month after the Pakistan NSA's "unprecedented" terror alert, there is still no sign of the "terrorists".

Pakistan has befooled the US for decades with this kind of double dealing. America though does not have JeM and Lashkar-e-Taiba (LeT) terrorists attacking its homeland. It has learnt to live with Pakistan's treachery. India can't afford that luxury.


Pakistan's JIT will surely "probe" the Pathankot terror attack, one fears, India might follow a policy that will again appear inconsistent. Pakistan has no intention of prosecuting JeM chief Masood Azhar. He is a state asset. Pakistan will use this investigation to wash its hands off the attack. Gurdaspur superintendent of police, Salwinder Singh, already under suspicion, will serve Islamabad's purpose of calling the attack an inside job.

What then should India's Pakistan policy be? Peace through strength has worked on the border. It can work on proxy terrorism if a clear-eyed policy is applied consistently. Modi must recognise that Pakistan's sweet-talking diplomats are a cover for what Husain Haqqani rightly calls the country's jihadi-minded army.

India has many options it can pursue, apart from the "hopeful diplomacy" being currently practised. First, if there is another proxy terror attack on Indian soil, send Pakistan high commissioner Abdul Basit packing. Downgrade diplomatic relations. That is a policy every nation - from the US and Britain to Russia and Bangladesh - uses to deal with hostile countries. Second, deploy covert operations as Parrikar implied in his thorn for a thorn comment.

In short, make Pakistan pay. India has been a victim long enough. Prime Minister Modi, of all people, knows that.

(Courtesy of Mail Today.)

Follow@minhazmerchant on twitter

Why Kanhaiya Kumar is not a hero
For the Opposition, the JNUSU president is yet another tool to chip away at PM's legitimacy.

Thursday, March 10, 2016

Immediately after his conditional release on bail, Jawaharlal Nehru University Students' Union (JNUSU) president Kanhaiya Kumar revealed the makings of a politician. He changed his demand from "azadi from India", which banners at JNU had displayed on February 9, to "azadi in India".

The debate over nationalism sparked by Kanhaiya's arrest and subsequent release misses the point. National interest has one definition. Nationalism has many. In a free society, practise whatever interpretation of nationalism you want but don't compromise on national interest.

Kanhaiya may be guilty of many things but sedition is not one of them. Remember what we were told at university: "If you're not a communist before 30, you don't have a heart. If you're still a communist after 30, you don't have a brain." Kanhaiya is 28, so he has a couple of years to make up his mind.


Why are so many otherwise intelligent people looking at Kanhaiya as the new Arvind Kejriwal? The argument goes thus: Kejriwal is lost to electoral politics. Kanhaiya is pure, idealistic and unspoilt by ambition. The people who say this are united by a common cause: undermining the leadership of PM Narendra Modi. To them Kanhaiya is yet another tool to chip away at Modi's legitimacy.

"Modi is just so gauche," shudders one Lutyens' lady who has spent a decade climbing the social ladder to arrive at her current perch. Others have more serious complaints. The PM hasn't delivered on several fronts, making him a vulnerable target. Modi has come under increasing attack from the Congress and its loyal following of lawyers, journalists, bureaucrats and beady-eyed power brokers who trawl Delhi.

The anti-Modi coalition got to work within months of the Congress' rout in May 2014. In Gujarat, a Patidar revolt was engineered with Hardik Patel projected as a 22-year-old giant-killer. In Haryana, the Jats were egged on to horrific violence.

Students are the latest instruments in a political attack directed expertly from the leafy heart of Lutyens' Delhi.

The Modi government presents a juicy target. It lacks talent in Cabinet and Parliament. It is hamstrung by an ideologically moribund RSS. And worst of all, it is poisoned by enemies within.

Rahul Gandhi, Arvind Kejriwal and Nitish Kumar are justified in feeling that their strategy of delegitimising the Modi government is well on track. Every time the PM pummels Rahul in Parliament, as he did in his speech last week, the dissidents within the BJP come to the Congress' aid with calculated barbs. By not acting firmly against these elements, Modi is making a serious mistake.


But what of Kanhaiya? Analyse his speech carefully: "Is it wrong to ask for azadi from the problems that are existing in the country? Brother, it's not from India, but it's in India that we are seeking azadi. And there's a difference between 'from' and 'in'. The azadi we are asking for is from starvation and poverty, from exploitation and torment; for the rights of Dalits, tribals, minorities and women. And that azadi we will ensure through this very Constitution, Parliament and judiciary. This was Babasaheb's dream, and this is Comrade Rohith's (Vemula) dream."

There's not a syllable here that has not been debated eloquently in Parliament, reported extensively in the media, and argued fiercely in the Supreme Court. The plight of Dalits, tribals, minorities, the poor, the starving and the marginalised in our society shames us all. But who does it shame most of all? Those who governed India for 56 of 68 years.

Does Kanhaiya have a single word of even mild chastisement for them? No, not a word. No mention either in his speech of the Congress' role in failing to remove poverty despite nearly six decades in power. No mention of the serial scams of the past UPA decade that stole the wealth of all Indians, especially those Kanhaiya's heart rightly bleeds most for: the desperately poor. Their food subsidies and MNREGA wages were cruelly siphoned off.


In his anguish, Kanhaiya does mention the sacrifice of our soldiers - but again says not a word against those who kill them. Instead this is what he said: "Who is responsible for deaths of soldiers? And in Parliament, who are you playing politics with? Who will take responsibility for those dying? Not the ones who are fighting, but rather the people making us fight. So who is responsible for war?"

Not a word against the perpetrators of terrorism from Pakistan but misdirected fulminations against "people making us fight" as if Pakistan's decades-long terrorism directed against India is, somehow perversely, India's fault.

Kanhaiya doesn't say a word against Sonia Gandhi or Rahul whose family has governed India - the India he decries - for six decades. He doesn't say a word either against his Left cohabitors who ruined West Bengal with a mixture of violence and povertarian politics. But he has no such qualms about the PM, telling a national daily that the "student movement" would continue till "the ruling alliance was thrown out of power".

There's nothing wrong with opposing the government. But to treat Kanhaiya as a messiah when he hasn't uttered a single original thought, merely parroting an ultra-Left ideology, is as wrong-headed as the government charging him with sedition.

(Courtesy of Mail Today.)

Follow@minhazmerchant on twitter

Confusing national interest with nationalism helps India's enemies
Modi government made a mistake treating all students in the JNU crackdown with the same bludgeon.

Thursday, February 25, 2016

Your freedom ends where my nose begins. That is what "reasonable restriction" to free speech means: Say and do what you want as long as you don't break the law - or impinge on others' freedom.

Dissent is the lifeblood of democracy. Incitement is its death knell. In India, however, dissent often crosses the red line into incitement. Insurgent groups have many benefactors: Pakistan-sponsored terrorists, Maoists, Kashmiri separatists.

They instigate dissent with the hope that it will morph into violence and anarchy. The key for any government is to differentiate between dissent and incitement.

By treating both with the same heavy hand, it plays into the narrative of those who want violence and not debate. The "anti-national" controversy is a red herring. Journalists opposed to the government are not anti-national. But some of the causes they espouse are. The relationship between journalists and politicians is, by definition, adversarial. The fourth estate must be a watchdog, not a lapdog.


In the debate over "anti-nationals", the real anti-nationals escape scrutiny. They are the hidden instigators and their reach is both wide and malignant. They include a relatively small section of students at Jawaharlal Nehru University (JNU).

The Modi government made a mistake treating all students in the JNU crackdown with the same bludgeon. That gave the real culprits - those who seek to weaken India, not just engage in dissent - the pretext they were looking for.

The obvious error was using the draconian law of sedition against the president of the JNU Students' Union Kanhaiya Kumar. That elevated a students' protest into an anti-government movement - exactly what the instigators wanted.

Sedition is a serious matter. It should be invoked in the rarest of rare cases. A colonial-era law aimed at curtailing Indian freedom fighters against the British, it has no place in an independent country.

Fortunately, the courts agreed. As jurist Fali Nariman wrote in The Indian Express last week: "In 1962, when a challenge was made to the constitutional validity of the offence of sedition as incorporated in Section 124A of the Indian Penal Code, the Supreme Court held that it preferred to follow the more liberal interpretation of the term 'sedition' as given by the Federal Court in 1942 rather than the pedantic and strictly 'colonial' interpretation of 'sedition' rendered in the Privy Council opinion of 1947. As a consequence, 'sedition' in India is not unconstitutional, it remains an offence only if the words, spoken or written, are accompanied by disorder and violence. Mere hooliganism, disorder and other forms of violence, though punishable under other provisions of the penal code and under other laws, are not punishable under Section 124A of the penal code."


One of the publications in my media group, Sterling Newspapers, carried a cover story by our national affairs editor, Harish Mehta, on the Khalistani agitation. In the course of the story, Harish interviewed a terrorist, Rajinder Kaur, who made "seditious" remarks against a then serving prime minister.

Within weeks of the cover story being published, the home ministry issued us a notice. An FIR was filed. We were accused of sedition. The offence carries capital punishment. All of us were charged: Myself as editor-in-chief and publisher, my national affairs editor Harish Mehta and the terrorist Rajinder Kaur.

We got a stay on the trial from the Delhi High Court. Eventually, the stay was vacated and the trial began in the Patiala House Court complex - where the trial of Kanhaiya Kumar could be held unless the Delhi High Court, following his bail hearing next Monday, quashes the case.

We thought were lucky. Our defence rested on a journalist's right to convey the truth without inciting violence. We had an outstanding judge in the trial court.

Despite a dozen visits to Patiala House Court between 2009-11, including deliberate adjournments by government lawyers, the case was thrown out. We received a clean acquittal.


The charge of sedition against Kanhaiya is unjustified. He has been used as a pawn by vested interests. While attention is focused on him, real culprits like Umar Khalid may get away. They are instigated by groups whose raison d'etre is anti-Indianism.

The "anti-national" debate over Kanhaiya confuses real issues. First, anti-national elements will use every opportunity to weaken India's unity. The government must target these treacherous elements in India and outside - but not students who are their sacrificial goats. To book rogue students, the Indian Penal Code has sufficient provisions. Sedition isn't one of them.

Second, don't let anti-nationals control the narrative. They know India is too big and stable to be damaged beyond a point. Their aim is disruption, not destruction. Deal with them with clinical precision.

Third, use the law of sedition sparingly - on those who incite violence and advocate the overthrow of the state - not on sloganeering students. It's counter-productive.

Nationalism can't be forced upon citizens.

By definition, it is voluntary. Much more important is national interest. That needs protection and constant vigilance. Confusing nationalism with national interest allows the enemies of India to hide behind a veil provided by overwrought students and their instigators.

Follow@minhazmerchant on twitter

How India's anti-Modi views help Pakistan
Islamabad bases its existence on being the antithesis of India.

Thursday, February 11, 2016

It's uncanny. After every terror attack on India from Pakistani soil, a rash of articles appears in Indian newspapers. Some are carried on the front pages of well-known dailies, others on the editorial page. All stress caution. Don't blame Pakistan yet, they chant in chorus. Simultaneously, television studios erupt with choreographed debates. Panellists urge viewers in dulcet tones not to jump to conclusions about Pakistani involvement in the latest terror strike.


This orchestrated campaign has a single point objective: dilute the perception that Pakistan, "the state", had anything to do with the terror attack on India. It places the blame squarely on "non-state" actors over whom Pakistan's army generals, wringing their hands in helplessness, have no control.

This unadulterated nonsense continues to be spread by sections of the Indian media despite David Headley's confession this week to an Indian court of the Pakistani army's direct involvement in terror strikes on India. The narrative echoes Islamabad's standard line and is a result of a longstanding Pakistani project. The project, generously funded by Islamabad, is aimed at subverting India's effete elite. Let's analyse how it works.

For a rogue state like Pakistan, perception matters disproportionately. Islamabad bases its existence on being the antithesis of India. And yet it craves attention from India. With the United States, China and Saudi Arabia, Pakistan's relationship is that of a vendor-serf. It provides geostrategic real estate to the US and China, and outsources nuclear capability to Saudi Arabia. In return, it receives money but no respect.

The Pakistan army is a well-oiled, professional machine. Its officers are paid generously. Retired generals have a lifestyle that is entirely un-Islamic, lubricated by scotch, golf and holidays in Dubai and Macau.

The ISI's mandate, as Headley confirmed this week, is to play a dual role in India. Its principal task is to fund terror groups against Indian civilian and military targets. Its parallel role is to build a cabal of Indian opinion-makers who will provide credible alibis for Pakistan after terror attacks by the terrorist groups the ISI has nurtured for decades.

Who are these opinion-makers and how are they subverted? In the first tier are journalists and retired army officers. They can be relied upon to defend Pakistan in newspaper columns and television debates. In the second tier lie filmmakers, artistes and writers who constantly seek people-to-people contacts and sporting links with Pakistan - irrespective of its terror strikes on India.


In the third tier lurk opposition politicians who are quick to find excuses for Pakistan-sponsored terrorism ("But Pakistan is also a victim of terror") while criticising the Indian government's response. In the fourth and final tier dwell former Indian diplomats. They are track-II specialists who eagerly attend peace seminars in Pakistan and return with mellifluous tales of Pakistani hospitality.

The ISI nurtures its Indian apologists as generously as it nurtures its terror groups. India's chattering classes have always been susceptible to Pakistani wiles. In the 1980s they thrilled to pre-satellite TV serials from Pakistan. In the 2000s no international summit in Delhi was complete without a swaggering Pervez Musharraf or supercilious Imran Khan.

The recent controversy over actor Anupam Kher being denied a visa to attend Karachi Literature Festival is a rare example of Pakistan's slick subversive machinery in India breaking down.


Pakistan high commissioner Abdul Basit then made a cardinal error which even the ISI's Indian apologists could not credibly defend. He denied that Kher had been denied a visa: Kher, he said, simply hadn't applied for one.

Usually though, Pakistan's strategy of cultivating Trojan horses in India has worked well. Most card-holding members of the Indian elite come from inconspicuous backgrounds. They have over the years climbed up the social, political and economic ladder, rung by rung. They host networking parties where politicians across the ideological spectrum mix with the rest of Delhi's nouveaux riches. Pakistani guests are often invited - visiting human rights activists from Karachi, TV anchors from Islamabad, retired army officers from Rawalpindi, and social butterflies from Lahore.

The fact that Pakistan has subverted a significant section of India's opinion-makers reflects poorly on successive Indian governments. During the ten years of the UPA-I and UPA-II, the atmosphere was especially congenial for the ISI to make deep inroads into the country's chattering classes. Track-II meetings, Aman ki Asha seminars and cultural exchanges were the flavour of the decade, rudely interrupted by the 26/11 terror attack. But even that was a temporary setback.

Modi government's inconsistent policy on Pakistan-sponsored terrorism has emboldened those in India who continue to speak for Pakistan. Headley's testimony won't change that: the subverted rarely reform.

(Courtesy of Mail Today.)

Follow@minhazmerchant on twitter

How the Nehruvian 'empire' aims to derail Modi
The PMO has made things worse by cloaking itself in silence.

Thursday,January 28, 2016

The Nehruvian consensus was rudely shattered by an arriviste called Narendra Modi. The consensus had held firm for 67 years — from 1947 to 2014. What were its core principles? First, secularism. Second, socialism. Third, non-alignment. Fourth, dynasty. Just to make sure, Indira Gandhi injected the words “secularism” and “socialism” into the Constitution during, without a trace of irony, the Emergency.


Even through the six Vajpayee years, 1998-2004, the consensus held. Its long duration nurtured an ecosystem composed of a curious amalgam: Marxist historians, Macaulay’s colonially-seduced bureaucrats, faux secular intellectuals, compromised journalists, and sycophantic politicians worshipping at the altar of the Nehru-Gandhi dynasty. These common threads formed the architecture of a secular, socialist democracy. Muslims were appeased, not empowered. They were kept in secular ghettos, paraded out every five years to vote for the Congress and its fairweather allies. Dalits were paid lip service. Like Muslims, they formed a rich vote catchment — however poverty-stricken they remained.

Poverty and socialism went hand-in-hand. While the GDP of countries in the rest of Asia — from Malaysia to Thailand — grew at over seven per cent a year through the 1960s, ’70 and ’80s, India crawled at the Nehruvian rate of growth (wrongly dubbed the “Hindu rate of growth”) of under three per cent a year. Had India’s GDP growth matched that of other Asian countries in that 25-year period, India’s economy would today be double its size. Per capita income would be nearer $3,000 than $1,500 and poverty levels below 10 per cent, not today’s 21 per cent. In short, 150 million more Indians would have been lifted out of the poverty they live in today.

The Nehruvian consensus was pregnant with good intent: Nehru himself was an honourable man if mistaken in the way he tackled Pakistan and China. He was colony’s child and allowed himself to be swayed more often than was good for India by the Anglo-German charms of Lord Mountbatten (whose original family name was Battenberg — “berg” is German for “mount”, hence the Anglicised surname). Though he was an excellent first PM of India and responsible for building a strong institutional architecture for a newly independent country, Nehru’s heirs in the Congress began distorting his legacy right from 1966 when daughter Indira, undeservedly, became prime minister. That set the example of dynastic politics which has spread through the body politic like a virus. It has today infected Indian governance with cronyism, feudalism and sycophancy.


India’s intellectual elite, which often fell in line with the British during the Empire, dutifully fell in line with the Empire’s heirs. The Nehruvian consensus was blessed at birth by the British who had ensured India’s economy grew at less than 0.5 per cent a year during the British colonial occupation of India (again wrongly termed the British “Raj”, implying benign consent on the part of its subjects). The Nehruvian rate of growth between 1947 and 1991, though slow, was higher than during the previous 190 colonial years. Indians, always easily satisfied, were content. Through this period, socialism and secularism took firm political root. Muslims were appeased. Their backwardness endured and eventually led to resentment and radicalisation. A bankrupt treasury in 1991 forced PM Narasimha Rao and his finance minister, Manmohan Singh, under intense IMF pressure, to wring economic reforms out of a calcified system devoted to povertarianism.

And then along came Modi. During the 2014 Lok Sabha campaign, he attacked Nehruvian politics. Dynasty was ruthlessly dissected. Left-leaning povertarian economics was clinically exposed. Communalism dressed up as secularism was unrobed.

The Lutyens’ ecosystem of corruption, sycophancy and dynasty was shred. The public anger against all this catapulted Modi to power. That’s when the problems began. Seizing power is easier than exercising it. In the first days of his prime ministership, Modi made a fatal error: he assumed that the Nehruvian ecosystem could be shamed into introspective retreat.


He was wrong. The ecosystem is like a lizard. Cut off its tail and it stays alive. Cut off its head and its tail writhes for long. Modi did neither. The ecosystem couldn’t believe its luck. Here was a man who, after reducing the Congress to 44 MPs in the Lok Sabha, was leaving them well alone. A few bungalows were taken away. Schemes named after the Nehru-Gandhis were changed. But the edifice remained untouched. It was as if Modi regarded the prime ministership as the end, not the means to the end.

The Nehruvian consensus, led by the crafty and wealthy, regrouped. Gradually, it struck back. It began the anti-Modi campaign a year ago. US President Barack Obama’s visit on R-Day in 2015 allowed it to mock Modi’s “15-lakh monogrammed suit”. This was followed by insinuating that “church attacks” were orchestrated by right-wing extremists. Modi’s ministers, meanwhile, scored own goals with intemperate statements. Award wapsi and the intolerance debate cast Modi as a dictatorial PM who had spawned an atmosphere of fear in minorities, who was callous about Dalits and who had damaged India’s “secular” image globally.

The Modi government made things worse for itself by cloaking itself in silence. Half-truths and disinformation were allowed to become the gospel truth. Clarifications came too late. Truth needs speed and clarity to survive, while lies thrive in an information vacuum.

Nehru, were he alive today, would have been mortified by the corrupt ecosystem that lives in his name. He would have dismantled it. Modi was elected to do that. He hasn’t — yet. For that a new strategy combining a radically reshuffled Cabinet, outcome-oriented policies and sophisticated communications is needed. Time is running out.

(Courtesy of Mail Today.)

Follow@minhazmerchant on twitter

World taking a Right turn It's Modi's turn to mentor RSS
TIt is a pity the PM has been unable to convince the Sangh to alter its mindset.

Thursday, January 14, 2016

With right-of-centre governments in power in the world's major democracies - India, Britain, Germany and Japan, similar to the trend seen across the United States, Europe and South America - is there a global ideological shift taking place?

Venezuela and Poland are the latest countries to lurch politically rightwards. Britain has had a Right-wing conservative government since May 2010. Germany's Angela Merkel completed ten years in office last November. Japan's Right-of-Centre Prime Minister Shinzo Abe is well into his second term.

France is seeing a huge wave in favour of Right-wing parties. Marine Le Pen could be a serious challenger to socialist President Francois Hollande in the 2017 presidential election.


In Sweden and the Netherlands Right-of-Centre parties are topping opinion polls. Denmark and Hungary too are witnessing an ideological lurch to the right. In the United States, the Republicans could well win the White House in November 2016.

What about Canada's Left-liberal Prime Minister Justin Trudeau who defeated conservative Stephen Harper last year? Is he an outlier, merely bucking a trend or do the Right-wing (conservative) and Left-wing (liberal) terms need to be redefined politically? "Liberals", as a new Pew Research Centre survey found, are actually quite illiberal - at least on social media. They tend to be more intolerant of opposing points of view than those on the right.

Analysing the Pew research findings, Becca Stanek wrote: "Conservatives tend to have circles of friends who mirror their political views, and liberals are more likely to cut ties online with those who disagree with them politically." Pew reports that "roughly four in ten consistent liberals on Facebook (44 per cent) say they have blocked or unfriended someone on social media because they disagreed with something the person posted about on politics'. In comparison, 31 per cent of conservatives and only 26 per cent of all Facebook users were reported to do the same.

This unfriending impulse can extend to the real world, too. The study found that about 24 per cent of liberals have stopped talking to someone because of opposing political viewpoints, compared to 16 per cent of conservatives and ten per cent of those with mixed political viewpoints.

A social liberal who, for example, favours LGBT rights, gender equality, women's empowerment and personal freedoms could be a Right-of-Centre fiscal conservative favouring open markets, foreign direct investment (FDI) and economic liberalisation.

In short, both a social and economic reformist. Today such a person would fit into neither ideological silo - Right-wing or Left-wing.


In contrast, a person who is a socialist on economic policy but a social liberal would be wrongly characterised as left-liberal. There is nothing liberal about socialist economic dogma that has financially ruined countries from North Korea to Cuba. Sitaram Yechury, who heads the CPI(M), exemplifies the failure of such a povertarian ideology.

In India, the RSS is on the wrong side of both social and economic policy. It is socially illiberal. It opposes gay rights and has a paternalistic attitude towards women. On economics, it opposes FDI in several sectors, including multi-brand retail, betraying a closed, even cloistered, mind. A self-confident India needs to deploy foreign resources for Indian benefit.

During British colonial rule, the opposite occurred: Indian resources were used for foreign benefit. It is time the RSS developed the self-confidence and nous to embrace modern culture and liberal economics.

Paradoxically, Prime Minister Narendra Modi is an economic liberaliser by instinct as he showed for over 12 years as chief minister of Gujarat. By exiling Vishwa Hindu Parishad's Pravin Togadia from Gujarat he demonstrated pragmatism. Modi further displayed a moderniser's mindset: He made it mandatory for property in Gujarat to include the wife's name as the first owner. It is a pity he has been unable to convince the RSS to alter its mindset. If the RSS wants to be a long-term influence on the minds of a rapidly modernising, youthful India, it will have to change.

As an RSS pracharak, Modi has made that change, both in social and economic thinking, embracing a contemporary worldview. The RSS mentored him. It is his turn to mentor the RSS.

One of the main reasons for the rightwards political shift in countries as diverse as Poland and Venezuela is a combination of economics and security. Terrorism, the rise of ISIS and the migrant influx have made electorates across Europe more nationalistic and insular. Eastern Europe has closed its borders to refugees, citing fears over Islamist violence carried over from Syria, Iraq and Libya.


In Venezuela, the fears are economic. The oil price crash from $115 per barrel in May 2014 to $30 per barrel today has plunged its economy into crisis. Last month, Venezuelans voted against the United Socialist Party (PSUV) that the late Hugo Chavez, a socialist icon, had helmed. A ragtag coalition, including Right-wing parties, won a majority.

In Britain, the Left is in disarray. Labour leader Jeremy Corbyn, a dyed-in-the-wool Marxist, is not nationally electable. Unless an internal coup in Labour dethrones him and picks a more centrist leader, like Hilary Benn, the Conservatives are guaranteed a third successive term in 2020.

In India the Left, led by Sitaram Yechury, is in a shambles. Yechury is a 19th century politician who will lead the left into well-deserved oblivion in the next Lok Sabha election.

But the illiberal-left in India, unlike in the rest of the world, has many claimants. They range from the Congress and the JD(U) to the Trinamool Congress and the AAP. If a patchwork combination is ever voted into office, India could be set back by years.

(Courtesy of Mail Today.)

Follow@minhazmerchant on twitter

For Modi, 2016 is critical. What he must do.
The clock is running down and tackling issues head-on is the only option for the prime minister this year.

Monday, January 4, 2016

Prime Minister Narendra Modi has a finely-honed talent for surprising friend and foe.

His spontaneous  though choreographed  visit to Lahore has transformed the India-Pakistan narrative. The Congress has been left flat-footed.

The Lutyens' ecosystem is puzzled: it thought it had its man in the crosshairs. The loss in Bihar was supposed to have robbed Modi of his electoral invincibility.

The BJPs weak-kneed performance in the Rajya Sabha and dissent within the ranks seemed to underscore the fact that Modi was losing his grip over both the party and the country. The ecosystem, as usual, got it wrong.

Modis swing through Russia, Afghanistan and Pakistan last week achieved several foreign policy objectives. But it has also cast the spotlight on what commentators have lost sight of: Modis X factor.

The ecosystem, meanwhile, is livid. Under Modi, it has lost patronage. Journalists no longer get access. Instead they have to make do with selfies. Bureaucrats are promoted on merit: the government has put an end to the lucrative transfer raj.

Courtier historians, writers, artists and filmmakers, beneficiaries of patronage, have retreated to their ivory towers.

For Modi, 2016 is critical. Much of 2017 will be dominated by the run-up to the Uttar Pradesh assembly elections.

In 2018 attention will turn to the 2019 Lok Sabha election. So 2016 is make-or-break year for Modi. For a large part of the past 19 months, Modi has focused on incremental rather than transformative changes.

The economy has been run with the vision of lawyers and accountants not that of economic evangelists. That clearly must change.

If the economy continues to underperform  with GDP growth likely to be 7-7.5 per cent, a full percentage point below previous estimates  politics will be the collateral victim. The year 2016 is the last year in which economic growth can be reignited. It takes time for the benefits to feed through to create jobs and revive investment.

There is no margin anymore for error: the clock is running down.

Clearly, assembly elections will dominate 2016. But apart from Assam, the BJP is unlikely to win any of the states going to the polls. In West Bengal, the Trinamool Congress has a lock on rural Bengal.

The BJPs momentum, built up in the Lok Sabha election, has withered.

Kerala is another critical state where assembly elections are due in 2016. The BJPs rapid inroads into the state and alliance with SNDP Yogam could divide backward caste votes between the Congress and Left fronts, making the Kerala assembly election the most closely contested in 2016.

Modi, meanwhile, will not repeat the mistake of over-exposure he made in Bihar where he addressed 31 rallies. Local leaders and BJP ministers will do the bulk of electioneering with Modi used sparingly for maximum impact.

Apart from assembly elections, where Assam could be the big prize, Modis key political challenge in 2016 will be to fashion a strategy to break the deadlock in Parliament. Much though can be achieved outside Parliament through executive order.

A joint session of Parliament, in which the NDA has over 400 MPs out of a total of around 790 Lok Sabha and Rajya Sabha MPs, is an option the government must consider. It will take much of the wind out of the Oppositions sails.

What though about internal dissent within the BJP?

Allegations of corruption against Finance Minister Arun Jaitley and earlier accusations against External Affairs Minister Sushma Swaraj over Lalit Modi have effectively removed any future intra-BJP challenge to Modis leadership going into the 2019 Lok Sabha poll.

Interestingly, his fiercest critic LK Advani was among the first to praise Modis impromptu Lahore visit. The group of four (Advani, Yashwant Sinha, Shanta Kumar and Murli Manohar Joshi) has lately fallen silent.

But for Modi to make 2016 count, he has to focus on three issues. One, refurbish his cabinet with new talent and remove some deadwood.

Two, personally ensure that the February 29, 2016 Budget (its a leap year) is far better than the disappointingly pedestrian Budgets of July 2014 and February 2015.

Three, use the cachet he has acquired in foreign policy to energise his domestic governance. In essence that means delivering measurable outcomes and communicating them swiftly.

The governments achievements are today being buried amidst the cacophony of a viscerally hostile media. A daily media briefing at 4 pm tackling every issue head-on is the only antidote to this. In the absence of information, disinformation fills the vacuum.

To recapture the X factor that won him a stunning mandate 19 months ago, Prime Minister Modi must first win the perception battle.

(Courtesy of Mail Today.)

Follow@minhazmerchant on twitter

Foreign Money, Indian benefit
It is an opportune moment for policymakers to change their mindset and relentlessly use foreign money for India’s benefit just as the reverse occurred during British colonial rule.
Friday, April 01, 2016

For decades India shunned foreign investment. Scarred by colonialism, prime minister after prime minister barred a significant Western role in the economy. 

Jawaharlal Nehru recognised at independence that Britain had left India with inadequate infrastructure, a rudimentary industrial base and low literacy. The nation had an economic and social mountain to climb. His solution was to follow the Soviet model of a centrally planned economy. 

Some of this was justified. Few in the private sector, bar the Tatas and Birlas, had the capacity at Independence to build large industrial plants. Hence Nehru’s relentless focus on the public sector – SAIL, BHEL, HAL – as well as on publicly funded IITs and IIMs. 

But by 1966, when his daughter Indira Gandhi took office as prime minister, the Soviet model had clearly run its course. While the rest of Asia embraced free markets, Indira sought refuge in populist socialism. She nationalised banks, raised taxes to over 90 per cent and closed the economy even further to foreign investment. 

The liberalized, privatized economies of Asian “tigers” like Singapore, South Korea, Malaysia and Thailand grew at an average of over eight per cent a year during this period while India’s economy crawled at the Nehruvian (wrongly dubbed “Hindu”) growth rate of three per cent. 

In the process India lost an entire generation to a socialist, low-growth economy. Had India grown at the rate of the rest of Asia between 1966 and 1984, its GDP and per capita income would have been double today’s and poverty significantly lower. (The annual growth rate differential of five per cent over 18 years, when compounded, is more than 100 per cent.)

Fast forward to the present. In the first term of the UPA government, solid economic policies led to near-eight per cent GDP growth. Inexplicably, in UPA-2, from 2009 to 2014, the Manmohan Singh government backtracked on economic reforms, catering again to Indira Gandhi’s povertarian economies. Growth slowed, due partly to emerging financial scams in telecom spectrum and coal, as well as the post-2008 global economic recession. 

The Narendra Modi government offered a whiff of hope in May 2014. His Gujarat model was an economic, if not entirely a social, success. Yet after nearly two years in office, Modi’s liberalization impetus has not gathered the momentum it should have. The responsibility for this must be shared between the prime minister and his finance minister, Arun Jaitley, who has delivered three uninspiring Budgets. 

Despite this, there are bright spots in the economy. Foreign direct investment (FDI) is up year-on-year. Net FII inflows in March 2016 (up to March 28) hit a record $2.74 billion. This is a sharp recovery after several months of net outflows due to worries leading up to the US Federal Reserve’s December 2015 interest rate cut. 

For two centuries the British used Indian money and labour for their benefit. Nehru was right in initially following a centrally planned economic model to build India’s economy, denuded by decades of rapacious foreign exploitation. 

But his successors, especially Indira Gandhi, did great economic damage by not liberalizing the economy 25 years earlier, in 1966. They eventually did so in 1991. It is a burden India still carries. 

However, with India now emerging as the world’s fastest-growing large economy, it is an opportune moment for policymakers to change their mindset and relentlessly use foreign money for India’s benefit just as the reverse occurred during British colonial rule. 

On March 29, 2016, the government finally bit the bullet. It allowed 100 per cent FDI in e-commerce marketplaces like Amazon, Flipkart, Snapdeal, Paytm and ShopClues. There are minor conditions attached but overall e-commerce retailers can now hope to achieve global scale and investment. 

Foreign direct investment (FDI) in infrastructure is especially vital. Roads, railways, bridges, waterways, airports, factories, sea terminals, housing – let foreign money pour in, whether through debt (at historically low rates) or equity. 

India’s leaders let India’s poor down for decades. They have finally recognised that only when the economic pie grows bigger can it be distributed more widely and fairly to reduce poverty. To achieve that the prime minister has two more years to recharge – and reorder – the economy. 

The fifth year of his term will be hostage to electoral populism as the Lok Sabha election of 2019 bears down on him. The time to act is now.

Follow@minhazmerchant on twitter

The Future Perfect India
If new Delhi plays its cards well, the combination of hard and soft power will finally allow India to punch at its true geopolitical weight. If it does that, India could well emerge as a pivotal power between the declining west and the emerging east
Wednesday, March 30, 2016

Geopolitical power is a combination of hard and soft power  and the ability of a nation to project that power. India has traditionally punched below its weight. Britain and France in contrast continue to punch above their weight. 

What are the factors that determine geopolitical power? 

In my trademarked annual Geopolitical Power Index (GPI), I rank 10 selected countries on 11 parameters. These include quantitative parameters such as the economy and military as well as qualitative ones like religion and culture. 

The GPI shows how well  or poorly  countries project hard and soft power. In the latest GPI, the US retains its top spot. China stays at No. 2, while the UK edges out India for third place. France is at No. 5, followed by Germany, Russia, Japan, Brazil and South Africa.

The 11 parameters that determine the GPI rankings are: Economy, Development, Military, Governance, Innovation, Geography, Population, Culture, Religion, History, and Diaspora.

Each parameter has five sub-parameters. For example, to assess the economy of each country, the sub-parameters analysed are: per capita income based on purchasing power parity, GDP (again on purchasing power parity), business competitiveness, forex reserves, and fiscal deficit. 
For the development parameter, the five sub-parameters are: human development index, poverty levels, literacy rate, civic infrastructure, and education (primary and secondary).

Each sub-parameter is assigned a weight. For example, to arrive at the ranking for the economy, the weights are as follows: per capita income 25 per cent; GDP 25 per cent; business competitiveness 15 per cent; forex reserves 15 per cent; and fiscal deficit 20 per cent. The country rankings are arrived at mathematically using a proprietorial methodology (see table).

For example, the Chinese economy has a rating of 9 with a negative (-) bias, indicating slowing GDP growth. India has a rating of 7 on the economy but with a positive (+) trendline. 
The geopolitical environment is currently turbulent. Uncertainly looms over the US presidential election. Multiple wars in the Middle-East have changed geopolitical equations. Russia, despite Western sanctions and low oil and gas prices, is an increasingly dominant force in the Middle-East even as it ends its military campaign in Syria and peace talks gather momentum. 

Britain, divided over an impending referendum in June about exiting the European Union, is at an historical inflection point. It has western Europes fastest growing economy, but public spending is getting squeezed, leading to deteriorating infrastructure and stagnating wages among the middle-class. 

India is already the worlds third-largest economy ($7.5 trillion by purchasing power parity). It scores well on soft power (culture, religion, diaspora), but does poorly on hard power (military, development, governance). Civic, bureaucratic and institutional governance remains hobbled by corruption and sloth. 
Brazil and South Africa have done especially badly in the past year. Brazils economy is in a shambles, while South Africa is struggling with a slew of corruption cases and poor governance.

Japan has began to move up the GPI rankings. Under Prime Minister Shinzo Abe, its economy has stabilised though growth remains anaemic. On the fifth anniversary of the devastating accident at the Fukushima nuclear plant, the surrounding area remains toxic. Local people are allowed by the authorities to enter the region for just five hours a day. But the return to a semblance of normalcy underscores the strength and resilience of Japanese society.

The US tops the GPI rankings despite political turbulence because of its economic and military power as well as its global leadership in innovation. The worlds most recognised brands are still American  from the century-old Coca Cola and Ford to Google, Apple, Microsoft, Facebook and Amazon. 

At a recent event, chief economic advisor Arvind Subramanian said India cannot aspire to annual GDP growth of 8-10 per cent unless exports increase and services are given equal importance as manufacturing. 

Subramanium, who like the Reserve Bank of India governor Raghuram Rajan and Finance Minister Arun Jaitley manages to introduce a negative train of thought even while seemingly praising Indias economic policies, in the process sounding like mentor P. Chidambaram, is being disingenuous. 

Services already contribute 60 per cent to Indias GDP. Obviously services growth is imperative. But manufacturing, which contributes only 17 per cent to GDP, needs greater nurturing. Without that India will remain the worlds call centre, back office and IT body shop. China has become an economic superpower on the back of manufacturing. As its economy cools, it is now turning to services. India must likewise now turn to manufacturing without losing sight of growth in services. 

The future clearly lies in geo-economics. India is well placed here. It has excellent economic and military ties with the US, Russia, Britain and France. It is extending its maritime footprint to the South China Sea in partnership with Chinas bjte noire Vietnam. 

Religion, culture and spiritualism add to Indias soft power. Yoga now has an international brand identity and Indian actors like Priyanka Chopra have given Indias image a global makeover. The Indian diaspora is meanwhile beginning to have a real impact on American and British politics. As British Prime Minister David Cameron said during Prime Minister Narendra Modis UK visit last year, an Indian-origin British prime minister in the next decade is a real possibility. 
In the United States too, Indian-origin politicians, entrepreneurs, venture capitalists and professionals have transformed Indias national brand equity. Indians are Americas highest earning ethnic group with rising political and business influence.

If New Delhi plays its cards well, the combination of hard and soft power will finally allow India to punch at its true geopolitical weight. If it does that and learns to project its influence with greater self-confidence, India could well emerge as a pivotal power between the declining West and the emerging East.

This article was published in BW Businessworld issue dated 'April 18, 2016' with cover story titled 'Indias Most Valuable CEOs: The Dynamic Dozen.

Follow@minhazmerchant on twitter

Needed: Reform 3.0
The Modi government is strong on ideas but weak on execution. Nothing demonstrates this more pointedly than tax
Monday, March 28, 2016

Assessing Prime Minister Narendra Modis performance on the eve of the second anniversary of his government throws up three facts and two conclusions. First the facts. 

One, on foreign policy, Modi is doing well with the exception of his Pakistan policy which remains a work-in-progress. 

Two, on social policy, the jurys still out. Education is a key area and needs more attention than it is receiving. So do sanitation and healthcare. 

Three, on economic policy, schemes on financial inclusion, digitization and domestic manufacturing are purring along nicely though tax reforms remain a standout failure.

That brings us to the two conclusions. 

First, the Modi government is strong on ideas but weak on execution. Nothing demonstrates this more pointedly than tax. Modi has promised an end to intrusive tax inspections. He has pledged his government will not resort to retrospective taxation. And yet, both promises ring hollow. 

Businesses continue to complain about harassment from mid-level tax authorities. Under Finance Minister Arun Jaitleys nose, Cairn and Vodafone have received notices to pay up old disputed retro tax amounts which are currently under litigation or arbitration. 

This is not just bad economic governance. It is bad faith. 

Why would foreign investors repose faith in Indias growth story when the tax department behaves extortionately barely days after Jaitley, under whose jurisdiction the tax authorities operate, promised that retro tax cases would be allowed to wind themselves down through the judicial process? 

In his 2016-17 Budget speech, Jaitley offered companies engaged in litigation over retro tax the option to pay the principal amount. The interest and penalty would be waived. 

The offer is bad in principle. On the one hand you say retro tax is not a good tax and will never be applied by the Modi government. On the other, you ask companies like Cairn and Vodafone to pay up the principal even while lawyers are making a tidy pile as the cases wind themselves down through the judicial process, in Jaitleys lawyerly words. 

Such doublespeak is not worthy of the government  any government. It does not inspire confidence in Indias economic governance. 

The second conclusion that presents itself after nearly two years of the NDA government is that execution often contradicts policy. Examples abound. In healthcare, the decision to ban fixed drug combinations (FDCs) seems antithetical to patients interests. Antibiotic resistance is a serious problem but banning hundreds of commonly used drugs is not a sensible policy. It has already led to litigation, again benefiting lawyers but few others. 

Take another example: Modis Make in India initiative is clearly an excellent idea but here too there is a slip between the cup and the lip. As journalist Swaminathan Aiyar wrote in The Times of India recently: The government is suffering from schizophrenia. Its Make in India campaign aims to convince global and Indian manufacturers that India is a business paradise. But recent measures (on tax, drug controls and cotton seeds) suggest the government is arbitrary, populist and scornful of the sanctity of contracts. 

Such cavalier misgovernance has consequences. Unsurprisingly, Cairn (which received an income-tax notice to pay Rs 20,495 crore) has counter-sued the government for $600 million (Rs 4,000 crore) for dimunition in its valuation. 

Modi needs to crack the whip, starting with his finance minister, and restore his own reputation as a reformer. In a piece in Business Standard, Dabashis Basu rightly observed: The PM surely knows that all serious businessmen want simple and transparent policies. They have to battle capricious policy changes and daily extortions and needless litigation. Only a few crony capitalists have built up massive bad loans and they are untouched. I have heard dozens of stories of proactive and fair action under Modi, as Gujarat CM. It is time the old Narendra Modi returns to launch a new thrust to create what matters most: millions of much needed jobs. 

Without creating those jobs over the next three years, the prime minister will find the 2019 Lok Sabha election a lot harder to win

Follow@minhazmerchant on twitter

Obama's Failed Dream
In the latest real clear politics poll of polls, Obama’s “approval” rating is 45 per cent. Not many us presidents have had such low popularity ratings with the exception of the reviled Richard Nixon and the bumbling George W. Bush
Tuesday, 1 March, 2016

When President Barack Obama took office seven years ago, hopes soared. The clean-cut young Democratic senator from Chicago was America’s first black president. He promised a racial entente cordiale, liberal social values and tough economic policies. 

Few though realise that Obama would not have become president had one seminal event not occurred: the collapse on 15 September 2008 of Lehman Brothers — the leading US investment bank.

A couple of months before that Obama had unexpectedly beaten favourite Hillary Clinton to win the Democratic party nomination. Not many, however, gave him a chance against Republican nominee John McCain — a decorated war veteran and longtime senator — in the November 2008 presidential election. 

They would have been proved right but for the financial meltdown that caused mayhem in the US and Europe, and spread like a contagion to Asia. Storied American mortgage lenders like Fannie Mae and Freddie Mac had to be bailed out by the US government. Dozens of banks and brokerages went bankrupt.

The New York Stock Exchange plunged 7 per cent on 29 September 2008, wiping off several hundred billion dollars of investors’ wealth. The financial crisis spooked Americans. By October, Obama — the charismatic attorney from Illinois who was brought up by a white mother after his Kenyan father abandoned the family — had become the favourite to win the election. Battered by the financial crisis that led to mortgaged homes being repossessed and employees retrenched, middle-class Americans voted for change. The rest is history. 

Cut to the present. Having served just over seven years of his two terms, Obama demits office in January 2017. But he is already a lame duck president. His popularity ratings have fallen steadily. In the latest Real Clear Politics poll of polls, Obama’s “approval” rating is 45 per cent. Not many US presidents have had such low popularity ratings with the exception of the reviled Richard Nixon and the bumbling George W. Bush. 
So what went wrong? On the economy, Obama actually has a good record: he has nursed it back to health. Unemployment has fallen to 4.9 per cent, annual GDP growth has climbed to 2.5 per cent and the dollar is strong. 

And yet, most Americans are angry. Unemployment remains high among young people. Obamacare — the president’s controversial health insurance scheme that helps the poor (mostly African-Americans and Hispanics) and taxes the rich (mostly whites) — is deeply unpopular. 

But what has also hurt Obama are his missteps on foreign policy. President Bush had erred by invading Iraq and destablilising the Middle East. That created space for the rise of the Islamic State (ISIS). President Obama compounded the error with three of his own: 

First, he began withdrawing US troops from Iraq in 2011 before the sectarian insurgency in the country was contained. That allowed the Sunni terrorist group ISIS to gain strength in Shia-majority Iraq. By 2014, Iraq was engulfed in a Sunni-Shia conflict. ISIS made rapid territorial advances. 

Obama’s second foreign policy error was in neighbouring Syria. In an attempt to drive president Bashar al-Assad from power, the US began funding and arming anti-Assad insurgent groups. The ensuing Syrian civil war has not only killed a quarter million Syrians but has caused an unprecedented refugee crisis that has spilled over to Europe and finds resonance in the 2016 US presidential election. It has also allowed ISIS to seize nearly 25 per cent of Syria’s territory. 
Obama’s third mistake is currently playing out in Libya. By allowing the country’s dysfunctional post-Gadaffi government to fester for over a year, American inaction could mark Libya as the next territorial conquest for ISIS. As The Economist recently pointed out: “Barack Obama is far from achieving his declared aim to ‘degrade and ultimately destroy’ Islamic State — the self-styled caliphate that straddles parts of Iraq and Syria. But at least it is being rolled back in some places. Ramadi in Iraq was retaken in December. Oil installations controlled by ISIS have been bombed, sapping the economic and fighting power of the jihadists. In Libya, though, the picture is more alarming: the caliphate is building a sprawling new ‘province’ on the southern shore of the Mediterranean, just a few hundred miles from Europe. This is the new front in the war against jihadism. 

“Unchallenged by Western forces, and exploiting the absence of a functioning state as rival national governments in Tripoli and Tobruk bicker and skirmish, ISIS has taken control of the city of Sirte and controls roughly 180 miles (290 km) of coastline. It already counts 5,000 or so fighters, threatens not just Libya’s duelling governments but also neighbours such as Tunisia, Algeria and Egypt. It has attacked Libyan oil terminals and ports, and raided towns ever closer to Tripoli. The expansion of ISIS could prompt another flood of refugees from Libya to Europe, with the obvious potential of terrorist infiltration.” 

It is this threat of terror attacks against the West that has given Republican presidential candidate Donald Trump an electoral boost. Trump promises tougher action on terrorism and illegal migrants. His anti-Muslim position may be politically inflammatory but is welcomed in an America fed up with seven years of Obama’s political correctness. Anti-Islamism sentiment is strong across even liberal demographic groups in the US: women, professionals and college graduates. 
Hillary Clinton is likely to be the Democratic party’s nominee. Her chances though could be hit by sheer association with Obama as his Secretary of State in his first presidential term. It was during that period that she unwisely used a private server to send classified emails, now a subject of a Federal Bureau of Investigation probe. The outcome could significantly damage her presidential bid. 

Obama rode to victory in a nation traumatised by economic meltdown. The next US president may be carried into the White House on a wave of anger against the Washington establishment that has failed to deliver on the young Chicago attorney’s promise of a revitalised American dream. 

A visibly greying and ageing Obama could ironically have set the stage for an American president who is another outsider — but coloured in a very different hue.

This article was published in BW Businessworld issue dated 'March 7, 2016' with cover story titled 'Saving Prime Minister Modi'

Follow@minhazmerchant on twitter

Flat Tax, Part 2
As the 2016-17 Union Budget nears, it's a good time to re-examine some concrete numbers on personal income-tax
Friday, February 26, 2016

In a previous column, I'd suggested a flat 10 per cent personal income-tax rate on all taxpayers with a taxable income up to Rs 20 lakh and a flat 20 per cent tax rate on those with a taxable income above Rs 20 lakh. Those with taxable income below Rs 2.50 lakh would, as now, remain exempt. 

Let's break this down to see how practical the proposal is and what the impact would be on tax revenue. 

Only 3 per cent of Indians pay personal income tax. In the United States, for example, 40 per cent do  14 crore people out of America's population of 32 crore.

Of India's 3.50 crore taxpayers, 3.40 crore people have taxable income below Rs 20 lakh. The number of taxpayers with taxable income above Rs 20 lakh is just 0.09 crore people.

The 3.40 crore taxpayers in the slab below Rs 20 lakh together pay a mere Rs 1 lakh crore in taxes every year  at less than Rs 30,000 on average per assessee per year. That's an effective tax rate below 5 per cent of taxable income, largely due to exemptions and other tax avoidance schemes. 

A flat tax of 10 per cent on taxable personal income below the Rs 20 lakh slab would therefore garner more revenue than is generated today from this category of taxpayers (who comprise over 98 per cent of all personal income taxpayers but account for only 35 per cent of total personal income-tax collections). 

Complex tax rates drive tax revenue down. A simple, flat rate will drive it up, eliminating grey areas of avoidance and exemptions.

Three conclusions present themselves. First, it makes little sense for the income-tax department to spend administrative time and resources on small taxpayers. 

Second, the key is to simplify the entire tax system, not piecemeal as finance ministers tend to do. Simplification is a sure way to improve compliance. 

Third, greater compliance will automatically widen the tax base over the next few years from 3.50 crore taxpayers to around 5 crore taxpayers  provided the tax system is fair, transparent and simple. The more complex it is, the greater the incentive for small businessmen, traders, jewellers and professionals (who get paid in cash) to stay out of the tax net. 

As Finance Minister Arun Jaitley rises to deliver his third Budget on February 29, the critical figure will not be the fiscal deficit for 2015-16 (which will, by various accounting fudges, be kept to 3.9 per cent of GDP) but the revenue deficit. 

The problem is that of approximately Rs 14.49 lakh budgeted tax revenue in 2015-16, the excess of expenditure over revenue is largely attributable to interest payments. These devour over 20 per cent of revenue  more, for example, than the entire defence budget. 

This cost of borrowed funds is an old legacy of financial profligacy. The only way out of the debt trap is to increase tax revenue significantly. And the only sustainable way to do that is by widening the tax base. Simplify tax slabs, flatten the tax rate and broaden the base: the rewards will follow. 

This is Jaitley's third Union Budget. If he doesn't make bold, decisive tax reforms, it could be his last.

Follow@minhazmerchant on twitter

India’s Hidden Prison Problem
The key problem is India’s criminal justice system. Over three crore cases are pending in various courts. The biggest victims are poor undertrial prisoners who don’t have money to pay bail
Wednesday, February 03, 2016

As a young reporter with The Times of India, one of the first assignments I undertook was a visit to Arthur Road jail in central Mumbai.

Permission for the visit was sought and received quickly. The jail warden readily agreed to an interview. I told him I was keen to see the condition in which jail inmates lived in this large, sprawling prison in the middle of one of Mumbai’s busiest commercial and residential districts. 

The first prisoner I encountered during a walkabout in the jail’s open grounds was a familiar figure: a tall, fair, light-eyed man who I couldn’t quite place. On speaking to him, he turned out to be the Parsi manager of our school rock band. I won’t name him here except to say he was in Arthur Road jail for a drugs-related offence. 

In the decades since, Arthur Road jail has housed some well-known names: Chhota Rajan, Abu Salem and Ajmal Kasab. Gregory Roberts, author of the bestseller Shantaram, spent time here as well and wrote about his experience in his book. Part of Katherine Boo’s film, Behind The Beautiful Forevers, was shot in the prison.

Built in 1926, the jail has got more crowded by the day. Today it has over 2,000 prisoners. Its capacity is less than 900 inmates. 

The key problem is India’s criminal justice system. Over three crore cases are pending in various courts, some several decades old. The biggest victims are poor undertrial prisoners who don’t have money to pay bail. Many have spent more time behind bars than if they had served the full sentence they would have received on conviction after a court trial. This is an injustice the Supreme Court must address urgently. 

India has 1,382 central and district prisons. Their total capacity is 2,86,751 inmates. The total prison population is 3,64,081 – an average overcrowding rate of 28.60 per cent. But this statistic is misleading. Overcrowding is greater in some city jails where it rises to over 200 per cent.

Shockingly, 2,38,657 prisoners out of an all-India prisoner population of 3,64,081 (65 per cent of the total) are undertrials. This ratio reflects the reality of India’s slow and often corrupt justice system where the rich get preferential treatment and speedier trials. The poor suffer inordinate delays and deprivation.

The Supreme Court has finally woken up to the problem. A bench of Justices Madan B. Lokur and R K Agrawal passed this recent order: “A prisoner is required to be treated as a human being entitled to all the basic human rights, human dignity and human sympathy.” 

The justices directed the Undertrial Review Committee to release on personal bond undertrial prisoners who have undergone half of the maximum sentence they would have received if they were convicted. 

The Supreme Court justices added: “The committee should see that undertrial prisoners are released at the earliest and those who cannot furnish a bail bond due to their poverty are not subjected to incarceration only for that reason.”

It further directed the State Legal Services Authority to hire “competent lawyers” to provide free legal aid to the poorest prisoners. 

This is a welcome order that will serve both justice and reduce endemic overcrowding in our prisons

Follow@minhazmerchant on twitter

The Chinese Puzzle
The launch on 16 January in Beijing of the Asian Infrastructure Investment Bank as a counterweight to the us-dominated World Bank is an indication of China’s determination to expand its global financial role
Wednesday, February 03, 2016

Is the China crisis as grave as many analysts think Yes and no. China’s annual gross domestic product (GDP) growth has dipped to 6.9 per cent. It could fall further. Clued-in observers say real GDP growth, bereft of fudging, is already below 5 per cent.

The Chinese stock market has plunged after a huge run-up over the past few years. Foreign exchange reserves have fallen — though at over $3 trillion they are still 8 times India’s. The 7 per cent depreciation of the yuan hasn’t helped bolster Chinese exports as global trade volumes continue to shrink.

Worse, Chinese debt has shot up to 250 per cent of GDP. Glittering new cities across China, built from scratch over the past ten years, are like ghost towns buildings lie empty and streets are deserted.

So is the China story over Is it moving in the direction of Japan which grew at a furious pace for 30 years before sliding into deflation in 1989 — from which it is still struggling to recover

The answer to both questions is no. China has serious economic imbalances but its engine of growth is sputtering, not idling.

China’s 35-year growth cycle since the Deng reforms of 1979 is changing gears. The country leapt from a per capita income roughly similar to India’s in the 1970s to that of a middle-income country in just over a generation.

China’s growth was fuelled by exports and industrial manufacturing. Now it must rebalance the economy by focusing on services and consumption. China’s unprecedented double-digit decades-long growth has made it the world’s largest economy by purchasing power parity (PPP). According to the latest International Monetary Fund (IMF) data, China’s GDP (PPP) is $18.10 trillion, ahead of the US’s’ GDP of $17.35 trillion.

This in itself is an extraordinary — and historic — achievement. The US has been the world’s largest economy since the 1890s when it surpassed Britain’s GDP. America’s 125-year-old economic dominance has been ended by Beijing’s astonishing manufacturing-led growth that has made it the factory of the world.

But like all good stories, this one now needs a change in narrative. China’s slowdown as it rebalances its economy is one of the principal causes of the plunge in global commodity prices, especially oil. The fall has driven commodity-department countries like Russia and Brazil into recession.

Saudi Arabia meanwhile is facing a budget crisis. Consider the numbers Riyadh pumps around 10 million barrels of oil every day. A fall in the price of crude from $115 in May 2014 to around $30 today translates into a loss of $85 a barrel or $850 million a day on its daily crude output of 10 million barrels. Over a year, that loss mounts to more than $300 billion — a humongous figure for a country with a relatively small economy (GDP $746 billion).

China’s problems pale in comparision. Even a 5 per cent GDP growth on an $18-trillion economy is a surge of $900 billion a year. Beijing will be content to cruise at 5-6 per cent a year while it shifts economic focus from manufacturing and exports to consumption and services. It needs to fill those empty buildings and populate those ghost cities.

On January 1, 2016, China officially ended its one-child policy. China’s fertility rate is now below replacement levels. The country’s population will plateau at around 1.45 billion and then start dropping. Already Beijing’s parks are packed with retired folk, many in their 70s and 80s.

The greying of China, as the median age rises, is the opposite of India’s youthful demographic dividend. While India needs to find jobs for its growing population, China needs to reverse its population decline. It is a problem that has played a role in Japan’s stagnation too the country, along with several in continental Europe like Germany and Italy, faces a steep fall in population.

This is a social time bomb. As a country ages and its population declines, the ratio of the elderly on pensions to young wage earners rises. This puts a huge strain on government finances. Taxes inevitably rise to pay for welfare, healthcare and pensions of those above 60. The young, in poorly paid jobs or without jobs at all, end up paying for their parents’ and grandparents’ social security. It is not a recipe for social harmony.

The Chinese know this. While rebalancing their economy they are encouraging young couples to have more children. They are the country’s future insurance policy. Significantly, countries where populations are rising have the world’s fastest-growing economies.

Three examples India, Britain and the US. Britain and America have fast-expanding populations due to high immigrant birth rates. Their economies are the most robust in the West. And India of course is the world’s fastest-growing economy.

These lessons are not lost on Beijing. President Xi Jinping’s most prominent recent visits have been to the US, Britain and India.

The launch on 16 January in Beijing of the Asian Infrastructure Investment Bank (AIIB) as a counterweight to the US-dominated World Bank is an indication of China’s determination to expand its global financial role. Anyone who writes China off does so at his own peril. Beijing has history on its side.

As I wrote in my book, The New Clash of Civilizations How The Contest Between America, China, India and Islam Will Shape Our Century “In 1700, China was the world’s second most populous nation with 152 million people and the world’s second largest economy after India. Together the two Asian giants produced nearly 50 per cent of global economic output. The yet-to-be United States was still a smattering of thirteen British colonies. And Britain It had a population of 8.6 million and produced a mere 3 per cent of the world’s economic output. Colonisation and the Industrial Revolution changed the world dramatically over the next 150 years. By 1870, the average Briton was six times richer than the average Chinese. Beyond the numbers, however, lies the real story. For the first time since the West became the world’s dominant geopolitical, military and economic force 200 years ago, the tide has turned decisively. The rise of China, the relative decline of the US, and the fall of Western Europe will establish a new world order.”

No one is more aware of this than President Xi Jinping, China’s most powerful leader since Deng Xiaoping, and his inscrutable mandarins in Beijing

Follow@minhazmerchant on twitter

Harvard Study Places India On Top
The Harvard researchers predict that Indian GDP will expand at an average of 6.98 per cent till 2025. This means nominal GDP will nearly double to around $4.50 trillion in 2025 at current exchange rates
Monday, January 26, 2016

The Indian economy was left in a shambles by the UPA government in May 2014. GDP growth had fallen to 4.5 per cent. Jobs were scarce. Industry was stagnant, manufacturing weak.

The Narendra Modi government has swept some of these economic debris away. But much remains to be done. Economic reforms have come in baby steps. One minister justified this recently by saying incremental reforms when added up amount to big bang reforms.

Not quite. In a recent column for BusinessWorld, I suggested how, for example, sweeping tax reform could reignite the economy, drive consumption and revive investment. Recent numbers on industrial growth and corporate earnings make for grim reading. The stock market and the rupee have plunged. The slowdown in China is having a domino effect.

Not everyone is pessimistic though. A decade-long study by Harvard University's Centre for International Development, published last month, has concluded that India will be the world's fastest-growing economy over the next ten years.

The Harvard researchers predict that Indian GDP will expand at an average of 6.98 per cent till 2025. This means nominal GDP will nearly double to around $4.50 trillion in 2025 at current exchange rates.

By purchasing power parity, a norm the International Monetary Fund (IMF) and World Bank (WB) routinely use, Indian GDP is already $7.40 trillion. Employing Harvard's calculations, India's GDP (PPP) in 2025 will thus be around $15 trillion.

This is what the Harvard study says: "India has the potential to be the fastest growing economy over the coming decade, according to new growth projections presented by researchers at the Center for International Development at Harvard University (CID). The researchers use their newly updated measure of economic complexity, which captures the diversity and sophistication of productive capabilities embedded in a country's exports, to generate the growth projections. The projections reflect the latest 2014 trade data available. The global landscape for economic growth shows greatest potential for rapid growth in South Asia and East Africa. Conversely, oil economies and other commodity-driven economies face the slowest growth outlook. India tops the global list for predicted annual growth rate for the coming decade at 7 per cent. This far outpaces projections for its northern neighbor and economic rival, China, which the researchers expect to face a continued slowdown to 4.3 percent growth annually to 2024."

Interestingly, western Europe's fastest-growing economy will be Britain (3.22 per cent) - a testament to Chancellor of the Exchequer George Osborne's prudent economic management since 2010. Osborne is being spoken of as the next British prime minister when the UK general election is held in 2020. David Cameron has pledged to step down as prime minister after completing his second term.

Another interesting projection in the Harvard study is Pakistan's growth of 5.07 per cent. India's economy is currently nine times Pakistan's. If the Harvard study's projections hold good (an approximately 2 per cent annual growth differential between the countries), the India-Pakistan GDP gap will widen to nearly 12 times by 2025.

In this lies clues to how the Pakistani economy's dependence on Indian trade and energy under SAARC's umbrella could be the long-term antidote to Islamabad's state policy of proxy terrorism. Just as talks and terror don't go together, trade and terror don't go together either.

If the Harvard study is right, India's GDP (PPP) in 2025 at $15 trillion will be the world's third largest after China and the United States. Pakistan's GDP (PPP) in 2025 will be $1.25 trillion, one-twelfth India's.

It is at this inflection point that trade trumps terror. Akhand Bharat may be a dotty idea: it is. But an economically Akhand South Asia could be in everyone's interest. It would certainly put Hafiz Saeed, Masood Azhar and other jihadis out of business well before 2025

Follow@minhazmerchant on twitter

Union Budgets Are Not For Tax Tinkering
Finance Minister Arun Jaitley will tinker with taxes: an increase of Rs 25,000 in exemptions here, a 5 per cent cut in excise duty there, a tweak in personal income-tax slabs everywhere.
Thursday, January 21, 2016

No country in the world has converted a straightforward annual statement of government accounts into televised theatre as India does every February.

In the United States, the annual budget passes without a ripple. It is discussed threadbare in the Senate and House Committees but it is not an annual make-or-break fiscal event. Britain, from whom India picked up this bad habit, does attach some importance to the Chancellor of the Exchequer's annual March budget. But even in Britain the focus is increasingly on year-round economic reforms rather than an annual fiscal smorgasbord.

On February 29, Finance Minister Arun Jaitley will deliver the 2016-17 Union Budget. In the grand tradition of Indian finance ministers, he will tinker with taxes: an increase of Rs 25,000 in exemptions here, a 5 per cent cut in excise duty there, a tweak in personal income-tax slabs everywhere.

And then will follow an hour of small changes in customs and excise duties across a laundry list of items: jewellery, tobacco, automotive, machine tools, consumer goods and so endlessly on.

An annual Budget should focus on one big idea. What should the 2016-17 Union Budget focus on?

The "Start-up India" initiative by Prime Minister Narendra Modi has shown that even the limpid, obscurantist bureaucracy, when motivated, can create conditions where businesses can flourish. As Modi said at the event on January 16: "Tell us what not to do."

There are six strands, all of which when strung together, can form a new economic paradigm.

First: sweeping tax reform. Simplify personal income-tax, reduce exemptions, cut corporate tax and look at the big picture. As I wrote here recently, 99 per cent of India's 3.70 crore taxpayers pay a mere Rs. 1 lakh crore in personal income-tax. Just 1 per cent pay Rs. 2 lakh crore in tax.

It makes little sense to tinker with tax slabs and tax rates of 99% of India's tax-payers: any positive outcome will be dwarfed by the enormous manpower deployed to monitor 3.66 crore tax-payers who pay an average of Rs. 28,000 each annually in tax (Rs. 28,000 x 3.70 crore tax-payers = approx Rs. 1 lakh crore). Much of this tax is anyway paid automatically as TDS. What does make sense is to rationalise the tax regime with a flat tax as I wrote here.

Second: repeal the regressive retrospective tax. This needs passing a simple amendment to the IT Act in parliament.

Third: cut red tape. Just as the prime minister's Start-up India initiative promises starting a business in one working day, make all businesses easy to start - and easy to shut down. Investors will flock to India.

Fourth: clean up bank NPAs (as bankrupt power discom debts have been) so they can start lending again to corporates.

Fifth: ramp up public investment by using savings from the crude oil price plunge. At below $27 a barrel, India's oil import bill in 2016 could fall to as low as $35-40 billion compared to $150 billion when crude was $115 a barrel in May 2014. Use this windfall to boost public spending, especially in infrastructure, education and healthcare.

Sixth: Privatise PSUs. The government must get out of business and spend its time and energy on governance. Leave business alone. IT software flourished because it was left alone.

Alas, on Budget day next month, we may get none of these changes - just more tax tinkering and fiscal fudging.

For a progressive, modern, "start-up" nation, that will no longer do.

Follow@minhazmerchant on twitter

Recharging The Economy
Getting India’s GDP growth trajectory back to 8 per cent a year is critical for three reasons: Creating jobs, driving consumption and boosting investment.
Thursday January 7, 2016

Getting India’s GDP growth trajectory back to 8 per cent a year is critical for three reasons: Creating jobs, driving consumption and boosting investment. The Mid-Year Economic Analysis tabled in Parliament recently, however, makes for grim reading. GDP was predicted to grow at between 8.1-8.5 per cent in 2015-2016. That estimate has now been lowered to between 7-7.5 per cent.

Cutting through the data clutter, both global and domestic factors are at play. The slowdown in China and the European Union has led to a dip in exports for 12 straight months. Imports have fallen even more steeply, signalling a slowdown in domestic industrial production. 

Economic management by the finance ministry has been lacklustre. The windfall gain of low crude oil prices has given India a cushion estimated at Rs 2.50 lakh crore. A third of that has been passed on to consumers as lower fuel prices. A portion has been appropriated by the government (through higher excise duties on fuel) to make up the likely shortfall in budgeted PSU disinvestment and tax receipts this fiscal. Only around Rs 75,000 crore has been used to boost government spending in infrastructure, especially highways and other civic projects. 

Corporate investment remains subdued. Interest rates are still high and most companies’ balance sheets are stretched by domestic and foreign currency loans. The depreciation of the rupee against the US dollar has worsened the situation with several companies unable to fulfil their foreign debt obligations. 

Lower oil prices should have enabled the finance ministry to meet the 2016-17 fiscal deficit target of 3.5 per cent of GDP. However, the Mid-year Economic Analysis is pessimistic on that as well, calling the target “challenging”. 

Both the Reserve Bank of India (RBI) and the finance ministry have proved poor custodians of their respective domains. The RBI has reduced interest rates too little, too late. As a result, the balance between lowering inflation and boosting growth is skewed. Wholesale inflation has been negative for months, while retail (especially food) inflation is rising. Raghuram Rajan has thus managed to deliver not one but two undesirable outcomes: a deflationary economy and a low-growth economy. 

The US Federal Reserve has done the exact opposite since the Lehman crisis in 2008. Faced with low growth, it slashed interest rates to 0-0.25 per cent (raised by 0.25 per cent recently) and pumped in billions of dollars to stimulate the economy. The results are apparent: the US economy is growing at a healthy clip of 2.1 per cent a year. Unemployment has fallen. Business confidence is up. 

The second villain, metaphorically speaking, in straitjacketing the Indian economy is the finance ministry. While the RBI erred on interest rates and establishing more effective supervision of bad bank loans, the finance ministry has been an unimaginative steward of the economy. Its two budgets (July 2014 and February 2015) were desultory. Retrospective taxation — imposed thoughtlessly by then Finance Minister Pranab Mukherjee — should have been summarily removed in the July 2014 interim Budget but has been allowed to remain like a sword of Damocles over corporate heads. 

Ask any foreign investor: the first complaint will be about the uncertainty caused by the government not removing retrospective taxation. It needed a committee headed by Justice A. P. Shah to squelch the harebrained move to impose Minimum Alternate Tax retrospectively on Foreign Institutional Investors. The imposition of various new cesses and cumbersome requirements in service tax regulations are contrary to the spirit of PM Modi’s attempt to improve the ease of doing business in India. 

Significantly, financial inclusion through Jan Dhan Yojana, pension reforms, FDI liberalisation across sectors and the use of Aadhaar biometric cards to send subsidies directly to beneficiaries by cutting out middlemen have all emanated from the PMO. The finance ministry has used neither imagination nor wit in articulating a clearheaded and farsighted vision for the Indian economy. The stock market has given a clinical verdict on this performance: the Sensex and the Nifty are barely above the levels of May 2014, when the NDA government took office. Unless the finance ministry displays far better stewardship of the economy, the Lok Sabha election in 2019 will pose a bigger challenge to the BJP than it imagines. 

So what should be done? Fortunately, India is in a sweet spot: demographics favour us. We have a young workforce. A startup ecosystem (the third-largest in the world after the US and Britain) is developing rapidly. An aspirational middle-class and rural-to-urban mobility could soon spur a consumption boom. 

All these factors though have to be harnessed skilfully. The demographic dividend can easily turn into a demographic — and social — disaster if 10 million new jobs are not created every year. Without a sharp increase in corporate and public investment that remains a serious concern.

The Seventh Pay Commission and one rank, one pension (OROP) benefits will, however, boost consumption in 2016. If oil prices remain low through 2016 (as they are expected to), this will provide India the window of opportunity to slingshot the economy into a higher orbit of growth.

For this to happen, the February 2016 Budget must provide for more public spending, lower taxation and incentives to the corporate sector, including a clear roadmap for reducing corporate tax to the promised 25 per cent. Many of these reforms can be done (as with FDI liberalisation) by executive order outside Parliament.

There are no excuses any longer for letting the economy drift. Every global investor says India has the potential to grow at 9 per cent a year. A 7 per cent growth rate signals inept economic management. And it is not the Goods and Services Tax (GST) alone that can add 1.5-2 per cent to the GDP growth as many believe. It is investment, consumption and innovation that will do so. 

For investors, red tape remains ubiquitous, the promised red carpet unfurled. Cut the former, lay out the latter and the pathway to 8-plus per cent GDP growth will rapidly emerge. 

(This story was published in BW | Businessworld Issue Dated 11-01-2016)

Follow@minhazmerchant on twitter

Bold Tax Reform PM's Silver Bullet
Tax all those with a taxable income below Rs 20 lakh at a flat rate of 10 per cent. Tax those with a taxable income above Rs 20 lakh at a flat rate of 20 per cent
Wednesday, December 23, 2015

The government collects nearly Rs 15 lakh crore a year in direct and indirect taxes. Of this personal income tax is around Rs 3 lakh crore.

How many Indians pay this tax? About 3.7 crore or 3 per cent of the population. But just 42,000 people with taxable income over Rs 20 lakh a year account for nearly 65 per cent (Rs 2 lakh crore) of total personal tax collected. The rest - 99 per cent of all taxpayers - account for the balance 35 per cent (Rs 1 lakh crore).

Look again at the math: 42,000 wealthy Indians (less than 1 per cent of all taxpayers) with taxable income above Rs 20 lakh collectively pay Rs 2 lakh crore in personal income tax every year. And 3.69 crore Indians (99 per cent) with taxable income below Rs 20 lakh collectively pay a total of just Rs 1 lakh crore in personal income tax. This is our vast middle-class - salaried employees, self-employed traders, small businessmen, etc. (TDS cut from salaries is included in the Rs 1 lakh crore the government collects from 3.69 crore Indians.)

Here's my proposal: tax all those with a taxable income below Rs 20 lakh at a flat rate of 10 per cent. Tax those with a taxable income above Rs 20 lakh at a flat rate of 20 per cent. No slabs. No exemptions. Only those with a taxable income below the current threshold of Rs 2.5 lakh (Rs. 3 lakh for seniors) would, as now, remain exempt from tax.

Since TDS is deducted at 10 per cent, most salaried employees will have to simply furnish a single compliance form annually. All others below the threshold taxable income limit of Rs 20 lakh would also need to submit a simple single-page annual return confirming compliance at a flat rate of 10 per cent.

By thus simplifying the tax code (which the cold-storaged Direct Tax Code was supposed to do), tax administration costs would fall. Nearly 3.7 crore taxpayers would save time and money. Corporate tax rates are anyway set to fall to 25 per cent by 2018-19, according to Finance Minister Arun Jaitley. Most exemptions in corporate tax will then also go.

So we could soon have a simple, effective tax regime. Personal tax: flat 10 per cent up to Rs 20 lakh taxable income and flat 20 per cent above Rs 20 lakh taxable income. No exemptions. Corporate tax: flat 25 per cent. No exemptions.

In personal income tax, while there could likely be a small initial net revenue loss, a simplified structure would actually increase compliance and revenue in the long term. When 99 per cent of taxpayers pay collectively just Rs 1 lakh crore a year (which is 6.70 per cent of total budgeted annual government receipts and a mere 0.75 per cent of GDP), simplification and compliance is the way forward

An small initial loss in tax revenue on the relatively low tax receipts of Rs 1 lakh crore collected today from the overwhelming majority of India's 3.7 crore taxpayers would be made up by four factors:

1. Higher revenue from a wider tax base, especially among HNWs above the Rs. 20 lakh taxable threshold.

2. Better compliance

3. Lower administration and litigation costs

4. Reduced corruption.

The Goods and Services Tax (GST), when finally implemented, will also boost tax revenue significantly, making this reformed, taxpayer-friendly structure both viable and desirable. The new tax structure will not only save time, minimise paperwork, cut corruption and reduce litigation but it will be revenue-neutral in the short term and revenue-surplus in the long term.

It is the kind of tax reform the Prime Minister should personally endorse. It could be his silver bullet for 2019.

Follow@minhazmerchant on twitter

Japan, India's 'Swing' Power
Following the festering dispute over the Senkaku islands in the East China Sea, Tokyo's long-term vision is to develop India as a manufacturing hub for its industries. India's low-wage economy and skilled workforce fit neatly into this vision
Monday, December 22, 2015

In the popular imagination, India's relationship with Japan begins and ends with bullet trains. Of course it doesn't.

Japan is emerging as a "swing" power in the complex trilateral relationship between India, the United States and China.

At the heart of the India-Japan entente cordiale is geopolitics and business. The mix resonates in Tokyo and New Delhi. The personal chemistry between Japanese Prime Minister Shinzo Abe and Indian Prime Minister Narendra Modi is a bonus.

What's clear is this: whichever government is in office in either country, the India-Japan partnership is set to flourish. The key areas of cooperation: nuclear energy, infrastructure investment, technology transfer, manufacturing and defence.

The Rs 90,000-crore bullet train between Mumbai and Ahmedabad has monopolised the headlines. Critics cavil that the money (lent by Japan International Cooperation Agency - JICA - at a negligible interest rate of 0.25 per cent a year) should be spent on refurbishing India's shambolic railways network.

That's true but misses the bigger picture. Along with the Mumbai-Ahmedabad "bullet", Japan is also quietly working on modernising India's decrepit railway stations. Japanese investment in railway infrastructure outside high-speed trains is now at an inflection point.

The Japanese are particularly keen to use India as a manufacturing base. Japan has long been China's largest FDI contributor. However, following the festering dispute over the Senkaku islands in the East China Sea, Tokyo's long-term vision is to develop India as a manufacturing hub for its industries. India's low-wage economy and skilled workforce fit neatly into this vision.

Wages and nationalist antagonism towards Japan are both rising in China. India with its underdeveloped infrastructure, huge marketplace, democracy and rule of law presents Japan with a valuable ally as it seeks an increasingly assertive global political and economic role. India is a more than willing suitor. It sees Japan as a long-term source of technology and investment.

Japan plans several industrial zones in India. In one such zone in Rajasthan, Japanese executives have set up a mini-Japan with sushi eateries, Japanese-language schools and neat little apartments fitted with high-tech Japanese-style toilets.

The Delhi-Mumbai industrial corridor in which Japan is heavily invested will further strengthen economic ties. The civil nuclear deal between the two countries, awaiting ratification by Diet, Japan's parliament, will take the partnership further.

Without the deal, US nuclear reactor contractors like GE and Westinghouse cannot build nuclear power stations in India under the India-US civil nuclear agreement. The reason: many critical components of these reactors are made by Japanese companies like Mitsubishi.

During his recent visit to India, Prime Minister Abe pledged an investment of Rs 83,000 crore in a slew of industrial projects under a "Make in India" fund apart from the loan earmarked for India's first bullet train. But beyond business lies politics. Abe is keen to build a triangular partnership between Japan, India and the US. He rightly sees India emerging alongside China and the US as one of the world's three largest economies by 2025.

In a sharply polarised world, trade, climate change and counter-terrorism are key issues. For India's voice to be heard - as it was during the climate change summit in Paris earlier this month - New Delhi must build alliances across countries and blocs.

The deadlock over global trade and farm subsidies at the recent WTO meet in Nairobi underscores how difficult it can be to deal with entrenched Western interests. Given its close ties with Washington, Japan represents an important bridge between the West and the East on, for instance, India's bid for a permanent seat in the United Nations Security Council (UNSC) and developing a fairer global trade regime.

Ranging across business, technology, defence and geopolitics, India's alliance with Japan could thus develop into one of New Delhi's most important strategic partnerships.

Follow@minhazmerchant on twitter

BJP/Congress must stop misusing patriotism to seduce voters
In a democracy, it gives you the right to speak as much as the right to remain silent.
Monday, March 28, 2016

If patriotism is the last refuge of scoundrels, what is the first? We'll answer that at the end of this article. For now, here's what patriotism means. 

First, it gives you the absolute right to dissent.

Second, it allows you the freedom to speak and the freedom not to.

Third, it lets you interpret patriotism and its country cousin, nationalism, in your own individual way.

It's only when dissent turns into incitement that it becomes a criminal offence.

In a liberal democracy, dissent must be welcomed. A plurality of views enriches debate. From sturdy debate follows reform.

The problem in India is that political parties use patriotism and nationalism to seduce their respective votebanks. The BJP uses nationalism as a pseudonym for Hindutva because it appears more inclusive. No one can argue about the need to be a nationalist. There are several interpretations of nationalism but few have the time or intellectual stamina to debate them.

The Congress has long used secularism as its calling card. In today's polarised atmosphere though, the party has realised that secularism, as practised by it for decades, is a discredited commodity. It has therefore embraced "pluralism", which is an elastic concept and as inclusive as you wish it to be.

So the two major political parties have staked out their positions well ahead of the election calendar: five state assemblies this summer, Punjab, Uttar Pradesh and Gujarat next year, and the Lok Sabha election in 2019. For the BJP, hard Hindutva has been put into cold storage. (It can be thawed any time a future electoral occasion demands.)

Soft Hindutva is more useful: it is anyway another name for nationalism, but without the ideological baggage that the Congress and Left-leaning opposition parties can readily attack. 

Most Indians, Muslims included, are happy to say "Bharat Mata ki jai". Javed Akhtar is just one example. But there are Muslims (and a few Hindus as well) who will not say it. Their right to remain silent must be respected. Condemn them, if you wish, but do not coerce them. If you do, you lose the greatest civilisational gift Hinduism has given the world: tolerance.

Hinduism is the only religion in the world that accepts all faiths as equal. Islam does not. Christianity does not. Judaism does not. Zoroastrianism does not. Each advocates its own path as the most righteous.

Hinduism makes no such claim. Like a sponge it absorbs all method of prayer, individual belief and even atheism. There are no harsh punishments for apostasy, no confessions by sinners to a priest, no call to violence.

All of this can be both a strength and a weakness. Strength because when you allow space, elasticity and freedom, your flock will remain faithful. Weakness because too much laxity can lead to division. A fine line has to be drawn. But if you err, err on the side of liberalism.  

The rigid caste system has been a principal reason why, despite comprising 79 per cent of the population, Hindus in India often feel they are a minority. When British Prime Minister David Cameron declared last year that Britain was a "proud Christian country", there wasn't a murmur of protest. Britain after all is a Christian majoritarian country. Now imagine if Prime Minister Narendra Modi had said India is a "proud Hindu country". All hell would have broken loose. The question would immediately be asked: is India a majoritarian country?

The short answer: no.

Why do over 210 million Muslims and Christians live in India in relative peace? If Hindus were really intolerant as some have speciously claimed and as, for example, Muslims are in most Muslim-majority countries - India would have turned into a cauldron of violence long ago.

As I asked at the beginning of this article, if patriotism is the last refuge of scoundrels, what is the first? There are alas three strong contenders: politics, religion and journalism. Take your pick

Follow@minhazmerchant on twitter

Mehbooba’s last gamble: Why the BJP-PDP alliance is doomed
Considering that she has sharply criticised non-implementation of the 'agenda', it will represent a humiliating climbdown for her.
Monday, March 21, 2016

It's not nice to say I told you so. But I did.

This is what I wrote here on January 12, 2016, about the BJP-PDP alliance in Jammu & Kashmir in my piece Mehbooba Mufti's divorce with BJP may work well for Modi:

"Mehbooba is more outspoken than her late father. She is also more sympathetic to the Hurriyat separatists. And she is as mercurial as the Mufti was equable. After initial misgivings, the Mufti had developed a rapport with Prime Minister Narendra Modi, even praising him as a strong leader who was likely to be PM for ten years. Will Mehbooba be able to keep the PDP-BJP alliance on an even keel or will her strong separatist views cause a rift with the BJP? Mehbooba is unlikely to break the alliance just yet - it would cast a shadow over her father's decision to ally with the BJP. In the long term, however, a Mehbooba-led PDP-BJP government is unlikely to overcome its constituent parties' inherent ideological contradictions. A political divorce may therefore not be such a bad thing for the BJP. It could lose a state but win a nation."

What next? Mehbooba suddenly finds herself in a corner. Ten weeks after her father Mufti Mohammad Sayeed died, Mehbooba is about to lose her high-stakes poker game with the BJP.

Mehbooba's options are limited. The first is to give up her laundry list of demands and form a government based on the previous "agenda for alliance". Considering that Mehbooba has sharply criticised non-implementation of the agenda, it will represent a humiliating climbdown for her.

Mehbooba's second option is to dilute some of her demands - as she has already shown signs of doing - and keep channels of communication with the BJP leadership open. Her meeting with Prime Minister Narendra Modi, scheduled for last Friday, did not take place. Mehbooba left for Srinagar in a huff. She is now back in Delhi in the hope that a meeting with the PM can be arranged.

Her third option is the most fraught: fresh Assembly elections. It is a prospect that unnerves Mehbooba - and for good reason.

The PDP's alliance with the BJP has alienated the party's core supporters bred on soft separatism. The low turnout at the Mufti's funeral in January shocked Mehbooba and senior PDP leaders. It reflected - more than any opinion poll could - the erosion of support for the PDP in the Kashmir Valley.

A similar predicament awaits the BJP. Its supporters in Jammu are disillusioned with the party's dalliance with the PDP which they regard as a pro-Pakistan, pro-Hurriyat party.

A fresh election today could well favour the Abdullahs' National Conference. Former chief minister Omar Abdullah is well aware of this: he has been demanding that the PDP-BJP alliance either form the government or dissolve the assembly and call for a mid-term poll.

Abdullah met the governor of J&K on March 21 to discuss the ongoing crisis in government formation.

The NC won just 15 seats in the December 2014 Assembly election following six years of indifferent governance. But with both the PDP and BJP diluting their appeal in their respective vote catchment areas, the NC could benefit the most from a fresh election.

In the 87-member J&K Assembly, the PDP currently has 27 MLAs, the BJP has 25, the NC 15, the Congress 12 and seven Independents. One seat is vacant following the Mufti's death.

A resolution to the impasse must be found before April 8 when the Assembly will complete six months without meeting at least once as the Constitution requires. The Assembly is presently in "suspended animation".

Development has been the first casualty. The promised flood relief package has still not reached J&K. Disaffection is rife. New power projects remain stuck. The unintended beneficiary in any future election will be the NC and, to an extent, the Congress. Public memory is short. The legacy of six years of the NC's relatively inept governance may be forgotten if J&K goes to the polls.

It is Mehbooba's fear of facing the electorate today which could yet bind the PDP and BJP together for a while longer in their unhappy marriage of convenience

Follow@minhazmerchant on twitter

Donald Trump leads because America is angry
Stagnant middle class wages and a racist backlash are driving the Republican candidate's campaign.
Wednesday, March 16, 2016

Super Tuesday 2.0 lived up to its billing. As results trickled in on Wednesday morning, the big winners were Hillary Clinton and Donald Trump.

Trump swept Florida and won Illinois and North Carolina comfortably. He also won the last of the five states that held primaries last night, Missouri, but his victory margin over Ted Cruz was a razor-thin 0.18 per cent. Under Missouri state election rules, a margin below 0.50 per cent can trigger a recount so the result remains provisional.

Ohio governor John Kasich meanwhile won his state to deny Trump a 5-0 sweep. Following his defeat to Trump in his home state of Florida, Marco Rubio announced he was ending his presidential campaign.

Amongst Democrats, Hillary won four of the five states. She also beat Bernie Sanders in the fifth, Missouri - though by just 0.24 per cent. Here too a recount looms.

The Republican nomination contest is now effectively a two-man race: Trump and Cruz. Kasich remains a factor but his appeal is limited to the American midwest. Excluding Missouri, Trump now leads Cruz by 640 delegates to 405. He needs 1,237 delegates to win the party's nomination.

Last Friday, Dr Ben Carson, the retired neurosurgeon who dropped out of the presidential race two weeks ago, endorsed Trump. Another candidate who ended his presidential bid last month, New Jersey governor Chris Christie, has already endorsed Trump.

Meanwhile, much of the world is aghast. How could Americans even think of nominating a man like Trump to face off against the Democrat nominee (Hillary Clinton or Bernie Sanders) in the presidential election on November 8?

The Republican party itself has been torn apart by Trump's string of victories. Influential members of the establishment elite, led by former presidential candidates Mitt Romney and John McCain, who lost to president Barack Obama in 2012 and 2008 respectively, have called Trump a "phony" and a "fraud".

Pro-Democrat newspapers like The New York Times are horrified by Trump's violence-strewn juggernaut. The Economist recently pointed out Trump's German ancestry on his father's side. It neglected to mention that Trump's mother, Mary Macleod, was British, born in an island off Scotland.

So the Anglo-German Trump steamrollers on. He may still implode, his critics hope. The violent protests at his rallies in Ohio and Illinois have dismayed most Americans. Others believe that Cruz and Kasich may together have enough delegates to keep Trump below the 1,237 delegates he needs to win the nomination at the Republican party convention in the last week of July. That could lead to a "brokered" convention, freeing delegates to vote for the candidate they want.

Aware of this, Trump has warned Republican party chiefs that this would mock the "people's verdict" and lead to chaos. It could fracture the party, handing the Democrat nominee (Clinton or Sanders) the presidential election on a platter in November. Cruz, however, has now gone on record to say that whoever has the most delegates should be the Republican nominee. A contested or brokered convention, he says, would "be disastrous".

Rising tide of anger

What accounts for Trump's popular surge? Americans are angry about rising income inequality. Blue-collar workers have seen real wages stagnating for over a decade while Wall Street fund managers and tech company whiz-kids in Silicon Valley earn millions. Trump promises to bring jobs back by cutting down on H-1B visas and stopping illegal immigrants from Mexico who take away jobs from local Americans. At a rally on Monday though, he praised "smart Indian students" and called for them to be allowed to work in America.

The second vein of anger Trump has tapped into is against Islamist terrorism. The beheading of Americans in Iraq and Syria by the Islamic State (IS) enraged the country. Anti-Muslim and anti-migrant sentiment is strong and rising. Trump is riding this xenophobic wave. He has promised punishment harsher than "water boarding" for captured terrorists. He says he will send 30,000 US ground troops to "destroy" IS in the Middle East.

Apart from jobs, migrants and Islamist terrorism, American anger is directed at Barack Obama. They see him as a weak president. Nearly 67 per cent of Americans are white. Add white Hispanics (of Portuguese and Spanish descent) and the number of white Americans goes up to 73 per cent. It is this majority that is reacting to Trump's Islamaphobic, racist message.

By getting a respected African-American former presidential candidate like Ben Carson to endorse him, Trump hopes to soften his racist image. After the violence in Chicago by a racially mixed group of protestors last Friday which led to the cancellation of Trump's rally in Illinois University, and a thwarted attack on Trump at a Dayton, Ohio rally, that seems unlikely.

Trump meanwhile points out that the number of people coming out to vote has nearly doubled and that Democrats and independents are flocking to the Republican party fold. Trump uses insult as a means to provoke. His favourite target is the media. He taunts journalists who cover his near-daily press conferences, saying they are the "most dishonest people created by God." He called The New York Times a paper that "lies" and never "checks facts".

The Left-liberal media in the US hates Trump with equal fervour. Even Right-wing Fox TV host Megyn Kelly has engaged in a running feud with Trump who dismissed her as a "lightweight". Kelly, a former practising attorney, got her revenge in a recent Fox TV-moderated debate among Republican candidates. She put Trump on the mat over alleged fraud at Trump University. The matter is in court.

For a man with so many enemies, Trump's presidential run has been surreal. The results of the five state primaries on Tuesday showed how volatile the 2016 US presidential election will be. Four people still have a chance to be the next US president: Trump, Hillary, Cruz and Sanders.

The smart money is on Trump versus Clinton come November in what promises to be the most sharply polarised US presidential contest since John Kennedy faced Richard Nixon in 1960.

Follow@minhazmerchant on twitter

Why Vijay Mallya has landed at the bottom of the barrel
It is his cussedness in not doing the right thing - despite having the resources to do so - that stands out.
Monday, March 14, 2016

Television camera crews stationed outside Vijay Mallya's 30-acre Hertfordshire estate in the quiet English village of Tewin have a long wait ahead of them.

Mallya's country home, 40 miles outside London, hides a bittersweet truth: Mallya owns assets far in excess of what he owes 17 banks, more than 1,200 former employees of Kingfisher Airlines, the income-tax department and other creditors. Much of this math has been lost in the hype around Mallya's flight out of India one day before his creditor-banks moved the Supreme Court to impound his passport.

How much does Mallya owe? And how much are his assets worth?

Mallya's debt liability (principal plus interest) to 17 lender banks is just over Rs 9,000 crore. In addition, he owes around Rs 1,000 crore in unpaid employee wages, tax deducted at source (TDS), service tax and other dues. His total debt is therefore about Rs 10,000 crore.

Now to Mallya's assets. On TV debates, a lot of time is wasted discussing the value of his impounded jet, office premises, a villa in Goa, a home in south Mumbai's Nepean Sea Road and other pieces of commercial real estate. The total value of these assets is less than Rs 1,000 crore and will barely make a dent in Mallya's liabilities.

Mallya's real wealth lies in his shareholding in United Spirits Ltd (USL) and United Breweries Ltd (UBL). Both are blue-chip public companies listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

Mallya owns just under four per cent of USL (Diageo owns 55 per cent) and more than 32 per cent of UBL (Heineken owns just under 39 per cent). The market value of those holdings have doubled over the past year due to the multinational presence of Diageo and Heineken - and India's booming beer and spirits market. Mallya's wealth in these companies has also doubled in this period.

The value of Mallya's shareholding in USL is around Rs 2,400 crore at current market prices. The value of his shareholding in UBL is around Rs 6,700 crore, again at current market prices.

Some of Mallya's shares in these companies have been pledged to banks. That, along with the personal guarantee he has given those banks, makes it easier for lenders to sell pledged shares in the market. Pledged shares valued at Rs 1,244 crore have already been thus sold by creditor banks. Another Rs 1,250 crore lie in escrow accounts following Mallya's aggressive court action to stop the sale proceeds from those shares going to banks.

The non-pledged shares can also be sold once the Supreme Court compounds all proceedings in the Mallya case. These are stuck in various courts and tribunals across the country. Mallya has exploited India's slothful judicial system to his advantage.

Once all these court cases are brought under the single jurisdiction of the Supreme Court, banks, employees and other creditors (including the income-tax and service tax departments) have an excellent chance of getting their money back - all Rs 10,000 crore of it

Mallya is reportedly negotiating a settlement at around half this amount. He wants to pay the principal (about Rs 5,000 crore) but not the interest that has mounted over the past several years.

What is clear though is that Mallya's India-based assets in highly liquid blue-chip shares of USL and UBL run by international icons Diageo and Heineken cover his entire Rs 10,000 crore liability.

Foreign assets

But that's only half the story. Mallya owns a slew of businesses in Europe, America and the Middle East. Crucially, the non-compete agreement he signed with Diageo last month (for which he has already received a $40 million advance payment of the contracted $75 million) excludes Britain. In short, Mallya is free to start or run a liquor business in Britain any time he wants. He already owns Kingfisher Beer Europe Ltd.

The value of his other assets abroad (including several in the United States such as Mondocino Brewing Company Inc in California) are hard to quantify. He has lost control to Diageo of his Formula1 team and Royal Challengers Bangalore IPL franchise, but retains several other foreign assets - brewing companies, real estate, island resorts, race horses and yachts.

Back of the envelope calculations show that even if Mallya pays up the entire Rs 10,000 crore he owes his Indian creditors from his USL and UBL shareholding, he will still have a net worth of between Rs 8,000 and Rs 10,000 crore in assets abroad. By doing the right thing by his former Indian employees and lenders, Mallya's wealth will decline from an estimated current Rs 18,000 crore to Rs 8,000 crore. That will still leave him a dollar billionaire.

Money therefore is the least of Mallya's current problems. It is his cussedness in not doing the right thing - despite having the resources to do so - that stands out. He has been insensitive to his former employees by holding up their wages. The arrears in most cases are more than 12 months of salaries. One former employee has committed suicide. Several others have lost their homes, savings and gold.

Mallya ran up most of his debt between 2008 and 2013 during the go-go days of the UPA government. In 2010, an event occurred that led to what might suggest collusion between senior bank officials and Mallya.

As Subhomoy Bhattacharjee reported in Business Standard on March 11, 2016:

"It was an innocuous change of policy by the finance ministry in 2010 which allowed Vijay Mallya and several others to tap public sector banks for additional loans, riding on often weak credit appraisals. The finance ministry that year told its officers who were nominated on the boards of public sector banks to stay away from the board sub-committees tasked with examining big-ticket loans. The nominee directors were instead supposed to give their opinion on systemic and other macro issues concerning the banks. A few months later, Vijay Mallya applied for a sizable credit from the state-owned IDBI Bank and that was approved for about Rs 900 crore. As soon as the finance ministry made the decision, the Reserve Bank of India (RBI) also asked its nominee director to step back. The boards of state-run banks are populated, among others, by two nominee directors from the finance ministry and the RBI. The former is supposed to represent the interests of the government as the largest shareholder in the bank and the latter is expected to be an eye for the regulator in the boardroom. The decision to withdraw the officers from the inspection of individual credit decisions of the banks happened just before the banks in 2010 and 2011 began a massive credit drive for the infrastructure sector. Like Mallya's loan, which has turned non-performing, plenty of those loans given out from the period now sit on the books as bad ones."

While the UPA bears the principal responsibility for allowing banks to lend copiously (and possibly collusively) to Mallya's failing airline in 2010-14, the NDA government has been remiss too. The CBI, ED and DRI did not act on their notices to Mallya for several months.

In the end, it is this laxity that allowed Mallya, unfettered by any court warrant, to leave India legally on March 2.

Finance minister Arun Jaitley (who oversees the ED, I-T department and DRI) and home minister Rajnath Singh (who oversees the CBI) must share responsibility for these leaden-footed agencies.

The ED has summoned Mallya to appear before it on Friday, March 18. He is unlikely to do so and instead will seek an extension citing business meetings in London. The Supreme Court has issued Mallya a notice for a hearing on March 30. Mallya may not attend that in person either and ask for personal exemption through his battery of lawyers.

Meanwhile, a Hyderabad court has issued a non-bailable warrant against Mallya and Kingfisher's CFO returnable on April 13. The Serious Fraud Investigation Office (SFIO) and SEBI have launched their own investigations into Mallya's businesses, including the criminal charge of money laundering.

Mallya's confidence, however, stems from the fact that, when push comes to shove, he has assets far in excess of what he owes. India's tortoise-like judicial system is an ally. He intends to eventually pay up, but like a small shopkeeper is trying to minimise how much he must pay and when.

Money buys a lot of things. The one thing it does not buy is ethics

Follow@minhazmerchant on twitter

Two friends visit Parliament and rate Budget session
'And why does Rahul Gandhi cover his face with the palm of his hand? Is he naturally shy?'
Wednesday, March 9, 2016

The phone rang. "Suleiman!" A familiar voice crackled over the line.

"Hello, Anwarbhai," Suleiman Khan replied, placing one hand over his ear to hear his friend over the cacophony around him.

"Where on earth are you, Suleiman," Anwar Sheikh asked, as the sounds of people and traffic reverberated in his phone.

"I'm at Jumeirah Plaza mall in Dubai, Anwarbhai, doing some shopping. Here on a short visit. Things in Saudi aren't that great these days."

"Really," asked Anwar. "How so?"

"Well, the collapse in oil prices has hit the economy hard. The princes are thinking of stopping subsidies to people. Petrol prices are up and they may even introduce a value added tax."

Anwar made sympathetic sounds as Suleiman continued: "I'm thinking of relocating to Dubai, Anwarbhai. More stable. And they don't lash or behead people."

Anwar changed the subject. "Listen, Suleiman, I've got two visitors' passes for the post-Budget debate in Parliament. You must come. I'll introduce you to lots of MPs. If we're lucky we may even run into Sonia Gandhi and Rahul Gandhi. They are so classy, na?"

Suleiman nodded excitedly. "Yes, yes Anwarbhai, that would be great. I'll take the first flight out of Dubai to Delhi. Let's plan our Parliament visit while they're still debating the Budget.

Anwar picked up Suleiman at Indira Gandhi International airport the next day. "Nice flight?" he asked, looking at Suleiman's bags with an Emirates tag.

"Lovely. They upgraded me to Business. Watched a movie, Haider, on my personal video screen." Suleiman grimaced as he said that.

Anwar looked at him sharply as they drove out of the airport. "Nice movie, Haider, no?"

"Not really," said Suleiman. "I have relatives in the Kashmir Valley and they tell me the movie was like it was written by separatists. You know the type, Anwarbhai."

Anwar shifted uneasily in his seat. Suleiman was frank, too frank at times.

They arrived at Anwar's South Delhi home, settled down to a mutton biryani dinner and chalked out a plan for their visit to Parliament House the next day.

The two friends arrived at gate 12 of Parliament by 9.45am. They showed their security-cleared passes at the gate and deposited their mobile phones in a small glass-encased cabin where a surly officer laboriously noted down their details in a register. He gave then a round blue token to reclaim their mobiles on their way out of Parliament.

More security pat-downs followed. "After the Parliament attack in 2001, the security has been beefed up," said Anwar as they walked towards the open grounds in front of the steps leading up to Parliament House.

They walked past the private office rooms of various political leaders with name plates on each door. Suddenly Suleiman's eyes widened. "See Anwarbhai," he said pointing to a heavy wooden door with the name plate Sonia Gandhi. "Do you think she'll be in her Parliament office room now?"

"No Suleiman, she's already in the Lok Sabha. The post-Budget debate begins at 11.00 am sharp."

Suleiman continued to glance at the name plates on the doors to his right as they continued walking down the corridor. Ram Vilas Paswan…Ravi Shankar Prasad…Arun Jaitley...the names flashed by.

As they made their way to the visitors' gallery, Anwar nudged Suleiman. "That's Rahul there in the second row, sitting next to - "

"The young man with a sullen expression on his face," interrupted Suleiman.

Anwar looked at him disapprovingly. "That's Jyotiraditya Scindia, Suleiman," he said, dropping his voice respectfully. "He's royalty."

"I know, Anwarbhai," Suleiman said soothingly. "So why does he look so sullen all the time? And why does Rahul cover his face with the palm of his hand? Is he naturally shy?"

Anwar nudged Suleiman gently on his side with his elbow. "Quiet, Suleiman. Parliament rules for visitors are strict. We can't talk loudly and we can't even shift position. The marshals will evict us otherwise."

Suleiman was thoroughly confused. "But Anwarbhai," he whispered, "MPs shout and scream at the speaker - no one evicts them!"

"They're MPs, Suleiman," Anwar said exasperatedly. Shouting is part of their job."

The Budget debate began. Suleiman watched in fascination. Finance minister Arun Jaitley defended his Budget proposals vigorously as Prime Minister Narendra Modi looked on impassively.

"Modi's changed his hairstyle!" said Suleiman suddenly, nudging Anwar. "He's swept his hair back like Shahrukh Khan. Must be watching too many Bollywood movies." Suleiman cracked up at his own joke but fell silent as a marshal directed a stern gaze at him.

During the lunch break, the two friends sauntered out. They ran into a short, silver-haired man giving his take on the Budget to a bank of TV cameras. "That's Ashwani Kumar, the former UPA minister who resigned during the Coalgate scam," Anwar said.

The camera crews suddenly abandoned Ashwani and rushed towards Rahul Gandhi as he emerged down the steps of Parliament.

"Sir!" A TV reporter from an English news channel accosted Rahul. He smiled, mildly embarrassed, dimples on display.

"I'm in a hurry," he said. "Just one question, please."

The TV reporter, jostled by other crew, said breathlessly, "Sir, how do you rate this budget on a scale of 0 to 10?"

"Minus 1," said Rahul, a frown replacing the smile. "It's a suit-boot ki sarkar budget dressed up in a dhoti-kurta to fool our farmers."

Impressed with his own wit and flanked by a kurta-clad brigade of young MPs, Rahul marched off.

"Are they going to have lunch in Parliament's subsidised canteen?" Suleiman asked.

"Of course not," said Anwar. "They are going to a five-star hotel to have New Zealand lamb. The Taj Palace does lamb really well. Tender, melts in your mouth." It's only Rs 2,300 a plate."

There was a sudden flurry of excitement among the battalions of TV crew as two women walked down the steps of Parliament hand in hand.

"That's Smriti Iraniji and Mayawatiji," said Anwar.

Suleiman was bewildered." I thought Smritiji had promised to cut off her head and give it to Mayawatiji if her statement on Rohith was proved false on the floor of the House."

Anwar looked at his friend indulgently. "They're politicians, Suleiman."

Suleiman shrugged. "Let's go to Taj Palace for that New Zealand lamb," he said to Anwar, eyes twinkling with mischief. We may even run into Rahul. I want to ask him where he gets those grey Lacoste T-shirts.

Follow@minhazmerchant on twitter

Was Modi LeT's target
UPA's overwhelming desire to fix a charge of a fake encounter in Ishrat Jahan case was apparent as he rose to national prominence.
Thursday, March 3, 2016

In February 2004, India's intelligence Bureau (IB) began a special operation to hunt down an active Lashkar-e-Taiba (LeT) terror module.

According to credible intelligence inputs, the module had been tasked to assassinate "senior political leaders" in Gujarat. The obvious target was then chief minister Narendra Modi.

The module comprised four members: Javed Sheikh (alias Pranesh Pillai), Amjad Ali (a Pakistani national), Zeeshan Johar (also a Pakistani) and Ishrat Jahan (a college student in Mumbra and an alleged LeT suicide bomber).

Who were the men privy to the events that followed? Among others, there were three senior UPA government officials: National Security Advisor MK Narayanan who served as NSA in the Manmohan Singh government and was later appointed by it as governor of West Bengal; GK Pillai, home secretary when P Chidambaram was home minister between 2008 and 2012; and former Intelligence Bureau director Rajinder Kumar, again a UPA government appointee. All three have corroborated the events that unfolded.

Acting on specific intelligence inputs (including electronic intercepts between February and June 2004) on the LeT module's plan to assassinate Gujarat chief minister Narendra Modi and former deputy prime minister LK Advani, the IB planned its strategy carefully. Surveillance of the module was carried out over a period of several months. The movements of the four LeT terrorists were monitored as they travelled to Gujarat. They were confronted and gunned down on the outskirts of Ahmedabad on June 15, 2004.

Was this a fake encounter like the several hundred that take place routinely in Uttar Pradesh, Bihar and elsewhere in India but rarely attract media attention? Or was it a controlled counter-terrorism operation, based on credible intelligence, to abort an imminent threat by a terrorist module against an Indian politician?

This is what GK Pillai, one of India's most respected former home secretaries, who served during the Congress-led UPA government, said in a recent television interview: "It was a very successful intelligence operation. We managed to entice the LeT to send their shooter to India and were able to monitor their activities in India and to catch them. It was a very planned operation something intelligence agencies around the world do."

But doesn't "entrapping" a terrorist module amount to a fake encounter?

Pillai elaborated in his interview: "You are using the sources of LeT people... to be able to pass on information... It is always better to know when your enemy is coming in rather than wait for collateral intelligence where someone plans something without your knowledge."

Such pre-emptive counter-terrorism operations are conducted whenever a serious terror threat is clearly identified by intelligence agencies.

It is important to underscore that whether or not Ishrat was an LeT terrorist, a fake encounter is murder by other means and unacceptable in civilised society. The issue is whether the encounter on June 15, 2004, was staged by the police or a legitimate counter-terrorism operation.

Turn now to MK Narayanan, former NSA and IB chief. Did he believe the encounter was fake? In an article in The Hindu on February 18, 2016, this is what Narayanan wrote: "Intelligence agencies were aware that (Ishrat) was an LeT operative and a key figure in a carefully planned LeT operation. The operational trail went from Pakistan to Dubai, Kochi, Kashmir and finally Ahmedabad."

When the encounter took place on June 15, 2004, just outside Ahmedabad, the LeT terror module was primed to carry out its well-planned operation. It was armed with weapons and ammunition. The police engaged the terror module. All four members, including Ishrat, were killed.

Satish Verma headed the three-member SIT set up by the Gujarat High Court to help the CBI, then under the careful gaze of home minister Chidambaram, probe the Ishrat-LeT case. Verma, whose reputation precedes him, said flatly in an interview on March 2, 2016, to the Indian Express (one among several media interviews he gave earlier this week): "Our investigation has found that Ishrat along with three others had been picked by IB (Intelligence Bureau) days before the encounter. In fact, there was no intelligence input with the IB that a woman would be accompanying the alleged terrorists. There was no input on Ishrat. These people were kept in illegal custody and then shot dead."

This version contradicts the statements of three men of unimpeachable integrity: MK Narayanan, GK Pillai and Asif Ibrahim (the former IB chief). It is also sharply contradicted by a highly-placed intelligence source who said in an interview with DNA on March 2, 2016: "The first affidavit was based on credible intelligence inputs from Maharashtra police, Gujarat police, Intelligence Bureau and RAW that unequivocally opined that Ishrat Jehan and her three accomplices were part of a Lashkar-e-Toiba (LeT) module formed to launch an attack on Modi. It is clear now that Chidambaram played politics to file the second affidavit by removing these intelligence inputs. If the case was related to a fake encounter, why did he do this?"


Why indeed did the home ministry change its affidavit in September 2009, deleting the portion in its original affidavit that clearly stated Ishrat Jahan was part of an LeT terrorist module? In its first affidavit, filed in the Gujarat High Court on August 6, 2009, the UPA government said Ishrat was a member of the LeT. It filed detailed, intelligence-backed evidence pointing to Ishrat being an LeT terrorist.

Within weeks, according to GK Pillai, someone at the "political level" ordered the affidavit to be changed. The new affidavit, filed in court on September 29, 2009, removed all mention of Ishrat being an LeT operative.

It is unprecedented for a government to recant within weeks a key part of an affidavit it has filed in court. When Chidambaram was asked at his recent book launch to explain why this was done on his watch, he did not offer an answer but in later television interviews attempted to defend his ministry's actions. Chidambaram acknowledged that he ordered a revised affidavit because the first one filed by his own ministry was "ambiguous".

The Supreme Court has meanwhile agreed to hear a public interest litigation (PIL), possibly this Friday or next Monday, seeking contempt proceedings against Chidambaram for perjury and misleading the court. The PIL also calls for quashing the charges against the Gujarat policemen accused in the Ishrat Jahan case and seeking compensation for the time they have spent in jail.


What do the facts tell us thus far:

One, that Ishrat Jahan was an LeT terrorist. Three senior, credible officers with close knowledge of the case have gone on record to say so: ex-NSA MK Narayanan, former home secretary GK Pillai and ex-IB director Rajinder Kumar. Asif Ibrahim, the highly respected former head of the IB, has also confirmed Ishrat's LeT links.

Two, that Ishrat was killed not in a fake encounter but in a controlled counter-terrorism operation, along with Sheikh, Ali and Zeeshan, as they headed towards Ahmedabad to carry out a terrorist attack. Ali and Zeeshan were identified as Pakistani nationals.

Was Sheikh an innocent consort of Ishrat? In a report published in the Indian Express last week, Praveen Swami wrote: "Immigration records show that on March 29, 2004, Javed Sheikh flew to Oman, on passport E6624023, identifying him as Pranesh Kumar M Gopinath Pillai - a travel document obtained illegally, in addition to an earlier one in his Muslim name. He flew back to Mumbai on April 11."

Sheikh's antecedents are thus clearly suspect.

The Central Bureau of Investigation (CBI), self-avowedly a caged parrot during the Manmohan Singh government, and SIT chief Satish Verma claimed the four LeT terrorists were killed "in cold blood." This led to a damaging schism between the IB and CBI which was resolved only after the change of government in May 2014.

The overwhelming desire to fix a charge of a fake encounter in the Ishrat Jahan case and portray Gujarat as a lawless state was apparent as Modi rose to national political prominence. The CBI was pitted against the IB to achieve cynical political ends.

The evidence meanwhile continues to mount. Following written allegations of torture against Satish Verma levelled by RVS Mani, former under-secretary in the home ministry, AK Jain, a former joint secretary in the home ministry, confirmed in a television interview on March 2 that IB's reports on Ishrat being an LeT terrorist were "authentic". Jain was the officer responsible for collating facts on Ishrat.

In another indictment of the CBI and the SIT's Satish Verma, former IB director Sudhir Kumar said this week that "IB officers were victimised" for providing intelligence inputs confirming both Ishrat's LeT links and more significantly the fact that the incident was a legitimate counter-terrorism operation.

Worryingly, instead of strengthening India's intelligence apparatus, the UPA government, wittingly or unwittingly, weakened it at a time (September 2009) when it should have been supporting the IB's inputs on the Pakistani ISI's proxy terror attack on Mumbai in 2008. The UPA government, however, employed its resources then to undermine and demoralise India's intelligence assets - indirectly helping the ISI's terror strategy against India. This will resonate strongly when a judicial inquiry is ordered into the issue.

Such a judicial inquiry must answer two questions: one, was the second affidavit filed by the UPA government on September 29, 2009, contradicting its first affidavit naming Ishrat as an LeT member, a device to derail Modi, then a rising BJP leader? Two, did this second affidavit give the LeT the official alibi it needed to escape responsibility in 2009 for an unsuccessful political assassination in 2004?

Significantly, it was in 2009 that Pakistan's ISI came under intense global pressure following the November 2008 terror attack on Mumbai and needed just such an alibi.

If the answer to both questions is in the affirmative, the judicial inquiry must probe all the events around the alleged LeT plot to assassinate Modi and Advani and whether any Indian politicians played a role in undermining an investigation into such a plot.

The new PIL in the Supreme Court may finally uncover the truth and lead to the prosecution of all those, to use GK Pillai's anodyne words, at the "political level" who subverted the Ishrat investigation and misled the Supreme Court.

Follow@minhazmerchant on twitter

Jaitley's sharp Left turn shows Modi eager to please Lutyens' Delhi
It is unconscionable to penalise middle class savers in such arbitrary fashion.
Tuesday, March 1, 2016

First, the good news. Finance minister Arun Jaitley didn't let his Lutyens' buddies down: he presented a socialist budget Congress president Sonia Gandhi would have been proud of.

That's actually the bad news. Spooked by Congress vice-president Rahul Gandhi's "suit-boot ki sarkar" jibe, Prime Minister Narendra Modi has tilted Left. His finance minister Arun Jaitley, who like Rahul in private is a Savile Row suit capitalist and in public a kurta-pyjama socialist, was delighted to oblige.

That's why the Union Budget for 2016-17 looks as if it was written with one eye on the Lok Sabha election in 2019 and another on jobs, GDP growth and fiscal prudence that would protect India's international credit rating and lead to lower bank interest rates for companies groaning under debt.  

Like everything that's hybrid, this Budget falls between two stools.

The good points:

  1.  An allocation of Rs 2.87 lakh crore for gram panchayats, villages and towns, along with the pre-budget crop insurance scheme, will ease rural distress, improve rural infrastructure and is one of the Budget's best points.
  2. Spending Rs 2.18 lakh crore on roads, railways and national highways is another excellent move. It will upgrade several state roads to national highways, boost civic projects and create jobs.  
  3. Keeping the fiscal deficit down to 3.9 per cent in 2015-16 and 3.5 per cent in 2016-17 will infuse confidence amongst global investors in the government's economic management. It will allow Reserve Bank of India (RBI) governor Raghuram Rajan to lower interest rates, drive consumption and kickstart corporate investment. This is why the stock market surged on Tuesday when it had absorbed the fine print of the budget.

In the fine print though lies a devil or two. The biggest is the proposed tax on 60 per cent of Employee Provident Fund (EPF) withdrawals after April 1, 2016.

This isn't just a bad idea; it is unconscionable to penalise middle class savers in such arbitrary fashion. Jolted by the angry public reaction, the ministry of finance has said it might alter some elements of the proposal by taxing prospectively only the interest (not the principal) on EPF. That too though would be deeply unpopular.

Other negatives? Allocating Rs 25,000 crore for bank recapitalisation is clearly a drop in the ocean. Banks need at least Rs 3.50 lakh crore to emerge from the black hole their balance sheets were sucked into between 2004 and 2014.

The new tax of 10 per cent on dividends above Rs 10 lakh is another nice socialist gesture that will punish dividend-paying companies which already pay tax on dividends before they are distributed to shareholders and create new jobs in the economy.

Jaitley had promised in his previous budget to lower corporation tax from 30 per cent to 25 per cent by 2019. He has now committed to bringing it down to 29 per cent in 2018, making the 25 per cent target for 2019 unrealistic.

To compound matters, the FM has added new cesses, including an infrastructure cess. This will fuel inflation. Carmakers like Tata Motors have already announced steep increases across models. The cess also flies in the face of simplifying the tax regime that Jaitley has rightly tried to achieve by forming a new tax dispute resolution mechanism and widening the concept of presumptive tax to ease the burden on smaller companies and professionals.

By not repealing the retrospective tax - former UPA finance minister Pranab Mukherjee's most lethal legacy - Jaitley has shown his lawyer's instincts. These are not a reformer's instincts. The FM's offer to waive penalty and interest on retro tax claims pending against, for example, Vodafone is academic since the company, citing a Supreme Court order, claims no tax is payable in the first place on its offshore transaction.

An eerie silence hung over Jaitley's private office room in Parliament House when I arrived, following an invitation to watch his Budget speech live from there. The PM later gave the Budget an A+. Why? Because it's ostensibly a farmer-oriented, rural-focused Budget and may seem to suit an electoral purpose. But with little devils in the detail still popping up here and there, that may be wishful thinking

Follow@minhazmerchant on twitter

Modi's new Union cabinet must reflect talent, not talent deficit
It's time to rebuild a strong, performance-driven core team as he approaches the second anniversary of his prime ministership.
Monday, February 22, 2016

Talent deficit. Poor bench strength. Underperforming ministers. The murmurs are growing louder. The prime minister's recent decision to convene a special cabinet meeting every month (apart from regular cabinet meetings every Wednesday) to specifically review the progress of various ministries shows he recognises the problem.

A cabinet reshuffle is around the corner, probably after next Monday's Union Budget. What are Prime Minister Narendra Modi's options? There needs to be a fair bit of reshuffling to give the cabinet balance and strength.

Here's what Modi's new cabinet could look like.

Home minister

Sushma Swaraj has the toughness and experience to head this vital ministry in place of the soft-spoken Rajnath Singh. Her first-hand knowledge of Pakistan as external affairs minister will be an asset. She is forceful, articulate and driven. Swaraj would work well with National Security Advisor Ajit Doval to revitalise India's counter-terrorism strategy and rebuild the country's covert operational capability.

External affairs minister

Arun Jaitley is the cabinet's most articulate minister. As the new external affairs minister he could continue the excellent job Sushma Swaraj has done and help Modi consolidate the foreign policy gains India has made in the past 20 months.  

Finance minister

This is one of the cabinet's most sensitive and important ministries. Modi's re-election in 2019 needs robust job-creating economic growth. As road transport and highways minister, Nitin Gadkari has been a standout performer in the NDA government. His ministry is building, on average, 18 km of roads a day. Infrastructure projects too are moving ahead at rapid pace.

As PWD minister in the Maharashtra government in 1995-99, Gadkari built the Mumbai-Pune expressway. He brings private sector professionalism to government. Moving him to the finance ministry would be welcomed by industry. His pragmatism and result-oriented approach are needed in a ministry dominated by powerful, status-quoist bureaucrats. Gadkari can retain additional charge of the road transport and highways ministry, one of the government's success stories. As he told a business conference recently: "Today, we have already finalised road contractors for 1.5 lakh km. The target is 5 lakh km for five years. We'll complete this target within three years. Things are moving fast, corruption-free and time-bound. As per a World Bank report, Rs. 1 crore of investment in roads gives jobs to 800 people. Through my ministry, I will give jobs to 50 lakh people and will add 2 per cent to GDP. It will give a boost to the steel and cement industries."

Gadkari enjoys the confidence of RSS leaders and can get them on board over key economic reforms. As finance minister for the next 38 months of this government's tenure, Gadkari would also restore confidence in the Indian economy among both global and domestic business leaders.

Defence minister

Manohar Parrikar is just getting to grips with a complex ministry long under the influence of shrewd ministry of defence (MoD) bureaucrats, arms dealers and their proxies. Parrikar has brought a whiff of integrity to the ministry. But he needs a strong MoS with technical knowledge of what the armed forces require. The decision to indigenise weapons production is a move in the right direction. But much more needs to be done to modernise India's under-equipped armed forces. Parrikar's performance remains under watch.

Parliamentary affairs minister

Rajnath Singh enjoys Modi's confidence but has proved an uninspiring home minister. A thakur, he is an honest, straightforward politician of the old school who could do well as parliamentary affairs minister in place of Venkaiah Naidu (who can continue to hold charge of the urban development, housing and urban poverty alleviation portfolio). While Naidu has Modi's ear, he hasn't been able to break the logjam with the Opposition. The emollient approach of Rajnath Singh would be more productive in parliament.  

Railways minister

Suresh Prabhu, after a slow start, has begun to hit his stride. Improvements and innovations in the railways are noticeable. Prabhu, however, has been criticised for lacking speed and imagination in turning around the railways, one of India's biggest employers. His performance too will remain under watch as he presents the Railway Budget on Thursday, February 25.

Power and coal minister

Piyush Goyal has been a standout success. On his watch, coal auctions have become transparent. Village electrification is gathering pace with information on progress available online in realtime. Goyal should be retained and promoted to full cabinet rank (he is currently MoS with independent charge).

Commerce and industry minister

Nirmala Sitharaman, contrary to recent criticism, has performed well. She is honest, hardworking and responsive. With more experience she will serve India's commercial interests well, especially in crucial World Trade Organisation (WTO) negotiations. The decline in merchandise exports by around 18 per cent is a challenge Sitharaman will need to overcome. Like Goyal, she should be promoted as full cabinet minister (she too currently is MoS with independent charge).

HRD minister

A talented technocrat and educationist, TV Mohandas Pai would be excellent in this crucial ministry. He has hands-on experience of how the education sector can be reformed. He is the only outsider in this refurbished cabinet but has impeccable credentials for the job. If this experiment works well, it would open the window to more technocrats being inducted into the cabinet as is common practice in the United States.

Information and broadcasting minister

Smriti Irani would ensure that the Modi government's achievements do not go unheralded. She is spunky, articulate and media-savvy. Her talent would flourish in the I&B ministry and help the government vastly improve its communications strategy.

Key ministries like environment (Prakash Javadekar), agriculture (Radha Mohan Singh), telecom (Ravi Shankar Prasad), petroleum (Dharmendra Pradhan) and civil aviation (Ashok Gajapathi Raju), among others, need strengthening with the induction of additional ministers of state who possess domain expertise.

Technocrats such as E Sreedharan, who developed Delhi's metro, geneticist MS Swaminathan, who led India's agricultural renaissance, and Nandan Nilekani, who helped create the Aadhaar biometric card, could be given advisory roles to infuse the government with greater depth.

In sum then, this is how to top ten key ministries in a reshuffled Modi cabinet should ideally look:

Home minister: Sushma Swaraj

External affairs minster: Arun Jaitley

Finance minister: Nitin Gadkari

Defence minister: Manohar Parrikar

Parliamentary affairs minister: Rajnath Singh

Railways minister: Suresh Prabhu

Power and coal minister: Piyush Goyal

Commerce and industry minister: Nirmala Sitharaman

HRD minister: TV Mohandas Pai

Information and broadcasting minister: Smriti Irani

It's important for Modi to rebuild a strong, performance-driven cabinet as he approaches the second anniversary of his prime ministership. The 2019 Lok Sabha election looms over a murky political horizon.

Follow@minhazmerchant on twitter

Meryl Streep is African. So are we
Modern humans evolved in east Africa, roughly where Tanzania and Kenya are today, between 50,000 and 65,000 years ago.
Friday, February 19, 2016

Oscar-winning actress Meryl Streep was slammed on social media recently for saying: "We're all Africans, really."

She was responding during the Berlin Film Festival last week to the controversy over all-white Oscars: for years there hasn't been an African-American Oscar winner. The 2016 awards ceremony on February 28 won't change that. All the nominees and jury members are white - or European-Americans, a term that has become popular in the racially-charged US presidential elections.

So what did Streep really mean? Here's what she said: "There is core of humanity that travels right through every culture, and after all we're all from Africa originally. Berliners, we're all Africans, really."

Across the world, flak followed. One said acidly: "You'd think Meryl Streep would be smarter than to say, 'We're all Africans, really' in any context, but alas."

But Streep of course is right: we, really, are all Africans.

Modern humans (Homo sapiens) evolved in east Africa, roughly where Tanzania and Kenya are today, between 50,000 and 65,000 years ago. The vast movement and migrations of humans now began. One stream of migrants went north from Africa to Europe. As they adapted to colder climes and lesser sunlight, genetic mutations took place. Melanin cells which give skin its colour diminished, resulting in pale-skinned people. Hair follicles get their colour from melanin too: they turn lighter and fairer as melanin cells reduce. Lack of sunlight in Europe and lower melanin concentration led to the iris turning from brown to grey and then blue.

Hence the blonde, pale-skinned, blue-eyed north European of today - Meryl Streep's ancestor.

As a recent report says: "Scientists have uncovered an unknown chapter of human history - a major population turnover in Europe at the end of the last Ice Age. The new data shows the mitochondrial DNA of three individuals who lived in present-day Belgium and France before the coldest period in the last Ice Age belonged to haplogroup M. This is remarkable because haplogroup M is effectively absent in modern Europeans but is common in modern Asians, Australasians and Native Americans. The researchers said the discovery now suggests that all non-Africans dispersed rapidly from a single population, at a time they place around 50,000 years ago."

A second stream of humans from east Africa set off on a longer route that took them across the Eurasian land bridge to north Asia, today's China and Mongolia. Genetic mutation again occurred. Due to "snow glare" (where there is extreme cold but also lots of sunlight), a second protective skin developed over the eyelids. This mutation took place over thousands of years and resulted in the narrower eyes of the Chinese and their racial derivatives in east Asia - from Vietnam to Korea.

A third stream of migrants from east Africa traversed across the Middle-East, the Khyber Pass and the Indian subcontinent. Over the millennia, some of these early humans landed up, through rudimentary sea rafts, in Indonesia and Australia. They carried with them their African genes. Aborigines in Australia developed their genetic traits in a milder climate, similar to east Africa, with physical characteristics resembling their ancestors.

By around 15,000 BC, four races had acquired their current genetic features: Europeans ("Caucasoids"), north Asians ("Mongoloids"), Aborigines ("Australoids") and the original Africans ("Negroids").

These are the academic terms for the four races that today inhabit the world. Over the last 10,000 years more migratory movements and inter-breeding have led to sub-racial groups. In the Americas, indigenous (Red) Indians and Aztec Indians are related to peoples who crossed over millennia ago from north Asia across the Bering land strip (now the Bering sea strait) in Russia to North America and thence to South America.

In the Indian subcontinent, a thoroughfare between the west and east, genetic mingling was particularly widespread. Hence the diversity of colour and facial features from Kashmir to Kerala, Tripura to Tamil Nadu.

Meryl Streep was right: We are all Africans. Really.

Follow@minhazmerchant on twitter

America's Syrian misadventure is a blot on Obama's legacy
The former has gained favour with the Right in much the same way as the latter appeals to the Left.
Wednesday, February 16.02.2016

History will not judge American foreign policy kindly. In the Middle-East especially, the United States has proved a cynical and damaging interloper.

Last week's 17-nation agreement on "cessation of hostilities" in Syria is a ploy to halt the Russian-Syrian advance in provinces held by insurgent and terrorist groups opposed to the Syrian government.

Since 2011, the US and its western allies have made a concerted effort to replace Syrian president Bashar al-Assad. The US has clandestinely provided arms and funds through the Central Intelligence Agency (CIA) to insurgent groups fighting alongside the terrorist al-Nusra front. These groups project themselves as a credible political "opposition" to Assad.

The Syrian president has over the years proved a cruel dictator. Thousands of Syrians have died, some allegedly after chemical attacks. Many more have fled the country. But the insurgent groups Washington supports as his replacement could prove far worse.

The Syrian civil war, fuelled by western weapons and money, has devastated Syria. Nearly 2,50,000 Syrians, mostly civilians, have died in the fighting. Over 4.50 million have become refugees, in Turkey and elsewhere, including large numbers in Europe. Till a few months ago, the sectarian civil war was being won by the insurgent and terror groups opposed to Assad. His eviction seemed assured.

The entry of Russia into the conflict on September 30, 2015, changed everything. Moscow began bombing the al-Nusra front and other groups who were making rapid advances on Assad's exhausted government forces. Even Damascus, the Syrian capital, seemed vulnerable.

The tide turned a month ago following increased Russian aerial strikes on anti-Assad forces. Syrian government troops are now encircling Aleppo in the north, Syria's largest city and the opposition groups' stronghold. If the city falls and insurgent groups are cut off from their supply links on the Turkish border, removing Assad from power will be next to impossible.

That is why the US convened a 17-nation security conference in Munich on February 12-13, 2016, to seek a ceasefire. The clear objective: to stall the Russia-backed Syrian government's recapture of territory it has lost to US-backed opposition groups over the last year.

The ploy won't work. While Russia is party to the "cessation of hostilities" agreement, it has not, and will not, stop bombing opposition-held positions. Assad too has vowed to fight on till all lost territory is regained, irrespective of the Munich agreement. Besides, the ceasefire agreement does not cover al-Nusra, the most powerful of the terrorist and insurgent groups fighting Assad.

The elephant in the room is of course the Islamic State (ISIS). The self-proclaimed caliphate has been weakened by sustained counter-attacks from Iraqi forces supported by Iran and Lebanon's Hezbollah. While steadily losing territory in Syria and Iraq, however, ISIS is gaining ground in lawless Libya where it has exploited a dysfunctional government wracked by two factional groups vying for control of Tripoli.

So far ISIS hasn't seized control of any oilfields in Libya. But as the Syrian civil war drags on, the US and its allies, in their obsession to evict Assad, could end up giving ISIS a lifeline in Libya.

The consequences for the Middle-East and beyond would be catastrophic. Former President George W. Bush made a tragic error by invading Iraq and laying the ground for the rise of ISIS in the post-Saddam Hussein vacuum. President Barack Obama risks making another seminal error by removing Assad. If that happens, terrorist groups like al-Nusra will fill the vacuum in Syria as ISIS did in Iraq in 2012.

That fortunately is unlikely to happen following the Russian-Syrian offensive, despite the Munich conference ceasefire agreement.

Assad is an Alawite (a Shia-affiliated sect). Sunni Saudi Arabia and Turkey fear an Iran-Iraq-Syria axis that will challenge Sunni ascendancy in the Middle-East. They are threatening to send ground troops to counter the Syrian-Russian advance. But judging by the Saudi experience in Yemen (where, after nearly a year of fighting the Shia Houthi rebels, a stalemate persists), Saudi troops are unlikely to frighten the Russians or Assad's rejuvenated troops.

Sadly, President Obama's last year in office will be marked not just by a foreign policy failure in Syria and Libya. It will also be discredited by Washington's noxious attempt to destabilise another Middle-East country by indirectly supporting terror groups like al-Nusra and allowing ISIS time to regroup.

History will excoriate American foreign policy in the Middle-East, but President Obama's personal legacy will not escape untarnished.

Follow@minhazmerchant on twitter

Rise of Trump and Sanders reflects polarisation in American politics
The former has gained favour with the Right in much the same way as the latter appeals to the Left.
Wednesday, February 10.02.2016

As results from the New Hampshire primary poured in on Wednesday morning, two things became clear. One, support for Republican frontrunner Donald Trump remains strong. He won New Hampshire with a commanding 35 per cent voteshare. Two, Marco Rubio, following a poor performance in last Saturday evening's Republican debate on ABC TV, is slipping. He finished fifth with 10 per cent voteshare. A week ago he looked like the centrist Republican candidate most likely to beat Hillary Clinton in the presidential election this November.

Hillary herself lost to Bernie Sanders in New Hampshire's Democratic primary but is leading her rival nationally by a large margin. That margin though may narrow in the coming weeks as Hillary's problems over classified email tampering mount.

The rise of Trump and Sanders reflects the sharp polarisation in American politics on both the right and left. Sanders is a socialist who appeals to young middle-class voters cut off from the great American dream: a good job, a nuclear family, and a suburban home with a pool and barbecue pit. Young Americans with a college education have, on average, debts of nearly $100,000. Some will have reached retirement age by the time they pay off their education loans and house mortgages.

Middle-income wages in America aren't rising. Unemployment hit a low of 4.9 per cent last month but jobs often offer little above the minimum wage. While the rich have grown richer, the poor are stuck in low-paid jobs and high debt. Sanders has tapped into this angst. Hillary, in contrast, represents Wall Street: sharp trading practices, million-dollar salaries and huge bonuses.

There was an outcry when Hillary recently disclosed that she had received $6,75,000 (Rs 4.60 crore) for three speeches. Most middle-class Americans with wages of $25,000 a year earn that much in a lifetime. Left-leaning Democrats see in Sanders a man committed to their values, not Wall Street's.

By playing on the rising fear and anger among Americans over Islamist terrorism and illegal immigration, Donald Trump has polarised the right in much the same way as Sanders has polarised the left. Trump has a narrow but strong support base. In a fragmented field that he has so far faced in the Republican primaries, the split is enough to help him win. But as the field narrows, Trump could run into a wall. Consider the math.

In head-to-head presidential match-ups, Trump trails Hillary by five per cent. In contrast, Rubio leads Hillary by 4 per cent. Trump also has the highest "unfavourable" rating among Republican candidates. According to Public Policy Polling, Trump has a net "favourable" score of only seven per cent. Rubio has the best net favourable score (28 per cent) among Republican candidates. In a head-to-head against Trump, Rubio leads 52-40 per cent. That though could change after Rubio's meltdown in New Hampshire.

Despite his poor performance in Saturday's Republican debate (where New Jersey governor Chris Christie accused him of being a neophyte and unprepared to be president), Rubio is still the man most likely to appeal to centrist Republicans. If he does well in South Carolina (which holds its primary on February 20), Rubio will recover lost momentum. He is the one Republican with crossover appeal to Democrats. As a Hispanic, and the son of poor Cuban immigrants, he will attract America's largest minority comprising 17 per cent of the electorate. If Hillary wins the Democratic nomination - which is likely despite the New Hampshire verdict - she will be electorally most vulnerable to Rubio among all Republican challengers.

Hillary could also suffer an anti-incumbency backlash after President Barack Obama's eight-year tenure. Resentment against America's first black president has been building steadily. The US remains a closet racist society. Till the early-1960s, people of colour were legally barred in southern states from entering white-only restaurants or enrolling in segregated schools. It took Martin Luther King and the Civil Rights Act of 1964 to drag America into the modern world. John F Kennedy's presidency in the early-1960s may have been the Age of Camelot for most Americans but for coloured folk in states like Mississippi, Alabama and South Carolina it was the age of institutionalised, legalised racism.

With such history to live down, race and religion play an important role in US politics. The evangelical Christian right is powerful and backs Ted Cruz who invokes God in every rally speech. The parallels with India are stark. Dalits and Muslims still face discrimination. Like African-Americans and Hispanics, they vote in blocs. Religion and caste play as important a role in Indian elections as religion and race do in US elections.

Anti-Islamist sentiment in America is strong. Unlike in India, however, Muslims comprise a tiny one per cent of America's population. The need to pander to a make-believe secularism is absent. But as a mirror image to India's communally-charged politics, American politicians pander ceaselessly to Christian evangelists who can make or break a candidate's electoral fortunes.

Meanwhile, Jeb Bush's unexpectedly strong fourth place finish in New Hampshire (behind Trump, John Kasich and Cruz with 11 per cent voteshare) has given him a straw to clutch on to. Nationally though, Bush trails Trump, Cruz and Rubio by a wide margin. Along with Hillary Clinton's faltering campaign momentum, that underscores how different America's electoral democracy is from India's in at least one respect: your surname gets you to the starting block, but not past the finishing line.

Follow@minhazmerchant on twitter

Can Rahul Gandhi be India's PM in 2024? We're about to find out
The Congress scion has failed to build the party of Nehru, Patel, Bose and Azad into a genuinely democratic organisation.
Friday, February 5, 2016

Rahul Gandhi doesn't expect to be prime minister in 2019. His target is 2024. Time is on his side. In May 2024, he will still be only 53. Narendra Modi, even if he wins a second term in 2019, will be 73 in 2024. Rahul believes that his time will then have come.

Prediciting so far into the future in politics is of course foolhardy. Events can overturn the best-laid plans. Still the Gandhi family's blueprint is clearly etched. Sonia Gandhi will hand over the Congress presidency to Rahul in the course of the next one year, possibly earlier. She will turn 70 in December 2016: a good time to bequeath the fief.

Congress old-timers who've blocked Rahul's coronation for a while, fearing their own obsolescence, have more or less come around. Rahul's hyperactivism in recent months has been directed as much at them as at the BJP.

The old guard in the Congress has for long doubted whether Rahul had fire in his belly. They persuaded Sonia to carry on as president last year. She radiates a European sense of purpose. Her body language is assertive. She speaks with firmness that brooks no dissent.

Rahul, half-European, quarter-Kashmiri and quarter-Parsi, is milder. It has taken him 12 years in Parliament to capture the aggression his mother projects effortlessly. And yet, when it comes to the crunch, Sonia is ruthless, Rahul conciliatory. A recent example highlighted the difference between mother and son. When the party journal Congress Darshan called Sonia's father a fascist she had the magazine's editor sacked in 24 hours.

Sanjay Nirupam, in overall charge of the publication, was also on the chopping block despite his contrite apology. When Rahul visited Mumbai, he met Nirupam and accepted his apology.

Sonia was still furious. The F-word (fascist) had hit a raw nerve. She insisted on Nirupam's sacking till Rahul intervened. Nirupam survived.

Unfortunately for Rahul, he is not a natural politician. But then neither was his father. Rajiv Gandhi joined politics at the age of 36, contesting his first Lok Sabha by-election in 1981 from Amethi, months after younger brother Sanjay Gandhi's death in an air crash.

By 40, he was prime minister, following his mother Indira Gandhi's assassination. At 46, he was dead.

By contrast, Rahul's progression has been glacial. He will be 46 this June and has still not held a constitutional post. As vice-president of the Congress, a family company, he has not had to deal with meaningful opposition within. He doesn't have to report to anybody. He isn't accountable to anyone.

At his age, Rajiv had been prime minister for five years, faced huge crises, including the defection of close confidants VP Singh, Arun Singh and Arun Nehru, carried out complex negotiations in Sri Lanka, Punjab, Assam and Mizoram, and countered fierce media attacks over Bofors before becoming an outspoken opposition leader in Parliament for over a year.

In comparison, Rahul has had it easy. Out of power, he has the advantage of attacking Prime Minister Narendra Modi without fear of serious retaliation. As the prime minister, Modi has to preserve the impression of being above the fray. The aggressive campaigner Modi of 2014 was a very different politician from the high-minded prime ministerial-Modi of 2016.

Rahul has taken full advantage of this. But the question remains: does Rahul have the stomach for the top job?

The same question was asked of Rajiv when he assumed the prime ministership following his mother's assassination. In the recently published second volume of his memoirs, President Pranab Mukherjee writes that on the flight from Calcutta to Delhi after hearing the news of Mrs Gandhi's assassination, Rajiv asked him if he "would be able to manage as prime minister".

A few months after that conversation, I interviewed Pranab Mukherjee. After also interviewing others who were on that Calcutta-Delhi flight along with Rajiv, this is what I wrote in my biography Rajiv Gandhi: The End of a Dream (pg 136-139), published by Penguin:

"After reading the message twice over I asked the policeman near our car to do three things immediately," Mukherjee told me. "First, to ascertain whether a pilot could be contacted at Calcutta by wireless and, if so, to keep him standing by to fly to Delhi by an air force jet. Second, to contact simultaneously the air force bases in Kolaikunda and Calcutta and keep one air force jet standing by at both places. And third, to keep us informed every five minutes over the car radio about the latest news from Delhi."

By now it was 9.45am. Mukherjee, Ghani Khan Chowdhury and Rajiv (still accompanied by his security officer) abandoned their Ambassador and got into a Mercedes (which was a part of the convoy) and sped off towards the junction at Kolaghat. "We thought the Mercedes would make better time than the Ambassador, hence the switch," Mukherjee told me.

Meanwhile, Rajiv put on the car radio and tuned into BBC. At around 10.00am the three men, sitting silently in the back seat of the Mercedes, now speeding towards Kolaghat at eighty miles per hour, heard the news of the assassination with shocked disbelief. BBC did not confirm Mrs Gandhi's death but did report that she was at the All-India Institute of Medical Sciences (AIIMS) in critical condition. The broadcast went on to give details, sketchy as they were then, of the shooting and the suspected assassins. The men sat in the car in grim silence. "The only words Rajiv spoke," recalls Mukherjee, "turning to look sideway at me, were: 'Is this all she deserved?'"

The three men flew by helicopter to Calcutta, 30 miles away. Two aircrafts were standing by at the Calcutta airport. Within minutes Mukherjee, Chowdhury and Rajiv were on board an Indian Airlines (IA) Boeing in which they were joined by Uma Shankar Dikshit, his daughter-in-law Sheila Dikshit, Lok Sabha speaker Balram Jakhar and veteran Congress leader Shyamlal Yadav. Accompanying them were Lok Sabha secretary S Aggarwal and Rajya Sabha secretary S Kashyap.

The IA Boeing left Calcutta for Delhi at 1.15pm. Inside the plane the mood was sombre. Mukherjee, Dikshit and Rajiv sat in seats 2A, 2B and 2C, just behind the cockpit; Rajiv was seated next to the aisle. Within minutes he made his way to the cockpit where he had spent 12 of the last 16 years as an airline pilot. In the cockpit, the atmosphere was equally tense. The pilot, in continuous touch with ground control, kept Rajiv informed of the latest situation in New Delhi.

At around 1.25pm the news Rajiv had subconsciously expected, but dreaded to hear, came crackling over the aircraft radio. Mrs Gandhi had succumbed to her injuries.

A few minutes later, at 1.30pm, an expressionless Rajiv came out of the cockpit and told Mukherjee and Uma Shankar Dikshit that Mrs Gandhi had died. His voice was calm, his composure striking. "He was in complete control of himself," recalls Mukherjee, "though he was obviously in deep shock."

Mukherjee, as the seniormost minister in Mrs Gandhi's cabinet, was now unofficially in charge of the government. "I broke down completely and wept," he confessed to me. "I went to the bathroom and was there for half-an-hour trying to compose myself. I don't remember what happened for the next 30 minutes."

Balram Jakhar, who as speaker of the Lok Sabha would have a pivotal role to play in ensuring an orderly succession, finally asked Mukherjee bluntly: "Do you think Rajiv should be inducted as prime minister?"

In his interview with me, Mukherjee recalled the conversation: "I said yes, he must be inducted as prime minister. Further, I pointed out that if we announced Mrs Gandhi's death at that stage, the country would be without a government. President Zail Singh was also out of town, remember. I urged them all to ensure that All India Radio and the national TV network should not announce the death till Rajiv had been sworn in as PM."

Everyone agreed with Mukherjee on this point and it was thus that AIR and Doordarshan did not officially broadcast the news of Mrs Gandhi's death till evening, long after the international media had confirmed the news. By then Rajiv was about to be sworn in as the prime minister.

Rahul has a bit of Rajiv in him. But he has a lot more of Sonia. The mother-son duo run a tight ship. The Congress has no credible leader to challenge the family. Historian Ramachandra Guha said recently that Rahul is unfit to be prime minister because he simply isn't bright enough. Guha is wrong. You don't need to be brilliant to be prime minister. If you did, a neuroscientist or physicist would be one. What you need is common sense - and the common touch.

The Budget session of Parliament beginning on February 23 will reveal whether Rahul has matured as a political leader. The first job of such a leader, of course, is to reject dynastic privilege and build the party of Jawaharlal Nehru, Sardar Patel, Netaji Subhas Bose and Maulana Azad into a genuinely democratic organisation.

That task proved beyond Indira, Rajiv and Sonia. It could alas prove beyond Rahul.

Follow@minhazmerchant on twitter

Budget 2016 is make-or-break for Jaitley
The Union finance minister should unveil a bold plan to simplify personal income tax and exemptions.
Tuesday, February 2, 2016

The early signs aren't good.

Union finance minister Arun Jaitley has warned that the 2016-17 Union Budget he delivers on February 29 will not be "populist".

Let's decode that. It means, first, that Jaitley will repeat the mistakes of his first two Budgets in July 2014 (interim) and February 2015 (his first full Budget). The basic mistake is to treat the Budget as a mere balancing of the nation's books. As long as the fiscal deficit for 2015-16 is kept to the promised 3.9 per cent of GDP, Jaitley and his team of bureaucrats and economists will be happy. They shouldn't be.

India's economy is in a deflationary phase. Industrial production is stagnating. Exports are down year-on-year by 18 per cent. Corporate earnings are flat. In this environment, the last thing the Indian economy needs is more of the same cautious book-keeping.

To get the economy up and running, it needs investment and consumption. With banks groaning under bad loans, lending to corporates has slowed. In turn, corporates are stuck with foreign exchange loans that have ballooned with the rising dollar. In the absence of domestic bank loans, corporate investment is shrinking.

Meanwhile, consumption has dried up. FMCG companies like Hindustan Unilever are reporting sharply lower sales from previously booming small towns. The only way to reignite the economic engine is for the government to spend - even if it means a temporary increase in the fiscal deficit.

In any case, low crude oil prices have given Jaitley some fiscal elbow room: the country's net oil import bill is likely to fall below $45 billion in 2015-16 compared to over $100 billion in 2013-14. Tax receipts are buoyant but part-provisioning for the Seventh Pay Commission, the One Rank One Pension (OROP) scheme and other expenditure has absorbed much of the windfall from plunging oil prices.

Reserve Bank of India (RBI) governor Raghuram Rajan recently warned the government against missing the fiscal deficit target of 3.9 per cent by spending to revive growth. He is wrong. Had he given the same advice to the US Federal Reserve five years ago when the US economy was sputtering, it would have been (rightly) discarded.

It should be by India too. Unfortunately, Jaitley is unlikely to show the same courage and insight of the Fed whose stimulus and low interest rates have returned the US economy to the highest growth (2.5 per cent) among advanced economies along with low unemployment (five per cent).

Tax reform

It is a scandal that the regressive retrospective tax introduced in 2012 by then finance minister Pranab Mukherjee has not yet been repealed. Jaitley has said that the retro tax will not be used. Why then keep it on the statute books?

Jaitley says that there are just a few retro tax cases which will wind their way through the judicial system and eventually be extinguished. The only people who will benefit from this are highly-paid lawyers whom global companies like Cairn and Vodafone are forced to hire to fight totally unnecessary tax cases. Meanwhile, foreign investors drawn by India's potential hesitate to commit themselves fully given such a glaringly unfair retrospective law.

The last thing Jaitley should do in this Budget is make small changes in tax rates. Instead he should unveil a bold plan to simplify and rationalise personal income tax, TDS, service tax and exemptions. Corporate tax was to drop in steps from 30 per cent to 25 per cent by February 2019. That process must begin with this month's Budget.

India's start-up entrepreneurs have shown how dynamic Indian business can be if it's left well alone. The government must reduce its role in business by removing complex duty and tax structures. These give bureaucrats in the finance ministry discretionary powers. Misuse is inevitable.

One of the errors this government has made is to hand over too much power to bureaucrats. As author and columnist Tavleen Singh wrote recently in the Indian Express, this can be fatal: "Is the prime minister in danger of having his political agenda crushed beneath the feet of the mighty mandarins of Lutyens' Delhi? Has he noticed this and is this the reason why he is reported to have given senior bureaucrats a pep-talk last week? In search of answers I wandered about the corridors of power listening to whispers and rumours, and what I gleaned from this exercise was that the prime minister has relied more on bureaucrats than on his political team and that this is one reason why almost nothing has changed in terms of governance.

"It will not change in the near future either, because there is nothing that our civil servants hate more than change. If Indian governance has remained in colonial mode nearly several years after the British Raj ended, it is because of the extraordinary ability of the Indian bureaucrat to resist change. Even so powerful a prime minister as Jawaharlal Nehru acknowledged towards the end of his long tenure that he had been wrong not to have made a serious effort to change the bureaucracy. Narendra Modi must not wait too long before recognising that bureaucrats are incapable of implementing political change, and that when they are given too much power, they become an obstacle in the path of parivartan and vikas."

There are two kinds of "bureaucrats" who reflexively resist change. In the first category are IAS generalists. In the second category fall economists who have served in the International Monetary Fund (IMF) and global think tanks - for example, RBI governor Raghuram Rajan and chief economic advisor Arvind Subramanian.

This is Jaitley's last opportunity to deliver a Budget high on vision and low on book-keeping. Next year will be too late to change course - and we might anyway have a new finance minister by then.

Follow@minhazmerchant on twitter

How one billion mobile phones can change India
Such connectivity will level the playing field across jobs, ease rural-to-urban mobility, and catalyse gender equality.
Tuesday, January 25, 2016

Last month, India became the second country in the world after China to cross one billion mobile phone connections.

This makes the little device we hold in our hands and place by our bedside every night the most used technology gadget in history. Consider the numbers: there are 160 million television sets in India. And just 120 million radios.

As prosperity seeps through the countryside, even more mobile phone growth is possible. In advanced economies like the United States, France, South Korea and Finland, there are more mobile phones than people. For example, South Korea with a population of 50 million has 56 million cell phones.

While the number of mobile phones will eventually plateau in India, there's still room for growth in the next few years to around 1.40 billion mobile connections. (China currently has 1.27 billion mobile phone connections.) Driving this growth of course are the world's lowest handset and usage prices. New phones with basic features retail from Rs 1,500 ($22) upwards. Full feature smartphones start at around double that.

Average monthly usage is often as low as Rs 200 for 2G voice services. Even high-quality 4G packages cost less than Rs 1,000 a month. The national launch of Reliance Jio's 4G service in March could drive prices down even further.

India, however, remains a mobile-poor country in terms of internet speed connectivity. Call drops are frequent. Spectrum is in chronically short supply. Download speed is abysmal.

Despite these shortcomings, the mobile phone is today India's leading "enabler". It allows farmers to get the latest weather forecasts in realtime to help plan crop seeding, fertiliser use and harvesting. It enables them to get the latest mandi prices so that middlemen don't skim off excessive profits.

The direct benefit transfer (DBT) scheme, which sends subsidies to Jan Dhan Yojana bank accounts, bypassing intermediaries, is bedrocked on mobile phones. Once mobile payment banks and payment wallets enlarge their footprint, mobile phones will become part of a larger financial and social transformation.

Most start-ups are moving to mobile-only apps. The growth of taxi aggregators like Uber and Ola, food delivery companies like Zomato and Faasos and hotel bookers like Oyo Rooms and Zo Rooms depend on how quickly mobile usage moves from voice (2G) to data (3G) to advanced applications including video streaming (4G).

India's start-up ecosystem is meanwhile exploding. It is set to overtake Britain with the world's second largest number of annual start-ups behind the United States. As mobile phone usage surges, so will mobile apps across sectors.

But the real gamechanger in India's mobile phone revolution is its socially transformative nature.

India has long been a hidebound society, tied to religion, caste and language. Mobile connectivity will level the playing field across jobs, ease rural-to-urban mobility, and catalyse gender equality.

Technology makes the world flatter. Women were disadvantaged in an era where most jobs involved hard labour in factory work. As India moves towards a service economy - from hotels and airlines to call centres, software, retail and other people-facing jobs - the traditional disadvantages women faced are reducing.

With economic empowerment comes gender empowerment - and equality. This is already manifest in urban India where successful women in the workplace have even changed the power equation within families. Economic independence has led to a subtle shift towards greater gender equality in urban India.

Mobile phones are at the leading edge of this key social change. Wherever technology makes jobs less dependent on women having to commute to work or do labour-intensive work, women benefit.

One billion mobile phones is therefore more than just a number. It presages a new mobile economy where traditionally disadvantaged sections of society based on gender, caste, religion or region get equal opportunities in a flatter playing field.

A recent statistic underscores this change: Nearly 30 per cent of students taking the main joint entrance exam (JEE) for the IITs are now women.

Follow@minhazmerchant on twitter

Sunni-Shia conflict and rise of ISIS have roots in the First World War
Keith Jeffrey's new book cogently shows how 1916 was the beginning of the end of Western dominance.
Tuesday, January 22, 2016

The facts numb the mind. During just eight months in 1916, the midpoint of the First World War, 2.2 million British, French and German troops perished on the battlefields of the Somme and Verdun in France.

As Keith Jeffery writes in 1916: A Global History, Verdun became "a byword for the manifest horrors of industrialised 'total' war." In the battle of the Somme, the British suffered 57,000 casualties (its biggest ever in a single day).

As the war dragged on, Indian soldiers bore much of the brunt. They were mercenaries, recruited in the 'defence' of the British Empire. Jobless in India or in poorly paid work, they were shipped to the frontline trenches to fight a bloody war between rival imperial European powers jockeying for global supremacy.

The Indian soldiers were used as cannon fodder. They were paid well though and the wounded looked after in hospitals. After the war, some married local girls and stayed back in Europe.

But the real story of Jeffrey's book is the madness that overcame Europe exactly a century ago. 1916 also marked the end of the Ottoman empire which fought the war as an ally of Germany.

In May 1916, Sir Mark Sykes and Francois George-Picot, a British and French diplomat respectively, divided the Arab Ottoman lands into zones of British and French influence.

New names would soon be given to "countries" within these artificially drawn borders: Iraq, Syria, Jordon, Palestine, Saudi Arabia, Kuwait and so on. Sectarian sensitivities between Sunni, Shia, Kurd, Alawite, Yazidi and Druze were largely ignored.

It was a bad, longstanding colonial habit. The British had divided Pashtuns across the Durand line between Afghanistan and Pakistan in 1893 - a problem that festers till today. They drew the McMohan line between India and China in a treaty with Tibet in 1914 that Beijing still refuses to accept.

The division of the Ottoman lands a century ago sowed the seeds of the Sunni-Shia war that rages today in the Middle East. It also created fertile conditions for the brutal rise of the Islamic State (ISIS).

Saudi Arabia in 1932 became the only country in the world to be named after a family - the al-Sauds. Abd-al-Aziz was proclaimed king and in 1933, his eldest son, Saud, named crown prince.

In an odd cover story recently, The Economist interviewed 30-year-old Muhammad bin Salman, Saudi Arabia's current deputy crown prince whom the magazine called King Salman's "favoured son".

The Economist is a magazine that thrives on condescension. But with the young Saudi prince it was all tea and sympathy.

Tough questions on the Saudi role in midwifing the Islamic State (ISIS) were delicately avoided. The overall tone was only mildly critical.

Any other country that executes 47 people in one day, forbids women from driving and bars cinema halls would receive harsh editorial treatment from most independent-minded magazines. But not, on this occasion, from The Economist.

The First World War changed the world, including the Middle East, in a way that is fully discernable only now. It ended colonialism within the next one generation, created dozens of new sovereign nations across Asia and Africa, and began the inexorable decline of Western dominance of world affairs.

That process, a hundred years later, is not yet over. But historians will mark the events of 1916, cogently analysed in Keith Jeffery's new book, as the beginning of the end of the old order.

Follow@minhazmerchant on twitter

Trumping Donald Cruz and Rubio have a better chance of beating Hillary Clinton
While Trump leads both the fellow Republicans he does badly in a one-on-one match-up against the leading Democrat candidate.
Tuesday, January 20, 2016

I sat through last week's televised debate on FoxBusiness between seven Republican presidential contenders - all 2.29 hours of it. The debate was the last before the opening primary in Iowa on February 1.

The main takeaway? Senators Ted Cruz and Marco Rubio came through as the most impressive of the seven men on the stage.

Donald Trump is still leading in national opinion polls but Cruz is catching up fast. The two men are in a dead heat in Iowa. If Cruz pulls off a win in Iowa and even if he loses the next primary in New Hampshire to Trump (which every poll predicts), he will gain critical momentum.

Early primaries in Nevada, South Carolina, Florida and other conservative southern states will give Trump a solid start as well though Democrat-leaning states like California could stall his charge. In the latest national opinion polls Trump continues to lead Cruz by 34 per cent-19 per cent with Rubio a distant third.

Among Democrats, Hillary Clinton, despite Bernie Sanders' late surge, should win her party's nomination comfortably. So which Republican candidate has the best chance of beating Clinton in the November 2016 Presidential election?

Polls suggest 44-year-old Rubio has the best head-to-head numbers against Hillary. He's charismatic, policy-driven and could eat into the traditional Democratic Hispanic vote. In a Real Clear Politics average of several national polls, Rubio beats Clinton head-to-head by nearly three percentage points. Cruz, also 44 and a highly-regarded senator, beats Clinton as well in Real Clear Politics' poll of polls.

Paradoxically, while Trump leads both Cruz and Rubio in national polls he does badly in a one-on-one match-up against Clinton. A recent poll showed him closing the gap with Hillary to 36 per cent-37 per cent, but he remains the only leading Republican to lose consistently in opinion polls head-to-head against Hillary.

Trump appeals to blue collar Americans, many without a college education, who are fed up with President Barack Obama's "effete" leadership. Trump's braggadocio resonates with them. His anti-Muslim, anti-illegal immigrant rhetoric could, however, be a double-edged sword. It has alienated not only liberal voters but centrists as well.

However, anger over Obama's muddled Middle-East policy, the deeply unpopular Obamacare health insurance scheme, and stagnant middle-class wages could wound Hillary's campaign. As Obama's secretary of state in 2009-13, Clinton bears the cross of a failed Iraq exit policy and the Benghazi disaster where the US ambassador to Libya, J Christopher Stevens, was killed in an Islamist attack on the American diplomatic enclave.

The deep rivulets of anger running through the US electorate make Hillary vulnerable on three counts: anti-incumbency against two-term Obama with whom she is inextricably linked as a former secretary of state, her own record on Benghazi, and a strong rightwards shift in US political discourse. If the Republicans come up with a strong, credible presidential nominee, the White House is theirs to lose.

Republican party insiders worry though that Trump is not the man to beat Hillary in November 2016. And yet, if there are more terror strikes on US soil - or if American citizens are killed in terror attacks abroad - Trump may himself be tough to beat.

Cruz and Rubio are both extremely impressive candidates. Either could beat Hillary in November and complete America's shift to the political centre-right. Both the Senate and the House of Representatives have Republican majorities. Islamist terrorism and refugees from the Middle-East have gripped mainstream America's attention. Trump is riding that emotive wave.

For India, a Republican victory would be a positive. Republicans believe in three credos: low taxes, minimum regulation and fiscal discipline. These resonate strongly with the Modi government in theory. In practice it hasn't quite worked out. "Minimum government, maximum governance" remains a work in progress, though of late there are signs the government is moving in the right direction with, for instance, its "Start-up India" initiative.

Tax reform in India, as in heavily-taxed America, meanwhile remains stuck in a black hole. Fiscal discipline too is wobbly with the fiscal deficit target of 3.5 per cent of GDP acknowledged recently as "challenging" by minister of state for finance Jayant Sinha.

In many ways, therefore, India and the US face similar problems: high budget deficits, terrorism and fractured politics. Both countries too are on the cusp of political and economic change. In India Prime Minister Modi is struggling to get the economy moving again. In the US, the economy has begun to recover but President Obama, according to opinion polls, is one of the most unpopular US presidents in decades. Race relations have paradoxically deteriorated on his watch. Gun ownership continues to climb.

Obama broke down during his recent speech on gun control. Though his State of the Union address a week ago (the last of his presidency) was widely praised, Obama has aged visibly in his seven years as president. He is still only 54.

In contrast, Hillary is 68, Trump 69. If they win their respective parties' nominations, they will be among the oldest rivals to contest a US presidential election in over a generation.

Two 44-year-old senators, Ted Cruz and Marco Rubio, will be hoping to change that, come November.

Follow@minhazmerchant on twitter

Mehbooba Mufti's divorce with BJP works well for Modi
The party could lose a state but win a nation.
Tuesday, January 12, 2016

Following the death of Mufti Mohammad Sayeed last week, a game of politics chess is underway in Jammu and Kashmir between his daughter Mehbooba Mufti, president of the PDP, and its alliance partner the BJP.

Mehbooba has three options.

One, continue the PDP-BJP alliance government but with tough new conditions that the BJP may find hard to stomach.

Two, break the alliance and forge a new one with the Congress to form a government with it (as it did in 2002-08) with support from independents.

Three, dissolve the J&K state assembly, call for fresh elections, and hope to win an absolute majority riding on a sympathy wave for the Mufti.

Mehbooba has said she will reveal her cards after "seven-eight days". Meanwhile, she will assess all three options and pick the one that will propel the PDP into J&K's natural party of governance.

What should the BJP do?

In May 2015, shortly after the PDP-BJP formed an alliance government in J&K following two months of tortuous negotiations between the BJP's Ram Madhav and the PDP's Haseeb Drabu, the Mumbai Press Club held an event to debate Prime Minister Narendra Modi's achievements and failures on the NDA government's first anniversary.

Senior journalist Rajdeep Sardesai and I were on the dais while a packed hall of journalists hurled questions at us. Among the Modi government's "failures", I listed its alliance in J&K with the PDP.

The PDP is a pro-separatist, pro-Pakistan party. Allying with it on the grounds that it would respect the fractured mandate of the J&K electorate was, I said on record at the event, a specious argument. It would further alienate Jammu and the BJP's support base in the rest of the country. The electoral cost could far outweigh any benefit that may or may not accrue from being the junior partner of the PDP in J&K.

The Mufti legacy

What kind of chief minister will Mehbooba make? How different will her leadership style be from the Mufti's? To answer these questions, a flashback.

In August 2004, a Jet Airways flight from Delhi to Srinagar was about to take off. A sudden flurry of activity on the tarmac delayed shutting the aircraft's doors. Two men emerged into the cabin followed by gun-wielding security guards. Both were profusely apologetic for causing the slight delay - just over five minutes - in the scheduled take-off.

The PDP's Mufti Mohammad Sayeed, then serving his first term as chief minister of J&K, sat down wearily in the first row's aisle seat. His companion, veteran Congress leader Mangat Ram Sharma, then deputy chief minister of J&K, eased himself into the window seat next to him.

The two men exchanged barely a word. Their body language sent out a clear message: the chief minister and his Congress deputy chief minister were deeply uncomfortable in each other's company.

I happened to be on the same flight to Srinagar for a pre-arranged interview with Mufti. Seated across the aisle from former Mumbai sheriff Bakul Patel and me, the Mufti spotted Bakul, an old friend (and wife of Rajni Patel, the late Congress leader, once one of the most powerful men in Mumbai).

The Mufti, crafty as ever, thought up a quick solution. He asked Bakul if she would switch seats with his deputy chief minister: they could then talk about Kashmir's fraught politics during the short Delhi-Srinagar flight.

Bakul, a partner in my media firm, was happy to oblige. She and I were anyway scheduled to interview Mufti in Srinagar the next day. Some preliminary political tidbits would come in handy.

I found myself spending the rest of the flight sitting next to deputy chief minister Mangat Ram Sharma, a thoroughly pleasant Congress politician of the old school. Slowly, he opened up. The situation in J&K is bad, he said. How about the Congress' relationship with alliance partner PDP? I asked. He shook his head grimly.

Choosing his words carefully, the veteran Congress leader analysed in detail the three issues that confronted J&K: Pakistan-sponsored terrorism, Hurriyat separatists and development.

It therefore came as a mild shock to the Congress when Mangat Ram left it to join the PDP just months before the December 2014 state assembly election - proving again that in politics there are no permanent friends or enemies.

Mehbooba is more outspoken than her late father. She is also more sympathetic to the Hurriyat separatists. And she is as mercurial as Mufti was equable. The Mufti, after initial misgivings, had developed a rapport with Prime Minister Narendra Modi, even praising him as a strong leader who was likely to be PM for ten years.

Will Mehbooba be able to keep the PDP-BJP alliance on an even keel or will her strong separatist views cause a rift with the BJP? Clues to her future behavior were visible when Bakul and I interviewed the Mufti for over three hours at his home the day after we landed in Srinagar. Mehbooba joined us later over lunch. Though reluctant to say much in the presence of the Mufti, she spoke of the evolving political situation in the Kashmir Valley. She seemed conscious of the need to focus on development in J&K, keeping ideological issues aside. But self-rule was never far from her mind.

Congress president Sonia Gandhi met Mehbooba on Sunday in Srinagar, ostensibly to condole her over the Mufti's demise. She was accompanied by veteran Congress leaders Ghulam Nabi Azad and Ambika Soni. Politics was clearly on the menu. Union Minister Nitin Gadkari met Mehbooba immediately after in an effort to retain the alliance.

The PDP has 28 MLAs in the 87-seat assembly. The Congress has 12, the BJP 25 and the National Conference (NC) 15. There are 7 independents. To form a government with the Congress, Mehbooba needs the support of four of those independents in order to secure a slender majority of 44 seats.

Will the PDP-BJP marriage of convenience survive Mehbooba's pro-separatist ideology and the tough new conditionalities she has imposed? Mehbooba is unlikely to break the alliance just yet - it would cast a shadow over her father's decision to ally with the BJP. She has also experienced the high-handedness the Congress exhibited during the PDP-Congress alliance government in 2002-2008.

In the long-term, however, a Mehbooba-led PDP-BJP government is unlikely to overcome its constituent parties' inherent ideological contradictions. She will force the BJP to compromise on key issues, including rehabilitation of Kashmiri pandits and retaining AFSPA, both of which resonate nationally.

A political divorce may therefore not be such a bad thing for the BJP. It could lose a state but win a nation.

Follow@minhazmerchant on twitter

Exposing the inner world of a recent Lutyens' cocktail party
Suleiman and Anwar meet Delhi elite and discuss Pathankot terror attack, Odd-Even rule, National Herald case and more.
Friday, January 08, 2016

Back in India from Saudi Arabia for a short holiday in the new year, Suleiman Khan was looking forward to spending a quiet evening at home. He switched on the TV. Four Pakistani panelists were angrily denying their country's role in the Pathankot terror attack. Why do Indian TV news channels invite such Pakistani commentators, he wondered aloud. Indian tolerance, he concluded with a slight shrug.

The phone rang. It was his friend Anwar Sheikh. "Suleiman, you couldn't have timed your visit better. I've been invited to a very special party tonight. You must come along! There'll be lots of politicians, businessmen, bureaucrats, editors, anchors and fixers."

"Ah, yes," Suleiman said knowingly. "The Lutyens' power elite, right?"

"Yes, yes," Anwar said impatiently. "Listen, Suleiman, be ready in an hour. I'll pick you up at 10 pm."

Suleiman slipped quickly into a Marks and Spencer jacket he'd bought at a discount a few weeks ago and splashed on some cologne.

Anwar picked Suleiman up from Nizamuddin West where he was staying with a cousin. Suleiman noted with curiosity that Anwar's black Honda City had an even number plate. Anwarbhai won't be able to drive the car tomorrow, he thought to himself as he clambered into the leather bucket seat and strapped up.

The car threaded its way through Delhi's traffic. The air was thick with smoke. "Smog," said Anwar, noticing Suleiman's quizzical look. "Gets really bad in winter."

They drove across a broad avenue towards a single-storied bungalow in the Lutyens' zone. After passing through a cursory security check, the two friends walked onto the large lawn that fronted the bungalow.

Suleiman spotted a short, sharply dressed man with a Freddy Mercury moustache holding forth to a group of people hanging on to every word. "Pathankot shows how poorly prepared this government is to handle terror attacks," the man said through clenched teeth.

"That's Robert," whispered Anwar, nudging Suleiman conspiratorially.

Suleiman's eyes widened. "Are you serious, Anwarbhai? That Robert?"

Anwar nodded. He tugged at Suleiman's arm, guiding him through the crowd towards a rotund, ruddy-faced man dressed in an immaculate suit and silk tie.

"Suit-boot sarkar," grinned Suleiman. Anwar frowned at his friend and turned to the well-shod guest whom he seemed to know well.

"Kapil, I'd like to introduce you to my friend from Saudi Arabia, Suleiman Khan."

Kapil, a grin pasted seemingly permanently on his face, shook Suleiman's hand vigorously. "What an exciting time for you to visit us," he said.

Suleiman nodded: "Yes! The National Herald case has made headlines even back in Saudi! The Gandhis, I hear, are due to appear in court again next month."

The smile disappeared from Kapil's face. Had he said something wrong, Suleiman wondered as the rotund man walked away towards the bar.

"Anwar," boomed a voice behind them. Suleiman turned to see a small, silver-haired man slap his friend on the back. "Good to see you, Mani," said Anwar.

"Oh Suleiman, Mani here is an expert on Pakistan." Suleiman nodded pleasantly as the two men shook hands. "All quiet on the western front after Pathankot," Mani said jovially.

Suleiman shrugged "For now. One can never quite trust Pakistan. Another terror attack could be around the corner."

Mani raised an elegant eyebrow. "Really, Suleiman? You seem to be an expert on Pakistan too."

Suleiman ignored the sarcasm. "Not Pakistan so much but its best friend Saudi Arabia. I've lived there for over ten years and know the jihadi mindset quite well. Saudi Arabia finances Pakistan. And Pakistan finances terror groups like Jaish and Lashkar."

Mani's eyes narrowed, his jaw tightening. Before the conversation could continue, Anwar pulled Suleiman away, telling Mani they were going to get themselves some kebabs from the live barbeque station. As they moved ahead, Suleiman overheard Mani muttering to himself, "Uninterrupted and uninterruptible, uninterrupted and uninterruptible" before his voice was lost in the growing cacophony of the crowd.

Anwar's face lit up as a television anchor waved to him. "Hi, remember me? We met in Pakistan last year."

Anwar nodded. "Of course, I remember. I was on a business trip with a delegation of steel tycoons. We were trying to convince the Pakistani authorities to grant India transit access to iron ore mines in Afghanistan."

The TV anchor seemed to be barely listening. She was almost beside herself with excitement. "I was super-excited about Prime Minister Modi's bold, imaginative stopover to meet Nawaz saab in Lahore," she trilled. "Such a pity about Pathankot though. Oh, and who's this, Anwar?" She smiled, looking at Suleiman who was standing by quietly.

"This is Suleiman," said Anwar. "He's from Saudi Arabia, soaking in the atmosphere of Delhi."

The TV anchor erupted in her trademark throaty laugh. "Atmosphere? What atmosphere! Despite odd-even, we're still choking on this smog! The air must be cleaner in Saudi Arabia, Suleiman, na?"

"It is," shrugged Suleiman. "But they flog us and confiscate our passports on the slightest pretext." He smiled wanly. "Frankly, I prefer Delhi's smog to the flogging." The TV anchor grimaced before traipsing away to talk to a group of Pashmina shawl-draped ladies.

"Have you read my book yet," Suleiman overhead her asking them eagerly over the din. "You must. You really must. It's had such super reviews!"

Anwar tapped Suleiman on his shoulder to get his attention back. He pointed to a tight knot of kurta-clad men with scarves, shawls and assorted head gear to keep out the cold. "Those are some of the most powerful politicians in India," Anwar said. "One of them is a leading Congressman, the man next to him is from the Left"

Suleiman interrupted him. "Anwarbhai, aren't they the same people who disrupted nearly the entire winter session of the Rajya Sabha?"

Anwar frowned. "Suleiman, these things happen in a vibrant democracy like India."

Suleiman's eyes were suddenly drawn to a short man with a clerk's moustache wearing an oversized, long-sleeved sweater, a coarse muffler wrapped around his neck. Noticing Suleiman's gaze directed at the diminutive man who was speaking in a high-pitched voice, coughing intermittently and waving his hands about vigorously, Anwar said softly: "He's quite a character, isn't he, Suleiman? He's got Modi in his sights. Wants to be the next PM."

Suleiman's eyes glinted. He'd been reading up on Indian politics. "Isn't he the same fellow whose party was set up as the B team of the then ruling party to discredit its main Opposition rival? Wasn't there a meeting in a boutique hotel on December 22, 2013 between two Delhi business tycoons with interests in steel and two-wheelers, a leader very close to 'Madam', and this man's senior party leader when the deal was fixed?"

Anwar looked at his friend's innocent face in amazement. "My, my Suleiman, you know things you aren't supposed to."

"That's the advantage of living in Saudi. We have sources." Suleiman smiled disarmingly.

Anwar shook his head in mock exasperation. Both he and Suleiman were teetotalers and sipped on fruit juice. Around them Glenfiddich flowed freely. "Time for us to leave," said Anwar. "Let's hope 2016 brings better tidings for India."

As they moved towards the bungalow's imposing exit gate, they ran into the TV anchor who was flitting from group to group. "Bye, Anwar! Bye, Suleiman!" She waved at them happily. "I'm off to interview Nawaz saab in Pakistan soon."

Follow@minhazmerchant on twitter

Pathankot attack Modi must engage with Pakistan but punish
India must pay them back in the same coin - covertly and overtly - with proportionate response and impeccable deniability.
Monday, January 04, 2016

It's increasingly clear that the terrorist strike on the Pathankot air force base was in planning for months. The heavy ammunition the terrorists used (including mortars) underscores the military-style training they had undergone.

A coordinated attack on a forward Indian air force base spread over 1,600 acres cannot take place without the absolute involvement of the Pakistani army and the Inter-Services Intelligence (ISI).

It's equally obvious that when Prime Minister Narendra Modi dropped by to meet Pakistani Prime Minister Nawaz Sharif in Lahore on December 25 planning for the Pathankot terror strike was well under way. Significantly, Sharif almost certainly knew about the planned attack even as he walked hand in hand with Modi at his opulent home on the outskirts of Lahore.

For Modi, Pathankot presents a nuanced challenge. Pakistan plays a double game. India must pay it back in the same coin. Because it can't win a conventional war against India over Jammu and Kashmir, Islamabad's long-held strategy is to bleed India by a thousand cuts. At the same time, Islamabad wants to engage in a comprehensive dialogue with India to show the world that Pakistan is not a pariah state.

This is Pakistan's Achilles' heel: it wants terror; but it also wants talks. Modi must target this weakness to bring Pakistan to heel.

Let's now get some myths out of the way.

Myth 1: The attack on the Pathankot air base was specifically designed to derail the new comprehensive dialogue between India and Pakistan.

Fact 1: The Pathankot strike was planned months ago, well before the new comprehensive dialogue was formalised recently by external affairs minister Sushma Swaraj in Islamabad. Pakistan follows the good cop-bad cop policy. The Nawaz Sharif government plays good cop, engaging with India, piously condemning terror attacks on Indian targets, promising action against the perpetrators, politely asking for evidence, and then doing nothing about it.

Meanwhile, Pakistan's army and ISI clinically plan attacks on India targets with their terrorist proxies: the Laskhar-e-Toiba (LeT) and Jaish-e-Mohammad (JeM). The attacks are designed to be lethal enough to damage key Indian assets but not lethal enough to compel New Delhi to break off talks or launch a retaliatory attack on Pakistan's terror infrastructure across the border.

The purpose of this strategy is plausible deniability. The Pakistani government pretends it knew nothing about the attack while the army lays the blame squarely on rogue terror groups over which it says, without batting an eyelid, it has no control.

This charade accompanies every Pakistan-sponsored terror attack on India. Jawans are routinely martyred. Officers are killed as well. So are civilians.

But Pakistan knows that Indian outrage is often shortlived. In a week, it will be business as usual as the two foreign secretaries continue with plans to meet in Islamabad on January 14-15 as part of the new comprehensive dialogue. For Pakistan, if these talks do go ahead, it will be mission accomplished. It would have successfully given India a bloody nose and shown the world that a handful of terrorists can occupy an Indian air force base for days. The Nawaz Sharif government will deny complicity and insist the dialogue process continue to discuss the root cause of terrorism.

This time though, Pakistan may have overplayed its hand. We will soon know.

Myth 2: India has no option beyond doing nothing and outright war - with all its nuclear dimensions.

Fact 2: There are a broad range of options between doing nothing and war. Examine three.

One, following an attack India can downgrade diplomatic relations with Pakistan. Recall our high commissioner in Islamabad. Tell Pakistan's high commissioner in Delhi to pack his bags. Downgrade the Pakistani high commission to consular status. (Saudi Arabia severed diplomatic relations with Iran on January 3 following the execution of a respected Shia cleric by Riyadh and a retaliatory attack on the Saudi embassy in Tehran.) Talks can meanwhile continue at consular level but Pakistan's diplomatic downgrade will send an important message to both Islamabad and the international community: terror carries a price.

Two, impose calibrated economic sanctions. After the Modi-Sharif meeting in Lahore, Pakistan wants more trade with India not less. Following Pathankot, give them less trade. It will pinch Pakistan's fragile economy and have no impact on India's.

Three, covert operations. Hit Pakistan quietly but consistently where it hurts most by using proxies. India's covert capability is poor but mercenaries (Baloch, Pashtuns and others) are available on hire. We must use them behind enemy lines to inflict proportionate damage with surgical precision on Pakistani terror assets - with plausible deniability. National Security Advisor Ajit Doval knows exactly what to do.

The Pathankot strike has shades of the Mumbai 26/11 attack that killed 166 people and took years of planning. Pathankot clearly was meticulously planned months ago. The air base, spread over 1,600 acres, has over 1,500 families in residence. Securing their safety was paramount. Hence the slow pace of combing operations to neutralise the remaining two terrorists. All physical assets in the air base - aircraft, helicopters and avionics equipment -were secured early in the attack.

To summarise: India must engage with Pakistan - there is no long-term substitute for talks. But the level of engagement can be downgraded. When terror from Pakistani soil strikes, India must punish it: diplomatically, economically and covertly. Pakistani proxies today attack India with impunity knowing India will outrage but eventually do nothing.

That comfort level must end. For every terror attack there must be relaliatory action - covert and overt - along the three measures outlined above, taken together or individually, depending on the scale and nature of the terror strike.

What about the nuclear threat? That is the biggest myth of all. Even in conflicts where only one of the two countries involved has nuclear weapons (North Korea-South Korea; Israel-Palestine; US-Iran), the nuclear option is not an option.

When both countries have nuclear weapons (India-Pakistan; US-Russia), mutually assured destruction rules out their use. Pakistan's Scotch-loving Generals are perfectly aware of the consequences of using even small battlefield nuclear weapons like the Nasr (which Pakistani commentators obliquely refer to in mildly threatening tones on virtually every Indian television debate). First use of such weapons will invite destruction of Pakistani cities on a scale the Pakistani army will not dare risk.

The smart thing for India, with an economy 900 per cent larger than Pakistan's, is to pay Pakistan back in the same coin - covertly and overtly - with proportionate response and impeccable deniability.

Only when Pakistan's Generals realise that proxy terrorism carries a price, will they end it.

Follow@minhazmerchant on twitter

How US and Saudi Arabia surrendered to ISIS and war on terror
Complicity between Washington and Riyadh has allowed Daesh to become the venal threat it is today.
Wednesday, December 30, 2015

The United States, Russia, Britain and France have been relentlessly bombing Islamic State (ISIS) positions. And yet ISIS is not in retreat. Though the Iraqi army on Monday recaptured Ramadi, provincial capital of the Sunni-dominated Anbar region, ISIS leader Abu Bakr al-Baghdadi remains defiant. In a 24-minute audio message released last Saturday, he taunted Western governments: "Your hearts are full of fear from the Mujahideen."

What is needed to defeat ISIS and end the unspeakable brutalities it is inflicting on its victims? The short answer: ground troops.

Aerial bombing has limitations. President US Barack Obama has forbidden US fighter jets from targeting civilian areas in ISIS-held territory. Consider Raqqa, ISIS' de facto capital and headquarters. A cluster of buildings in Raqqa houses top ISIS leaders, control centres and a jail. The jail has civilian prisoners from the West as well as from local militias. The US has so far avoided bombing these buildings for fear of loss of civilian life.

Russia has no such compunctions. But it too has not bombed ISIS buildings in Raqqa, instead targeting Syrian President Bashar al-Assad's heavily armed opponents backed by America's Central Intelligence Agency (CIA). Zahran Alloush, leader of one of the most powerful of these groups, Jaysh al-Islam, was killed last week in a Russian air strike.

The key cities under ISIS control are Raqqa in Syria and Mosul in Iraq. They need to be re-captured if ISIS is to be defeated. The only way to do that is commiting ground troops.

On December 29, Iraqi prime minister Haider al-Abadi said that "2016 will be the year of the big and final victory, when Daesh's presence in Iraq will be terminated." He may be underestimating ISIS' resilience.

The US invasion of Iraq in 2003 with a force of over 1,00,000 US ground troops, which led to the eventual emergence of ISIS, was misconceived. It destroyed the Iraqi army, led to the dismantling of the Iraqi bureaucracy and set Sunni against Shia.

But when ground troops are required - as they are now in Syria and Iraq - US policy has again proved shortsighted. Obama is obsessed with ousting Assad who may be a brutal dictator but is still a better option than either ISIS or opposition terrorist groups like Jaysh al-Islam which the CIA has been funding and arming for over four years in an attempt to remove Assad from office.

If Washington's earlier Iraq policy was myopic, its Syria policy today operates blindfolded. Obama has proved a timid, indecisive leader. He withdrew US ground troops from Iraq before the country could rebuild its army to defend the country from ISIS. As a result, key areas in Iraq are now under ISIS control.

Inviting ISIS home: India should stay away from European Islamophobia

The Middle-East has a chequered history. Countries like Iraq, Syria, Jordan, Qatar, Saudi Arabia and the United Arab Emirates (UAE) did not exist before 1920. After the First World War ended in defeat for the Ottomans in 1918, the Americans, British and French carved up the Ottoman-ruled Middle-East into artificial nations, disregarding old sectarian conflicts between Shia, Sunni, Kurd and other ethnicities.

Nearly 100 years later the day of reckoning has arrived. A long-term solution to the Iraq and Syria crisis may involve the trifurcation of each country into autonomous Shia, Sunni and Kurd provinces as they were, loosely, under the Ottomans. What the Western powers stitched together in the 1920s is unravelling today.

ISIS has meanwhile taken full advantage. To defeat it militarily, US-led ground troops are necessary. To sustain the military victory over ISIS, a political solution too will be needed: trifurcation or at best self-governing, autonomous provinces under Shia, Sunni and Kurd control. This could be an unpalatable, but inevitable outcome.

In his latest audio message, al-Baghdadi has vowed publicly for the first time to attack Israel. He has continued his scathing criticism of Saudi Arabia, calling upon Saudi citizens to "rise up against the apostate tryrants, and avenge your people in Syria, Iraq and Yemen." Much of ISIS' tirade against Saudi Arabia is for public consumption.

Saudi Arabia is the progenitor of ISIS along with Qatar and other Gulf states. It funded ISIS until, like all Frankensteins, it turned rogue and began attacking Saudi interests. Saudi Arabia has a record of brutal human rights violations in which close ally America, through its silence, has been complicit. An article by Washington-based human rights lawyer Arjun Sethi, an adjunct professor of law at the Georgetown University Law Center, recently exposed the Saudi-US nexus in clinical detail:

"Saudi law criminalises dissent and the expression of fundamental civil rights. Those who simply expect Saudi Arabia to reform its criminal justice system ignore the fact that the kingdom is an authoritarian regime that uses the law as a tool to maintain and consolidate power. They also ignore the reality that Saudi Arabia often escapes moral condemnation in large part because of its close relationship with the US.

"In 2014, for example, President Barack Obama visited the kingdom but made no mention of its ongoing human rights violations. The two leaders discussed energy security and military intelligence, shared interests that have connected the US and Saudi Arabia for nearly a century. Obama travelled to the kingdom earlier this year to offer his condolences on the passing of King Abdullah and to meet with the new ruler, King Salman. Again, human rights were never mentioned. Instead, US National Security Adviser Susan Rice tweeted that Abdullah was a 'close and valued friend of the United States'.

"This deafening silence is not lost on Saudi Arabia and has emboldened its impunity. In the wake of the Arab uprisings, the kingdom's brutal campaign against its Shia minority and political opposition has deepened. Despite its appalling human rights record, Saudi Arabia was awarded a seat on the UN Human Rights Council last year and this summer was selected to oversee an influential committee within the council that appoints officials to report on country-specific and thematic human rights challenges. Unsurprisingly, Saudi Arabia has used its newfound power to thwart an international inquiry into allegations that it committed war crimes in Yemen."

Complicity between Washington and Riyadh has allowed ISIS to become the venal threat it is today. Defeating ISIS is one thing; cleansing the Middle East of the malaise of Wahhabism spread by Saudi Arabia and left unchallenged by the US is quite another.

Follow@minhazmerchant on twitter

Despite media's rapid digital shift, print is still a safe bet in India
The entry of e-commerce giants Amazon and Alibaba taking over big newspapers augurs well for global news industry.
Monday, December 28, 2015

Eyebrows were raised when Amazon's Jeff Bezos bought the Washington Post. Editorial staff weren't thrilled. Here was one of America's most venerable newspapers being sold out to a digital shopping site. They thought Bezos would interfere in editorial operations and introduce his own quirky style of management. The Post's storied majesty would be irreparably damaged.

Nothing of the sort happened. Bezos ran the paper at arm's length. He hired rather than retrenched staff, merged the paper's print and digital teams and secured the Post's financial future.

What Amazon can do, Alibaba can do better. The Chinese e-commerce giant announced earlier this month that it was buying the 112-year-old South China Morning Post (SCMP) and all its associated media properties.

Long regarded as the newspaper of choice for Hong Kong's English-speaking elite, the takeover of SCMP by Alibaba has caused much the same concern in the former British colony as Amazon's acquisition of the Washington Post did in the United States.

The worries are more deeply felt though. Alibaba operates within the tightly controlled rules of censorship imposed by Beijing. This is the reason why Google and Twitter are not present in China.

Of course, Hong Kong has the protection of the 50-year agreement signed in 1997 between Britain and China under which the former colony is a specially administered region (SAR) with quasi-independent governance until 2047.

This protection though is already wearing thin. Beijing increasingly remote controls political appointments in Hong Kong. Readers of the South China Morning Post worry that the newspaper will gradually fall hostage to the creeping takeover by China of Hong Kong's freedoms.

Alibaba, sensing the disquiet, has moved quickly to allay such fears. In a letter to readers of the SCMP, Joe Tsai, executive vice-chairman of the Alibaba group, wrote: "The SCMP has iconic status in the region, with a strong reputation internationally for the quality and credibility of its journalism over the years.

Like many print media, however, the SCMP faces challenges amid the dramatic changes in the way news is reported and distributed. But these changes play to Alibaba's strengths, which is why we believe the two companies complement each other well."

Alibaba certainly has the financial resources to weather any storms that blow over print media. Its market valuation is $ 311 billion. And yet, journalists point to Alibaba chairman Jack Ma's track record of cozying up to Beijing. In 2013, a reporter in the South China Morning Post resigned under a cloud.

He had written that Ma supported China's "violent crackdown" on pro-democracy protestors in Tiananmen Square in 1989. Ma denied he had done so or forced the reporter's resignation.

So will Beijing pressurise Alibaba to restrict the Post's editorial independence? Joe Tsai in his letter again tried to dismiss these concerns: "In reporting the news, the SCMP will be objective, accurate and fair…day-to-day editorial decisions will be driven by editors in the newsroom, not in the corporate boardroom."

The larger question, of course, that should engage all media owners, journalists and readers is the rapid global shift from print to digital. Circulations of newspapers in the West are declining. Advertisement revenue is in free fall. Classified advertising, the mainstay of newspapers, has fled to digital sites like Craigslist.

In India, print is relatively insulated by two unique factors. First, literacy levels (currently 74 per cent) are rising and the move to print by a new class of literate readers remains strong. Second, purchasing power is growing, giving print a lease of life. Strong print brands will therefore continue to be read and make a profit.

Nonetheless in India, as in the rest of the word, the shift from print to digital is inexorable. With online advertising rising at over 40 per cent a year, websites are beginning to see the outlines of a sustainable business model.

Firewalled content is working well in the West (a good example is The Times and the Financial Times in Britain and several newspaper titles in the US) but will take time to take root in India where readers still expect digital content to be free.

Amazon's Jeff Bezos and Alibaba's Jack Ma are cut from a very different cloth than old-school media barons like Rupert Murdoch and Katharine Graham, the late former owner of the Washington Post and Newsweek.

But they do have one quality in common: the recognition that content is king. If you dilute the credibility of content, you'll have nothing left. That knowledge is the best protection the Washington Post and the South China Morning Post have.

Follow@minhazmerchant on twitter

Enemy lies within Why do so many Indians demean India
Modi needs to change the over-deferential psychological mindset of the BJP.
Tuesday, December 22, 2015

In an extraordinarily misconceived video comment for The Guardian last week, Shashi Tharoor, a Congress MP, said: "The impression has gained ground that India is now governed by obtrusive and intolerant forces determined to put minorities, rationalists and liberals in their place, somewhere not far from the dustbin." Narendra Modi's war on pluralism is destroying India's reputation, The Guardian interpreted Tharoor as saying.

It is difficult to think of a more concentrated piece of incendiary nonsense in a 2.42 minute video comment.

The corrupt Lutyens' ecosystem meanwhile roared with delight. India was getting a good, little bashing. Prime Minister Narendra Modi, that arriviste, was being shown his place.

Why do so many Indians so often demean India?

VS Naipaul put his finger on it when he said India remains a wounded civilisation. Hinduism has been in retreat for centuries - first through internal caste divisions, then Islamic invasions, and finally colonial occupation.

The anti-Indian rantings of Arundhati Roy should not be taken seriously. Every country has its share of dissenters and critics, many with outlandish and (as in Roy's case) subversive ideas. In a democracy they should be welcome. Such views need sunlight: they will then be disinfected. Democracy is a great leveller in the fullness of time.

In India, though, the enemy lies within.

Jairam Ramesh, a former Union minister, speaking on carbon emissions, said this three days before the climate change summit in Paris earlier this month: "Unfortunately, India's style has been very confrontational, very argumentative. It is a Krishna Menon style, it is a moralistic style. I think the world does not like that. As far as Africa and the Small Island States are concerned, we are part of the problem. So India must be less moralistic, less argumentative, less confrontational and more in an engagement mode."

Maneka Gandhi, Union minister for women and child development, told a television channel just as India was battling to get a fair deal for the developing world at the climate change summit: "Historically (the fact that) the polluters have been the West doesn't absolve India from the fact that it is today one of the major polluters. It is a question of putting the blame always... the West did it. They may have done it hundred years ago. India is one of the main players destroying the climate. We, China and Brazil are the largest producers of methane. Coal, animals and rice, these are the three reasons for methane and methane is 26 per cent more powerful than carbon dioxide in creating climate change."

What do these two ministers, past and present, have in common? They compromise India's interests at crucial times and play into the West's hands.

It gets worse.

Also read: Campaign to bring Modi down is afoot (and why he is partly to blame for it)

Last month in Pakistan, former Union minsters Mani Shankar Aiyar and Salman Khurshid made public remarks that were perverse in intent. Aiyar told a Pakistani television talk show host: "First, you need to remove Modi... otherwise the talks will not move forward."

Khurshid at a conference in the Jinnah Institute in Islamabad said: "If you look back at the first face-to-face between our PMs, your PM took a brave, far-sighted decision. What we said and did made things uncomfortable for Pakistan after the visit. If there has been a leader of democratic Pakistan who wanted peace with India, it is (Nawaz Sharif who) was the first non-military (Pakistani) leader to try for peace."

What went wrong

In a recent interview with Swarajya magazine, five-time MP Dr Subramanian Swamy recalled his close friendship with former prime minister Rajiv Gandhi: "I thought well of Rajiv. He was a great patriot, I thought he would make a great prime minister if he came back for the second time around, and I supported him. Openly, on the floor of Parliament (I said) he didn't get the Bofors money, (Ottavio) Quattrocchi (Sonia Gandhi's close friend) got it, and these were proved quite later, too late.

"(When) I had a ministerial rank position in (Narasimha Rao's) government, as the chairman of a commission (Sonia) used to meet me once a week for tea. She, in fact, told me, 'I'm more Sicilian than an Indian.' I said, 'Why do you say that?' She said, 'Indians like to be kicked.' That's what she told me. 'Whereas you are a ruthless person,' she told me."

Also read: Stop claiming Lutyens' Delhi as your own

This conversation can't be independently verified and remains Dr Swamy's version. Pertinently though, no one has ever sued Dr Swamy for defamation despite the several serious allegations of corruption he has levelled against, especially, the Gandhis.

In contrast, the BJP (apart from Prime Minister Narendra Modi) remains resolutely respectful of the Gandhis. In return, it periodically gets kicked in the teeth. The body language of several BJP ministers and MPs is deferential - in Parliament, in TV studios, and in public.

The sight of parliamentary affairs minister Venkaiah Naidu pleading with a handful of Opposition MPs tells multiple stories. The BJP behaves as if it is in office, but not in power. The more accommodative it tries to be with the Congress, TMC, JD(U) and the Left, the more aggressive the Opposition becomes.

The Congress and its handmaidens - AAP, RJD, JD(U), the Left, TMC and National Conference - meanwhile swagger their way through Parliament, TV debates, media interviews and public functions. The Congress is out of power but the ecosystem it has created over decades enables it to punch above its weight. The talent deficit in the Modi government exacerbates matters. Apart from eight to ten ministers and a few dozen MPs (out of 281) in the Lok Sabha, the BJP lacks intellectual breadth.

Modi has begun to turn the economy around, reboot foreign policy and reform infrastructure financing among many other achievements. But the positive message is hijacked by an Opposition well versed, as embattled finance minister Jaitley observed, in Gobblesian propaganda. The BJP's Delhi unit has been ineffective for years. It is time talented and honest administrators are brought into the party's Delhi unit or its 67-3 rout in the February 2015 Assembly elections will not be the last.

The Congress behaves like a colonial master, the BJP, despite attempts at retaliation, like a deferential subject in a colony where it has the majority but not the wit to enforce its will. While Modi has his hands full cleaning up the detritus left behind by the scam-tainted, policy-paralysed ten-year regime of the UPA, he must now turn his attention to bridging the talent deficit in the government. He also needs to change the over-deferential psychological mindset of the BJP.

That doesn't mean emulating the Congress' empty swagger but being clinically assertive. "Playing nice" will not work with colonial-clone bullies. As with all bullies, aggression conceals cowardice. There's only one way to deal with that: stand up to it.

Postscript to National Herald case:

Associated Journals Ltd (AJL) announced through advertisements in newspapers last week that an extraordinary general meeting (EGM) of its shareholders would be held in Lucknow on January 21, 2016. The aim: to seek approval to convert the AJL into a section 8 company under the Companies Act 2013 (equivalent to a section 25 company under the old Companies Act, 1956) and change its name.

The notice, clearly sparked by recent court events in the National Herald case, says: "The board of the company has been considering for more than four years that the company should not be commercially motivated with a view to distribute any benefits or dividends to its members. It should, instead, operate and undertake its activities for the larger public good. As such, the board has decided to take necessary steps to convert the company into a non-for-profit section 8 company under the Companies Act, 2013."

A close reading of the Companies Act, 2013, Business Standard reported, reveals that under sub-section (9) of section 8, "If on the winding up or dissolution of a company registered under this section, there remains, after the satisfaction of its debts and liabilities, any assets, they may be transferred to another company registered under this section and having similar objects, subject to such conditions as the tribunal may impose, or may be sold and proceeds thereof credited to the Rehabilitation and Insolvency Fund formed under section 269."

As Business Standard correctly pointed out: "This means that the assets, after meeting debts and liabilities, could be transferred to another section 8 company. The assets could also be sold and the proceeds credited to the government's Rehabilitation and Insolvency Fund. A section 8 company could also be converted into a regular company after meeting some prescribed requirements under the companies law."

This last critical fact significantly weakens the not-for-profit argument on which Sonia and Rahul Gandhi's lawyers have based their defence against Dr Swamy's complaint.

Follow@minhazmerchant on twitter

Will Congress snatch victory from jaws of defeat (even when it is wrong)
Whenever there is a crisis like National Herald case, Sonia and Rahul immediately field a battery of lawyers
Friday, December 18, 2015

Sonia Gandhi and Rahul Gandhi, along with four other individuals and a representative of Young Indian Ltd., will appear before the metropolitan magistrate at Patiala House court on Saturday, December 19, accompanied by a battery of lawyers and throngs of baying Congress supporters. In a symbolic gesture, they may offer themselves for arrest.

Meanwhile, after defending their disruption of parliament over the National Herald case, Congress leaders have, without a trace of embarrassment, reversed course. So now disruption of the Rajya Sabha is not over National Herald but a carryover of the protest against Madhya Pradesh chief minister Shivraj Singh Chouhan (over the Vyapam scam), Rajasthan chief minister Vasundhara Raje (over Lalit Modi), External Affairs Minister Sushma Swaraj (also over Lalit Modi) and a host of unrelated issues in Punjab, Assam and Arunachal Pradesh.

The National Herald case, Congress lawyers say loftily, will be dealt with by the trial court. The matter will in fact be decided on three key legal questions:

One, can a political party collect tax-exempt public donations (meant specifically to be used for political purposes) to, in effect, transfer real estate worth over Rs. 2,000 crore to a private company?

Two, can the subsidiary (Associated Journals Ltd.) of such a private company (Young Indian Pvt. Ltd., 76 per cent of whose shares are owned by Sonia and Rahul) rent its property rather than use it to publish a newspaper which was the express condition on which the property (Herald House and other buildings around the country) was given to it, virtually free, in the 1930s?

Three, does a private complainant like Subramanian Swamy have locus standi in the matter?

The third question is easiest to answer. Over ten shareholders of Associated Journals Ltd. (AJL), now a subsidiary of Young Indian Pvt. Ltd. (YIL), have already said they were not consulted when the share transfer took place. At least one of them, former Union Law Minister Shanti Bhushan, whose family owned 300 shares in AJL, has said he will implead himself in the case.

The Indian Express reported: "A number of shareholders of Associated Journals Ltd. (AJL) have claimed that the company's chairman, Motilal Vora, and its directors did not inform them or obtain their approval while deciding to transfer its entire equity to Young Indian Pvt. Ltd. (YIL) in December 2010. At least 10 shareholders that the Indian Express spoke to said their approval had not been sought by the management. Vora is also the treasurer of the Congress party."

The question of "locus" is thus settled.

Turn now to the other two questions. First, whether tax-exempt public donations can be used to, in effect, transfer over Rs. 2,000 crore of property to YIL? Second, whether buildings given or leased virtually free to AJL decades ago for the specific purpose of publishing a newspaper can be used to earn rental income?

An analysis of AJL's balance sheet reveals that its fortunes soared after the Gandhis closed the National Herald in 2008 and rented out its properties once AJL became a subsidiary of YIL. In 2008-09, AJL made a loss of Rs. 33.78 crore. In 2013-14, it made a net profit of Rs. 7.95 crore. Its rental income in that year stood at Rs. 9.40 crore.

Assuming only 20 per cent of AJL's property across India is currently rented out (there are several unoccupied buildings) and further assuming that rental yields are on average 4 per cent per year, the value of AJL's properties can be easily computed: Rs. 15 crore (estimated rental income in 2014-15) x 5 (20 per cent of space rented out) x 25 (4 per cent rental yield) = Rs. 1,875 crore.

This is roughly in line with the Rs. 2,000 crore estimated valuation of Herald House and other AJL properties - although their current valuation could be significantly higher.

Kapil Sibal and P Chidambaram have argued that a Section 25 (non-profit) company can't benefit its owners commercially. That's not strictly true. Owners of a Section 25 company cannot receive dividends or profits but they can certainly debit expenditure to the comapny.

Besides, a Section 25 company could under the old Companies Act have changed its structure to a for-profit company at a later date with shareholder approval. Given that Sonia and Rahul own 76 per cent of YIL's shares (24 per cent are held by their close associates), such permission would have been a formality. The value of its real estate assets and their rental potential would meanwhile have risen considerably. The new Companies Act blocks this change. Hence the Gandhis' consternation and anger.

A FAQ statement issued by the Congress (and published by, among others, Business Standard) claims that Rahul and Sonia haven't gained from YIL. It states: "Does YIL today own the property owned by AJL? No, both YIL and AJL are separate entities. All assets and properties of AJL continue to remain with AJL."

This is, to put it kindly, disingenuous. AJL is a wholly owned subsidiary of YIL. Thus the rental income and assets on AJL's balance sheet should form part of the consolidated accounts of YIL. This will come under particular scrutiny during the court trial.

More incendiary material

Meanwhile, NCP leader Sharad Pawar's newly released book, On My Terms, reveals that Sonia Gandhi "chose" Narasimha Rao as prime minister in 1991 after Rajiv Gandhi's assassination because she did not want an "independent-minded" PM. His book further reveals that Sonia has made it clear that she regards the Congress as a "personal fiefdom."

Sonia runs her fief with ruthless efficiency. Whenever there is a crisis like National Herald, she and Rahul immediately field a battery of lawyers who descend on television studios with spin interlaced with bluster. For example, P Chidambaram, Kapil Sibal and Abhishek Manu Singhvi have been omnipresent on TV over the past week defending the Gandhis over National Herald while major domo MPs like Anand Sharma and Ahmed Patel deftly turn the narrative in parliament back towards Vyapam, Arunachal Pradesh and the CBI's raid on Delhi chief minister Arvind Kejriwal's principal secretary Rajendra Kumar even as other Congress MPs shout slogans in the well of the House.

This three-tiered tactic is classically subversive - and effective. In perception terms, the Congress, with its vast treasure chest, highly-paid lawyers, a well-oiled political machinery and in-house media, often snatches victory from the jaws of defeat even when it is patently in the wrong. In sharp contrast, the BJP often snatches defeat from the jaws of victory even when it is patently in the right.

The obvious question the BJP should have long asked the Congress is this: if it can disrupt parliament over Vasundhara Raje's and Sushma Swaraj's alleged wrongdoing, why has the Congress's battery of formidable lawyers not filed a single court complaint against them as Subramanian Swamy did against Sonia and Rahul over National Herald in 2012?

As Sonia and Rahul prepare to appear as "accused" at Patiala House court on Saturday, Swamy has upped the ante. This is what he told the Indian Express: "Now the government should move forward and immediately attach the National Herald building (in New Delhi). The building was built with help from the then government, which gave land, almost for free, to National Herald. Young Indian had no business, as a charitable company under Section 25 to acquire controlling shares of the commercial company. They should reverse the deal. I have written a letter to Union Finance Minister Arun Jaitley about it."

Swamy is not likely to get a reply in a hurry.

Follow@minhazmerchant on twitter

Is Roger Federer the greatest tennis player of all time
To produce a GOAT like him, India must shift its focus from doubles to singles.
Monday, December 14, 2015

Comparisons are odious but sometimes inevitable. How would, for example, Australian tennis legend Rod Laver have fared against Swiss great Roger Federer? Impossible to answer. The racquet Laver used was made of plain wood; Federer's is composed of high-tech carbon fibre and aluminium with a large head, a scientifically stretched gut and a huge sweet spot.

And yet, if we had to pick the five greatest tennis players of the past 50 years (going back further to the era of Don Budge and Fred Perry would be too contentious), here's my pick:

1. Rod Laver

2. Bjorn Borg

3. John McEnroe

4. Pete Sampras

5. Roger Federer

Laver won the Grand Slam (all four majors in one calendar year - the Australian Open, French Open, Wimbledon and US Open) as an amateur in 1962 and then again, in the professional era, in 1969. He's my first GOAT (Greatest Of All Time).

Borg was a prodigy. During the 1970s, tennis was dominated by Australians and Americans like John Newcombe, Roy Emerson, Fred Stolle, Stan Smith, Bob Lutz, Jimmy Connors and Arthur Ashe. Then came along a long-haired blond Swede called Borg. He won five consecutive Wimbledons from 1976 through to 1980 before he was beaten in an epic five-set final on centre count by McEnroe in 1981. He's my second GOAT.

McEnroe was as volatile as Borg was icy cool. He had an incredible touch game at the net. As a left-hander (like Laver), his matches with Borg and Connors were the stuff of legend. He's my third GOAT.

The fourth GOAT is another American, Pete Sampras. Of Greek descent, Sampras brought a quiet efficiency to the court. He was a brutal serve-and-volleyer but, unlike compatriot McEnroe, Sampras never lost his cool and never abused match umpires.

The fifth and final GOAT is Roger Federer. One of the very few contemporary players with a one-handed backhand, Federer is possibly the most complete tennis player since Laver. In all, Laver won 11 majors. Federer has won 17 and he's not done yet. Sampras won 14 majors, McEnroe seven and Borg 11.

Statistics of course aren't everything. Boris Becker of Germany won his first major (Wimbledon) at the precocious age of 17 in 1985. He won two more Wimbledons in 1986 and 1989 but never quite lived up to his early promise, winning just three other majors in a 14-year-long career. Sweden's Stefan Edberg and Mats Wilander, Australia's Leyton Hewitt, Czech Ivan Lendl and, in an earlier era, Spain's Manuel Santana and Manuel Orantes, Australia's Ken Rosewall and America's Chuck McKinley could all have won more majors than they did.

India's Ramanathan Krishnan reached two Wimbledon semi-finals and Vijay Amritraj reached one Wimbledon quarter-final and one US open quarter-final. In 1973, Amritraj beat Connors to win the Bretton Woods tournament. He was 19 and many expected him to be India's first winner of one of the four majors. It was not to be. Vijay gently faded though he has built a fine career as an affable TV commentator, coach and mentor.

What about our doubles champions - Leander Paes, Mahesh Bhupathi and Sania Mirza? They've done India proud. But it's hardly tennis' greatest secret that doubles is regarded by connoisseurs as a sideshow. It requires dexterity and quick reflexes but not the speed, power, stamina and skill of singles.

McEnroe, as brutally frank at 56 as he was at 22 when he sent Borg packing at Wimbledon in 1981, echoed most people's thoughts when he said: "Doubles don't count as much because they're not as good as the singles players. Would it be better off, no disrespect, but would it be better off if there was no doubles at all, and we invest all the money we save elsewhere so that some other guys, who never really got into a good position in the sport, end up playing more in singles?"

India's loss in the Davis Cup to the Czech Republic exposed how Paes, Bhupathi and Sania's doubles success has lulled Indian tennis into complacency. We simply have no players of quality in singles anymore. And the talent pipeline is dry.

Kunal Pradhan put it well in India Today: "India's best singles player, Yuki Bhambri, is ranked 125th on the ATP tour. He is followed by Somdev Devvarman, now 30 years old, at 164th, and Saketh Myneni at 195th. Remember any of them staring at you from TV screens or newspaper pages recently? Our top women's player, Ankita Raina, is ranked 238th. None of them have won a World Tour title. Over the last decade, and particularly since 2010, Indian players got into the habit of chasing minor glories rather than striving for the ultimate prize. The blame for this, for no fault of their own, must fall on Paes and Mahesh Bhupathi. The two had come together as a doubles team at a time when their own singles careers were on the wane. Their chest-bumping chemistry lit up the circuit, giving them six titles in 1997, and taking them to all four Grand Slam finals in 1999. That was a time when doubles, although in decline, had not been sidelined completely.

"However, as doubles deteriorated into a pleasant pastime, Indian players who followed Paes and Bhupathi picked up all the wrong pointers from their success. They saw the format as a meal-ticket, something for which they didn't have to work as hard, and which would give them enough money to stop bothering with their singles careers altogether. Once their new-found success was toasted by the Indian media, with no riders attached to add perspective, there was no turning back."

To produce a GOAT - like Laver, Borg, McEnroe, Sampras or Federer - Indian tennis must shift its focus from doubles to singles. It won't be easy. Doubles delivers great financial rewards and you can play the majors well into your 40s as Paes has shown. But it's singles that counts and for that you need more than just quick hands at the net and a fierce forehand. Ask any GOAT.

Follow@minhazmerchant on twitter

Why is Rahul Gandhi so angry these days Two friends discuss
'This is India, not America. We don't have primaries. We have dynasties.'
Friday, December 11, 2015

Suleiman Khan was puzzled. The Saudi dailies were full of news about Donald Trump, the man with a coiffed mop of blond hair and a permanent pout who wanted to be president of the United States. Why did he look so angry all the time, wondered Suleiman.

Islamophobia had gripped the US ahead of the Republican and Democratic primaries. Trump and Dr Ben Carson, a retired black neurosurgeon who looked half-asleep most of the time, were constantly making angry anti-Muslim remarks in their campaign speeches.

All because of these Islamist terrorists, Suleiman thought to himself glumly. And, to make it even more depressing, Trump was leading in every opinion poll among Republican presidential candidates. Even pitted against Democratic front-runner Hillary Clinton, Trump was just one percentage point behind in the polls. What was America coming to, Suleiman mused.

And then Suleiman's mood suddenly brightened. His eye fell on a news item in a local newspaper: Rahul Gandhi was kicking up a storm in India's Parliament. Suleiman turned his new LED television set on. Surfing Indian news channels, he stopped at one where eight people in tiny vertical boxes on the TV screen were shouting at the same time.

He caught a few words in the din: "Rahul", "Sonia", "Swamy", "National Herald", "Pakistan", "Sushma", "GST", "Jaitley", "VK Singh". And then the screen cut to a middle-aged, square-jawed man in a white kurta pyjama, speaking and gesticulating angrily.

Rahul Gandhi's put on weight, Suleiman thought to himself. He looks just like his grandfather Feroze Gandhi. Only angrier.

From what he could gather in the chaotic debate, Rahul had become aggressive and vocal after ten years of parliamentary silence. In contrast, Prime Minister Narendra Modi was looking thoughtful and defensive.

Intrigued at this reversal of roles, Suleiman speed-dialled his friend Anwar Sheikh in Delhi. It was 7.30 pm in Riyadh and Suleiman, after counting on his fingers the time difference between Saudi Arabia and India, figured it would be 10pm in Delhi.

Seeing Suleiman's name flashing on his phone screen, Anwar said cheerfully: "As-salaam alaikum, Suleiman."

"Wa-alaikum salaam, Anwarbhai. I am watching eight people on an Indian TV channel shouting at one another at the same time about the tough, aggressive new Rahul. He and his mother Sonia have blocked Parliament because of some court order over a newspaper called National Herald. I always thought Rahul was a soft-spoken young man like his father Rajiv. What's got into him?"

Anwar coughed, partly in mirth, partly due to Delhi's smog. "Suleiman, you are stuck in 2004 when you left India. Rahul was soft-spoken then. Those days are over. After the Bihar elections, Rahul has come into his own. He has Modi and his ministers on the run, in parliament and outside. And forget about National Herald. As Sonia said, she is after all Indira Gandhi's daughter-in-law. She's not scared of anyone. It's all a political vendetta by the BJP and that incorrigible fellow Subramanian Swamy. This case will be forgotten in a few days. No one can question our Sonia and Rahul."

Suleiman was further intrigued. "But Anwarbhai, what has changed? The Congress still has only 44 MPs in the Lok Sabha. Yet they're behaving like the ruling party, not the Opposition, ticking government ministers off, challenging the Delhi High Court order on National Herald, stalling parliament and holding up the Goods and Services Tax (GST) Bill. Why is the BJP, with 281 MPs, behaving like the Opposition?"

"Now, now Suleiman," Anwar laughed, "First of all, the Congress has 45 MPs, not 44. Remember, it won a by-election in Madhya Pradesh last month. The tide is turning! Look at Gujarat - the Congress won 23 out of 31 district panchayats and 113 out of 193 taluka panchayats. Rahul is now confident he can be prime minister in 2019. Modi will soon be history."

As he absorbed all this, Suleiman glanced at the TV screen in front of him. The anchor was shouting at his panelists, telling them to stop shouting.

He turned his attention back to his friend in Delhi. "But Anwarbhai," Suleiman said pensively, does Rahul have any administrative experience? Has he run a state as chief minister or served in any ministry in the Union Cabinet when the Congress-led UPA government was in power?"

Anwar chuckled again. "Don't be naove, Suleiman. He's a Gandhi. He doesn't need administrative experience to be prime minister. Look at Rajiv. He flew old Indian Airlines Avro planes from 1968 to 1980. Yet he was prime minister by 1984. This is India, not America. We don't have primaries. We have dynasties."

"Of course," agreed Suleiman. "It's like that here in Saudi too. Our Kings all come from one family, al-Saud. It keeps things nice and simple."

Anwar didn't like the comparison but let it pass. "You know, Suleiman," he said, his voice clear and strong over the line from Delhi, "it'll soon be just like old times. A Gandhi as Indian prime minister and a Gandhi as Congress party president. And 15-year-old Raihan, Priyanka and Robert Vadra's son, when he turns 25 in 2025, can stand from Rae Bareli or Amethi. The family has looked after both constituencies so well over the years."

Suleiman was startled but managed to keep his tone even. Ten years in Saudi Arabia had taught him that discretion was usually the better part of valour.

He said tentatively: "Anwarbhai, a report by an NGO, Naandi Foundation, released by then Prime Minister Manmohan Singh in 2013, said Rae Bareli was one of the most backward constituencies in India. Nearly 70 per cent of children under the age of 5 in Rae Bareli, according to Naandi Foundation, are stunted or severely malnourished. How can that be? This is a constituency that has been looked after by the Gandhis since 1952 when Rahul's grandfather Feroze Gandhi was first elected from there! Aren't Rahul and Sonia worried that they won't be re-elected from there in the future?"

Anwar's chortle drowned out even the TV anchor who was closing a debate on Rahul's new-found aggression despite the controversy over the National Herald case.

"Suleiman," Anwar laughed, "you've been out of touch with Indian politics for far too long. Sonia will win from Rae Bareli and Rahul will win from Amethi even if the two constituencies have no electricity, water, sanitation or roads. It's about Family."

Suleiman's eyes widened. "You mean like in The Godfather?"

There was a sudden click at the other end. Anwar's phone line had gone dead.

Must be one of those call drops everyone in India complains about, Suleiman thought to himself, switching his phone off and turning back to his TV set.

Follow@minhazmerchant on twitter

How Obama allowed ISIS to grow into the monster it is
As long as the US continues to treat Saudi Arabia as a key ally, the Islamic State will remain a menace.
Tuesday, December 8, 2015

As the Barack Obama presidency winds down, his errors of judgment in the Middle East will intrigue historians for years.

President Obama has tried unsuccessfully for four years to unseat Syrian president Bashar al-Assad. By weakening but not defeating him, Obama created a power vacuum in northern Syria. In stepped the Islamic State (ISIS). Before 2011, ISIS was not a force to reckon with - a mere subaltern of al Qaeda.

America's Central Intelligence Agency (CIA) and the Pentagon meanwhile funded, armed and trained anti-Assad "moderate" terrorist groups like the al-Nusra Front. It was a classical outsourced operation to depose the Syrian leadership. But who would replace Assad? The United States thought it could prop up a Sunni puppet - as it did in post-Saddam Iraq - and all would be well.

It of course wasn't. Most of the "moderate" terrorist groups fighting Assad (an Alawite, a sect related to Shias in Sunni-majority Syria) were just that - terrorists. Assad's alleged use of chemical weapons, the US claimed, gave it the moral authority to depose him.

Rewind to 2003. President George W Bush used a dodgy intelligence report on weapons of mass destruction (WMD) in Iraq to invade the country. Saddam Hussein was chased, caught and executed. Chaos followed. Saddam, for all his brutal faults, had held Iraq together for over 30 years. A Sunni, he achieved a secular balance in a country where around 60 per cent of the population is Shia.

His Ba'ath party was, for all practical purposes, a US stooge. After the 1979 Iranian revolution deposed another US puppet, the Shah of Iran, the US nudged Iraq into a devastating eight-year war with Iran. The war, which dragged on from 1980 to 1988, cost millions of Iraqi and Iranian lives.

Saddam fell out of favour with his American benefactors in 1990 when he attacked another US protectorate, Kuwait. A short, sharp Gulf war, Desert Storm, followed. Saddam, defeated, withdrew from Kuwait. A vengeful US imposed debilitating economic and milita