Heralding 2017

Hi Friends,

"Dil hai ki Manta Nahi" that 2016 has elapsed into history to be replaced by "Zabardast" 2017. Wish you all a very Happy & Prosperous New Year 2017 - free from the "Dangal" of demonetization & serpentine queues.

"PK" you feel like a "Rangeela" that reveals your "Andaz Apna Apna" ; hope, therefore, that prohibition is not launched across the country like it was done in Bihar last year. 'Dil Chahata Hai" that "Lagaan" (Read Personal Income tax) be reduced this year during the budget presentation by the Finance Minister rather then by the PM who constantly steals the former's thunder; he did it again last night. "Akele hum akele tum" we have become today; hope we become more tolerant to an "Argumentative Indian" this year. AAP has respected the "Parampara" of all political parties & removed the list of donors from their website; hope they find their "Pehla Nasha". It is time for the Congress to move away from "Yaadon Ki Baraat"; else it will turn to "Raakh".

Trump may dump climate change initiatives but you should fall in "Ishq" with the "Earth" & protect it. There is "Aatank Hi aatank" across the world" & people akin to "3 idiots" are getting elected. Hope the trend gets reversed. 

"Dil Chahata Hai" that your "Talash" to clear your "Mann" & find the real "you" is revealed this year. Finally, this is annual appraisal time - accept the dictum: "Jo Jeeta Wahi Sikander"; hope you get the "Awwal number" not "Luck by Chance" & win your "Baazi". Praying for a "Mela" of great increments this year. 

'Isi Ka Naam Zindagi" 

"Satyamev Jayate"

"Love, Love, Love"
Ram

Movie review: Dangal

Aamir Khan emerges from his 2 year hibernation post “PK” in “Dangal” a movie of the sports genre, magnificently mixed up with a cocktail of patriotism & gender sensitivity. The “intolerance” remark cost him dearly vide a right wing backlash some time back & he appears to have taken care this time to make all the right comments that include “goose bumps” he experienced while the national anthem was played in the movie.   Not sure if it is the right wing push or the Supreme Court ruling that made people stand up twice for the national anthem: once before the movie began & later during the movie when the protagonist Geeta  wins gold at the commonwealth games. Children insisting that their reluctant parents stand up for the anthem were needless to say, a positive change.

Mahavir Singh Phogat (Aamir Khan) a wrestler retires from the mat forced by circumstances: a family to feed & a truant father who admonishes him. Going about his chores along with his wife Daya Kaur (Sakshi Tanwar), he dreams of a son who shall bring laurels for the country - a gold medal for the nation – a hark back to the sentiment amongst all Indian parents who drive their children, perhaps recklessly, to fulfil the aspirations that they themselves failed to achieve.  Destiny, however, wills otherwise & Mahavir is blessed with 4 daughters. His dejection transforms to hope when his 2 elder daughters – Geeta (Fatima Sana Sheikh) & Babita (Sanya Malhotra) beat up the village boys for passing snide remarks at them.  “The blood of a wrestler flows in them” he concludes & starts training the girls in wrestling widely seen as a male sport in this country including parochial Haryana where the plot is based.

The Haryanvi lilt of the movie is enchanting & has been used extensively in movies like Matru Ki Bijli ka Mandola & Tanu Weds Manu returns in the last 5 years. Bhojpuri was used extensively in Ganga Jumna more than 5 decades back. People paid for tickets as they do so now alluding to the fact that as long as our political class stays away from dividing India on linguistic lines, Indians by nature are tolerant & language agnostic.

Coming back to the movie, despite opposition from the society that include  refusing to allow the girls to use  their akhadas, meagre financial means & his wife refusing to serve non- vegetarian fare - a prime protein requirement  for a wannabe wrestler, Mahavir fights all odds & emerges triumphant. The daughters themselves resent his strict regimen & hilariously invent excuses to avoid the pain of rigorous training which he circumvents through creative solutions; difficulty in running in pyjamas is addressed by offering them half pants & complaint of greasy hair as a consequence of fighting on the sand pits addressed by cutting their hair short.  Only when one of their friends reveals her pain at getting married off in her teens by her father while Mahavir was at least thinking about his daughters future do Geeta & Babita soften up & seriously take to training. Geeta confesses that the real “Hanikarak” Bapu was tougher than what was portrayed in the movie.

With his wards now trained in his farm backyard, Mahavir takes them to wrestling competitions - ‘Dangals” in rural parlance - to take on male counterparts, initially, only to be ridiculed by the organizers; views change when they see the economic potential of attracting larger crowds & hence greater ticket proceeds by showcasing the glamorous girls & not because of any altruistic aim of transforming society or out of genuine gender sensitivity. Incidentally, Haryana has an abysmal gender ratio & is also plagued by a high percentage of female infanticide.

The girls initially win laurels in the “Dangals’ & later in the nationals which takes Geeta to the NIS (National Institute of Sports) Patiala, Punjab.  Initially, Geeta responds positively to her coach’s attempts to force her to “Unlearn” & even takes on her father in the bargain in what is an intensely poignant scene.  However, when “aggression” - her forte - is replaced with tactical patience she starts losing international bouts. Her rapprochement with her father & how his guidance to change tactics after going through the match videos puts her on a victory path forms the remaining part of the movie. However this puts Mahavir in conflict with her coach Pramod Kadam (Girish Kulkarni). Yet, Geeta, finally, wins the Commonwealth gold, in 2010.

The movie seems to have taken some cinematic liberties deviating from reality. Mahavir in reality is a stoic man whom Aamir tries to play sensibly until the script forces him to regress into mild histrionics to tug at the heart strings of the audience. Sakshi Tanwar, caught in a rut between the demands of her husband & the pleas of her daughters plays a helpless mother to perfection. India, unfortunately, has many such mothers caught in this grind of a patriarchal world.  While Geeta won her final bout in the finals quite easily in 2010 as the score read 1-0, 7-0 unlike the score of 5-1, 4-6, 6-5 claimed in the movie & shown as a cliff-hanger of a contest – a nail biting  finish - that was only settled in the final seconds of the third round. Off course she had longer hair in the actual bout too unlike what was claimed in the movie.   It is also untrue that Geeta did not win any contests before 2010; infact, she had earlier won the gold medal at the Commonwealth Wrestling Championship in 2009, where she competed in the same 55kg freestyle wrestling category. The actual coach PR Sondhi has protested that he was unnecessarily shown in an unflattering light & that Mahavir was not locked up during the finals but was in fact in the crowd cheering his daughter.  In Mahavir Singh Phogat’s biography, ‘Akhada: The Authorized Biography of Mahavir Singh Phogat’, Saurabh Duggal confirms the coach’s assertion.

Aamir has confessed that the movie mixes fact with fiction while retaining the essence of the original story. Despite the deviations the movie is a dish to be savored for 2 reasons: Aamirs’s body transformations as part of “method acting” to fit the different age profiles of Mahavir , perhaps an ode to Robert De Niro in the 1980 Martin Scorsese film "Raging bull"; & a reminder to society to shun gender bias for a girl child can bring, perhaps, more laurels too. Hope the audience is listening.

Year 2017: The Predictions

The assassination of the Russian Ambassador to Turkey, Andrei Karlov, on Dec 19^th, by an off-duty Turkish police officer, Altintas, in Ankara, after proclaiming “Allahu Akbar” & “Don’t forget Aleppo” - a reference to the Syrian cataclysm - is perhaps an indicator of more violent things to come.  Paradoxically, on the same day, Russian President, Putin, had to cancel his schedule to see the play Woe from Wit - written by the poet and diplomat Alexander Griboyedov, murdered by a mob when he was ambassador to Tehran, in 1829 - to attend to the event. One only fervently hopes that this event would not do to Europe today what the assassination of Archduke Ferdinand did in 1914. World War I happened then, leading to about 17 million dead. The other predictions for 2017

Russo-US Entente

Strategic experts aver that covert support to the ISIS by the US to unseat the Bashar- Al Assad regime, in Syria, is the genesis of the Syrian crisis. Eliminating both the ISIS & the Syrian regime is an unrealistic aim for one can’t run with the hare & hunt with the hounds simultaneously. With accusations flying thick & fast regarding Russian hackers help in a Trump win, in the elections, it would be reasonable to expect the Trump regime to work on a Russo-US entente to refashion the West Asian conflict. The nomination of ExxonMobil CEO Rex Tillerson - a known friend of President Putin - as the next US Secretary of State alludes to such a possibility.  However complexities abound.

Shia-Sunni/ Abrahamic Religion Conflict

While the Russians are friendly with the Shia regimes of Iran & Syria, Trump intends to back-off from the Iran deal struck by Obama; this could placate Israel & the traditional US supporters – the Sunni Arab regimes including Saudi Arabia - who are annoyed with the Obama regime for opening up to Iran. Obama’s parting shot was to surreptitiously support by abstaining on a non-binding UN resolution that chastised Israel on pushing settlements in West Bank & East Jerusalem, thereby keeping the two nation – Israel & Palestine – theory alive, in West Asia, Trump has promised to reverse the same & is insistent that the US ambassador should be based in Jerusalem & not Tel Aviv, which would reopen the old wounds of “holy wars”. He has taken a position on the West Bank that is more right to the one peddled by the Israeli PM, Benjamin Natanyahu which has the potential of annoying the Gulf Co-operation Council(GCC) & the Islamic Umma & that could serve as the powder keg, the conflation of which could rekindle the Arab-Israel wars of 1967 or 1973. Expect the Middle East to be a heightened battle ground between religions & sects accentuating the chaos.

Caliphate would try to regain relevance

ISIS & Al-Qaeda are fighting for supremacy & the former is the current darling of the Jihadis. ISIS will initiate & if unable to execute will at least take credit for lone wolf attacks across the world particularly Europe & North America - the forces which it sees as arraigned against it.  A petulant Putin & an impetuous Trump are likely to plan muscular reactions which have the potential of reigniting the crusades which will have religious, social & economic consequences. Therefore expect a violent 2017. A world war 3 is not unlikely.

Weakening of the International Order

The rise of right wing nationalists with the promise of making their countries “Great Again” is unlikely to stop with Trump. Expect more to join the ranks of Abe in Japan, Putin in Russia & Xi in China. Prodded by masochism, they are likely to overturn the world trade, economic & social order based the narrow pursuit of nationalistic objectives. Expect a further weakening of the UN & WTO. More no. of regional trading blocs would emerge while some like the TPP (Trans-Pacific Partnership) would disappear. Consensus on issues like climate change would weaken further.

Unravelling of the EU

Brexit is a consequence of voluble debaters playing on xenophobia & instilling in citizens fears regarding loss of jobs & terror threats. Right wing parties have gained in the European Parliament & are likely to storm to power in certain countries. The perceived German high handedness is dealing with the issues plaguing Europe could implode the European Union. Angela Merkel could lose the elections & not make it to a 4^th term in office.

South China Sea: The new area of conflict

Trump accepting, ostensibly, a congratulatory call from the Taiwanese President Tsai Ing Wen, predicts a fraught start to the US- China relationship since it challenges the “One China” policy which successive US regimes have respected since President Nixon’s historic rapprochement in 1972; the immediate consequence of that action is a US drone being captured by the Chinese in the high seas.  It is conceivable that Trump would attempt to fulfil his electoral promise of extracting trade concessions from the Chinese & the latter being patient & prolonged negotiators would wear him down. Attempts to arm-twist the Chinese would be responded through dumping of US debt that could effect the stability of the dollar plunging the world into an economic crisis. Alternatively, trying to hem them in the militarily would see tensions mounting especially in the South & East China Seas.

While Trump has already expressed his intentions of moving ahead with tightening the H1B visa regime which has the potential of impacting Indo-US relations, its ill effect could be softened through a closer Security & Defence partnership.  A closer US – India - Japan- Australia- South Korea- Vietnam axis to counter China is likely. Expect the South China Sea to be the focus of much duelling in 2017.

Conclusion

The world in 2017 will never be the same again. The fissures that have developed during the last few decades are waiting to be exploited & there is no shortage of interested parties.  In short expect social, economic & political upheavals across the world in 2017 & that is definitely not music to any ones ears. 

Demonetization: Consequences & The Way Forward

The govt. has called the current demonetization move as a “surgical strike” on black money - building up on the military strike on Pak earlier - unleashing yet again the patriotic sentiment of the people. The Supreme Court averred that it is actually “carpet bombing” while hearing a PIL requesting for staying the move; a stay has not been granted though. Kejriwal & Mamata Banerjee, the two leaders with aspirations of leading an anti Modi front, have issued an ultimatum to the govt. to reverse the move in 3 days; perhaps protests shall follow.  As Abhishek Manu Singhvi put it eloquently, we are in a “scrambled egg” situation & recovery of the egg is, therefore, ruled out. It would therefore be prudent to think on way forward to ease the inevitable pain.  

That the demonetization plan was ill planned is a fact. How will once explain the spelling mistakes on the 2000 rupee notes?  Earlier we had news reports on Marathi misspelt & now it is Urdu’s turn. Terror funds have dried up says MOS Home Ministry, Kiran Rijuju & perhaps Naxals are hand tied. Relative peace in Kashmir, as per analysts, though could either be attributed to the shortage of Rs 500/- notes paid daily to the demonstrators or temporarily suspended due school examinations underway; only time will tell. Other details of whether demonetization is good or bad is analysed in the following article.

http://meetrk.blogspot.in/2016/11/demonetization-in-india-good-or-bad.html

As per an India Today report, India has a capacity to print 26.66 billion notes per annum in two shifts across 4 currency printing presses: Nasik (Maharashra) & Dewas (MP), Salboni (WB) & Mysuru (Karnataka).  India has demonetized 15.7 billion 500 rupee notes & 6.8 billion 1000 rupee notes; Arun Jaitley has indicated that there are no plans to re-issue 1000 rupee notes unlike the 500 rupee notes.  Therefore, if the 2000 rupee note replaces the 1000 one, we need to print 3.4 billion notes along with 15.7 billion of 500 notes for replacement. If the printing presses work for 3 shifts they can print 40 billion notes per annum & printing the 19.1 billion (15.7+3.4) would take about 6 months. Clearly currency worries would not end on 30^th Dec as the PM would like us to believe even if we incorporate the news that the 2000 rupee note printing started at Mysuru from Sept.

What are the options then?

Religious Trusts: The govt. has persuaded religious trusts to deposit small change into the banking network to help liquidity which is unlikely to be a successful intervention since only 14% of the overall cash economy is in small denominations & not all of the same lands up into places of religious worship. 

Mobile Payments:  87% of Kenya’s GDP is transferred vide “mobile money” & it would seem an enticing opportunity for replication. However, It is pertinent to note that while India has over 1 billion of its 1.25 billion population, with mobile connections, urban tele-density is about 150% while rural tele-density is only about 50%; clearly, 150% penetration in urban indicates multiple SIMs with the same person which alludes to the actual mobile penetration being less than a billion while rural penetration at 50% indicates that many are yet to be incorporated into the mobile revolution. Incidentally, 68.8% (86 crores) of the Indian population resides in rural which means about 34 crore people have no mobile connections. Perhaps they belong to the BPL (Below Poverty line) segment.

Furthermore, overall tele-density in states like Bihar, Assam etc. is under 60% & hence mobile option in such states is rather limited – rural or urban. Thus mobile payments or wallet options is thus a slow burn.

Use Plastic: As per the RBI, at the end of Aug 2016, India has 71 crores debit cards & 2.6 crore credit cards. India has about 25 crore households & the debit card fig indicates that each family has at least 2 cards; however averages mislead. It would be safe to assume about 30 crore people to be BPL (Below Poverty Line) – despite various figs being bandied about - & in all probability many of those people would not have either a Jan Dhan account of a RuPay card activated.

Even if the above argument is disproved, one cannot wish away the paltry count of ATMs & POS machines in the country.  As per the same RBI data, end Aug’ 16 India has 2.02 lakh ATMs & 14.6 lakh POS machines; 1/3^rd of India’s 2 lakh ATM are based in the top 60 cities & 60% are located in urban.  Clearly the rural economy would go cashless for many more days for their inability to access the bank network - branches or ATMs.

In Aug’16,  71 crore debit cards were used to dispense 2.19 lakh crores from ATMs & 0.18 lakh crores from POS machines vide 7.5 crore transactions & 1.3 crore transactions respectively indicating that less than 10% of the people could be using the cards; clearly, these people need to be educated on how to use cards. 2.6 crore credit cards have a better story but their nos. are small; they were used to dispense 0.03 lakh crores from ATMs & 0.25 lakh crores from POS machines vide 64.63 crores & 83.95 crore transactions respectively.  Thus machines would dispense only 2.65 lakh crores of the 14.5 lakh crores cash notes being demonetized; surely, the current infra would be inadequate to handle the additional rush. Add to that the fact that there are only 2000 engineers to re-calibrate the ATMs to dispense the new 2000 note implies that many of the ATMs are currently forced to dispense only 100 notes leading to the proliferation of serpentine queues; safe to assume that it would take 3-4 weeks for the recalibration work to conclude. 

Activating the 1.2 lakh banking correspondents, inadequate in number though, is a solution but the process would be excruciatingly slow.  Logistics problems abound in supplying cash even to the 1.5 lakh post offices across the country - 89.9% of which are in rural.

Go Online: Govt. has already asked PSUs & central govt. departments to make all payments possible online. Responsible citizens have also started doing the same which needless to say is welcome.

   

Engage additional Printing presses: Since reversal of the demonetization decision is foolhardy, the only option left is to arrange for printing across presses across the world; security however could be compromised.

Conclusion

If 25% ($500 billion) of the $2 trillion Indian economy is “black” & 50% of the $217 billion in value of 500/1000 notes are assumed to be part of the parallel economy, it is unlikely that the entire money would be forfeited. The govt., perhaps, believes that if about $40-50 billion is forfeited & the RBI transfers the same as a dividend, the same could be used for pump priming the economy. While the aim is laudable, lack of cash for 6 months would ensure that the infra projects, even if announced, would fail to take off.

The rural economy which is largely a cash based one would be in shambles.  APMCs (Agricultural Produce Marketing Committees) at many places have started refusing to buy edibles since liquidity squeeze at the destination markets have effected payments. Farmers now have an option to either sell directly to the consumers, perhaps, at huge discounts or allow the vegetables & fruits to rot. The situation would worsen once the Kharif crop is harvested; it is probable that prices would drop or farmers store till liquidity eases. Purchasing power in either case, in rural would be an unfortunate casualty.

The industrial situation in urban is deteriorating rapidly. MSMEs facing a cash crunch have started retrenching labour which could start an unfortunate spiral of migration back to the villages. Production is surely going to drop effecting exports further. The drop in GDP during the next 3 quarters, including the current one (Sept 2016 - June 2017) is therefore a certainty.

While demonetization was a politico- financial move – to break the back of political financiers, largely of the opposition apart from sending across a signal to the electorate that the govt. is serious in tackling black money - the lack of detailed planning to ensure a smooth transition is a worry.  Needless to say, the path to hell is often paved with good intentions.

Demonetization in India : Good or Bad?

PM Modi - who has an uncanny knack of managing the media narrative - announced on 8/11 that the 500 & 1000 rupee currency notes are being demonetised at the stroke of midnight; the media which was till then closely following the US elections was forced to immediately shift to a domestic capsule. Defense Minister, Manohar Parrikar, said later that this move would impact the opposition parties in the impending state elections; clearly, this action was not bereft of political motives. The spin on terror financing from across the border, though true,appealed to the patriotic sentiments of the people.

As per Ambit Capital about 1/5^th of the $2 trillion dollar Indian economy is “black” while others have pegged it at a more ambitious $1 trillion dollar (50%) parallel economy; safe to assume 25% ($500 billion). India’s cash economy is about 17 lakh crore rupees ($250 billion) & 86% of that – 14.5 lakh crore rupees ($217 billion)  – is in the form of 500 ($120 billion in value & 15.7 billion in no’s) & 1000 ($97 billion in value & 6.3 billion in no) rupee notes. As per the finance ministry, during the period 2011-16, while currency notes circulation increased by 40%, 500 rupee notes increased by 76% & 1000 rupee notes by 109%, suggesting that higher value currency notes might have an important role in India’s black economy. Since all the 500/1000 rupee notes are not “black” money & if we assume about $100 billion (about 50% of the 500/1000 notes in value) of such notes as “Black” this is only 25% of the $500 billion black economy. Clearly, more of the “black” money is not in a cash form.

With interest rates low, internationally, Indian black money is not hoarded in Swiss Banks but has “round tripped” to India vide the Mauritius & Singapore routes.  Participatory notes (PNs) – the opaque financial instrument – that helps people invest in the stock market without revealing their identity, is the other culprit. As per a Credit Suisse report the top 1% of Indian population hold 53% of wealth & the top 10% hold 76%; surely, if the black money has been invested in real estate, housing, gold, precious stones & securities, would it not make more sense to target the top 10% rather than inconveniencing the entire population?.

The cost of production of Rs 1000 note is about Rs 3.2/-, Rs 500 is RS 2.5/-, Rs 100/50 note is Rs 1.8/- & for Rs 10/- is Rs 0.96/-. Thus reprinting the same of of 500/1000 notes withdrawn would cost about Rs 6000/- crores. If all the 500/1000 notes are replaced with Rs 100 notes it would cost Rs 25400 crores; however the same is unlikely since some of the money would is re-issued in the Rs 2000 note form. Chidambaram has pegged the cost of transition at anywhere between 15-20000 crores & has argued that the action undertaken by the govt. should achieve at least the breakeven value.

Positives of the move:

Indian savings rate which about 37% of GDP in 2007-08 has dropped to 29% now while China is around 50%; a high savings rate can spur investment creating more jobs in the bargain. Since agriculture is a political hot potato that is not taxed, India has the dubious distinction of only about 5.5 crores(4%) filing income tax returns of which only 1.25 crores (1%) actually pay income taxes & another 1.25 crores pay TDS (Tax deduction at source); demonetization is a route to force those outside the banking net to come to the banks for conversion, thereby leaving a financial trail; if in the bargain savings rate increases it would be a double whammy. Bank account seeded with Aadhar could be used by data analysts later to spot rich farmers & track them.

Indians are experts at “Jugaad” & it was not surprising to read in The Hindu that some politicians of Kolar have distributed 3 Lakhs each to commoners as an interest free lean for 6 months with the directive to get the same exchanges at the banking networks; India Today carried a report where touts offered to exchange the notes at a 40-60% discount.  The govt. seems to have moved in quickly to stem the same by introducing a 200% penalty which implies that a person in the 30% bracket shall pay another 60% as penalty, leaving only 10% as white money. Penalties have the potential of increasing taxes for a govt. 

The most positive aspect of a shrinking cash economy is less cash chasing goods & services which translates into reduced inflation & hence interest rates, a key demand from the corporate sector.

Negatives of the move:

P Chidambaram has argued that fake notes account for 0.07% of the entire cash economy & hence using a sledgehammer approach is unhelpful.  For those who have attributed this as a step to tackle terror, data suggests that fake currency from Pak flowing into India vide the Nepal & Bangladesh routes is about 400 crores per annum only – a pittance.  

As per the National Institute of Public finance & Policy report released in 2012, when the Janta govt. in 1978 withdrew the 1000, 5000 & 10000 rupee notes only 15% of such notes were exchanged for fear of penal action. Burma implemented it badly in 1987 leading to riots & a coup followed in 1988. While a coup is unlikely in India the social situation should be closely monitored.

As per the former chief statistician of India, Pronab Sen, with 86% of value of money in circulation withdrawn, the economy will have to make do with only 14% of money in circulation at least for two weeks, until when there are restrictions on withdrawing money would ease, effecting a chain reaction that could drop GDP growth by 1% this year

Conclusion

Modi had promised in his election rallies that he would tackle black money struck abroad & usher in 15 lakh into every bank account which Amit Shah later attributed to as an “chunavi jumla”; this statement had been attacked by the opposition & has effected the image of the BJP & the PM. Non action in the HSBC accounts case has convinced some that the govt. is not serious in bringing the issue to its logical conclusion. The spin doctors of the govt. would argue that the income disclosure scheme announced by the govt. in the last two years has netted about 75000 crores & the current move is an extension of the same resolve to tackle the parallel economy.

If the PM is indeed serious he should immediately announce that the BJP shall declare every paise collected as electoral funding on its website unlike the current practice where parties hide behind the clause in the Representation of peoples act that mandates declaration of only amounts above Rs 20000/-, ensuring that about 80-85% of collections remain undeclared. That would not only lead to an image boost but usher in genuine electoral reforms.

The reintroduction of the 500 & 1000 notes is questionable & the introduction of 2000 notes surprising. If indeed black money is stored in the form of high denomination notes, making it easier by launching a 2000 rupee note is perplexing.  

Cash to GDP ratio in India, as per a MINT report, is 10.86%, much higher than other major economies at 4%. If the intention of the government’s move is to transition to a cashless economy, creating infra should have been the first step.  The POS terminals, mobile wallets & ATMs per million of population is much less in India as compared to other economies. NSDL was inaugurated in 1996 & it rolled out infra before SEBI pushed for dematerialisation. Incidentally, UPI (unified payment interface) system is likely to be fully operationalized only by January 2017.

Clearly, the measure is meant to send across a signal to the population that the govt. is indeed serious in its intentions. It is also a political strategy to hurt the treasury of other political parties in the impending elections. Surely, the PM proves again that he is politically astute even though he is a self-confessed economic illiterate. 

India 2016: Are We Regressing to the 1990’s?

 Kashmir is burning in the North & Bangalore burned for a day in the South, both gaining international headlines. The game of musical chairs continues in Arunachal with 43 of the 44 MLAs shifting allegiance from the Congress to the opposition; Centre throttled development funds to the state forcing regime change, accuse the Congress. Earlier, article 356, was used with impunity to dislodge the Congress governments in Uttarakhand & Arunachal till the Supreme Court intervened to make amends. The Patels in Gujarat, Marathas in Maharashtra, Jats in Northern India & Kapus in AP are up in arms demanding reservation. Campus eruptions abound; while the JNU imbroglio raised the bogey of the real definition of “nationalism”, the actions in the Rohit Vemula case in Hyderabad University, Periyar Study circle in IIT – Chennai & the Una trashing incident perpetuated by the cow vigilantes, have raised Dalit identity issues. Religious polarization is on the rise too. While the riots in Western UP, in 2013, pitted the landed Jats against the Muslims, slogans like “Love Jihad” & “Beef Ban” have continuously raised the temperatures; incidents such as the lynching of Mohd. Akhlaq & the activism of “Gau Rakshaks” have accentuated the divide between the 2 largest religious communities of the country to precarious levels. Racism is reaching catastrophic levels; while ethnic maltreatment of Africans & people of the NE, visible vide incidents in Bangalore & NCR is deplorable, the “Insiders- Outsides” branding in the NE is equally reprehensible. These schisms in our polity are a consequence of linguistic, caste, ethnic & religious polarizations.  That raises the question: Has India regressed to the 1990’s? Is war mongering being used to supress all these issues?

The 1990’s arguably were the most trying times for the Indian polity. While the break-up of the Soviet Union forced India to devise a new foreign policy in a unipolar world, financial distress prompted us to initiate economic reforms. Kashmir was burning then too with insurrection fronted by the JKLF & Hizbul Mujahedeen in the valley with support from across the border & Kashmiri Pandits were forced to become refugees in their own country.  Article 356 continued to be imposed with impunity with Karnataka, Tamil Nadu, Rajasthan & states of NE being the significantly effected ones. The acceptance of the Mandal Committee recommendations in1990, by Prime Minister VP Singh, to shore up a support base for himself, at the expense of his deputy, Devi Lal & to checkmate a rising BJP, unleashed in its wake a wave of protests, largely led by the students, who felt their career ambitions threatened.  Forward castes reacted violently & OBCs countered the protests creating a violent political cauldron. A desperate BJP, finding its Hindutva base getting dispersed, raised the “Kamandal” issue of Ram Janmabhoomi, which triggered the Babri Masjid demolition, in 1992, leading to the Hindu-Muslim riots that were soon followed by the Bombay blasts the next year. Are the events of today not ringing a similar bell?

All political parties in India, generally, ride on caste combinations & therefore it is in their interest to further caste polarization. The core base of many regional parties is based around a particular caste. Parties like the BJP, AIMIM et al, on the contrary, succeed through religious polarization.  Ethnic & tribal polarization has frequently been employed in the NE. Raising issues of Identity without resorting to violence is a legitimate political act but unfortunately that has rarely been the case; polarization is seen as assuring a more surer shot at political power. The scourge of polarization of all hues, therefore, unfortunately, appears back on the horizon.

Mid 1990’s saw major problems being addressed through political initiatives & Supreme Court judgements. The Punjab problem was solved by PM Narsimha Rao who initiated a political process, in 1992, in the state despite many odds & persuasions to the contrary; the Mandal agitation was solved through a Supreme Court judgement in 1992, restricting the reservation to 27% to ensure that overall reservation in India is under 50%. Pragmatism defined the Kamandal forces resolve to lower the rhetoric in a bid to win allies which they did & formed the govt. in 1998 post a short lived 13 day stint, earlier, in 1996. Sanity was restored in state legislatures vide the Bommai Judgement of 1994 that ensured a drastic reduction in the misuse of Article 356. Hiteshwar Saikia’s able administration in Assam coupled with Operation Rhino launched by the Army broke the back of ULFA in the early 90’s while the talks initiated by Home Secy. Padmanabhaiah, in 1997, with the Naga outfits of the NE ensured long lasting peace in the region. Vajpayee initiated the Kashmir peace talks with Pakistan & Manmohan Singh took the same forward through a Track II backchannel diplomacy. Regrettably, we seem to be squandering all these gains.

Instead of solving the new problems of pollution, climate change, abysmal social indicators et al we are regressing & opening up old wounds, the solutions for which were arrived at post intense debate & sustained through bipartisan support across the aisle. The culprit as one can guess appears to be the lust for political power.

India needs leaders who display vision & statesmanship in good measure, unwilling to enter into Faustian pacts for political gains for whichever entity wins in this war of polarization, India shall be a loser & that should be unacceptable to any “patriotic” Indian.

Uri attack: What should be India’s response?

The attack on an Army cantonment at Uri, reminiscent of the Pathankot attack, in Jan 2016, by Pak based terrorists, perhaps, of the JeM (Jaish – e Mohammed) resulted in 17 soldiers taken down – burnt in tents to be precise;  one more succumbed to his injuries a day later. Not taking any action would be an act of cowardice said MoS Jitender Singh while the BJP General Secy., Ram Madhav, advocated a jaw for a tooth; sadly a day later their voices were more nuanced leading one to wonder if it was not merely rhetoric. That the Govt. is yet unmoved alludes either to the absence of a strategy or presence of an ineffective one, not executed to prevent embarrassment; neither depict India, with great power ambitions, in great light. A country with expectations of being acknowledged as a “World Power” cannot be tagged even as a “Regional Power” if it cannot tame an intransigent neighbour. Should India not have anticipated such bellicose acts from Pak & planned an effective response beforehand?

The Indian response should be based on only one criterion

Are the Pak armed forces getting weakened by out acts?

Pak for long has been ruled vide a military dictatorship & even in the presence of a civilian administration, the ISI & the army form the real power centre. Talks with a civilian administration are therefore ineffective since they lack the power to execute the promises. Indo-Pak talks have been most effective when a military ruler was in power & it needs no rocket science to assert that negotiation from a position of strength is always a preferred option.

The suggested responses

Diplomatic Options

(1)Withdrawal from the SAARC summit – India should either withdraw from the SAARC summit, planned in Pak this Nov, downgrade it to a ministerial representation  or attend it & along with Afghanistan & Bangladesh – both at the receiving end of Pak’s stick –  wreak the summit. While it shall cause diplomatic embarrassment to Pak, it shall not weaken the military.

(2)Downgrade Diplomatic Relations with Pak: India can expel the Pak High Commissioner or the Defense attache - who definitely must be from the ISI - & withdraw its own Ambassador from Pak before there is reciprocal action from the other side. The effect, unfortunately, shall only be cosmetic.

(3)Declare Pak a terrorist state – India has raised the issue of Pak support to terrorism at the G20 & has urged the UN to include non-state actors too while defining terrorism.  However, all major powers have a dubious history when it comes to supporting terror to achieve geopolitical objectives & hence have cold shouldered the proposal. Any Indian resolution to declare Pak a “terrorist” state is unlikely to find support at the UN, because of the lack of support from the Muslim Ummah - the 57 member OIC (Organization of Islamic Countries) & the GCC (Gulf Co-operation Council) - or torpedoed through a Chinese veto. Even the US would be loath to pursue the option for fear of pushing Pak, further, into a Chinese embrace, losing whatever little leeway it has over the country today.

(4)Push Major powers to stop joint military exercises, military aid or arms sales to Pak – The Russians have cancelled the first ever joint military exercises, planned with Pak; incidentally, plan to sell MI 35 attack helicopters & military exercises was a consequence of India moving closer to the US, much to Russian chagrin, in the recent past. The military sales could still go through. No western country would stop defense sales to Pak unless threatened with denial of bidding into our annual defense capital purchases market, worth about Rs. 70000 crores – amongst the top 2 in the world, with Saudis giving us company. The Chinese, however, would continue to prop up Pak just as they have supported the International pariah, North Korea, nullifying our expected gains.

(5)Support Baloch liberation: Granting asylum to Brahumdagh Bugti & others fighting for the Balochi cause while helping them travel to world capitals to canvass for Baloch independence & bring sharper focus on the human right violations in Balochistan would help; however the collateral damage would be risking a focus on Kashmir. Just as Kurdish Independence from Iraq - Turkey- Syria is not getting international acceptance, Balochi independence too would suffer a similar fate; even the US believes that Balochistan is a indisputable part of Pak. Therefore, but for needling Pak & causing it some headache, this strategy would not take us far unless we use this to wreck the $46 billion  CPEC (China Pak Economic corridor)

(6) Stop Visas & cancel People to people engagements: This is the softest but the most foolhardy option that is generally exercised which merely succeeds in some “signalling” without achieving any strategic goals. When supported by jingoism, prompting the digging of cricket pitches during an Indo-Pak match or forcing the cancellation of the Gulam Ali show, perpetuated by the Shiv Sena, in Mumbai, evoke nothing but discord & sends wrong signals to the international community. It is prudent to allow Pak citizenry to continue to come to India to create a constituency in the civil society of Pak.; offering citizenship to interested personnel, without national security implications, as was done in the case of  Adnan Sami, could start a discussion back home in Pak, creating a better appreciation of India.

Economic Options

(1)Stop trade with Pak or withdraw the MFN status – Annual Trade with Pak is about $7.5 billion, of which 2/3^rd flows through informal channels vide Dubai; India has a trade surplus. Stopping trade would push the entire basket through Dubai & hence shall not pinch Pak; withdrawal of the MFN status shall not help either. Incidentally, the Kashmir fruit trade that happens across the LOC would be severely dented effecting the economic conditions in the valley further. Damaging Pak’s export economy by forcing its largest trading partners EU & the US, by dangling our defense import or the large domestic Indian market carrot, shall help. But this shall be a medium term plan which could be torpedoed if China plays white knight

(2)Threaten China with Trade sanctions: To prevent China from supporting Pak,  India could threaten sanctions. The China – India annual trade is about $70 billion with a trade surplus of about $50 billion in favour of China. But are we in a position to threaten china – a $10 trillion dollar economy, 5 times our size?; the latter could very well put its strategic interests above the trade ones & call our bluff.  Enticing China by granting greater access to the Indian market if they forsake Pak could be a better option; but it would not sail either since an Indo-Pak narrative & not an Indo-China one is seen by China as being in its long term interest.

Military/Covert options

(1)Declare War on Pak: This is unlikely despite our conventional weapon superiority.  While India has the 4^th largest military in the world at 1.3 million with about  $40 billion annual budget, Pak has the 11^th largest military in the world at 0.55 million with a military budget of $7.6 billion apart from being  a nuclear power & hence no pushover. It is unlikely that they would use the nuclear trigger since it would invite Pak’s annihilation too. Mao once called the western bluff, on nuclear war, by asserting  that even if 400 million Chinese perish in the act, the remaining 200 million would continue to build a greater China; Does India have the gall to take a similar stand?

(2)Attack terrorist training grounds: India had attacked the PLA, a Meitei outfit’s camp & NSCN (K) site in Myanmar, as retaliation for the ambush killing of 18 soldiers in Manipur last year. However the sites were deserted when the attack happened, aver some strategic analysts; Pak too keeps changing the locations of the training camps & unless India has concrete information on the sites, a punitive strike would be counter-productive for the diplomatic fallout would most likely dent India’s reputation as a “responsible power”. Pak has a fairly robust air defenses too as per the analyst Cristian Fair.

(3)Take down ISI’s prized assets: Finishing off Dawood, Hafeez Sayeed, Mahsood Azhar et al would cool, partially, the pent up public opinion. This action has to be executed covertly either by our RAW agents or hired mercenaries. Genaral Roy Choudhary wants “non-state actors” to be created to sharpen our covert machinery while VP Malik has confirmed that such an arm was disbanded in the mid 1990’s on political directions; Manohar Parrikar statement in 2015 that a thorn has to be removed by a thorn alludes certainly to some thinking in that direction even as it confirms absence of such capacity today. The point to remember is that such actors could recoil on their patrons, perhaps, creating a Frankenstein monster – as has happened in Pak now; therefore, hiring is always desirable. A covert plan hatched by using hired mercenaries – Pashtuns or the Balochis – should be immediately executed to finish the JeM chief.  

Other options

(1)Cancel the Indus water treaty:  The Indus Water Treaty, signed between India & Pak in 1960 reserves 80.52% of the river water to the lower riparian state; such largesse was, perhaps, meant to be a barter for the still elusive peace. Pak has used the international dispute resolution mechanism to stop India from constructing dams while simultaneously proceeding with its own - the Bunji & the Basha dams with Chinese help. Strategic expert - Brahma Chellaney- argues for annulling the treaty under clause 62 of the Vienna Convention by reason of a fundamental change of circumstances of exporting terror & causing palpable harm to an upper riparian state. Unfortunately, this would hit the people of Pakistan & not the military. This strategy also could depict India as a country which does not respect international treaties & perhaps force China to squeeze the Brahmaputra effecting water flows into the NE.

(2)Cyber Warfare: Being an IT powerhouse, India's capability in this space is miles ahead of Pak. However, sensitive assets, in Pak, must be currently protected through isolation, defeating our strategic resolve. Desecrating more than mere websites should be our aim & that could take time. Since attacks of such nature can never be owned publicly, the  heightened public angst cannot be subdued. Some form of saber rattling in this space could be expected.

Conclusion

None of the options listed above weaken the Pak Military industrial complex.  Even if Pak economy is weakened, affecting the annual budget of Pak military, they are cushioned by the Fauji Foundation which has assets of $20 billion; thus other options like keeping the Pak army engaged in internal disturbances in Balochistan, Khyber Pakhtunkhwa & Sindh, to stress them out, need to be explored. Balkalization of Pak might not help since the Pak army & the ISI are largely drawn from Punjab; disruption in Paki Punjab shall genuinely weaken the Pak army which is what India should target.

For details see http://meetrk.blogspot.in/2016/09/is-balkanisation-of-pak-effective.html

Alas, all these are medium to long term strategies & that perhaps, explains why the Indian govt. is still silent despite the carnage. Gen. Jaswal has argued for taking down a few Pak army pickets, immediately, post the attack; that even such a tactical act was not implemented is surprising for it would not have elicited a more than proportionate response from the other side. With every passing hour the element of surprise is getting lost & patrolling on the other side shall get more robust, reducing the possibility of a retaliation further. It is unlikely that any action would be initiated post the UNGA session comes to a close. Many in the govt. would like us to believe that just as the Indian Armed forces prepared for a few months before launching a war in 1971, a similar exercise is currently underway. Hopefully, the don't do something before the Punjab or the UP elections to gain some advantage as the cancellation of talks with Pak was done earlier to gain an advantage in the then impending J&K elections.

Post the 1971 defeat, in the Indo-Pak war, that led to the creation of Bangladesh, Pak spent the next decade in capability building to launch a blitzkrieg in Punjab in the 1980’s  & Kashmir in the 1990’s. Col Ajai shukla avers that currently India & Pak capabilities are symmetric & the consequences of an attack are far worse than what is generally assumed. China is bound to intervene if they sense the annihilation of Pak; hence we need to be prepared for a war on 2 fronts. Perhaps, India should cease rhetoric, plan adequately & reciprocate in the same coin.

Is Balkanisation of Pak an Effective Strategy?

The successful separation of East Pakistan - known vide its new name of Bangladesh – from West Pakistan in 1971, has convinced many strategic analysts to ponder on the possibility of repeating the surgical act again to tame an intransigent Pakistan. The purported statement by NSA, Ajit Doval, that any repeat of a Mumbai blasts like situation would lead to the dismemberment of Pak sent shock waves through their power elite; perhaps Doval’s reputation as a man who had spent 7 years in Pak, incognito, as a covert agent, could also be a reason for replacing their NSA, Sartaj Aziz with Gen. Janjua.  The reference to Balochistan in the Sharm- El- Sheikh declaration earlier in July 2009, capture of Kulbhushan Yadav by Pak authorities in Mar 2016 & PM Modi clubbing together POK, Gilgit Baltistan & Balochistan during his independence speech, from the ramparts of the Red fort, in Aug 2016 & GOI showing its keenness to accord asylum to Baloch separatists, perhaps, is an indication that this strategy is indeed being taken seriously.

India’s attempts to de-hyphen itself with Pak & be seen as China’s equal by the international community shall always be torpedoed by China; China’s attempts to club India & Pak together for NSG membership falls into this strategic calculus.  With a $10 Trillion dollar economy – the 2^nd largest in the world after the US - & a $146 billion military budget, China wishes to challenge the unipolar world order & appears to be succeeding. China has traditionally treated the East China Sea & South China Sea as its backyard &  engaged in a conflict with Taiwan, Japan & ASEAN;  her claim over the entire South China Sea vide the nine dashed line has suffered a temporary reprieve through, because of the recent judgement of the International Court of Justice.

For details see http://meetrk.blogspot.in/2015/07/geopolitics-of-artificial-islands.html

Its attempts to circumvent India’s ambitions include a “string of pearls” strategy though engagement with Sri Lanka, Pakistan, Myanmar & now Maldives too. China had opened up a route into the Bay of Bengal vide infra development through Myanmar & is now planning a route through Pakistan into the Arabian Sea effecting challenging India in its backyard. This opening also wards off the possibility of getting chocked at the Malacca straits in the event of a war with any enemy country.

 For India’s response read http://meetrk.blogspot.in/2015/05/geopolitics-of-infrastructure-indias.html

The $46 billion CPEC (China Pakistan Economic Corridor) that provides unimpeded access to the Arabian Sea, if constructed could smoothen logistics support & India could be inconvenienced in the event of a war on two fronts.

China Pakistan Economic Corridor

Pakistan has 4 provinces Punjab, Sindh, Khyber- Pakhtunkhwa & Balochistan even as they continue to retain hold the disputed territories POK & Gilgit Baltistan known as “Northern Territories”.

CPEC is 3218Kms long, starting at Kashgar in the Western Chinese region of Xinjiang & passing through Gilgit-Baltistan terminates at Gwadar in Balochistan; it consists of pipelines, highways & railways & is expected to be operational by 2020. Economic prosperity & greater integration are expected to be the fallout of this project.

With Af-Pak relations strained, Pak has shunned Afghanistan & requested China to connect the CPEC to the OBOR (One belt one road) project to provide a link to Central Asian republics, bypassing Afghanistan where India has made substantial investments.  Ideally, if the aim is economic alone, it makes sense for India to connect the Delhi Mumbai industrial corridor to the CEPC & gain access to Central Asia rather than make further investments in connecting the Chabahar port in Iran via Afghanistan to Central Asia especially when Afghanistan continues to be in turmoil & our relations with Iran uncertain.  Pak realizes the strategic importance of the project & fearing sabotage is guarding the 7000 odd Chinese personnel working on the corridor with about 15000 soldiers.

What should be the Indian Response?

Hawks are convinced that dismemberment of Pak is the only solution. Severing Balochistan could cut off the Gwadar port - from the corridor - which China plans to develop as a naval hub. Here is assumption is that an independent Balochistan, cognizant of India's interest, would not allow the corridor or port to be developed by China; however, it is possible that looking at the economic benefits involved the Baloch leadership could allow China access effectively nullifying our efforts. While keeping the issue of Balochi response open, it is sane to assume that if Sindh continues to remain in Pak, then the Chinese could be expected to terminate the corridor at Karachi, nullifying the gains. Therefore, engaging Muhajirs – Indian Muslims who migrated to Pak in 1947 – largely residing in Karachi, smirking at being treated as second class citizens, could help achieve disturbances but not severance; other citizens of Sindh, who dominated the power apparatus, from 1947 & replaced by the Punjabi elite, since the 1960’s, could be tapped  &  resentment sharpened.  A better alternative would be to finish off the project at Gilgit- Baltistan, since it is technically Indian territory & the local population is seething with anger at the prospect of their traditional land holding being usurped by aliens. While evaluating all alternatives, it is important to find answers to 2 questions: Would an Indian action not lead to an ISI response?; Does dismemberment of Pak serve our purpose?

The Pak Army is about 5.5 lakh strong & dominated by Punjabis; the ISI too is dominated with a disproportionate representation from Punjab. Dismemberment of Pak shall not change the composition of either the ISI or the Pak army & they would continue their diatribe against India as they are wont to do now. They have not forgotten the ignominy they suffered against India in the 1971 war & further dismemberment or attempts in that direction would only accentuate these hard feelings, effecting peace in South Asia. If severed, the Pak armed forces would have only Punjab to defend, which they can do better, because of the principle of contraction defense; breaking of Punjab into smaller principalities is desirable to weaken the Pak Army but that is highly unlikely, unless "non state actors"like the LeT, JeM et al recoil on their patrons. Even if that does happen, India needs to be on guard for instability across its borders could always spell trouble.

China would not intervene in an Indo-Pak conflict unless it senses Pak annihilation. It needs Pak to continuously needle India & maintain an Indo-Pak narrative. Since CPEC helps China, to circumvent the Malacca Straits & gain access to the Middle East & Africa's natural resources at a cheaper cost, it would never ditch Pak. It is, therefore, important to step back & analyse if dismemberment of Pak would help us achieve out twin objectives of checkmating the Chinese & ensuring ever lasting peace with Pak. Obviously, there are no easy answers.

Kashmir Problem: Waiting For The Still Elusive Solution

The flamboyant Hizb ul Mujahedeen commander & social media star Burhan Wani’s killing by the armed forces has reintroduced bloodshed in the pristine valley with casualties on both sides – civilians & security personnel. GOI is fighting a Pak enhanced diplomatic offensive internationally & belligerent stone pelting crowds locally, the latter, perhaps influenced by the Palestine’s “Intifada” movement. 

Pakistan Occupied Kashmir (POK) consists of Western Jammu districts of Muzzafarabad, Poonch & Mirpur - & the northern territories of Gilgit - Baltistan which accounts for about 46% of the J&K State.  “Aksai Chin” was occupied by China after the Indo- China war in 1962 & 5180 Sq. Kms of the Shaksgam tract was ceded to China by Pakistan soon after in 1963; thus the dispute has effectively become a tripartite one. The recent American foreign Ministry spokesperson calling for a settlement between India Pakistan & Kashmiris – leaving out China – makes it a tripartite problem, contrary to the Indian position that it is a bilateral problem to be resolved under the Shimla agreement of 1972. Surely, Pak or the US would not refrain from fishing in troubled waters unless we put our house in order.

Rajnath Singh – the Indian Home Minister – visited the valley but received a cold response with even the trade lobby refusing to meet him. A similar fate awaited the Joint parliamentary committee (JPC) that visited the valley later; a JPC when deputed in 2010 did cool tempers post a promise to constitute a committee to look into the whole imbroglio. The recommendations of the 3 member committee headed by Dilip Padgaonkar though were never acted upon.

The committee is supposed to have suggested greater autonomy – a reversal to the pre 1953 position - which would give J&K a PM & Sadr-i-Riyasat (A president equivalent) apart from the benefits of their own flag & 6 years elected term - unlike 5 years in Indian legislatures - which they currently enjoy. That would also entail the CAG & the Indian Supreme Court being off limits for J&K; off course all the other benefits under article 370 would still continue. 

The former Home Minister, P Chidambaram’s (PC) statement that the 1947 treaty of accession should be respected to give more autonomy to the state has BJPs  Prakash Javadeker quip that PC is “repenting at leisure” for the Congress never acted upon the Dilip Padgaonkar’s report. Clearly, a national consensus eludes the Kashmir imbroglio for where the Parties stand – on this issue – depends on where they sit – in the opposition or the ruling benches. Unless we evolve a national equanimity on this issue the problem is unlikely to be solved in a hurry accentuating the alienation in the valley further which does Indian democracy no credit. If we continue doing what we have done till date expecting a different result, we shall only be fooling ourselves. it is important to recall that Vajpayee attempted something different & despite roadblocks, his outreach did create a constituency in the valley.

Issues to ponder over

(1)Does it make sense for India to station about 50% of the 13 lakh strong Indian Army in Kashmir alone while Chinese aggression on the Northern borders has increased & we do not have budgetary leeway to raise additional battalions?

(2)Media channels were abuzz about how Rs. 100 crores was spent by Pak to formant the current mob violence; if such small amounts can prod people to the streets, then would Pak not continue with this low-cost disruptive game? If yes, does it not help engaging Pak to stop or reduce the flow of funds from across the borders as a first step to control domestic crowds?

(3)If the Hurriyat leadership is indeed rootless as proclaimed by many analysts, what does India lose by allowing Pak representatives access to them? Why does the Govt. approach them to control the intransigent crowds now?

(4) AFSPA has been in existence in the NE since 1958 & in Kashmir since 1990; should it not be used for short duration? What needs to be done post the Supreme Court strictures on the continued use of AFSPA?

(5)Are the J&K police performing what they see as merely their job to remain employed or are they wedded to the Indian cause? The answer to this question would indicate how different the J&K problem is to the erstwhile Punjab insurgency which was initially contained through police action & later eliminated through a deft political process initiated by P V Narsimha Rao.

(6)Do the mainstream political parties in the valley enjoy genuine political support or are they merely either hard-core separatists or soft separatists? Elected representatives, unable to curb mob violence & engage citizens, perhaps alludes to some answers.

(7)Is the increased interest in Indian civil service jobs by the Kashmiris a sign of their keenness to integrate with India or a long term plan to build their own bureaucracy?

(8)Does it make sense to draw RED lines on Pak representatives meeting the Hurriyat when India had allowed such meetings since the early 1990’s? Can we solve the Kashmir problem without engaging Pakistan when the Shimla agreement willy-nilly recognizes it as a player in the dispute?

(9)If ‘Non-interference in each other’s internal affairs” is seen as a bedrock of our foreign policy does it make sense for the PM to raise the issue of Baluchistan from the ramparts of the RED fort? Is it only a tactical negotiating ploy?

Possible Solutions

Kashmir is without doubt a “political problem” which needs to be handled by the political leaders since the Indian Army has done its job of weaning back the valley from the brink of separation in the 1990’s.  While India is keen on de-hyphenation with Pak, China would do everything possible to ensure continuance as part of its power calculus; this explains its veto on  Mahsood Azhar being declared an “International terrorist” or insisting on a rule based entry into the NSG.  A 2.3 million military & $146 billion budget puts China miles ahead of India’s 1.3 million military & $37 billion budget. Arraigned against Pak’s 0.55 million military & $7.6 billion budget, many Indians & national TV channels indulge in jingoism without the realization that India is in no position to fight a war on 2 fronts. A tilt towards the US is thus welcome especially when Russian tilt towards China is pronounced; keeping Russia in good humour on defence imports is critical to prevent the latter's tilt towards Pak.

The Pak Army budget at 3.5% of GDP is high; permanent enmity with India & encouraging lawlessness in Afghanistan is the only way it can retain its budgetary support & preeminent position. Therefore, political leaders have been either finished or propped up by the army from time to time; Bhutto’s hanging in 1979 on a trumped up murder trial, Nawaz Sharief being propped up in the 1980’s & dumped in 2001 or Imran Khan & Tahirul Qadri being supported now are part of these diligent chess moves. Not surprisingly, civilian governments in Pak, wary of being dethroned, have played footsie with their Army either by ratcheting up emotions on Kashmir or through anti- India rants. Any leader who tried to engage in peace talks with India incurred the Army’s wrath; Kargil happened soon after Vajpayee’s bus ride to Pak & Pathankot after Modi’s visit to Raiwind are cases in point. Does the trajectory of events indicate that Indo-Pak peace is a pipe dream? Perhaps, not.

There is no denying that the army – the sole arbiter of Pak destiny - along with the ISI is the only institution in Pak with the capability to implement bilateral agreements.  Mysteriously through, dictators who made  moves to arrive at some form of peace agreement & settlement were either killed or dethroned; Gen Zia’s air crash in 1988 or Musharraf’s loss of power in 2008 are examples. Clearly, the actors of the Pak deep state would pull all stops to maintain status quo & any deviations would not go unpunished.

The current Pak Army Chief, Raheel Sharief’s forefathers are from Kashmir & having seen his relatives - brother Shabbir & Uncle Raja Aziz Batti - die in the 1971 & 1965 Indo-Pak wars, has emerged as a hawk. Therefore, expect no change in Pak stance till he is in the saddle. Nawaz too post the Panama scandal revelations is a leader in limbo & hence expect nothing from him either. Therefore, PM Modi's strategy of investing too much of political capital on Nawaz was a politically short sighted act. Since China could encourage Pak’s actions even if we push the US to intervene on our behalf & India is in no position to hurt China by raising the Uighur issue in Xinjiang, the Tibetan issue should be activated, to cause them some diplomatic headache.  

Engaging Pak is helpful only if the Army is in the saddle vide a military takeover or a Pak PM of the Erdogan’s stature emerges, whose sheer popularity muscles the Army into submission. Neither is going to happen soon.

The Way forward

Short Term plan - A joint parliamentary committee visiting J&K can generate nothing but good optics. Engaging the moderate separatists of the Hurriyat & keeping people like Ali Shah Geelani at bay shall send the right signals. Geelani or groups like the Hizb or Lashkar shall fall in line once engagement with Pak is initiated at a later date.

Announcing the withdrawal of pellet bullets & free medical treatment to all those maimed for life could generate empathy. Replace pellets with rubber bullets or PAVA shells while dealing with the hoi polloi so as to make a differentiation between terrorists & citizenry.  Proclaiming a phased removal of the AFSPA shall help.

Medium Term Plan – There is no substitute to engaging Pak, since any agreements signed between the Indian Govt. & the Kashmiri leadership shall be negated by Pak sponsored destabilisers. There are only 3 ways left to solve the problem

 (1)A solution similar to the one adopted to solve problems of Northern Ireland by England, Quebec by Canada or the Basque by Spain. This solution too would involve Pak just as Ireland was involved by England to renounce their claim on Northern Ireland as part of a tripartite deal.

(2)India & Pak agree to convert the LOC into an international border & make the borders between POK & J&K irrelevant to allow reunions among families separated in 1948. Open borders especially with ISIS or terror cells across the border might not pass security muster though.

Both the solutions also have the problem of setting a precedent which other states especially of the NE could demand too. A deft negotiation of this labyrinthine maze would be a stress test to the Indian interlocutors.

(3)India declares Ladakh – dominated by Buddhists - a Union territory, a local demand for many years & divides the Hindu dominated Jammu as a separate state; Pak is likewise encouraged to absorb Northern territories as a separate state of Pak. The problem is thus treated as only a bilateral one between India & Pak as envisaged in the Shimla Agreement; without support from across the border it would become extremely difficult for separatists in the valley to sustain disruption or an armed insurgency. India & Pak should agree to convert the LOC into an international border. 

This strategy appears unlikely since India is contemplating to call J&K as Jammu, Kashmir & Ladakh. An agreement with Pak would also necessarily entail a withdrawal of our moral support to the Baloch cause.  

If the idea is to involve Kashmiris then Kashmir state alone - & not Jammu & Ladakh could be given some degree of additional powers within the contours of the Indian constitution although it risks setting a precedent. Integration of Jammu & Ladabh minus article 370 can be tom-tommed by the BJP as a victory.

Conclusion

When the civil society of a country or its part revolts – either on its own or through abetment – it becomes the responsibility of the state to engage to remove grievances. Kashmiri Pandits who have become refugees in their own country also need to be settled. The Vajpayee template is perhaps the only solution.