Prem Shankar Jha

Fake encounters have become common but India needs to get back to rule of law, however weak and slow it may be.

DG Vanzara in a file photo. Credit: PTI

DG Vanzara in a file photo. Credit: PTI

In her 22 minute televised press conference attacking the UPA government’s decision to revise the home ministry’s affidavit to the Gujarat high court on the Ishrat Jahan encounter killing, Union Commerce Minister Nirmala Sitharaman hurled not one but two accusations against the Congress. The first was that it had ‘created a charade’, of an innocent girl being killed in cold blood by a brutalised police, when it knew from its own intelligence inputs that she had been a member of the Lashkar-e Taiba cell that had been sent from Pakistan to kill chief minister Narendra Modi. As my article in The Wire showed last week this was pure political jousting.

But in the furore that followed Sitharaman’s second, more serious, allegation slipped into peoples’ minds through the cracks created by the first. This was that by unleashing the CBI on the case, and allowing it to interrogate officers and men of the Gujarat police endlessly in their search for evidence with which to discredit the Modi government, the UPA had divided and demoralised the police and security agencies, and harmed the country’s security.

To make this accusation Sitharaman glossed over the fact that the CBI had had to be brought in because the reaction of the Gujarat government to affidavits presented to the Gujarat High Court by two ‘whistleblowers’ in the government, S.P. Tamang, chief metropolitan magistrate of Ahmedabad, and Satish Verma, member of the Special Investigation Team set up by the Gujarat high court after it received Tamang’s report, showed that it had no intention of indicting its own police personnel.

Both had presented evidence to the court that the four had been killed in cold blood at least six hours earlier, and that whatever the other three might have been, Ishrat Jahan could not possibly have been a Lashkar terrorist.

Debate on faked encounters

When Gandhinagar took no action it left the Centre with two choices: turn a blind eye, or turn the case over to the CBI. It started out to do the former but in 2009, with faked encounters in Punjab, Assam and Kashmir already a subject of anguished debate in the country and media empowered by satellite TV and internet, this option was closed. Embarrassing Modi was a bonus.

Why did Gandhinagar make itself complicit in the killings? The short answer is that by 2009 faked encounters had become a part of India’s unwritten code of criminal justice. When the Ahmedabad CBI court dismissed the CBI’s charges against former home minister Amit Shah, he did not say “God and our courts are just, I have been vindicated”. He said , “these accusations were politically motivated. There have been far more encounters in other states. Gujarat has had the fewest encounters, and also has one of the best records in maintaining peace.” Why, he asked in short, were we singled out?

However repugnant one may find his reasoning, it would be less than just to dismiss it out of hand, because ‘encounters’ have been the Indian State’s way of dealing with dangerous criminals and insurgents since well before independence. In the 1920s Sultana Daku was caught and hanged by the British under due process of law, but large numbers of others simply disappeared. After independence, in its half century long bid to clear the Chambal ravines the Madhya Pradesh Police killed more than 500 dacoits. A majority, police sources told me then, were killed after being captured. It was to avoid this fate that others surrendered.

In 1980 and 1981, during the chief ministership of V.P. Singh, the UP police killed more than 2,000 dacoits in Uttar Pradesh. The newspapers of the time were rife with accusations of fake encounters and the deaths of innocents. But that campaign did curb the menace of dacoity in the state and open the way for its development.

Integral part of counter insurgency

In more recent years fake encounters have become an integral part of counter insurgency operations in Punjab, Kashmir and the North-East. In Punjab, in particular, this policy was forced upon the police by the acute shortcomings of the criminal justice system, and by the insurgents practice of killing judges, and the families of high profile policemen to paralyse the this criminal justice system.

The insurgencies have all but ended, but the practice of letting the police be the judges and executioners of persons considered too dangerous to allow back onto the streets, has taken on a life of its own. Today, dozens of bodies are being recovered from the state’s irrigation canals every week. According to Inderjit Singh Jaijee, the human rights activist who brought this to light, many are farmers who have committed suicide, but the majority are what he terms ‘missing people’. At a time when Punjab is being overwhelmed by drug smugglers with powerful political patrons, the possibility that many of these are captured drug smugglers cannot be ruled out.

Initially Kashmir suffered less from the disease of fake encounters than Punjab. But, contrary to what Kashmiris had expected, fake encounters, extortion and other crimes committed by the police multiplied after 1996, when the elected government shifted the responsibility of ‘mopping up’ the remaining ‘terrorists’ from the security forces to the police. Today it is their frequent misuse of power in the rural areas, and continuation of the bestial practice, also adopted in Punjab, of awarding prize money to those who bring in the heads of alleged terrorists, that is mainly responsible for the resurgence of terrorism in South Kashmir.

In Gujarat, the growing disquiet in civil society was not stoked, much less manufactured, by the Congress. It became the focus of civil society’s disquiet because none of the conditions that had made people condone the shortcuts employed by other state governments existed there. Gujarat did not face an insurrection, and the handful of home grown and imported terrorists who came there after the 2002 riots had not even tried to kill judges or policemen’s family members.

Turf wars between smugglers

It had a large and variegated Muslim population with a prosperous middle class component. The communal riots that it had experienced every few years since 1969 had been triggered by turf wars between rival gangs of smugglers and illicit liquor vendors, and not religious passion. Had the riots of 2002 not taken place the state would in all probability, have remained entirely free of terrorism and encounters, whether genuine or fake.

The Godhra train burning and the riots that followed changed everything for they were the very first to be covered by television. Previously people had only read circumscribed reports. This time millions actually saw the burnt bogey of the Sabarmati express and the corpses being carried out from it. Nearly 2,000 people died in the riots that followed, and for the first time the killing was fanned by pure communal hatred.

Without waiting for an enquiry Modi and his cabinet jumped to the conclusion that the Godhra train burning was the work of Muslim terrorists and adopted a pro-active policy of prevention in anticipation of terrorist reprisals.

The custodial killings that occurred between 2002 and 2005 ,for which 32 police officers and men await trial today, were the outcome of that policy. They were therefore not only morally indefensible, but actually increased the threat of a future communal insurrection by showing Muslim youth how casually their fundamental right to life could be taken away from them.

Nirmala Sitharaman is right when she says that the controversy over the Gujarat encounter killings has demoralised the security apparatus of the country and seriously weakened it’s security. But curiously enough, the officers and men indicted for them blame the Modi government, and not the Congress for their plight.

Vanzara’s letter

Their monumental sense of betrayal was captured by D.G. Vanzara, director-general of Gujarat’s anti-terrorism force and widely known as its ‘encounter specialist’, in the letter of resignation from the India Police Service, that he wrote from jail on September 1 2013. Forfeiting all his post-retirement benefits Vanzara wrote:

To the best of my knowledge, nowhere in any part of the country, such a big number of police officers were/are arrested and continuously being kept in the jails for such a long period of time except in the state of Gujarat. The most notable part of the whole episode is that they are made to suffer in the jails, inspite of the fact that they had been, and are, loyal soldiers of this government who fought incessant war against Pakistan inspired terrorism with complete honesty, integrity and sincerity without falling prey to any of the mundane temptations…. 

With the passage of time, I realized that this government was not only not interested in protecting us but it also has been clandestinely making all efforts to keep me and my officers in the jail so as to save its own skin from CBI on one hand and gain political benefits on the other…..

I, therefore, would like to categorically state in the most unequivocal words that the officers and men of Crime Branch, ATS and Border Range, during the period of years between 2002 to 2007, simply acted and performed their duties in compliance of the conscious policy of this government … we have simply implemented the conscious policy of this government which was inspiring, guiding and monitoring our actions from the very close quarters.” 

Vanzara’s letter contains no tinge of remorse, but also none of communal rancour:

A monstrous episode of Godhra train burning and equally horrible post-Godhra riots in Gujarat provided a pretext to Pakistan based terrorist outfits like Let, JeM and D gang under the direct supervision of ISI, to “convert Gujarat into another Kashmir” by exploiting the sentiments of the muslims all over the world.”

Listing 14 bomb blasts, five assassination attempts and two fidayeen attacks on the Rath Yatra and the Swaminarayan temple at Akshardham, he concludes: “I can say with pride that my officers and men not only successfully prevent(ed) Gujarat from becoming another Kashmir, but were also instrumental in providing a solid atmosphere of durable peace and security in the state”. 

The bulk of the letter is a violent diatribe against the Modi government, and Amit Shah in particular, for having abandoned his police force when it most needed their support.

This government suddenly became vibrant and displayed a spur of sincere activities only when Shri Amitbhai Shah, former MOS, Home, was arrested by CBI. It (engaged) Shri Ram Jethmalani, the most learned, senior most and highest paid advocate of India … and got him released on regular bail within (the) record time of 3 months of his imprisonment.

In contrast, when I, along with Rajkumar Pandian and Dinesh M.N, was arrested by the CID Crime, forget about providing the legal services, nobody from the government bothered even to provide a lip service to us or to our family members.  (The) Gujarat police … used to be one of the finest … in the country till the coronation of this government in Gandhinagar. Today the same proud police … stands totally shattered and demoralized (by)….. the continuous betrayal of jailed police officers since last six years”. 

Gujarat is not the only state in which the police feel betrayed. Within weeks of the end of the Khalistan insurgency in 1993 the Punjab police was assailed by a spate of indictments for carrying out fake encounters. The feeling of betrayal this generated in the police was highlighted when a senior superintendent of Police, A.S Sandhu, threw himself in front of a train to express his protest.

Re-instating indicted policemen

Today the Modi government is frantically trying to make amends by bailing out and re-instating indicted police officers. P.P. Pandey, police commissioner of Ahmedabad in 2004, was not merely released but is now the director general of police in Gujarat. Former assistant commissioner of police ( crime) in Ahmedabad, N.K. Amin, has been made the superintendent of Police for Mahisagar district.

Vanzara, who was released on bail in December 2014 on condition that he did not enter Gujarat, has been allowed to do so . He was greeted with flowers on his return to his village by no less eminent a person that DGP P.P Pandey, and is now being wooed by the BJP to join politics, while still being indicted for murder.

Modi does not seem to realise that the further the government goes down this road the more will India become a country that is not only without law, but one that flaunts its disregard for the very concept of law. When this realisation sinks in abroad, India will become not only an economic but also a political pariah.

This must not happen. The first requirement for containing and repairing the damage that has already been done is for all political parties to admit their culpability and jointly resolve never again to allow anyone in police custody to be killed, or punished in any other way, than through the due process of the law. Existing laws, like the National Security Act, allow incarceration for long periods. Prisoners deemed to be too dangerous to be incarcerated in their home state can be sent to jails in distant parts of the country. If it is deemed necessary to protect judges and witnesses, trials can also be held in these locations, and conducted in camera.

None of this involves rocket science. If it hasn’t been done so far—if government after government has continued to take the easy route of killing inconvenient prisoners, it is because clever lawyers have made a fine art out of subverting justice by raising procedural issues that make trials last forever. As Pakistan is showing with its 21st constitutional amendment and military tribunals, this too can be got around, although at some cost in terms of fairness and equity. But some legal process, however restricted, is a huge improvement over sanctioned, extra-judicial murder.

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Raising a ruckus over P. Chidambaram’s “second affidavit” in the Ishrat Jahan case will not make the truth about encounter killings go away

The bodies of Ishrat Jahan and others who were allegedly shot dead in police encounters

The bodies of Ishrat Jahan and others who were allegedly shot dead in police encounters

Sixty-nine years after its birth, India’s democracy is facing a mortal threat. A government – and a political party – with little respect for the law is using the law to harass and humiliate its political opponents. It may not be the only government in India to have done so. But it is the first Central government to do so, and it is pursuing its vendetta with a disregard for consequences that is threatening to tear the seams of democracy asunder.

In less than two years it has dragged Sonia Gandhi, Rahul Gandhi and Arvind Kejriwal, its principal opponents in the nation, and in Delhi, into court on flimsy charges that no self-respecting judge should have entertained. It has sent the police into Jawaharlal Nehru University, something no previous government had done, and arraigned JNU Students Union president Kanhaiya Kumar on the basis of a doctored video that its own propaganda factories have produced; it has kept the Patidar agitation leader in Gujarat, Hardik Patel in jail for 80 days, repeatedly denying him bail.

It is now contemplating dragging former home minister P. Chidambaram into court on the charge of having changed an affidavit the Union home ministry submitted to the Gujarat high court on the Ishrat Jahan encounter in 2009 in order to strengthen the case being made by the Central Bureau of Investigation against the then Gujarat home minister Amit Shah and a score of indicted Gujarat police officers and men. The Modi government’s opportunity to do this arose on February 12, 2016, when the 26/11 mastermind, David Headley, stated – while ‘cooperating’ with Indian interrogators – that the 19-year-old Ishrat Jahan was not an innocent bystander but a member of the Lashkar-e-Tayyaba.

Armed with Headley’s statement and a junior home ministry official’s claim that he had been coerced by his senior into preparing the second affidavit, Union home minister Rajnath Singh has sought to suggest that there was no fake encounter, that Ishrat Jahan was a suicide bomber and had been killed in a genuine shootout, and that Chidambaram fabricated evidence in order to create a case against Modi and Amit Shah.

Dangerously inflammatory statement

Union commerce minister Nirmala Sitharaman has gone a long step further and claimed that the purpose of the changed affidavit was to invite ‘the enemy’ to launch more terrorist attacks to assassinate Narendra Modi because they cannot fight him politically. “They are happy to play with the enemy… they wanted to quietly watch a terror plot bloom in order to eliminate a political opponent.” she said in a carefully prepared, 22 minute televised statement.

If this allegation were true, the Congress would be guilty of having violated the first principle of democracy – the replacement of the ballot with bullets. It would therefore provide a moral justification for the BJP to abandon democratic politics as well, and resort to brute force to destroy its opponents.

Sitharaman’s accusation therefore needs to be subjected to the most rigorous scrutiny possible. If it cannot be substantiated, it will rank as the single-most dangerously inflammatory statement made by any politician in India’s 69 years of independence.

Fortunately this allegation fails to cross the very first hurdle it encounters: a complete absence of motive. Had Chidambaram revised the first affidavit in late 2013, there would have been room to doubt his motives, for the Congress was clearly on its way out and the BJP had chosen Modi as its prime ministerial candidate. But in September 2009, when the home ministry filed its revised affidavit, the Congress had just won a huge victory in the national elections four months earlier, and the next Gujarat state election – where it would have to pit itself against Modi once more – was still more than three years away.

The BJP had lost a sixth of its 2004 voter base in 2009 and Modi had yet to replace L.K. Advani as its national leader. The economy was also at its peak, with GDP growing by more than 9%, industrial growth close to 14% and employment growing by 7 million a year. Inflation was also close to zero. So what could the Congress conceivably have gained from inciting the assassination of Narendra Modi?

Sound reason for revising the Ishrat affidavit

Second, the sequence of events in 2009 shows that there was a perfectly legitimate reason for the home ministry to order the filing of a second affidavit on September 29.

Its first affidavit, submitted at the beginning of August, had dismissed the LeT’s later retraction of its claim that Ishrat Jahan was one of theirs, and firmly backed the Gujarat government’s claim that there had been a genuine shootout. But five weeks later, on September 7, Ahmedabad metropolitan magistrate S.P. Tamang submitted a 243-page report on the killing to the Gujarat high court, prepared on his own initiative, that made a very convincing case that the four alleged terrorists had been kidnapped and brought to Ahmedabad a few days earlier, and killed in cold blood a day before the alleged encounter.

The crucial piece of evidence he cited was the pathologist’s finding that when the bodies were examined, they were already in rigor mortis, which had set in about six hours before the reported time of the encounter. Tamang gave a two-page list of police officers and constables who had been involved in the fake encounter.

More convincing even than the evidence he adduced were the precautions that he took to keep his findings secret from the entire city. In an unprecedented departure from practice, Tamang did not employ a stenographer, and did not use a computer, but wrote the entire 243-page report in long-hand. Tamang clearly did not trust even his personal staff and the inviolability of his computer. There can be no more eloquent testimony of the atmosphere of terror that the Gujarat police had created to keep its misdeed secret.

The Tamang report and the circumstances in which it was prepared may have delighted the Congress, but it also made it impossible for the home ministry to keep ignoring the LeT’s retraction of its initial claim. The revised affidavit did not reverse any conclusion it had reached in the first. It simply removed sections that referred to Ishrat Jahan.

Did the BJP only seize the opportunity created by David Headley’s identification of Ishrat Jahan as a suicide bomber? Or did it create it? Conspiracy theories are inherently repugnant but in this case the second possibility cannot be ruled out.

Headley’s confession has been accepted as gospel far too readily. “Jahan was an LeT member, Pakistani-American Headley said in his sensational disclosure while deposing before Special TADA Court Judge … on Thursday”, one online journal asserted.

In fact he did nothing of the sort. The video of this portion of Special Public Prosecutor Ujjwal Nikam’s interrogation, uploaded to YouTube, shows that Headley did not volunteer the admission. Nikam led him to it by the nose, asking no fewer than four leading questions, to name Ishrat Jahan a terrorist. The last two of which were “do you remember her name” and “was it Noorjahan Begum, or Ishrat Jahan, or Mumtaz Begum”.

Noorjahan and Mumtaz are names rarely, if ever, given to girls today because they were the titles, not names, of the wives of Mughal emperors Jahangir and Shahjahan. Noorjahan’s real name was Mehr-un-Nissa, and Mumtaz Mahal’s was Arjumand Banu. What is more, begum is a form of address reserved for married women. There is no possible way David Headley would not have understood what Nikam wanted him to say. How he, and his former ISI handlers in Rawalpindi, must have chuckled when the storm broke!

What is the compulsion that has made the BJP, if not coax David Headley into indicting Ishrat Jahan as a terrorist, then leap upon it a full 12 years after she was killed? The answer is that Ishrat Jahan’s is not the only fake encounter to have taken place in Gujarat during the tenure of Narendra Modi and Amit Shah. Thirty-two officers and men of the Gujarat police, including six senior officers, are either out on bail or have been languishing in jails for up to eight years, waiting to be tried for no fewer than five separate fake encounter cases.

When these come up in court, as they must one day, they will reveal that between 2002 and 2007 the crime branch of the Ahmedabad police had become a “killing machine” (a term senior New York Times correspondent Mark Mazzetti had coined for the CIA) not only for terrorists from Pakistan but also for eliminating other criminals whom the rickety and deadlocked judicial system could not punish, and, in some cases, even people unconnected to wrongdoing of any kind who happen to be in the wrong place at the wrong time.

Nothing reveals the damage that the five cases together can inflict more clearly than the “encounter killing” of Sohrabuddin Sheikh in November 2005.

Killing of Sohrabuddin

Sohrabuddin and his accomplice Tulsiram Prajapati were straightforward gangsters and assassins for hire. Both faced a number charges of criminal extortion from marble mine owners in Rajasthan and Gujarat, arms smuggling, and murder. According to the CBI, Sohrabuddin was taken off an interstate bus, along with his wife Kausar bi and Prajapati, taken to a farmhouse outside Ahmedabad, and killed in a staged ‘encounter’ – allegedly as a terrorist who was planning to assassinate Modi.

Three days later Kausar bi was strangled, taken to Illol village in Gujarat – the home village of D.G.Vanzara, director general of the state anti-terrorist task force – and cremated there. (The killing was later admitted by the attorney general of Gujarat before the Supreme Court). Prajapati, who was a crime branch informer, was initially spared.

No one doubted the police version of the Sohrabuddin killing till, a year later, drunken police officers boasted about it in front of a journalist, Prashant Dayal, who published a well-researched report in a Gujarat daily, Divya Bhaskar. Four weeks later, on December 28, Prajapati was killed in another staged encounter whose details were recounted in excruciating detail by the CBI in its charge sheet against Amit Shah.

These were the three ‘encounter killings’ for which the CBI indicted Amit Shah – then Modi’s home minister in Gujarat, in 2010. Dayal believed that the Gujarat police had carried out a Rs. 2 crore supari – contract killing – of Sohrabuddin, then killed his wife to silence her, and killed Prajapati in order to eliminate the sole remaining witness.

In its indictment of Shah, the CBI presented evidence of Amit Shah’s involvement. It also submitted cell-phone records, and audio and video tapes that, seemingly, implicated Shah in the conspiracy to eliminate Tulsiram Prajapati. Shah was arrested, but immediately granted bail and remained the home minister of Gujarat. But a dozen officers and men were sent into judicial custody.

This is simply not the kind of publicity that Modi can afford, either as the leader of the BJP, or as the prime minister of India. Nor is it, in the Information Age, something that India can. For the plain truth, which public trials of the indicted officers and men will reveal, is that there is hardly a state in the country where fake encounters have not become the police’s way of dealing with insurgents, terrorists and criminals.

This is the dirtiest side of India’s corruption-ridden democracy. The BJP’s leaders knows trading accusations with rival political parties is not the way to exonerate themselves. They also know high-profile trials that expose this pattern to the world  – and their own culpability – need to be avoided. The Narendra Modi-Amit Shah strategy is to try and contain the damage by making the encounter cases simply  disappear. That is not going to happen. What could disappear, if this no-holds-barred, law-be-damned effort continues, however, is democracy itself.

Prem Shankar Jha is a senior journalist and former adviser to V.P Singh.

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File picture of Prime Minister Narendra Modi with US Defence Secretary Ashton Carter. Credit: PTI

File picture of Prime Minister Narendra Modi with US Defence Secretary Ashton Carter. Credit: PTI

Modi government’s last minute decision to postpone the signature of a Logistics Supply Agreement with the US during the visit of US Defence secretary Ashton Carter to India last week is the most recent manifestation of the confusion that grips India’s foreign policy today .

The government has given no explanation for its sudden turnabout, so most analysts have concluded that it got cold feet because the agreement would have made India a party, even if passively, to all of the US’ future military operations in the region. This had aroused serious misgivings in the country and invited a vigorous attack by the Congress party.

But the fact that Defence minister Manohar Parrikar visited China only days after Carter’s visit to reassure Beijing that India would not let relations with ‘third countries’ affect its relations with China, suggests that it was a Chinese reminder that India could not run with the hare and hunt with the hounds indefinitely that may have provoked its second thoughts on signing the agreement.

It is doubtful whether the Chinese will be reassured though, for this is only the latest of a succession of about turns that Modi has made in the 22 months that he has been prime minister. In August 2014, he reversed a decade of steady improvement in relations with Pakistan by rejecting all the understandings that the UPA had reached with it and the Hurriyat over the future of Kashmir. Today, he is trying to rebuild those relations once again.

Six months ago, Modi reversed five decades of Indian support for Nepal’s evolution into a modern nation state by imposing, or at least doing nothing to prevent, an oil blockade of that landlocked state. Nepal’s riposte was to repudiate Indian bilateralism, formally welcome China into Nepal and join its One Belt One Road initiative.

But nothing is likely to prove more costly than its ambivalence towards China. Modi has spared no effort to deepen India’s relations with China. But he has simultaneously deepened India’s military cooperation with the US, Japan and Australia whose stated purpose is to contain China’s rise, militarily if necessary.

To Indian policy makers this may look like a clever balancing act but, coming on top of the UPA government’s gradual distancing of India from its old allies, such as Russia and secular nations in the Arab world, in favour of the US, the gulf sheikhdoms and Israel, it is giving the rest of the world the impression that India does not understand where its long term national interest lies, and is therefore a country that no one can rely upon.

China has already signaled its distrust of India’s moves by moving swiftly to Nepal’s aid, and blocking the designation of Masood Azhar as a terrorist by the UN. It seems also to have lost interest in getting India to join its One Belt, One Road initiative.

Two epic developments are responsible for these power shifts. The first is Globalization – the migration of manufacturing from the high wage economies of Europe and North America to Asia — that began in the 1970s. The second is the victory of the transatlantic alliance in the Cold war and breakup of the Soviet Union in 1991.


Over four decades, gradual de-industrialisation has hollowed out the economic base of the West’s military power by shrinking its revenue base just when its social security expenditure has been pushed through the roof by longer life spans and rising unemployment.

In Asia the hectic industrial development triggered by globalisation has done the opposite. First Taiwan, then Singapore, Hongkong, South Korea and Malaysia , and finally and most spectacularly China, have run budget and foreign trade surpluses, and accumulated massive reserves of Capital that have become the base of huge economic power. China has been able to leverage these into growing military power and hegemonic influence.

Had the resulting power shift been gradual the world could have adjusted to it peacefully. But the economic weakening of the West virtually coincided with its victory in the Cold War. This created a sense of entitlement to the fruits of victory, that enabled the US to launch, or support, a succession of attacks on so called ‘rogue nations’, with scant regard for the UN charter or the sanction of the Security Council.

Goes back to Kosovo

Beginning with Kosovo in 1999, it has launched, or supported, a succession of assaults on nations that posed no threat to it or any of its allies–Afghanistan, Iraq, Libya Syria, Lebanon, Palestine, and Yemen. Not one of these has created a democracy, protected human rights or promoted freedom. What they have done is to destroy the tenuous system of international law that upheld the Westphalian state system that the UN charter had underpinned.

American, and several Indian, analysts have made light of the destruction of the Westphalian state system. “The West’s victory in the cold war”, they say, “has created a unipolar world. We therefore need a new paradigm of international relations“.

This seemingly profound observation relies upon ignorance of history, to gain its spurious credibility. For the Westphalian system was created to put a check on precisely the propensity for conflict between nation states that has dragged the world into chaos today.

This propensity springs from fact that the modern European state was born in war and territorial conquest. Since the boundaries created by conquest did not coincide with ethnic fault lines they had to be continually defended. This was done by creating standing armies to defend them and erasing pre-existing ethnic loyalties to create a new loyalty to “the Nation”. The constant need for coercion to maintain it gave the nascent Nation-State System a built in propensity for war .

Like the League of Nations and the United Nations three centuries later, the Treaty of Westphalia, which was signed in 1648 after the ruinous Thirty Year War, was designed to prevent this from ever happening again. To this end the signatories agreed to respect each others’ sovereignty, not to interfere in each other’s internal affairs and to resort to war only as a weapon of last resort.

The Westphalian precepts were still taking root when the rise of industrial capitalism in the 18th century gave a fillip to the propensity for war by giving inter-State rivalry an economic dimension that it had lacked until then. Competitive industrialisation behind tariff barriers further hardened frontiers, and set off a race to colonize large parts of the world to ensure access to raw materials and create new markets for their products.

Despite this, peace was maintained for a hundred years after the Napoleonic wars by a tacit acceptance of British hegemony, backed by an international network of bankers who were perfectly willing to finance colonial expansion but demanded peace within Europe in return. Karl Polanyi collectively labelled them Haute Finance.

Unstable peace

But the peace these created was an unstable one. By the end of the 19th century Britain’s hegemony had begun to be challenged by Germany and the US. When the space for further expansion of nation-based capitalist systems was exhausted, competition boiled over again into not one but two world wars in a space of 31 years that claimed at least 70 million lives. Peace did not return till 1945 when hegemony within the capitalist system passed to the USA.

US hegemony was based upon the reputation it gained during the second world war as a defender of freedom , democracy and human rights, and cemented by its lead role in the framing of the UN Charter. But till 1991 its exercise of hegemony was constrained by the challenge of Communism and non-alignment. By the time these failed and the US was able to resume its quest for global hegemony, the Vietnam war and Globalization had sapped much of its economic strength.

Victory in the Cold War nevertheless re-awakened the US’ hegemonic ambitions just when, as Paul Wolfowitz noted in a Defence Policy Planning paper as early as 1987, the economic base needed to sustain them was shrinking. Wolfowitz’s solution, which soon became the mantra for both political parties in the US and was enshrined as a new security doctrine by President George W Bush in 2002, was to use military power pre-emptively to destroy potential rivals before they developed the capacity to challenge its supremacy.

This is the true genesis of the US’ cavalier disregard for the UN charter and its determination to build a hegemonic world order. What US policy makers, other than President Obama, have still not realized is that hegemony is not the same thing as military dominance, and the resort to the second inevitably destroys the first by making the lives of peoples and nations less and less secure.

A quarter century after the end of the Cold War, it is no longer possible to ignore the fact that the effort to re-establish western hegemony has created not a new world order but chaos. Both the Westphalian and the unipolar world order are history. What has survived is the mindset, of constant suspicion and barely restrained aggression that characterizes relations between nation-states. This mindset views any improvement in a neighbour’s capabilities as a potential threat to itself, and therefore reduces international relations to a zero sum game in which if you gain anything I must necessarily be losing something, even if I cannot identify what it is.

This is the mindset that must change if humanity is to survive and rebuild a peaceful, livable world. Today when the merest whiff of trouble makes foreign investors rush out of a country,  starting a war with, or intervening clandestinely to secure regime change in, another country is an act of suicide.

The first requirement therefore must be to banish unilateral war and return to negotiation as the way to settle disputes. As Iran’s foreign minister Husain Jawad Zarif reminded an invited audience in Delhi in January 2015, this will only happen when negotiators eschew win-lose outcomes and start exploring bottom lines to find compromise solutions that leave both parties better off than before.

In his speech to West Point graduates in 2014 and, more concretely, in his dogged determination to push the Iran-EU nuclear deal through, President Obama has shown that he wants the US to eschew Bush’s pre-emptive first strike security doctrine and to abandon the pursuit of a unipolar world order in favour of a multi-polar order. But his term is ending and, as of now, even Hilary Clinton has said nothing that suggests that she understands the need for a radical change of direction. Until that happens, India will do well to steer clear of a closer involvement with it or its allies in the Middle East.

What the world needs now is not a new paradigm of international relations, but a powerful reaffirmation of the Westphalian paradigm with modifications to make it meet the needs of a culturally integrated world.   So long as the West resists this, or tries only to broad-base its quest for uni-polarity by forming ‘coalitions of the willing’, it and its friends will remain on the wrong side of history.

Russia, Iran committed to multipolar world

By the same token today it is Russia, China and Iran that are on the right side of history, for it is they who are most committed to building a multipolar world. This is apparent from the popularity Russia and Iran have gained by going decisively to the assistance of Syria and Iraq in the fight against the Islamic State. For no fault of its own India found itself on the wrong side of history during the Cold War. It must not make the same mistake again.

But this does not mean that it should simply switch sides. The role that it is best fitted to play is that of a mediator that can moderate conflict and bring warring nations back to sanity. This is a leadership role of a different kind from what India aspires to today, but it is one that it is ideally situated to play. This is not only because it is vast, democratic and unthreatening even to its immediate neighbours, but because it is the only modern state that has not been built through conquest and ethnic homogenization, but through negotiation and accommodation of differences. It is therefore comfortable with compromise and does not have to overcome the zero-sum mentality embedded in European nation states by their history and circumstances of birth, before initiating the quest for peace.

Prem Shankar Jha is a senior journalist and the author of Twilight of the Nation state: Globalisation, Chaos and War, published in 2006.)

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File photo of Prime Minister Narendra Modi and his Nepalese counterpart Khadga Prasad Sharma Oli meeting in Delhi last February. Credit: PTI

File photo of Prime Minister Narendra Modi and his Nepalese counterpart Khadga Prasad Sharma Oli meeting in Delhi last February. Credit: PTI

New Delhi has shown commendable restraint in dismissing an alleged news ‘scoop’ by Pakistan Today, that Pakistan’s Joint Investigation Team has concluded that the Pathankot terrorist attack was “ another False Flag” operation carried out by Indian security agencies to bring Pakistan into disrepute, and reiterating that its multi-level interaction with Islamabad to root out terrorism will continue .

But this only serves to highlight the confusion in other areas of India’s foreign policy today, for it is in stark contrast to the Modi government’s hectoring policy towards India’s other important neighbour, Nepal.

India’s 1850 km border with Nepal is not its longest but its most sensitive and indefensible one. All but a tiny fragment of the country lies south of the great Himalayan wall which has been India’s natural frontier in the north since pre-history. Thus, were any hostile power to gain ascendancy over the country, the entire Indo-Gangetic plain would be rendered defenceless.

In 1947 this possibility was remote. Nepal and India had fought much of their respective struggles for independence together. The Koirala brothers, who founded the Nepali Congress, found sanctuary from the wrath of the Ranas in North Bihar and took their cue unabashedly from Mahatma Gandhi and the Indian National Congress. Two years after gaining Independence, therefore, India expelled the Ranas and restored King Tribhuvana to power. Since then, for better or for worse, it has been mentoring Nepal’s transition into  modern statehood.

It sheltered the leaders of the democracy movement in the eighties and nineties and helped them to force King Birendra to accept of a constitutional monarch.

Difficult to frame a Constitution

It again sheltered the democrats when King Gyanendra declared an emergency in 2005, persuaded him to restore democracy in 2006, and persuaded the Maoists to end their decade long guerrilla war and return to parliamentary democracy. Since then Nepal has been trying to frame a constitution that empowers its ethnically diverse people in an equitable way. This has proved a decade long nightmare because its 29 million people belong to no fewer than 66 ethnic groups.

By the end of 2014, protracted negotiations in two Constituent Assemblies had produced a consensus in principle. Nepal would be a federal state divided into eight regions representing eight broad ethnic groupings, and while 165 members of parliament would be elected through the simple majority voting system, 110 would be elected through proportional representation. All that was left was to demarcate the eight regions, and decide whether to adopt the constitution by a majority vote or a consensus.

India had made no secret of the importance it attached to consensus. Prime minister Modi, who had signalled the importance India attached to it’s Himalayan neighbours by making his first and second bilateral visits to Bhutan and Nepal, urged the Constituent Assembly to strive for consensus during his second visit to Nepal, in November 2014.

But the differences proved intractable. In the summer of 2015 the Constituent Assembly ran out of patience and decided to adopt the new constitution by a majority vote, leaving the demarcation of the regions to be decided later. This set off an immediate, violent, protest from two major groups in the Terai, the Madhesis and the Tharus, who feared that this was a stratagem for restoring the domination of the hill peoples over the Terai.

When, despite this,  the Constituent Assembly adopted the new constitution on September 20, India had to choose between not intervening and allowing Nepal to learn from its own mistakes, or make it rethink its options by expressing its displeasure in a more concrete way. Narendra Modi chose the latter option.

Within hours Indian Oil Corporation’s tankers stopped carrying transport fuels to Nepal. From around 300 trucks and tankers a day the number dropped to between 10 and 15. In Nepal diesel, gasoline and kerosene stocks dwindled, prices shot up and a black market was instantly born. On September 23 the Nepali government imposed draconian fuel rationing, accused Delhi of imposing a blockade and, a short while later, took its complaint to the UN.

New Delhi blames Madhesi unrest

New Delhi’s spokesmen put the blame for the blockade upon the Madhesi unrest which, they claimed, had made truck drivers fear for their lives. But this was not convincing because the Madhesi agitation had begun 40 days before the fuel blockade began. What is more, the drivers of trucks carrying fruit and vegetables did not seem to share this insecurity.

Modi has been accused of imposing the blockade out of personal pique. But this trivialises a very difficult decision. Delhi understood that to enjoy legitimacy a democratic constitution had to be accepted by everybody, and not by only a majority. Ramming it down the throats of the Madhesis and Tharus without even an agreed demarcation of their regions would only exacerbate the conflict and make India’s position more difficult because of its shared ethnicity with the Terai.

New Delhi may have wanted Nepal to rethink its options, but unlike 1989, when Rajiv Gandhi’s year-long oil blockade ended absolute monarchy in Nepal, this time the cure is likely to prove worse than the disease, because the Nepali government has turned for help to China. And China now has both the capacity and the motivation, coming from its slowing economy, to help Nepal end India’s stranglehold upon it.

This became abundantly clear in the last week of March when Nepal’s prime minister, K.P.Sharma Oli paid a week-long visit to Beijing at the invitation of Chinese premier Li Keqiang. During the visit China signed a trade and transit agreement with Nepal that will enable it to trade with third countries through Tianjin, the port closest to Beijing,  pledged $216 million to build an airport at Pokhara, Nepal’s second largest city, and to build a bridge at Hilsa in the extreme west of the country to connect it by road to Tibet.

These projects will provide considerable psychological relief to Nepal but will reduce India’s coercive power to only a limited extent. What will come close to destroying it, however , is the proposed 562 km rail link between Lhasa and Kathmandu, for Lhasa is already linked by high speed trains to the rest of China.

China’s giant infrastructure companies, which face rapidly shrinking order books, have been eyeing this gargantuan project, which requires drilling a tunnel under Mount Everest, and other giant projects, like a nine dam, 40,000 MW, power project on the Big Bend of the Yarlung-Tsangpo (Brahmaputra) , for some time. Indeed Beijing’s entire One Road One Belt policy is driven very largely by the need to keep its companies, and their vast labour force, employed.

Modi’s decision to blockade, or let the Madhesis blockade Nepal (for Kathmandu the difference is immaterial) has removed whatever inhibitions Nepal had felt till then about the rail link project.

Chinese signals to Nepal

Equally important were the political signals that Oli sent out during his visit. He described China as Nepal’s “All Weather Friend”, a pointed invocation of China’s description of Pakistan ( whom China has now raised to ‘Iron Brothers Forever’), and a reminder that India is a friend only when it suits it to be one.

He also signed a free trade agreement with China and committed Nepal to participating actively in China’s ‘One Belt, One Road’ initiative. These are largely symbolic gestures when more than two-thirds of its trade is with India, but they signal the end of Nepal’s acceptance of Indian bilateralism.

The Madhesis suspended their agitation at the end of February and oil began to flow to Nepal once more. But neither capital seems to have realised that the blockade, and Kathmandu’s reaction, have brought India-Nepal relations to a fork in the road. Last week, after returning to Kathmandu, Oli said that India had lifted the blockade because it had proved futile. This was not only because it had drawn a barrage of international criticism but because Nepal had not succumbed to it.

His remarks show that Oli has still not grasped what Delhi, with India’s vast experience of ethnic federalism, has understood all along — that no country can impose a Constitution upon a dissenting minority and remain a democracy for very long. The Madhesis have warned the government that they will resume their agitation in May. If Oli does not resume talks to arrive at an agreed demarcation of the eight regions before then, and relies on force again, the divide between the hills and plains of Nepal will widen further and imperil the unity of the country.

Had they been left to themselves Nepali politicians would have come to this conclusion sooner or later. But the support promised by China has given them false confidence, and lessened their awareness of danger. Modi’s faux pas has therefore pushed Nepal towards a relationship with China that could land it in the same predicament that Israel faces today. Unconditional American military , economic , technological and political support during and after the Cold War made it unnecessary for Israel to negotiate peace with its neighbours and the Palestinians when they had a chance to do so. Today the opportunity has passed: Israel faces rising terrorism, and does not know what to do.

Given the organising power of the social media, and the easy availability of arms in the black market, Kathmandu could find itself facing a similar situation in the Terai in not years but in months.

Does India want Nepal to go down this bitter road? The answer must be ‘no’. But to make it reverse tack Delhi must first stop treating Nepal as a de-facto protectorate, and help it to complete its transition to full nation-statehood. The first requirement for this is to respect Nepal’s sovereignty, scrupulously respect all treaty obligations and avoid intervening in its internal affairs.

This requires allowing its government to make, and to learn from, its own mistakes. In the immediate future, if Oli forces the Madhesis to resume their stir in May, India must still ensure that IOC’s oil tankers reach the distribution points within the country. This will involve forming convoys, cooperating with the Nepali army, and persuading the Madhesis that there are other, less destructive, ways of attaining their political goals. Delhi should remember that giving public support to the Madhesis movement can do to them exactly what Chinese support is threatening to do to Kathmandu.

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RBI governor Raghuram Rajan needs to halve India’s lending rates and allow companies to get out of debt in order to revive growth and undo five years of flawed policymaking

File photo of Finance Minister Arun Jaitley with RBI Governor Raghuram Rajan. Credit: IANS

File photo of Finance Minister Arun Jaitley with RBI Governor Raghuram Rajan. Credit: IANS

India’s tottering economy has reached a fork in the road.

On April 5, the Reserve Bank of India (RBI) will announce its policy for the next quarter. What it decides will determine whether the economy will recover or die.

For five years, since mid-2011, industry has been begging the government for a cut in interest rates, but the Reserve Bank of India has been adamant about keeping them up. As a result, the corporate giants have migrated to more benign pastures abroad, taking close to a hundred billion dollars with them. Indian industry has therefore languished, growing at rates below 3% a year – the lowest the country has ever known.

This dark epoch may at last be coming to an end.

It is now a foregone conclusion that the RBI will bring interest rates down. Earlier this week, finance minister Arun Jaitley told the media that what he wants is what everyone wants—a cut in rates. “I have done everything that [the RBI] wanted me to do. I have held the deficit at 3.9%. And I have brought down the deposit rates on provident funds and small savings. This will make it possible for the commercial banks to bring down their lending rates, without losing deposits to small savings accounts.”

RBI governor Raghuram Rajan has also indirectly signalled a rate cut by admitting that official estimates of GDP growth are almost certainly too high.

The question on everyone’s mind is how much the lending rates will be brought down. The markets have assumed a cut of 50 basis points, i.e, half a percent, in key policy interest rates. If commercial banks pass this, and earlier cuts, down fully, the lending rates could come down by more than one percent. In expectation of this, the Sensex has already re-crossed the 25,000 mark, and will doubtless rise further.

But will a 1%, or even 1.5%, cut in lending rates suffice to re-ignite economic growth?

The blunt answer is “No.” Indian enterprises are so deeply mired in debt that all this will do is prolong their death throes.

Where we are now

To understand why this is the case let us take a quick look at where the country stands:

A year ago there were Rs. 880,000 crores worth of “stalled” investment projects – which is just a polite way of describing projects that the investors had abandoned because they felt that carrying on was throwing good money away. Only a handful of these projects have been revived in the past year, and others have joined their number.

Not surprisingly, therefore, by the end of 2015, public sector and private banks had piled up a total of Rs. 400,000 crores of bad debt.

A lot more debt was on its way to “going bad,” for 415 out of 2300 large companies, heavily invested in infrastructure, were not making enough profit to pay the interest on their debt.

Today nine out of India’s dozen steel plants are insolvent and outstanding. Companies like Jaypee and Gammon India have piled up debts in excess of Rs. 33,000 and Rs. 15,000 crores respectively that they are unable to repay.

One by one, companies that had become brand ambassadors for India in the fiercely competitive global market have begun to fail.

Kingfisher Airlines, which had set a new standard of comfort and service in economy class flying, was the first to go, and it has gone all the way to the bankruptcy court. It was followed by Suzlon, which saved itself only by selling out to a foreign competitor and, in effect, ceasing to be Indian.

Jet Airways has done the same and become a subsidiary of Etihad airlines. Today, United Breweries (rechristened United Spirits), which had made its Kingfisher brand of beer synonymous with international cricket, is going the same way.

Unitech, one of India’s largest construction companies, has gone broke and its owners have spent time in jail before being bailed out. Behind Unitech is a queue of other construction companies inching towards a similar fate.

So far, like a caring undertaker, the Modi government has done everything it can to make these companies’ passage to the other world less painful. Loans have been ‘re-structured’ – a euphemism for having repayment conditions eased on a case-by-case basis – and laws have been changed to make the dissolution of bankrupt companies easier and quicker.

But since the Modi government has done nothing to change the basic conditions in the market that have driven these companies into crisis, the re-structured loans are also speedily souring.

The first step to economic revival

Can this economy be revived?

There is nothing magical or secret about what needs to be done.

The first step is to halve India’s brutally high lending rates from the present 11 to 15%, and allow all companies with a positive operating surplus, i.e, a higher current revenue than operating cost, to refinance their loans at the new rates of interest. For a very large number of companies, this will suffice to make them solvent once more.

To those who have uncritically accepted the quarter percent rate cuts that Governor Raghuram Rajan has been willing to concede so far, this cure may sound too radical.

But it isn’t. In 1999, the interest rate I was receiving on my five year bank deposits was 13.5%. By 2003, Finance Minister Yashwant Sinha and RBI Governor Bimal Jalan had brought it down to 6.5%. But the economy did not suffer because the economy was growing at an 8.2% (genuine) rate of growth. And I did not suffer because I had shifted my money into equity shares and multiplied my capital by 220 percent.

So where is the downside in this solution?

Today’s financial pundits never tire of reminding us that this makes for the revival of “inflationary expectations.” The surge in demand that will follow a sharp lowering of interest rates will, they fear, cause the economy to “overheat” and push up not only prices but also India’s balance of payments deficit. “Real” interest rates, they maintain, must therefore always be “positive,” i.e, above the rate of inflation. With the cost of living still rising at 5% and the REPO – the rate the RBI charges commercial banks that borrow from it – at 6.75% there is only limited room for a further cut.

This reasoning is, to put it bluntly, pure gobbledegook. To investors it is not the REPO but the borrowing rate that matters. Today, the prime lending rate of the commercial banks is 3% higher than the REPO rate, and the average borrowing rate is 4 to 4.5% higher. So, there is plenty of room for a sharp cut.

Waiting for something to grow. Credit: Shome Basu

Waiting for something to grow. Credit: Shome Basu

Misplaced theories

In any case, why must the real interest rate be positive?

China has financed its explosive growth for thirty years by paying negative real rates of interest on bank deposits. The downside of this – a huge excess of capacity in infrastructure and heavy industry – is only surfacing now, but has any Chinese person said, or written, that he or she wishes the growth had not taken place?

By the same token, for more than three decades, South Korea systematically used a variety of financial instruments, including negative real rates of interest, to foster the growth of private and state owned enterprises that it felt had the capacity to take on the European, American and Japanese multi-nationals that dominated the world market.

The truth is that “inflation targeting” and “positive real rates” are products of the neo-liberal dogma spawned by Milton Friedman and the Chicago school. These ideas have gained their popularity because they have served to legitimise the dominance of finance capital over industry in the de-industrialising western world. But they are, in the end, only dogma. And in India, they have been misapplied and have caused us to lose a crucial decade of economic growth – a decade that we may never recover.

Kaushik Basu, who was Rajan’s predecessor as Chief Economic Adviser in the ministry of finance, has summed up the worthlessness of dogma in his latest book An Economist in the Real World, as follows:

“One thing that experts know and non-experts do not, is that experts know less than non-experts think they do. Take for instance monetary and fiscal policies. Decades of careful research have given us important insights into these. But on many large questions we have little more than rules of thumb: if there is stagnation lower interest rates and inject liquidity; if there is inflation raise policy rates and the cash reserve ratios of the banks….

The reason these …work, at least tolerably…is evolution. Over time the wrong moves get penalised and their users either learn by watching others, or disappear themselves. In brief we get our monetary and fiscal policies right …in the same way as birds get their nest building right.”

Basu’s simile sums up everything that has gone wrong in policymaking during the past five years.

Rajan and his predecessor, Subba Rao, abandoned the wholesale price index and switched to using the cost of living index as a measure of excess demand, and imposed a high interest rate regime on the economy. However, what the cost of living index was measuring was not an excess of demand, but shortages of supply caused by the growing failure of the state to provide essential services like health, housing and education, and state government-administered increases in the price of foodstuffs, agricultural raw materials, transport fuels and power.

Today, every index of inflation – wholesale prices, the GDP deflator and the core rate of inflation – is zero or negative. So, either the RBI governor must learn from his mistakes and bring the interest rate down to half the present level over the next six to nine months, or he must “disappear.”

The second step towards revival

Sharply lowering the interest rate is only the first step towards revival.

The second step is for the government to help companies that are deeply mired in debt to be saved, in this way: convert a sufficient part of their debt into equity and then itself buy enough of the shares to instil confidence in the market that it does not intend to let the company in question fail. Here Jaitley could follow Basu’s second dictum – learn by watching others.

The shining example of success is President Obama’s rescue of General Motors (GM).

In 2009, when GM and Chrysler were about to declare bankruptcy, the US treasury spent $49.5 billion to purchase 500 million shares of GM, $1.5 billion to bail out some key ancillaries, and $3 billion in subsidies to make Americans replace old cars with new fuel efficient ones.

Not only was GM saved but three years later, the treasury was able to sell the 500 million shares to the public for $39 billion. What is more, it saved 1.2 million jobs and also earned $39.4 billion in taxes.

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The RSS is sparing no effort to create a sense of siege among Muslims; it is stirring this cauldron of despair at the nation’s peril

Sword-bearing RSS volunteers march past portraits of KB Hedgewar and MS Golwalkar. Credit: Shome Basu

Sword-bearing RSS volunteers march past portraits of KB Hedgewar and MS Golwalkar. Credit: Shome Basu

Even as Prime minister Modi lauds the plurality of India and the profound peacefulness of Sufi Islam, the RSS and its cohorts have been sparing no effort to drive a deep wedge between the Hindus and Muslims in our country.

A single day’s newspaper tells us that the student Umar Khalid found, while being questioned in jail, that his interrogators had already decided his guilt before they talked to him, because he was a Muslim whose father had been an activist of the now banned SIMI. Anirban Bhattacharya was repeatedly cajoled by his interrogators to get all charges against him dropped by pinning all the blame for the February 9 sloganeering on Khalid.

Waris Pathan, a Muslim MLA, In Maharashtra is suspended from the state assembly for refusing to chant Bharat Mata ki Jai. On the same day four Kashmiri students are arrested in Rajasthan because someone reported to the police that they were eating beef in their hostel.

In Jharkhand, two Muslim cattle traders are murdered by a gang of criminals, and the public and the media immediately conclude that the killers belong to a cow protection group.

In Delhi the BJP MP from Agra, Ramshanker Katheria, (who is a member of Mr Modi’s council of ministers, no less ) publicly warns the UP state government that Agra will see a ‘different kind of Holi’ if cases lodged against one BJP and two local VHP ‘leaders’ for making hate speeches against Muslims, comparing them to ‘rakshasas’ who need to be cornered and destroyed’, are not withdrawn before the festival.

All this news appearing on a single day evinces no shock because, from Ghar Wapsi, to ‘Love Jihad‘, to throwing beef into a temple, to killing Mohammad Akhlaq, to changing the name of Aurangzeb Road in Delhi, such inflammatory statements and actions have become routine in the past 21 months.

Intimidating dissenters

What is relatively new is the brazen attempt to intimidate anyone – like Kanhaiya Kumar or Teesta Setalvad – who has the courage to take up cudgels in defence of the freedom of speech, thought, justice and legal process; the administration of punishment to them through harassment, torture and beatings while in judicial custody, the cancellation of licenses and denial of access to funds.

Beneath all of this runs one leitmotif : The Muslims are not ‘us’. In anthropological terms, they are the alien ‘other’ and don’t belong in a resurgent Hindu India. The Muslim conquest of India was an aberration, and its impact on Hindu culture must be erased.

The damage was real, but was done aeons ago by rulers and generals now long dead. What does the Sangh parivar hope to gain from making people who are not even their lineal descendants pay a price today? Does it think that the community will take this lying down forever? And if it does not, can India be purged of 190 million Muslims?

No matter what its motives are, if it persists it will push the country into civil war and force it to disintegrate, as the states in the south and east scramble to insulate themselves from the virus being exported ­­­from the north. Instead of a Hindu rashtra India will become the world’s largest failed state.

This may sound alarmist but beneath the surface calm, changes have been taking place in the structure of the Indian economy and society that have been weakening our collective faith in the possibility of a prosperous future. These are being felt most acutely by the youth, who have their entire lives ahead and do not see how they will traverse it. The need of the hour is to reverse these changes so that they can begin to hope again. The BJP/RSS is doing the exact opposite.

Muslims’ worsening plight

Partition made the first serious dent in India’s syncretic culture by planting resentment and suspicion in Hindus, and a wary defensiveness in Indian Muslims. With the pre-partition Muslim elite having largely opted for Pakistan, the community desperately needed educational and economic assistance to recover their place in Indian society. But a bitter legacy of Partition was the Congress’s adamant refusal to even consider the reservation of jobs and seats in schools and colleges for Muslims, as this was the tool the British had used to split the Indian social fabric.

V.P Singh was among the first to recognise the long-term damage this had done. He understood that a rural peasantry newly empowered by the Green Revolution was demanding reservation in government jobs and colleges not for the sake of a handful of poorly paid sinecures, but to create an urban base from which their children and grandchildren could acquire the education that was the only avenue to the modern world.

But he too shied away from making an overt commitment to the Muslims on this incendiary issue. As a result, in the 1990s the rate of urbanisation among the OBCs surged ahead, while that of the Muslims actually declined. As the Kundu commission noted, a process of ‘exclusionary urbanization’ set in.

The full impact of six decades of neglect was laid bare by the Sachar committee, which found in 2006 that not only was Muslim enrolment in secondary schools and colleges well below their share of the population, but their representation in salaried jobs was less than two-thirds of the national average.

The imbalance was even worse in the Central government where despite being 14.4% of the population Muslims filled only 4 percent of the senior police and paramilitary posts, only 3% of the IAS, 1.8% of the IFS and perhaps most importantly, only 6% of the posts in the constabulary. The situation was equally grim in the universities, banks and central Public sector undertakings.

The UPA government responded to the shock the report gave it by mooting an Equal Opportunities Commission and creating a Ministry of Minority (note, not Muslim) Affairs. But six years later, no perceptible dent has been made in the structural disadvantages of the Muslim community.

A study of actual disbursements till the end of March 2011, showed that of the allocation till then of Rs 3,780 crores for minority concentration districts, only Rs 846 crores actually reached the districts and only Rs 131 crores had reached the intended beneficiaries. Despite this, when the Ministry of Minority Affairs asked for Rs 58,000 crores in the 12thplan, it was allocated only Rs. 17,323 crores.

The Muslims fared no better in raising concessional bank loans, for these were monopolized by Sikhs and Christians who secured 47% of the funds when they made up 21% of the minorities. Muslims who made up 69% got only 44%.

It would have been surprising indeed if being at a perennial disadvantage had not created dissatisfaction, and a feeling of being discriminated against in Muslim youth who found their path into modern India severely constricted. Wahhabi Islam backed by an abundance of Saudi money and flashy new mosques offered a new sense of purpose and source of hope. Gradually, but relentlessly, it began to erode the Sufi base of traditional Islam in India.

But even this would not have not have dented communal harmony had Pakistan not intervened. Determined to take revenge for the splitting of the country in 1971, it began to actively encourage insurgency and dispatch of terrorists across the borders of Punjab and Kashmir.

As all governments that have faced armed uprisings have learned, state responses to terrorism tend invariably to be indiscriminate. In India, this has meant sudden descents upon Muslim neighbourhoods, sustained, unfriendly interrogations, and an automatic presumption of Muslim involvement even when, as in the Malegaon idgah bomb blast and the burning of the Samjhauta express, the victims are all Muslims. The casual ‘elimination’ of terrorists in staged ‘encounters’ sowed fear and anger, especially in young Muslims just when they had begun to realise that the economic resurgence of the country was passing them by. Quite suddenly, therefore, the ground beneath their feet began to quake.

The Gujarat riots gave a new twist to the  fear of young Muslims because for the first time in their lives they felt that the state had not protected, but actually targeted them. Ahmedabad, therefore, created India’s first home-grown Muslim Islamist terrorists.

Roots of Indian syncretism

Indian syncretism has survived despite this because it is based upon an easy acceptance of diversity.  In the mosaic that is India, Tamils, Bengalis, Mizos, Nagas, Manipuris, Odias, Punjabis, Parsis, Bohras, Memons, Christians – everyone feels different. We are comfortable with being different and demonstrate it by unselfconsciously wearing different headgear, different cuts of beard and moustache, different lengths of hair, even different lengths of pyjamas. We wear different clothes, build little temples, mosques, and shrines to Jesus or one of the Sikh gurus, wherever we wish. We spread prayer mats on a busy road at midday in order to pray, and some of us even walk down the street wearing no clothes at all.

This comfort with diversity makes India the envy of European nation states which were created through enforced cultural homogeneity. But this is what the RSS mistakes as weakness, and is bent upon erasing.

The Muslim community has responded to their Muslim baiting by consolidating its vote and building closer ties with the opposition. But it is defenceless against the economic impact that programmes like the ban on beef, and the liberalisation of the economy are having upon its future in a period of unending jobless growth.

There are 3,600 legal and 30,000 illegal slaughterhouses in India, that export 2.4 million tonnes of beef and buffalo meat valued at 4.8 billion dollars. The ban on cow slaughter is threatening the livelihood of anything up to half a million families, the majority of whom are Muslims. While the ban on beef exports has received a great deal of attention all over the world, its even more deadly impact on the leather industry has been all but ignored. Maharashtra’s ban on the slaughter of all cattle and its spread to several other states has starved the industry of hides. According to the industry, by June 2015, 98 tanneries had shut down in Kanpur alone and 150,000 workers had lost their jobs. Here too most were Muslims.

The ban has also affected farmers and cattle herders – Dalits, and OBCs – to whom aged cattle and male calves rendered surplus by the spread of tractors and automotive transport, have been an important hedge against sudden financial need or drought. Today, as large parts of the Deccan are reeling under one of the worst droughts they have ever experienced, the price of cattle has crashed and this source of succour has been cut off.

Perhaps the most serious and least noticed setback has come from the ‘scissors’ effect on the profitability of the  power loom industry from falling tariffs on imports after economic liberalization, and the simultaneous, relentless annual increases in the minimum sale price of cotton decreed by the state governments. While this is killing the power loom industry all over the country, in Maharashtra whose two centres, Bhiwandi and Malegaon, account for three quarters of the power loom industry, the vast majority of the workers are Muslims.

These are three exemplars of an even more terrifying crisis that Muslims in particular face. This is the assault upon the entire artisanal sector of industry – fine textiles, embroidery and handicrafts, by cheap imports from China. From Kashmiri carpets, Pashmina and Jamawar shawls, to Lucknowi Chikan, Hyderabadi Bidriware and  Kancheepuram and Banarasi saris, all are facing shrinking markets as mill-made alternatives, domestic and foreign, push their products out.

Muslims are the prime sufferers in every case because only 23% of them have salaried jobs against 34% of the Indian work force. Three-quarters are therefore self-employed, as against two-thirds of all Indian workers. What is worse, while many of the Hindu workers, both salaried and self employed, own small pieces of land in their villages, very few of the Muslims do. They have, therefore, nothing to fall back upon when their traditional skills become redundant.

So let us see what future a typical 18-year-old 12th pass Muslim boy faces. He finds it difficult to get into the army; he will almost certainly not get taken into the police. He is unlikely to qualify for a lower grade clerical post in the government, given that 52% of these are already reserved for OBCs and Dalits ; his schooling has not equipped him for any of the traditional skills his family excelled in, and in any case these skills being made redundant. So how long will he be able to hold out when a recruiter offers him 400 dollars a month to join a jihad somewhere in the world, even India, to ‘save Islam’? The RSS is stirring this cauldron of despair at the nation’s peril.

Prem Shankar Jha is a Delhi-based author and commentator

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Government initiatives will help shrink the public support for armed militancy, and pressurise the militants to lay down their arms and return to normal life.

Srinagar: Youths throw stones and water bottles on police at the venue as violent clashes erupted during the first ever International Kashmir half-Marathon at Kashmir University Campus in Srinagar on Sunday. PTI Photo by S Irfan(PTI9_13_2015_000085A)

Srinagar: Youths throw stones and water bottles on police at the venue as violent clashes erupted during the first ever International Kashmir half-Marathon at Kashmir University Campus in Srinagar on Sunday. PTI Photo by S Irfan(PTI9_13_2015_000085A)

In the past three months Prime Minister Narendra Modi has made two overtures to Pakistan, leaving little room for doubt that he wants to reverse the deterioration in bilateral relations. First he “dropped by” Lahore to meet Pakistani Prime Minister Nawaz Sharif on his way back from Kabul, Afghanistan, in December. The second was his telephone call to Sharif wishing the Pakistan team good luck in the World Cup match at Calcutta.

Pakistan has responded by providing intelligence on the Pathankot terrorist attack and warning India of a possible terrorist attack on the Somnath temple in Gujarat, which the government was able to foil.  But how will the countries build upon these initiatives if the situation in Kashmir continues to worsen at the rate it is doing today?

Kashmir appears to be moving in a different direction at present. With the continued reluctance of Peoples Democratic Party (PDP) president Mehbooba Mufti to form a government and the BJP’s inability to do so, Jammu and Kashmir has been left without a representative government. Meanwhile, the slow burning anger that has been growing in south Kashmir is approaching a boiling point.

South Kashmir on the boil

In the past two months every killing of a militant in south Kashmir has been followed by shutdowns of business and funeral processions that have grown ever larger, followed by ugly confrontations with the police and paramilitary forces. The first two months of the year saw 20 days of shutdowns in the the Pulwama, Kulgam and Anantnag districts. Besides, the intervention of civilians to foil the armed forces in their fight against the militants has led to the injury and deaths of several civilians, and a further rise in public anger.

The security agencies in Delhi and Srinagar are, as usual, blaming Pakistan: unable to send terrorists across the Line of Control (LOC), they claim Pakistan is training local youth to carry out violent acts within Kashmir itself. This explanation is self-serving, to say the least, as it is entirely possible that Pakistan is not sending infiltrators into India simply because it no longer needs to. But such an explanation also evades the real questions: why are the youth in south Kashmir, a PDP stronghold for 15 years, taking to armed insurgency again? And why is popular support for insurgency growing in an area where there was virtually none before?

The answers lie in Delhi’s failure to understand the causes of the Kashmiri insurgency and thus its inability to end the conflict despite many opportunities. The failure has risen out of a belief embedded in the psyche of most Indians – as Muslims, Kashmiris find it hard to resist the blandishments of Pakistan. This was and continues to be very far from the truth.

Denial of political space

The insurgency in the 1990s was born not out of religious separatism, but a complete denial of room for democratic dissent in the valley after the arrest of Sheikh Abdullah in 1953.  From 1957 till 1972, every election in the valley was rigged to ensure a sweeping National Conference victory.

As Pakistan found out in 1965 when its infiltrators found no support in the valley, the National Conference’s victories were not altogether unpopular as the party’s main purpose was to ensure the domination of the valley over the politics of the entire state. But as a consequence, two successive generations of Kashmiri youth were denied the political space in which to express their growing frustration and anger with an increasingly corrupt and predatory state government that was being backed uncritically by Delhi.

In 1987, when the National Conference entered into an electoral alliance with the Congress, the Muslim United Front (MUF) emerged as a political voice for the youth. But when the MUF was denied a reasonable presence in the state assembly through vote manipulation, a large section of the youth became convinced that they would never be allowed to secure the right to dissent, let alone govern, through the Indian democratic system. This led them into the arms of the Jammu and Kashmir Liberation Front (JKLF) and thus, Pakistan.

Although initially sheltered and armed by Pakistan, the JKLF’s goal was Kashmiri independence and not a merger with Pakistan. Its leaders knew that neither Ladakh nor Jammu would go along with secession. Had religion been their main driving force, JKLF leaders could have espoused the Dixon Plan, proposed by the British in 1947, to hand over the Kashmir valley to Pakistan. But not once in the 39 years of its existence has the JKLF advocated this “solution”.

On the contrary the JKLF has consistently demanded azadi (freedom) for Kashmir as it had existed before 1947, in the full knowledge that this would increase its heterogeneity and drag it further away from a purely religious identity. Over the years the Hurriyat conference, with the sole exception of Ali Shah Geelani, has also come around to a similar position.

In hindsight it is clear that no matter what they professed in public, what the militants wanted in the 1990s was to be the architects of a peace settlement along the lines of the Framework Agreement signed by General Musharraf and Manmohan Singh in 2005.

It is not surprising then that between the Islamabad declaration of 2004 and the attempted Amarnath land scam in 2008, domestic militancy all but died out in Kashmir. The Lashkar-e-Tayyiba and the Jaish-e-Mohammad repeatedly sent terrorists across the LOC, but lacking local support they were soon rounded up or killed. For this four-year period, Kashmiris lived in the expectation that a lasting peace was around the corner.

State crackdown

That hope has since died. The UPA’s ill-advised crackdown in the valley in August 2008, the deaths of more than a hundred stone pelters in 2010 and the hanging of Afzal Guru in 2013 convinced Kashmiris that a harder, more merciless Indian State had emerged over the years.

Paradoxically, this new State was a product of the unexpectedly high turnout in the valley in the assembly elections in December 2008; it enabled the architects of the crackdown to trumpet that the Kashmiri militancy had ended, that the Hurriyat and other separatists had never enjoyed significant support, and that what the Kashmiris really wanted was jobs and a better future.

The corollary of this was that there was no more need for a political dialogue with the ‘separatists’. As a result, the dialogue between government and the Hurriyat, which had been an important part of the peace process till then, came to an end. On the ground in Kashmir this erased the distinction between crime and political violence. All subsequent militant attacks became criminal acts to be dealt with by the police with the help, where necessary, of the paramilitary forces.

Police methods invariably include the interrogation of all those whom they consider likely to have information that will lead to the arrest of the “criminals.” Treating the nationalist movement in the Kashmir valley as a law and order problem thus made the nearly 31,000 militants who remained on the police’s history sheets and the thousands of stone pelters who were added to their number after 2010, the prime targets for interrogation.

For them, and their families, life became an uncertain, nerve-wracking hell. Add to this the never-ending trickle of deaths of local Kashmiri youth in encounters and crossfires, and one begins to understand the mixture of anger, despair and desire for revenge out of which the new militancy in south Kashmir has been born and is gathering support.

Reviving hope

Unlike the militants of the 1990s, the current crop of militants in south Kashmir have no political agenda, because they have no hope. They know from the experience of their predecessors that Pakistan will help, perhaps even provide shelter, but will ultimately enslave them. And the pointless, brutal hanging of Guru has shown them that there is no mercy in the Indian State. Their only desire now is to hit the Indian State repeatedly and invite retaliation that will rekindle a general uprising again as it did in the 1990s.

So far their tactics have met with unqualified success. The disaffection in south Kashmir today is not far short of what it was in Srinagar and north Kashmir in the 1990s. If Delhi continues to deal with it through repressive police measures alone, the tension and anger that is building up will inevitably boil over into a more general uprising. The only way to reverse this spiral is to rekindle the militants’ desire for peace, their desire to live. But so great is the accumulation of anger and mistrust that weaning them, and the tens of thousands who are openly supporting them, away from violence will not be easy.

The starting point should be for Delhi to recognise and concede publicly that the struggle in Kashmir needs to be dealt with through negotiation and accommodation, not through repression. To do this the Modi government could take a page from Atal Bihari Vajpayee’s book and declare a unilateral cessation of anti-terrorist action by security forces, coupling this with the offer of a general amnesty to all those who forsake armed struggle, and restart a political dialogue with the Hurriyat and back-channel talks with Pakistan on Kashmir.

Such initiatives will gain credibility if it is accompanied by a promise to repeal the Public Safety Act that gives the Kashmir police its extraordinary powers, and limit the scope of AFSPA as peace is restored. These initiatives may not lead to an immediate cessation of violence in south Kashmir as Pakistan may continue to stir the pot to strengthen its hands in negotiations with India. But if the government persists with these initiatives, it will shrink the base of public support for armed militancy that is building up in south Kashmir, and pressurise the new militants to lay down their arms and return to normal life once again.

Prem Shankar Jha is the Managing Editor of Financial World and a senior journalist.

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Kanhaiya Kumar’s battle cry that the fate of India lies in the hands of its poor and oppressed may turn out to be more true than even he has bargained for.

Students within the JNU campus celebrating the granting of an interim bail and subsequent release of their union leader Kanhaiya Kumar, March 3, 2016. Credit: Shome Basu

Students within the JNU campus celebrating the granting of an interim bail and subsequent release of their union leader Kanhaiya Kumar, March 3, 2016. Credit: Shome Basu

What began on February 9 as a small protest meeting at JNU to mark the hanging of Afzal Guru has ballooned into a struggle that is without precedent in the country’s history. This is not the first  nationwide polarisation we have seen. Remember the debate over the Indo-US nuclear deal? Or Anna Hazare’s fasts unto death over the Lokpal Bill in 2011? But this polarisation is different. Those had occurred over what India should do, but this is over what India should be. The struggle that has begun now is over defining the soul of India.

For sixty nine years India has defined itself as a pluralist, secular, ethnically heterogeneous country  that has built its nationhood by accommodating diversity. This is now being challenged in earnest by the BJP or, to be more precise, the RSS, (the distinction between the two that was so sharp in Atal Bihari Vajpayee’s years has all but disappeared). The RSS has begun to fear that far from staying in power  for ten years, as Prime Minister Narendra Modi had confidently predicted shortly after the 2014 elections, the BJP may well lose its majority in 2019. This has left it far too little time  to implement its long cherished agenda for uprooting India from its pluralist-secular moorings and turning it into a “Hindu Nation”.

Its fears might run even deeper for after its shock defeats in Delhi and Bihar, it cannot be unaware that it may meet the same fate in Punjab and UP next year as the consolidation of the opposition that took place in Bihar is likely to be repeated there too. Those defeats, were they to take place, would turn the Modi government into a lame duck administration for the next two years. This is a possibility that the Sangh Parivar does not seem willing to contemplate.

The many attacks

How high the stakes for it are is revealed by how far it is prepared to go. Conspiracy theories should be treated with great scepticism, but everything that has happened since February 9 has the stamp of premeditation. When the Union Home Ministry decided to arrest JNU Students’ Union (JNSU) leader Kanhaiya Kumar on charges of sedition after four full days to search for seditious matter in his 23-minute address to JNUSU, it did so on the basis of a single Zee TV video clip  aired on February 10 that purported to show that students at the meeting had shouted ‘Pakistan zindabad’ slogans.  Last week a magistrate’s court ruled, on the basis of a forensic examination, that the tape was a fake and that the words Kumar was shown to have been spoken had been pasted on from another sound track.

This immediately raises the question about who doctored the tape? If someone was prepared to go so far, can we be sure that the pro-Pakistan slogans at the February 9 afternoon meeting had also not been planted? Can we even be sure any longer that the entire fracas at JNU was created not by Kashmiris from outside JNU, as presumed by Harshit Agarwal, an uninvolved third year student who posted a video of  the entire meeting on the web, but an ABVP ‘false flag’ operation from the outset?

Undaunted by this setback the RSS has hit back through its newly discovered star orator, Human Resource Development Minister Smriti Irani. On the day after Kumar gave his second speech in defence of democracy, the constitution, the rule of law, and the freedom of speech and thought, Irani counterattacked by turning the defence of her government over the death of Dalit scholar Rohith Vemula in Hyderabad  into a wholesale attack on anti-national and leftist elements, accusing Vemula’s fellow students of deliberately preventing the police from cutting down his body as he hung from the ceiling fan, and preventing doctors from seeing him for a full 12 hours, in order to ensure his martyrdom for their cause.

Her vitriolic speech went viral on the internet and Modi hailed it with the two-word tweet, ‘satyamev jayate’. Only a full 24 hours later did Indians learn that everything she said had been fabricated. Vemula’s family and friends said his body had been cut down from the fan as soon as it was discovered, and that the chief medical officer of the university had arrived within four minutes of receiving the students’ call, had examined him and pronounced him dead. What’s more, as the doctor said, when she examined him he had already been dead for several hours. The police had not been prevented from seeing his corpse, much less from trying to revive him.

But by then the Sangh Parivar’s attack on ‘anti-national, left-wing, Muslim-loving, pseudo-secularists’ was in full swing. While Kumar was in jail and his colleagues in hiding, the Sangh Parivar had posted another video that purported to show some  JNU students yelling pro-Pakistan slogans during a  clash between them and the ABVP. But students at the university had already recognised some of the slogan shouters as prominent members of the ABVP.

A few days later another clip went up reporting that thousands of empty liquor bottles and used condoms were recovered from JNU every day. And not perhaps by coincidence, Chandan Mitra, the Oxford-educated editor of the BJP’s mouthpiece, The Pioneer, sermonised that the time had come to close down JNU altogether.

The common thread that runs through these attacks is a casual disregard for the truth, and a willingness to use any lie, any rumour, any prejudice, any person and any means to serve the higher purpose of converting India into a Hindu State. Irani claimed that everything she had said in parliament was from the Hyderabad police report. But a comparison of what she said with what appeared in the report shows that she saw only what she wanted to see and filled in the blanks from her preconceptions.

Pervasive hyper-nationalism 

More than anything else it is the Sangh Parivar’s total lack of concern at being caught lying that reveals the depth of the danger that Indian democracy faces, for it shows that facts no longer matter. Only myths matter because, with executive power already in its hands, these are all the BJP/RSS  needs to persuade the army and the police, even large parts of the judiciary, to do its bidding.

To say this is not to imply that the army, the judiciary or the police, will not demur if asked to enforce another Emergency. But their minds are being systematically prepared. The danger that they could be asked to do so is therefore too real to ignore.

How deeply the appeals to hyper-nationalism have resonated within the power structure of the country is reflected in the judgement handed down by Delhi high court Judge Pratibha Rani while granting bail to Kumar. Prefacing her judgement with a patriotic song she made it clear that she was granting bail only because the defendant was unlikely to abscond or be able to obstruct the dispensation of justice. But he had associated himself with unpatriotic slogans and actions, and needed to be educated in nationalism. What is more, she opined that mild doses of anti-nationalism should be treated through education. More severe cases may need surgical excision, as becomes necessary with gangrene.

Nowhere did this learned judge elaborate what constituted anti-national behaviour. Nor did she explain what she meant by the chilling word ‘surgery’. What she did not bother to hide was her virtual direction to a lower court that it should find Kumar guilty of sedition ‘for his own good’.

Days later, while admitting a criminal defamation case against Delhi Chief Minister Arvind Kejriwal, a district judge   made ex cathedra remarks that have all but pronounced him and five other Aam Aadmi Party leaders guilty without the benefit of a trial.

If this is the resonance that the BJP/RSS’s campaign can create in a judge of the Delhi high court, what is it creating in  the middle class? Internet provides us with a crude yardstick. Till last Wednesday noon Kumar’s post-bail speech had received 884,000 hits, while Irani’s speech in parliament had received 3.6 million hits. As for the Hyderabad chief medical officer’s testimony demolishing Irani, forget the TV anchors, even I have difficulty remembering her name.

Kumar’s battle cry that the fate of India lies in the hands of its poor and oppressed may turn out to be more true than even he has bargained for.

 Prem Shankar Jha is the Managing Editor of Financial World and a senior journalist.

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Jaitley’s effort included many significant policy plans but had little to offer on reviving economic growth. Unless interest rates are lowered sharply, there is no possibility of recovery.

Only a drastic cut in interest rates can get the economy moving again. Credit: Shome Basu

Only a drastic cut in interest rates can get the economy moving again. Credit: Shome Basu

The Budget presented by Finance Minister Arun Jaitley on Monday contains a number of new departures that merit unstinting praise. Chief of these are a national crop insurance scheme for farmers, a health insurance scheme to protect families from the impact of illnesses that incapacitate the breadwinner and a three-year programme to provide 50 million families in villages with cooking gas facilities.

But on the revival of economic growth, the central challenge facing the country today, the Budget has little to offer. Instead, Jaitley implicitly absolved the government of responsibility for it’s failure to revive growth, by laying the blame on the “serious crisis” in the global economy but said the Indian economy held its ground despite the global headwinds.

The bad debt problem

The self praise, however, is muted. Both the Budget and the Economic Survey have admitted that all is far from well in the economy. The 2014-15 Survey had estimated that 880,000 crore rupees of investment was locked up in stalled projects, concentrated mostly in the heavy industry, construction and infrastructure sectors, and this year’s Survey dealt at length on the mountain of bad debt that this has created in the banking system. On December 31, 2015 the non performing assets (NPAs) – debt on which banks are not able to recover their interest and amortisation – of 24 listed public sector banks, including the State Bank of India and its associates, stood at a whopping 3,93,035 crore rupees, or about 11% of their loans. Private banks had not done much better; although they accounted for less than 20% of outstanding loans, their NPAs added up to 45,000 crore rupees.

This mounting bad debt has reduced banks’ willingness and capacity to lend, slowed the growth of credit to less than half of what it was during its heyday a decade ago and locked the entire secondary economy in the jaws of stagnation. Not surprisingly, industrial growth has been stuck at just over 3% for the last five years. This is close to 2% lower than the growth it recorded in the 1960s and 1970s, during the worst period of the closed economy. Judging from the quarterly data collected by the labour ministry, the slowdown in the growth of employment has been equally sharp.

It is in suggesting a remedy for the crisis that North Block is strangely reticent. Both the Economic Survey and the Budget reflect the conviction that the remedy lies in drastically simplifying and speeding up the procedure for declaring firms bankrupt and liquidating their assets. The Survey has likened the Indian economy to the Chakravyuhain the Mahabharata – easy to get into but very hard to get out of. Enabling companies to exit easily will release what Joseph Schumpeter called “the gales of creative destruction,” for it will free land, buildings and other assets for sale, and bring the capital locked in them back into useful circulation. Citing academic studies, the Survey has claimed that this will improve the productivity of capital by 30-40% and trigger an economic revival.

Jaitley has taken his cue from the Economic Survey. In paras 90-94 of his Budget speech he unveiled a spate of measures that will make it easier to set up asset reconstruction companies, to speed up the working of debt recovery tribunals by digitising the collection of information and recapitalise  public sector banks in order to free up the flow of credit.

Persistence of widespread insolvency

It was these announcements that sent the Sensex up by 800 points, the biggest one-day increase in seven years. But as a panacea for economic stagnation they will not suffice, for implicit in them is the belief that investment is going bad mainly because of the greed of investors who borrow too much and therefore run up very high interest costs, and because of cronyism and unprofessionalism in the management of public sector banks.

These are not the only, or even the main, causes of the malaise in the economy. One key indicator is the large number of companies with restructured loans that have once again become insolvent. In 2014-15, 57,000 crore rupees of restructured loans had gone bad, double the amount from the previous year.

The persistence of widespread insolvency despite the restructuring of debt shows that its cause is not episodic but systemic. Every single one of the economy’s problems can be traced back to the very high interest rate regime that has existed, with one short interlude, since 2007. This has drastically reduced demand by discouraging purchases made on instalment plans, including the purchases of housing and office space, automobiles, electronic and digital equipment, and home and office furnishings. These make up almost half of industrial production. It has also caused a collapse of the share market in all but a few sectors and a virtual disappearance of initial public offerings of shares since 2007. Finally, it has forced promoters to rely almost exclusively on bank loans to finance investment just when the cost of borrowing has gone up. This has greatly increased the risk of investment and is responsible for the large scale abandonment of infrastructure and heavy industrial projects that were highlighted in the 2014-15 Economic Survey.

The interest rate quagmire

Jaitley has urged the Reserve Bank of India (RBI) to lower interest rates on several occasions, and in July his chief economic adviser, Arvind Subramaniam, wrote an article in The Indian Express arguing that the cost of living index is no longer a satisfactory measure of inflation and urged the use of the GDP deflator instead. It is thus surprising that Jaitley did not say anything in his Budget speech about lowering interest rates, a point left out in the Economic Survey too.

This may be out of respect for the RBI’s autonomy in determining monetary policy. But central bank chief Raghuram Rajan has shown no inclination to lower the interest rate so far as he believes, with the cost of living index still averaging 5%, the RBI’s current policy rates – ranging 7.75-5.75% – are already low enough in real terms not to merit much further reduction. Additionally, he firmly believes that most of the problems of industry can be traced back to the mistakes of the promoters, who “do not have a divine right to stay in charge regardless of how badly they mismanage an enterprise, nor … have the right to use the banking system to recapitalize their failed ventures”.

But the RBI’s policy rates do not reflect the actual cost of borrowing. Today the average borrowing rate, including various bank charges, is over 11%. With inflation, measured by the GDP deflator, close to zero the real rate of interest for borrowers is prohibitive. Till it is brought down, and that too very sharply, there is no possibility of a revival of investment and an economic recovery.

The real test for the government will therefore come when the RBI announces its next policy review at the end of this month. If Rajan does not bring down interest rates substantially, Jaitley and Prime Minister Narendra Modi will have to choose between foregoing economic recovery or foregoing the services of Rajan. The choice, either way, will not be easy.

Prem Shankar Jha is the Managing Editor of Financial World and a senior journalist.

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The hyper-nationalism being fuelled by the government’s aggressive stand on the JNU issue is proof that the RSS senses waning support for the BJP across the country.

Hindutva Undivided Family: Narendra Modi and Amit Shah at the funeral of VHP leader Ashok Singhal. Credit: PTI

Hindutva Undivided Family: Narendra Modi and Amit Shah at the funeral of VHP leader Ashok Singhal. Credit: PTI

‘Something extraordinary is going on in this country’. So said two respected supreme court judges on the Kanhaiya Kumar bail issue. Supreme court judges are not given to expostulation. So when these judges brushed aside legal objections and decided to hear a simple bail petition in the highest court of the land, their decision to intervene expresses their mounting disquiet even more loudly than their words.

The ‘something extraordinary’ that has so distressed them is the re-emergence of a totalitarian threat just when most Indians have assumed that their democracy is finally secure.

These are some of the recent events that have made this threat apparent:

A small fringe group of students met  to protest against  “the judicial killing of Afzal Guru and Maqbool Bhat” and  express  solidarity with “the struggle of Kashmiri people for their democratic right to self-determination”. The meeting  was cancelled by the vice chancellor at the last moment, but the students insisted upon their freedom of speech and went ahead with it nonetheless. Some inflammatory anti-India remarks were made by a small group of Kashmiris. A fracas ensued, at the conclusion of which the president of the main JNU students’ union Kanhaiya Kumar gave a fiery speech defending  freedom of speech and thought  but  explicitly condemning  “any act of violence, terrorism, any terrorist act, or any anti-national activity.”

Despite this, the Delhi police came to the campus four days later and arrested Kanhaiya on charges  of sedition and criminal conspiracy. It did so because Union home minister Rajnath  Singh received a phone call from  BJP MP Maheish Girri, and tweeted to the world that “anyone who shouts anti-India slogans & challenges nation’s sovereignty & integrity while living in India,  will not be tolerated or spared”.

Abuse of the law

Singh did this without bothering to find out what the demonstrators said and whether it qualified as sedition.  Had he been more circumspect  he would have found  that even the most extreme slogans raised on February 9 did not  qualify as sedition.   In five separate past judgments  the Supreme Court had drawn a sharp distinction between the advocacy (of) and incitement (to) violence, and defined sedition as an “incitement to imminent lawless action”. Based on this definition  it had rejected as sedition the slogans raised by some Sikhs on the day Indira Gandhi was assassinated — “Khalistan zindabad, the time has come for us to expel  Hindus from Punjab and seize the reigns of power” — because it was an expression of desire  and did not suggest when or how it should be carried out.

But  Singh did not have the  patience to educate himself on  the finer points of the law, and instead issued the order to arrest Kanhaiya and other demonstrators, leaving it to  the police to  find sufficient grounds for doing so. In doing so  he  broke the boundary that  separates legal process from witch hunt and mob rule.  What followed shows how far we have fallen.

While Kanhaiya was in police custody three lawyers – Vikram Chauhan, Yashpal and Om Sharma – beat him mercilessly for three hours. The police watched the beating without raising a hand to stop it. In secretly filmed interviews with  reporters from India Today, the trio boasted  that they had planned the  beating  administered to journalists, students and professors who attended Kanhaiya Kumar’s bail hearing  inside the Patiala house court on February 15.

Via Facebook, Chauhan had issued nine appeals to ‘boys’ from all over Delhi to come to Patiala house and teach the traitors a lesson. The three  had  initially toyed with a plan to throw a bomb, but settled for administering a sound beating. The beating was watched by the police and CRPF on duty, several of whom  expressed their regret at not being able  to join in because they were wearing their uniforms.

Yashpal boasted  that he was looking forward to being arrested and would not ask for bail because he wanted to be in the same jail as Kanhaiya so that he could beat him up some more. Journalists present at the court and  lawyers who watched the many clips that went viral that same night identified several of the  lawyers who beat Kanhaiya as members of the BJP’s legal cell, the  Adhivakta Sangh.

That evening, on Rajdeep Sardesai’s prime time news channel, Sharma aggressively justified his actions  on the grounds that everything he had done was in service of ‘Bharat Mata’, and asserted five times that he would kill anyone who dared to speak against ‘Mother India’.

Silence on the part of the Modi government

What is most disturbing is the Modi government’s lack of reaction to the fracas at the courthouse. Police commissioner B.S. Bassi described it as a minor scuffle caused by students and professors who refused to vacate seats in the courthouse reserved for lawyers. When Finance Minister Arun Jaitley, who had been in another courtroom emerged, the journalists who were being pummelled on the ground in front of him appealed to him for help, but he ignored them and walked away.

The judge could not spare 23.05 minutes to watch the video of Kanhaiya’s speech to decide whether or not to  grant him bail, instead  remanding him to Tihar jail for another 15 days. But the same court, if not judge, gave bail to Sharma, Yashpal and Chauhan

As for Prime Minister  Modi, he has  responded to the rise of mob rule on February 15 in much the same way as Hitler responded to Kristallnacht – the Nazi storm troopers’ attack on German Jews in  1938 — by completely ignoring it and everything that led up to it.

More than anything else, it is  this  calculated silence that makes it necessary  to face the possibility that the  Delhi incident is not an accidental confrontation that went  out of control but a first testing of the waters of Hindu chauvinism to see if it can be  harnessed to realising the RSS’s long-cherished dream of creating  a ‘Hindu Rashtra’. For,  with the BJP at last in unfettered power, and two devoted pracharaks at the helm of  party and government, it cannot but believe that its time has finally come.

The RSS’s hyper-nationalism

The RSS stoutly claims that it is nothing but a social organisation that leaves politics to the BJP. Over the 68 years that have passed since the assassination of Mahatma Gandhi – culminating in the benign tenure of Atal Bihari Vajpayee as prime minister from 1998 to 2004 –  we have lulled ourselves into believing this.

But the RSS  has learnt nothing and forgotten nothing. By an extraordinary feat of intellectual gymnastics, it remains convinced that snatching independence from the British was not a triumph for Hindu India. Not even the partition, which removed two-thirds of the Muslims and gave the Hindus an 83% majority was sufficient to create a Hindu Rashtra.  For the RSS, the Hindu Rashtra must be  a country purged of all ‘impure’ elements.

With non- Hindus still making up almost a fifth of the country’s 1.3 billion population, this purging cannot be physical. So, it must be cultural. But as the European nation states have found to their immense cost, cultural homogenisation cannot be achieved without the sustained use of force.  The RSS is therefore not only a totalitarian organisation, but also one that cannot afford not to be one.

One has only to read Jawaharlal Nehru’s letters to chief  ministers  in 1947 and 1948 to see how little the RSS has changed. On December 7, 1947 he wrote: “We have a  great deal of evidence to show the RSS is an organisation which is in the nature of a private army and which is definitely proceeding along the strictest Nazi lines, even following the techniques of organisation. It is not our desire to interfere with civil liberties. But training in arms of a large number of persons with the obvious intention of using them is not something that can be encouraged”.

Similarly, on January 5 1948 he wrote: “The RSS  has played an important part in recent developments and evidence has been collected to implicate it in certain very horrible happenings. It is openly stated by their leaders that the RSS is not a political body but there can be no doubt that policy and  programme are political, intensely communal, and based on violent activities. They have to be kept in check”. That was 25 days before Mahatma Gandhi was  assassinated.

On December 5 1948, looking back on that tragic year,  he wrote: “The RSS has been essentially a secret organisation with a public façade, having no membership, no registers, no accounts… they do not believe in peaceful methods or Satyagraha. What they say in public is entirely opposed to what they do in private.”

Reading these excerpts 68 years later,  one is overwhelmed by a sense of déjà vu. For the  RSS is still a ‘social’ organisation that  operates through more than two dozen shadowy, unregistered organisations. Of these the Vishwa Hindu Parishad, the Bajrang Dal, the Dharma Jagaran Samanwaya Samiti, the Hindu Dharma Sena, the Hindu Janjagruti Samiti, the Durga Vahini,   the Adhivakta (lawyers’) Sangh, and of course the ABVP, are the most aggressive.

It is we who constitute the rest of the nation who persuaded ourselves that Vajpayee and Advani were not an aberration and that the entire Sangh Parivar had changed. And we were not entirely wrong. For, responding to the inexorable pull of the simple majority voting system, which forces all political parties  to moderate their ideologies and woo  centrist opinion if they wish to capture power,  Vajpayee and Advani  had pulled  the BJP a long way away from the RSS, and made it entirely acceptable to other parties as a coalition partner.

This enabled them to give India one of its best governments since independence. But the RSS had only gone into hibernation and, as his ‘new year musings’ show, no one knew this better than Vajpayee himself.

Step-by-step descent

Had the NDA won the 2004 elections, both the economics and the politics of India would have taken a different turn. But the RSS was able to seize upon its defeat to discredit  not only Vajpayee, but also his message. With Modi as prime minister and Amit Shah as BJP president, the four-decade long attempt to distance the BJP from the RSS has been reversed. As of today, the chain of communal provocations and cultural onslaughts that began with ‘love jihad’,  ‘ghar wapasi’ and the casual dismissal of the Agenda for Alliance signed with Mufti Sayeed,  has shown that it is the RSS that is in the driver’s seat.

Throughout this step-by-step descent into mob rule Modi, Shah and Singh have maintained a studied silence. But  the administration and the police have already learned the lesson it is meant to convey. In Ahmedabad on the evening of February 27 2002,  TV channels showed clips of charred corpses being removed from the Sabarmati express at Godhra. The next day, the Vishwa Hindu Parishad called a bandh and Modi announced state sponsorship for it. This handcuffed the police and prevented them from rounding up ‘history sheeters’ in Ahmedabad and other cities, to prevent riots from breaking out the next day. The result was some 2,000 dead in terrible communal riots. Today, state sponsorship of violence is no longer needed. Modi and Shah are achieving the same goal through their silence.

The most puzzling feature of the RSS’s campaign is that it seems utterly unfazed by the inevitable  loss of  electoral support that will follow the resurgence of ideology within the BJP. In 50 assembly by-elections in 2014, held to fill seats whose incumbents had moved to the Lok Sabha, the BJP was able to hold on to only 19 of the 40 seats it had  held before. This was followed by its shattering defeats in the assembly elections in Delhi and Bihar.

To stand a chance of winning the 2019 general elections, the BJP must widen its appeal and actively court the support of coalition partners. Under Modi and the RSS, it is doing the opposite. Could this mean that the RSS is planning to ‘derail’ democracy once more? The possibility is no longer remote, because hyper-nationalism  has been the final card played by governments of other countries that have felt their  support waning. Delhi shows that the BJP is beginning to play it too.

Prem Shankar Jha is the Managing Editor of Financial World and a senior journalist.

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