kvijaya40

Contemporary issues related to human development , regional and global.

Category: Infrastructure

Kerala and its Vizhinjam International Port

Kerala and its Vizhinjam International Port

Construction of Vizhinjam International Port, estimated to cost over Rs.6000 Cr, has just started: Project was initiated fifteen years ago: It was facing serious environmental objections and a judicial enquiry was ordered recently to look into the serious irregularities pointed out by C&AG. Copied below is an old note on this project, prepared by me and sent to Kerala State Planning Board, in Sept 2006.

This note was titled by a question: International Container Transshipment Terminals at Vizhinjam, Kochi and where else? Those were the days, when global finance capital was promoting ICTTs all over the world, including the Indian subcontinent: Global consultants were ready with big-ticket feasibility notes for port development, in support of new global markets and trade routs, divined by the IMF-WB-WTO regime.

I was part of the consortium of Rogge Marine Consult and L&T Rambol, who had prepared the first DPR for Vizhinjam ICTT in 2004 (?) on behalf of GOK. Despite several road-shows organized by foreign teams, there were no takers for the project. In the mean time another ICTT project proposed at Cochin was assigned to Dubai Port International on a single tender basis and there was little scope for yet another ICTT on Kerala Coast.

There was a Government change again in 2006, and the new Ports Minister was keen to revive the project at least on a smaller scale, but nothing much happened during the five year term of this Government. In 2011, as soon a new Government took over, a Delhi based consultant was asked to re-design the project as an International Port: All consultants were suitably compensated and Adani group assured of big profits but issues raised in my good old note remain unanswered!

INTERNATIONAL CONTAINER TRANSHIPMENT TERMINAL
AT VIZHINJAM, KOCHI AND WHERE ELSE?
A policy note sent to Planning Board by K Vijayachandran

1. Facts as I know: Myself as well as my consultancy, Industries Research & Services (IRS), were part of the the professional team that prepared the ICTT Project Report for Vizhinjam. L&T Ramboll of Chennai were the lead consultants and we were associated in the study through M/s Rogge Marine Consult of Germany, a leading port development consultancy in the world, for the socio-economic study of the hinterland and for transportation economics. Apart from myself, M/s Gopalakrishnan IAS(Retd) and tranport economist, Jayachandran and Neelambran (both, retired Chief Engineers of Cochin Port Trust) and Vijith V (Naval Architect of IRS) had participated in this study on behalf of IRS.

2. ICTT, a new concept in global shipping: The concept of International Container Transshipment Terminal (ICTT) is a product of the recent large scale restructuring and optimization of global shipping: Huge vessels called Mother Ships, sticking to the trunk routes and visiting only ICTTs, which serve as regional hubs that exchange containerized international cargo, and lighter ships ferrying between ICTTs and domestic ports are a relatively new development in global shipping. ICTTs are already in operating in Colombo, Singapore and Dubai ports which are used as regional hubs by global shippers. Commercial success of any new ICTT in the region depends on the patronage extended by shipping monopolies, as part of their restructuring plans aimed at the maximizing of their global profits.

3. Economic Reforms, Indian Ports and ICTTs: As part of the economic reforms, all the thirteen major ports under the administrative control of the Central Shipping Ministry had engaged global consultants to prepare corporate plans aimed at their corporatisation or privatization. ICTTs were suggested by the consultants in about half a dozen major ports, and the tenth plan had proposed four ICTTs, two each on the East and West coasts. These proposals were supported by an unsubstantiated estimate that India was incurring an additional expenditure of Rs.1000 Crore per year because of wasteful transshipments in Colombo and elsewhere. These plan proposals did not include establishing ICTT at Kochi or Vizhinjam. Cochin Port Trust was asked to build an ICTT outside the plan, with foreign investment on a Build Operate and Transfer (BOT) basis. There was no takers for the much publicized Vallarpadam ICTT, despite repeated global tenders and finally the Cochin Port Trust was asked to hand over its existing Rajiv Gandhi Container Terminal to the Dubai Ports International (DPI), a company owned by UAE Government, on the condition that it will build and operate an ICTT at Kochi, within four to five years, after establishing its techno-economic viability. In the meanwhile, Ports Department of Kerala organized the earlier mentioned feasibility study for ICTT at Vizhinjam, which was in the assembly constituency of the minister for ports. Discipline of national planning having collapsed, questions whether we really need ICTTs, and if we need how many and where all, were never asked or answered. In the meanwhile, the long pending Sethu Samudram Canal Project had taken off under the initiative of the Central Minister for Shipping: This canal will eliminate the need for sailing around Sri-Lanka and cut down sailing distances by 850 Km for ships touching India’s Eastern Coast. Our planners have not cared to study the impact of SS Canal either on the shipping routes along Indian ocean and or on the ICTTs planned as well as in operation.

4. ICTT proposal for Vizhinjam: Located 60 Km North of Kanyakumari, and just 10 Km away from the international shipping route, Vizhinjam with its 20 meter deep contour within a nautical mile off the coast, was identified as an ideal site for a Major Port even before national independence. CP Ramaswamy Iyer, the Dewan of Travancore had commissioned a British consultant who had conducted detailed engineering investigations, prepared preliminary designs and submitted detailed estimates for constructing an all weather port at Vizhinjam in early forties. However, the British had started developing a major port at Cochin which had a big locational advantage over Vizhinjam to serve as a gateway of united Kerala. The site selected for the Vizhinjam ICTT is further South of Vizhinjam and close to Tamilnadu border. In fact the site selection committee would have recommended the Poovar-Colachal stretch, transcending the inter-state boundary, as a more suitable site. The three southern districts of Tamilnadu including Kanyakumari and Thiruvananthapuram district of Kerala were considered as the hinterland of a future harbor in the region. ICTT was, in fact, a national facility in the region and was possibly best promoted jointly by Kerala, Tamilnadu and Central Governments. Though this was considered the ideal solution, the feedback from political leadership was reportedly hostile. Arguments were simple: Projects were primarily for votes, and the prevailing political environment in the country demanded a different gender of cost-benefit analysis! Our German counterpart Captain Menzel, a leading light in our project team and a strong supporter of the joint initiative, was greatly amused by this political situation. He said despite strong local sentiments, such factors could never distort infrastructure planning in his country.

5. Development planning and vote banks: I am not an expert to decide on the developmental priority of an ICTT at Vizhinjam. It is to be decided at the national level, based on some cost-benefit criteria. No such exercise was ever done, as far as I Know, neither by the Federal Government nor by the State Government. Interestingly, an Indian private firm has offered to BOT, the facility jointly with a Chinese Public Sector Enterprise. Why the Chinese Government should think of building this national facility at Vizhinjam? This is not a first or isolated experience: At Kochi, on the promise of building an ICTT at Valarpadam in the coming years, the existing Rajeev Gandhi Terminal was handed over to Dubai Port International, a company owned by the Government of Dubai. Incidentally, this company had recently taken over, the facilities in several international ports, operated by P&O Lines (see my article in Passline of April 15 2006). The promised ICTT may may not come at Kochi but Central and State Governments are committed to make large matching investments in anticipation: Even today, the quantum of public investments needed has not been assessed in full. Political leaders of Left and Right persuasions blindly support such populist mega projects. They compete among themselves in extending blind support to all such vote catching exercises, reminding us of an earlier era of Latin American politics. The recent all party delegation for Vizhinjam was a typical response: There was the rumor that the Central Shipping Minister Balu was conspiring for Tamilnadu and US imperialism was blocking Chinese initiatives!

6. Development planning based on cost-benefit analysis: This was the guiding philosophy prior to economic reforms. Shipping ministry and Planning Commission should have evaluated the ICTT facilities proposed at Kochi, which were infrastructure investments involving thousands of Crores of Rupees, from a point of view of national requirements and priorities. The argument that, such evaluation is not necessary in the case of private or foreign investments, do not make any economic sense. Moreover, heavy public sector outlays are necessary for acquiring land and providing rail and highway connexions, power, water and other related infrastructure in support of this project. UPA Government has, long ago, done away with that type of modern governance at the federal level. Even before assessing how much plan funds would be necessary for supporting the Vllarpadom ICTT, to be built by a company owned by Dubai Government, the Prime Minister of India was under political compulsion to lay the foundation stone for the same, in an imaginary site kilometers away from the actual construction site. An all party delegation to Delhi was mobilized, in support of the Vizhinjam ICTT, by the LDF Government in a hurry, even before the newly constituted State Planning Board with all its experts and advisers, getting even a chance to evaluate the Rs.4000 Crore project. UDF regime had formulated more than a dozen high profile investment projects during the last five years, mainly as vote catching exercise and the LDF Government is under political pressure to inherit them.

7. Fresh look at priorities, necessary: The Vizhinjam exercise had brought to surface the basic weaknesses in the planning and management of our ports. India has a coastline of around 6000 Km with well over 300 minor or intermediate ports, all under the custody of state governments. But the federal Government has no policy perspective whatsoever, for managing them and for the revival and development of coastal shipping, which should serve as a key component of our transport infrastructure at the national level. Concepts like Golden Triangles and Quadrilaterals are pushed on by automobile MNCs but there are no lobbies to support of coastal shipping or inland water transport. ICTTs may be priority investments for world shipping monopolies; they could cut down costs and increase profits at our expense. This is quite understandable. However, if the LDF Government is serious about looking for patriotic alternatives, the State Planning Board should have a fresh look at all the high investment proposals including Vizhinjam and Kochi ICTTs. And, this is true with regard to most of the dozen or so high-profile high-cost infrastructure projects, given shape to by the UDF regime.

END/08-09-06

*Note: This technical note was slightly modified later and published in the Passline dated 15.10.2006

TWO DECADES OF WTO: THE FAILURE TO DELIVER

TWO DECADES OF WTO: THE FAILURE TO DELIVER*

By K Vijayachandran: Chairman Cochin Center for Policy Initiatives

 

With WTO hijacking the role of UNCTAD, United Nations has lost its development mission. UN is managed by a global bureaucracy, today, sitting over the head of a virtually apolitical Security Council. It has lost its moorings and has to re-discover its founding objectives. And, the two decades of WTO were a disaster: World has turned more unsafe and insecure for its inhabitants. These are my stray thoughts as we observe the 70th UN Day.

 

World Trade Organization was founded on 1st Jan 1995 in a unipolar global environment, three years after the dissolution of USSR on 26th Dec 1991 and the demise of socialist camp. United Nations Conference for Trade and Development (UNCTAD), established in 1964 under the initiative of G77 including China with the support of Non-Alignment Movement (NAM) and the socialist camp, had served as its harbinger.

For the past two decades, WTO has been trying jointly with the International Monetary Fund (IMF) and World Bank, to develop a global market economy that functions. This TRIO, now virtually independent of the UN System and its Security Council, is held together by the developed countries and the Organization for Economic Cooperation and Development (OECD).

How far the concept, framework and practice of WTO could succeed in achieving the declared objective of building an orderly global economy during the last two decades, is planned to be examined by the 10th Ministerial Conference of its 161 member countries, scheduled for December 2015 at Nairobi. Issues to be hammered out in the Ministerial Conference are being finalized, now, in the so-called Doha rounds of consultations among various interest groups.

Institute for Studies in Industrial Development (ISID-1) New Delhi and their affiliates organized a two day National Conference on 22-23 Sept on the theme, WTO Negotiations, Free Trade and Investment: Implications for Development Policy Space: Venue was the well appointed conference hall of ISID at Vasant Kunj: It was attended by some eighty delegates from professional bodies, NGOs and Trade Unions: This writer was invited as an observer.

The conference was over-represented by Delhi-based institutions and experts. There were one or two foreign delegates; participation by mass organizations, rural communities and non-Delhi states was scanty. Nevertheless, the conference papers, as well as the discussions thereon, were reflective of the larger concerns of the Indian people.
Statistical data and information revealed in the conference intro-paper, circulated by the Secretary General of ISID, were quite revealing and disquieting: “India has signed some 14 FTAs and is negotiating 16 more. The most controversial amongst these include the EU-India FTA and the Regional Comprehensive Economic Partnership (RCEP) with the ten ASEAN Countries plus Australia, China, India, Japan, the Republic of Korea and New Zealand.
…..Another mega FTA, the Trans-Pacific Partnership Agreement (TPP) is being used as a benchmark for standards on IP and this will have an impact on RCEP and other FTAs. With the growing coverage of trade agreements spanning agriculture, industry, services, intellectual property, investment, government procurement and other areas, the interactions between provisions in the sector/area and specific liberalization policies are becoming more complex. These interactions have to be fully understood for their likely impacts on future policy space.

 

….Further India’s trade policy continues to be undemocratic and opaque, especially in case of FTAs and BITs. Negotiating texts are secret, consultations with affected groups are limited to the big industry bodies, and there are no publicly available impact assessment studies especially from a human rights or development perspective. Neither is there parliamentary oversight, or consultation with state governments.
…..What is at stake are livelihoods, incomes and labour rights; agriculture, seeds and the right to food; access to affordable medicines; environmental protection; access to essential services such as health, education, water, and energy; conservation and peoples control over natural resources”.
And, we may append to this long listing of treaties: reports on collapse of the manufacturing sector, chaotic roads and power systems, break-down of infrastructure in general, farmer suicides, rapid increase in crime rates, galloping corruption and lawlessness, and rapid decline in the quality of governance all around the country and at every level. In brief, WTO was being used as an instrument for forcing down the unwilling throats of our people all sorts Free Trade Agreements, without rhyme or reason. It was an irresponsible act of the ruling elite classes and history will not forgive them.
Picture at the global level and the experience of the people of other countries was also not different, according to the ISID report: “…trade and investment landscape has expanded in the past two decades in a big way through the execution of FTAs. As of 2015, some 406 Free Trade Agreements (FTAS) are in force according to the WTO. Further, UNCTAD estimates that there are more than 2200 Bilateral Investment Treaties (BITs) currently operational…ability of national governments to pursue independent macro-economic and development policies on a range of issues from agriculture, industry, services and the environment has been compromised. Global institutions and forums are today crucial in determining people’s access to decent jobs, incomes, food, essential services and natural resources”.
It is, now, more than obvious: Attempts to regulate and expand the global economy in a crisis free manner through Free Trade Agreements under the supervision of WTO have proved to be a grand failure. The current year (2015) report of ILO on World Employment and Social Outlook (2) had noted that the Global economy had failed to recover the output levels of pre-crisis trends: “Employment creation is still not sufficient to close the jobs gap that opened up with the crisis. Indeed, there were more than 61 million fewer jobs in 2014 than would have been expected had the crisis not struck.
….Global employment grew at an average annual rate of 1.7 per cent between 1991 and 2007. However, since the outbreak of the economic crisis, employment growth has slowed to 1.2 per cent per annum between 2007 and 2014. On current trends, unemployment will continue to rise as the labour force expands. Going forward, job creation is expected to remain at this lower growth rate over the medium term, causing a widening of the global jobs gap to around 82 million jobs in 2019. If new labour market entrants are taken into account, 280 million jobs will need to be created over the coming five years to close the crisis-related global jobs gap and to absorb the increase in the labour force.”
Trade and Development Report of UNCTAD of 2014 (50th Anniversary-3) had made this disquieting observation: “…Markets require a framework of rules, restraints and norms to operate effectively. As such, the market economy is always embedded in a legal, social and cultural setting, and is sustained by political forces. How and to what extent the framework of rules and regulations is loosened or tightened is part of a complex political process specific to each society, but it cannot be dispensed with without threatening a breakdown of the wider economic and social order.”
In more recent years this sort of breakdown of economic and social order or breakdown of political economies of nation-states has been widespread experience among the developing countries of almost all continents. Destabilization of the state, internal strifes, stage-managed color revolutions, military interventions and cultural invasions of every sort, all reminiscent of the massive trade expansion through colonial wars of the earlier centuries, were the indirect if not the direct consequences of the invasion of policy spaces of developing countries, by the OECD, using WTO as a cover.
Under the direct and indirect impact of WTO, India’s education system is in a total crisis: With the spread of English medium schooling, abetted by the CBSE (4), starting from KG and primary, we have shifted away from the time-tested culture of neighborhood schooling. Quality education is a luxury and perceived as a passport for migration to OECD countries: Anarchy prevails at every level, starting from KG classes. Worst is yet to come, according to a campaign paper presented in the Delhi Convention, by All India Forum for Right to Education (AIFRTE): “The offer of ‘Market Access’ to higher education under General Agreement of Trade in Services (GATS) will turnout to be a commitment in perpetuity”.
Political economies of several Afro-Asian and Latin American countries have virtually collapsed under the impact of mindless globalization presided over by WTO. Political economies of the Southern partners of even EU are reportedly under strain. Political economy of Greece, the citadel of a millenniums old civilization, is under serious repair: With two-thirds of its people voting against economic policies, its economy had collapsed, contributing to the rapidly swelling ranks of refugees in Europe. Reports by the UN High Commission for Refugees (UNHCR) indicate that the number of refugees under its care has already crossed the post-war record of 60 millions.
The desire for cultural autonomy of nationalities and nation-states is quite logical and legitimate: Peaceful coexistence and mutual cooperation were the basic building bricks of UNO: The tempo of globalization forced on the member countries using the WTO mechanism, is being resisted today not only by developing countries but even by some of the developed countries. Even the United Kingdom of Great Britain is facing dissent from within: People of Scotland have won their demand for autonomy and the new leader of Labour Party in UK, Jeremy Corbyn, has announced several policy initiatives to strengthen local governments and grass-root level democracy.
Intellectual Property Rights (IPR) regime forced on the peoples of the world by WTO was supposed to globally accelerate S&T development and spread the use of new production technologies. Experience of the past two decades in this regard was disappointing: UN organizations like WHO, FAO, UNIDO, UNDP, IAEA, ITU, WMO and the others, established for promoting technological cooperation among member-states turned more and more dysfunctional under the weight of WTO and its totally irrational IPR regime.
This had a negative impact on even the Millennium Development Goals (MDG) program of UN launched in 2007 in its fight against diseases as well as for agricultural, industrial, infrastructure and cultural development in less developed countries (5): As Prof Galbraith used to point out, Mankind has all the technologies needed for supporting several time the present day world population and for sustaining the environmental balance. (6)

 

Global production-distribution systems based on market competition are wasteful and inherently incapable of making full and optimum use of already established technologies. And, history of discoveries and innovations would tell us that they are not the products of market forces or competition. In fact, it is the other way round: market is the product of S&T developments. State monopoly capitalism of USA is supported by a state supervised S&T program in the public domain and an all pervasive National Science Fund administered by Federal Government (7).
WTO has failed in delivering its commitments to the global community. Promise of accelerating global economic development through free trade, FTA etc has not been fulfilled. It has failed in ensuring the optimum use of the technologies already available. Its contribution to improve work participation rates and creating new jobs has been negative. Reforms have disrupted the political economy of several nation-states, creating massive refugee problems, reminiscent of the post-war and prewar situations.
It is time for the countries of the South to think of quitting WTO and getting back to the UNCTAD perspective and agenda of real development, by utilizing the expertise and resources of UNDP. UNIDO, FAO, WHO, WMO, ITU, and other UN Institutions. What humanity needs, today, is a performing world political economy that could make full use of the vast possibilities of information, space and bio technologies, but at the same time assuring the cultural autonomy and identity of nationalities and nation states based the principle of peaceful coexistence and mutual cooperation, and not anymore on destructive competition and conquests of the colonial period. Prospects of using UNO for global governance was the theme of my seminar paper presented on the UN Day observed by CCPI, two years ago(8).
UNO and the several institutions created and developed under it for mutual cooperation among members have been rendered dysfunctional thanks to the disruption caused by WTO during the last two decades of its existence. There are hardly any statistics or logic to support its existence: It is time to get back to the spirit of UNCTAD and wind up this white elephant.

………………………………………………………………………….

* Paper for the UN Day Seminar of 24th Oct 2015 at the Ernakulam Public Library Hall

Notes and references
1. ISID: A sponsored Institution of the Indian Council of Social Science Research: More info at : http://isid.org.in and http://isidev.nic.in
2. ILO Report 2015: Full report downloadable from http://www.ilo.org/global/lang–en/
3. UNCTAD Report 2014: Chapter III, Policy space and global governance issues at stake
4. CBSE: See blog: https://kvijaya40.wordpress.com/2014/08/05/cbse-for-equity-and-excellence-2/
5. MDG: The much hyped Millennium Development Goals announced by UN in 2007 has turned out to be virtual non-starter. It is now being re-vamped by the UN bureaucracy.
6. Galbraith: The celebrated economist and proponent of the theory of convergence of Soviet and US systems of governance was convinced that the technological levels achieved by late fifties was good enough to give a life plenty to a much larger world population.
7. NSF: National Science Foundation was ordered to be set up by President Roosevelt as recommended by his scientific adviser Vannevar Bush in his report of 1945; Science the Endless Frontier: It is the fountainhead of state monopoly capitalism in USA, today. Though launched in 1950, US Congress started committing large funds for NSF only after the launch of Soviet Sputnik in 1957. NSF perfected the art of state directed R&D, with the help of autonomous universities managed by State governments: Interestingly the Bush report was inspired by the ‘scientific ecosystem’ created by the state monopoly socialism of USSR. Site http://www.nsf.gov gives detailed info on NSF as on today.
8. United Nations: New relevance of the world body: https://kvijaya40.wordpress.com/2013/11/22/httpwww-frontline-inworld-affairsnew-relevance-of-the-world-bodyarticle5338837-ece/

DECENTRALIZE INFRASTRUCTURE DEVELOPMENT

DECENTRALIZE INFRASTRUCTURE DEVELOPMENT
By Engr K Vijayachandran F.I.E

This paper was written for a seminar at Kochi on 5th April 2015, organized by Bharathiya Vichara Kendra. It could not be presented and is reproduced here for those who missed it. The seminar in memory of Pandit Deen Dayal Upadhyaya was inaugurated by Murali Manohar Joshi: See report at: http://epaper.newindianexpress.com/c/4922093

The Left had looked at India as a multinational country: A federal Government at the Center, decentralized administration and real autonomy for state governments were the core part of their political ideology. However, they have been compromising on this fundamental after the collapse of USSR, and ever since the economic and structural reforms got initiated in the country, in early nineties (1).

Pandit Deen Dayal Upadhyaya and his philosophy of Integral Humanism (ekaatma maanava darsanam) had visualized for India ‘a decentralized polity and self-reliant economy with the village as the base’: A concept which, according to him ‘was deeply embedded in the Indian Psyche.’ This was very close to the Gandhian view: Both had rejected capitalist globalization on moral grounds but did not have a chance to look at the possibility of socialist a globalization as Einstein did, and using the framework of United Nations, founded on the principles of peaceful coexistence of diverse cultures, an altogether new historical experience. (2)

BJP had, in the past, mostly stuck to the one-nation theory of RSS and like Congress had looked at a strong Central Government as the panacea for the under-development at national level. However, elections for the sixteenth Loksabha were a watershed in BJP policies: Its election manifesto had explicitly accepted the need to revamp Central-State relations. And the views of Modi Government on the re-defining of Central-State relations were reflected in the Presidential speech of Pranab Mukherjee; he had commented, “India is a federal polity. But, over the years, the federal spirit has been diluted.”

In order to correct this distortion from the past, the President had promised to “re-invigorate fora like the National Development Council and the Inter-State Council” and introduced a novel concept of Cooperative Federalism, possibly intended to deepen the economic relationship between State and Central Governments. However, he did not elaborate on how the concept will translate itself into reality and help to rectify the distortions.

Our constitution makers had looked at the development and upkeep of basic infrastructure, physical as well as social, including language and culture, as the joint responsibility of Central and State Governments. For a newly liberated multinational country of continental proportions federal type governance was, no doubt, most appealing as well as practical.

However, role of state level and lower level governments, as well as those of Inter-State Council, National Development Council, Planning Commission and other policy making institutions at the national level, built up during the early years of national independence, as well as that of even Loksabha and Rajyasabha, were drastically eroded in more recent years, thanks to the highly authoritarian economic reforms. It appears the trend continues even under the new regime of the new Prime Minister.

Central Government, along with its elaborate Committee of Ministers and PMO, had virtually taken over the sole responsibility for infrastructure development, with the help of foreign and Indian monopoly capital, leading to numerous scams of national shame. Even the Planning Commission was charged of breeding crony capitalism. And, despite massive doses of privatization and foreign direct investments and experimenting with PPP concepts, Indian reforms have so far failed to deliver positive results from a patriotic perspective.

Experience of India’s Power sector, where structural reforms had an early start, is typical: Indiscriminate import of equipment and systems are causing costly breakdowns in our national and regional grids. Reforms have inflated capital costs and further increased the financial losses of State Electricity Utilities. They have turned totally dysfunctional: Uninterrupted quality power, at lowest possible costs to the consumer, is not their motto anymore.

Electricity generation using imported fuel is on steady increase, while our own fossil fuel reserves remain under-utilized. Role and functions of Central Electricity Authority (CEA), the federal organization that was in charge of power sector as per the 1948 Electricity Act, was virtually taken over by Power Ministry and re-assigned to international consultants in the pay role of global capital and MNC monopolies. (3)
A World Bank study of June 2014 has admitted the near-total failure of power sector reforms of early nineties and the new electricity act, in meeting their declared objectives: Debts of electricity utilities have ballooned to Rs. 3.5 Trillion or five percent of India’s GDP by 2011, the target of full electrification by 2011 was miserably missed with some 300 million households remaining non-electrified, and the objective of an integrated all India power grid remains a pipe-dream despite massive investments in T&D gear (4). Solution lies in reversing the reforms initiated in the early nineties for force-opening up of the national market for electricity and power equipment. Federal character of the power sector needs to be urgently restored in national interests.

In the telecom sector, the two legged policy of having state-wise circles and centralized technology development by Central Public Sector Units was given up, in order to force open the national telecoms market. Net result is abject dependence on imports in the telecoms sector, not only for hardware and software needed for modern communication systems but even their maintenance. The only silver lines in our communication system are the great achievements in space communication technologies developed by ISRO.

Reforms had struck the telecoms sector, when ICT revolution based on microchips and Internet technologies started its sweep. Instead of mobilizing the technology resources of central and state public sector organizations as well as academic and R&D institutions, market oriented solutions like state-wise auctioning of spectrum rights was resorted to by the Central Government, leading to massive scams and corruption. It is time to restructure India’s telecoms sector on a federal basis with an expanded role assigned to central and state public enterprises. Will this fit in with the concept of Cooperative Federalism of Modi Government?

Indian Railways is, possibly, most suited for exploring and enriching the idea of co-operative federalism, suggested in the Presidential speech: IR is a leviathan, an insensitive bureaucratic organization presided over by a cabinet minister, supported by one or two ministers of state, and then the Railway Board, its Chairman and half a dozen board members etc etc, and all connected up in series and in parallel.
There are fifteen zonal railways, each administered by a General Manger, who looks after the construction and operation of rail lines and related subsystems of the zone. The nature and number of complaints with regard to their performance indicate that they are likely to perform far far better, if IR is organized state-wise, as in the case of P&T, BSNL, DD, CEA and the good old Electricity Boards, and several other central government functions (5).

It will be even better, if these state-wise zonal organizations are converted into public sector undertakings, with equal shareholding by IR on behalf of Central Government and then the other half by the concerned State Governments, as in the case of Delhi or Chennai Metro. A full fledged rail minister and a skeletal rail department or even a rail board in every state, for servicing and supporting this sort of joint national endeavor will greatly enhance the policy planning and management capabilities of the country with regard to rail development.

This sort of structural reforms will bring the administration and management of our on-rail resources closer to the people, and their elected Governments at the state as well as lower levels. Rail penetration continues to be very low in our country and hardly two percent of the 598,110 census villages and towns are connected to the national rail system even after seven decades of national independence: There were only very few additions to the number of railway stations in the country after national independence. (6)

Food Corporation of India (FCI) owned and operated by the Central Government is best re-organized and operated as a federal entity. The State Warehousing Corporations could also be reorganized under a federal umbrella, brought closer to the users and managed more effectively. There is an urgent need to improve the performance of these key public sector undertakings, and this is best done by reorganizing them on federal basis. There is an urgent need for a federal set up for promoting modernization of agriculture: The Indian Council for Agricultural Research (ICAR) intended to support agriculture development and food security programs in the country will perform far better with the support of their state level counterparts. (7)

Water tight division of responsibilities between Central and State governments and the three lists annexed to Indian constitution, viz Central, State and Concurrent are a colonial legacy, inherited from imperialists. An earlier article of mine ‘Third Front and RE-Envisioning of Indian Unity’ ( 8) had examined the several areas, where economic relationship between Central and State Governments could be deepened within the existing constitutional framework, by taking the route of cooperative federalism.

Cochin International Airport Ltd (CIAL) virtually owned and managed by GOK and erroneously quoted as an ideal PPP model, is a splendid example for the potential of Co-operative Federalism. Air Kerala the dream project of State Government and a project of great relevance to the regional economy could take off instantly provided it is promoted as a subsidiary of Air India. And the much talked about Palghat Rail Coach Factory will roll out immediately, if it is re-envisioned as a JV of Kerala Government and the Indian Railways.

Like the Indian Railways, there are several CPSEs and Central Government organizations which have distinguished themselves as technology generators for the country, who could join hands with state governments in industrial development. I had the good fortune of brokering a deal in 1987, between GOK and ISRO: The Kerala High-Tech Ltd (Kel-Tech), promoted with Dr, Kasturirangan as Chairman, is today a proud partner in BrahMos Aerospace, an Indo-Russian Joint Venture (www.brahmos.com).
The CSIR, ICMR, ICAR and other all India institutions were formed on the basis of the British model, which had nothing to do with the Indian reality and Indian ethos. The same could be said about all India institutions in the social sciences as well as art, literature and culture. These organizations could have performed far better if they were organized on federal principles, with their autonomous State-level counterparts functioning under the patronage of State Governments. Instead, we see that individual institutions or even head offices of central agencies are farmed out to different states on some consideration or other but mainly for appeasing public opinion in different states. (1).

State level offices of ESI and EPF offices could be easily converted into autonomous state level units under the state governments and better managed with the participation of the elected representatives of employees and employers at the board level. These state level boards could then be federated under the central government.

Participation of state governments in banking, insurance and investment industries through appropriate participatory mechanisms could substantially cut down on the investment requirements and also improve the quality of economic management in the country which is now entirely left to the whims and fancies of a few RBI bureaucrats and their global mentors.

Why not put the concept of co-operative federalism and deepening of economic relationship between Central and State Governments as well as institutions under them on the fast track, instead of PPP that has proved to be a virtual non-starter or even FDI for the development of physical, social and fiscal infrastructure?

This is the need of the hour: building a strong Centre based on the capabilities of the constituent states and not their weaknesses and disabilities, so that Indian people could unitedly stand against neocolonial exploitation in the rapidly globalizing international market.

 

References:
1. Center-State relations and the Indian left, article by K Vijayachandran, published in the book, Perestroika Glasnost and Socialism, ISBN 978-1-4828-1353-1
2. United Nations: New relevance of world body: http://www.frontline.in/world-affairs/new-relevance-of-the-world-body/article5338837.ece, article by the author
3. Problems of national grid: belling of Chinese cat is no solution- by K Vijayachandran, Passline Business Magazine January 2014
4. World Bank Report: More power to India, the challenge of electricity distribution, Sheoli Pargal and Sudeshna Ghosh Banerjee: April 2014
5. Indian Railways: in search of a new vision, Perestroika Glasnost and Socialism, by K Vijayachandran, ISBN 978-1-4828-1353-1
6. Blog: https://kvijaya40.wordpress.com/2014/07/10/coopertive-federalism-india-needs-a-federal-rail-board/
7. Indian agriculture: search for patriotic alternatives, Perestroika Glasnost and Socialism, by K Vijayachandran, ISBN 978-1-4828-1353-1
8. Passline Business Magazine, April 2009

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