For A Few $$$ More

As a prelude to Prime Minister Atal Behari Vajpayee’s trip to the US, the government seems to have extended itself in keeping the Americans happy. As a build-up, there has been a slew of decisions and sops-much to the displeasure of the scientific establishment, trade unions, small farmers and manufacturers and the swadeshi lobby within the Sangh parivar-to appease US business and the Clinton administration.

This eagerness to please is most visible in the suppression of a cabinet note on violations of WTO agreements by the US in imposing economic sanctions against India following the Pokhran nuclear tests. Titled "Compatibility of Export Restrictions imposed by US against India with the WTO agreements", the note, signed on July 25 by joint secretary V.S. Seshadri, was to be tabled at a cabinet meeting last month. But it was not, and the reason, sources say, was that the government felt that it would hurt US sentiments. Appended to the note were the minutes of the meeting of the Committee of Secretaries held last December. Among the issues discussed was the need to register a protest against the inclusion of civilian entities in the US sanctions list. It was estimated that the impact of sanctions was to the tune of Rs 400 crore a year and that the government should "encourage" psus and private institutions to submit individual representations against the sanctions and to bring to the fore violations of the WTO agreement by the US.

The cabinet note-which was finally shelved-analysed the issue of moving the WTO dispute settlement mechanism "since the US action was unilateral and was seen to be contravening the provisions of the WTO". Pointing out that the "US action is violative of at least Article I, XI and XIII of gatt, and consequently, India has a right to seek consultations and file a dispute in the WTO", the note observes that the "security exceptions" clause in Article XXI could be invoked. In which case, the note adds, India might have to "subject the activities of the various entities against which export restrictions have been imposed to scrutiny...to establish that their activities do not relate to supplying a military establishment." While the note is clear on the point that India has a strong enough case, it cautions that we would have to take the risk of subjecting some defence installations to international scrutiny. However, it points out that if India wins, then all future sanctions could be halted.

Had the subject been taken up, the main issues before the cabinet would have been "selective approach of challenging the US action", "filing of a non-violation complaint against the US action" and "seeking formal interpretation of Article 21 which forms the basis for justifying trade sanctions of the type adopted by the US". But no discussion took place as the note was withdrawn through a formal circular a day before the cabinet met and has not been scheduled thereafter. The government’s unstated policy of keeping the US happy doesn’t end with that. The way the pmo railroaded through the policy on opening up of long-distance telephony to the private sector has also raised eyebrows both within the industry and the bureaucracy. It was the PM, rather than the telecommunications minister, who made the policy announcement. It’s reliably learnt that a former ambassador to India and a US lobbyist stationed in New Delhi and . K. Singh, principal secretary to the prime minister, played a significant role in pushing the new telephony policy through.

In fact, the telecom ministry was left with little choice but to play along despite its reservations. Last week, the government also announced the long-pending corporatisation of the DTS (Department of Telecom Services), henceforth the Bharat Sanchar Nigam Limited. Top US telecom firms, looking to the lucrative Indian market, have been pushing for privatisation and their pressure seems to have worked. Another recent step that’s evoked protest is the awarding of the consultancy for the Khadi and Village Industries Commission (KVIC) to a US firm, Arthur Andersen. KVIC chairman Mahesh Sharma admits that an Indian agency, IRMA, had offered to do the project for one-third of the fee Arthur Andersen is charging.

Why do we need the Americans to tell us what to do? The very idea of khadi is that you do not need hi-tech, hi-capital inputs. I am terribly upset and against it," says Seshadri Chari, editor of the RSS’s Organiser. Where Indian expertise was already available, foreigners shouldn’t rush in, he says, citing the example of the Tidal IT park in Chennai, for which Korea’s Hyundai was the main contractor, but sub-contracted the work to three Indian firms! Chari is also irked by the lack of transparency in the process of liberalisation. To further vindicate its stand, the swadeshi lobby points to the alleged con perpetrated by another US consultancy firm, Ernst & Young. Asked to submit an environmental impact assessment on the Dandeli hydel project, Karnataka, the firm reportedly lifted its material from a report by the Bangalore-based Institute of Catchment Studies on the Tattihalla project.

On the positive side, from the swadeshi point of view, dereservation of items in the small-scale industries sector-expected to hit some SSIS badly-did not materialise last week, apparently because the Group of Ministers (GoM) could not arrive at a consensus. As for the decision to permit foreign institutions to extend rural and micro-credit, the swadeshi lobby is yet to analyse their impact.

Two key decisions that the US is pushing, and are likely to be taken before the PM embarks on his tour, relate to foreign venture capital and brand royalty. "Offshore venture capital funds/companies may be permitted to invest in domestic venture capital undertakings as well as all other companies through automatic route subject only to SEBI," says the note before the cabinet (the meeting of the Cabinet Committee on Economic Affairs, which was to clear it, was cut short because of the PM’s health problems). Likewise, a brand royalty, without technology transfer, of one per cent on domestic sales and 2 per cent on exports will be approved. The pmo calls it inevitable, given its WTO commitments.

But providing a little comic relief for the swadeshi-wallahs last month was the hurried withdrawal of a notice against Microsoft India, the 100 per cent Indian subsidiary of the global giant, over the software licensing arrangement. The government’s Press Information Bureau, which had issued a release to this effect, practically fell over itself in its haste to withdraw it. "The PM has started talking of the irreversibility of globalisation...can it be linked to the PM’s desire to keep America in good humour?" asks the editorial in the latest issue of Swadeshi Patrika, the official organ of the Swadeshi Jagran Manch edited by BJP MP Mahesh Chandra Sharma. "Indians are expected to sing and dance in joy at our great leaders’ servile invocation of US capital. The government has been striving hard to make the acquisition of Indian industries painless and juicy for American predators. "

The Hindi version of the journal is even more scathing in its attack on the prime minister, charging him with espousing anti-national policies and of having betrayed the expectations of the RSS and the Indian people. "The BJP and its leadership have come to believe that the good of developed nations and multinationals is the good of India". Another Sangh publication, Manthan (also edited by Sharma), in its latest issue charges the US with creating "the aids scare" in order to dump pharmaceuticals on the third world. A recent speech by US President Bill Clinton on the subject of containing hiv does appear to have found an echo in the PM’s August 15 address. The swadeshi lobbyists call it a matter of regret.

While Sharma has been compelled to apologise to the PM for his criticism, SJM convenor Murlidhar Rao is unrepentant. "The language may’ve been harsh, but we stand by the sentiments," he says. The new American friends certainly don’t sit well with old family equations.