The Hindu - Kishenganga project

While water-sharing in the Indus system stands settled by the Indus Treaty 1960, divergences are possible, and have occurred, over the question of the compliance of Indian projects on the western rivers with certain stringent provisions of the Treaty which were meant to take care of Pakistan's concerns as a lower riparian.

The Treaty recognises three categories of such divergence: ‘questions' to be discussed and resolved at the level of the Indus Commission, or at the level of the two governments; ‘differences' (that is, unresolved ‘questions') to be referred to a Neutral Expert (NE) if they are of certain kinds (that is, broadly speaking, differences of a technical nature); and ‘disputes' (going beyond ‘differences,' and perhaps involving interpretations of the Treaty) that are referable to a Court of Arbitration. In the Kishenganga case, both ‘difference' and ‘dispute' come into play. Pakistan has proposed the reference of certain technical issues to a Neutral Expert, and the submission of a couple of other issues to a Court of Arbitrators.

The Kishenganga is a tributary of the Jhelum. It originates in J&K, crosses the Line of Control, runs for some 150 km in Pakistan-occupied Kashmir, and joins the Jhelum (in PoK). India proposes to build a dam on the Kishenganga shortly before it crosses the LoC, divert a substantial part of the waters of the river through a tunnel to the hydroelectric project (330 MW, that is, 110 MW x 3) located near Bonar Nala, another tributary of the Jhelum, and then return the diverted waters, after they have passed through the turbines, to the Jhelum via the Wular Lake.

The ‘differences' to be referred to a Neutral Expert will be regarding the compliance of the project features with the conditions and restrictions laid down in the Treaty (design of the project, quantum of pondage, need for gated spillways, placement of the gates, etc.). This reference, which will be somewhat similar to the reference to the NE in the Baglihar case, will not be discussed further in this article.

The main ‘dispute' to be referred to a Court of Arbitration is on the issue of whether the diversion of waters from one tributary of Jhelum to another is permissible under the Treaty. Art. III (2) of the Treaty requires India to let flow all the western rivers to Pakistan and not permit any interference with those waters, and Art. IV (6) calls for the maintenance of natural channels. If we go by these provisions, the diversion of waters from one tributary to another seems questionable. On the other hand, there is another provision (Ann. D, paragraph 15 (iii)) which specifically envisages water released from a hydroelectric plant located on one tributary of the Jhelum being delivered to another tributary; this seems to permit inter-tributary diversion. The correct understanding of these provisions and the determination of the conformity of the Kishenganga Project to the Treaty is a matter for the two governments to agree upon, or for the Court of Arbitration to decide.

Any diversion of waters from a river is bound to reduce the flows downstream of the diversion point. It is true that the diverted waters will be returned to the Jhelum, but there will certainly be a reduction of flows in the stretch of the Kishenganga (some 150 km) before it joins the Jhelum. This will affect not merely certain uses of the waters but also the river regime itself and the ecological system. It may be true that only a small part of the waters (30 per cent or so) flows from the Indian part to the Pakistani part and that the rest (70 per cent) of the flows arise after the river crosses the LoC. However, the diversion of a substantial part of the former by India will undoubtedly have some impacts downstream.

Assuming that diversion from the Kishenganga to another tributary is found permissible, there is a condition attached: the existing agricultural use and use for hydro-electric power generation on the Kishenganga in Pakistan must be protected. There is indeed some existing agricultural use along the Kishenganga (Neelum) in PoK. Pakistan is also planning the Neelum-Jhelum hydroelectric project at a point on the Neelum before it joins the Jhelum. These claims of existing uses will probably be contentious issues between the two countries, with reference to (a) the crucial date for determining ‘existing use' and (b) the quantum of existing use.

Arbitration is action under the Treaty and is therefore not a matter for concern. In this case, the arbitration process has already been initiated. However, it seems to this writer that even at this stage an effort should be made to reach an agreed settlement on this project. The reasons for saying so are as follows:

First, arbitration by a court of seven arbitrators of the highest international standing will be a very expensive process; it may also take a long time — possibly several years.

Secondly, arbitration is essentially an adversarial process. Each side will try to make the strongest possible presentation of its own case, and question the other's. The media in both countries will keep reporting developments in the case, probably in a partisan manner. All this will definitely cause an accentuation of strained relations between the two countries.

Thirdly, the outcome of the process is uncertain. There are three possibilities: a clear negative finding (that is, the diversion of waters is impermissible under the Treaty), in which case the project will have to be abandoned; or a clear positive finding (that the diversion is permissible) in which case, the project can go ahead as planned; or a mixed finding that the diversion is permissible but must be such as to minimise adverse downstream impacts, in which case India may have to reduce the planned diversion and let a larger quantum of waters flow down. It would be very rash to predict the outcome of the process, but undertaking that rashness, the author would venture to suggest that a mixed finding seems more likely than a categorical one (positive or negative).

If that tentative forecast seems plausible, is it really necessary to go through a costly and time-consuming process of arbitration to arrive at that result? Is it not possible — and more sensible — for the two countries to try for an agreed settlement of the dispute even at this stage? It should not be extremely difficult to arrive at a satisfactory, negotiated settlement on the reconciliation of the conflicting interests of the Kishenganga and Neelum-Jhelum projects, as also on the extent of agricultural use that needs to be provided for, and on the ‘ecological flows' that must be maintained.

A second issue that Pakistan proposes to refer to the Court of Arbitration is the legitimacy of drawdown flushing of the reservoir for sediment-control. This is not specific to the Kishenganga project but is a general issue applicable to all future projects. In the case of Baglihar, the Neutral Expert had strongly recommended periodical drawdown flushing of the reservoir as a means of sediment control, which (in his view) was part of proper maintenance, and had observed that while the dead storage could not be used for operational purposes, there was no objection to its use for maintenance purposes. Pakistan has been unhappy with that recommendation, but could not challenge it as the NE's findings are final and binding. It is now raising this as a general issue before the Court of Arbitration. Three questions arise:

(i) Can an issue on which a NE has given a final and binding finding be raised again before another NE or a Court of Arbitration?

(ii) If the NE's finding is applicable only to the particular project in question and not to others, should we accept the position that there can be substantially different (even contradictory) principles (laid down by different NEs) applying to different projects?

(iii) If drawdown flushing is ruled out, then must the corollary of heavy siltation and reduction of project life (as in the case of Salal) be accepted as inevitable? If so, does this not amount to ignoring the words “consistent with sound and economical design and satisfactory construction and operation” and again “unless sediment control or other technical considerations necessitate this” in the Treaty?

These questions will no doubt be argued before the Court by the two countries.

http://www.thehindu.com/news/national/india-pakistan-granted-more-time-to-file-submissions-on-kishanganga/article4831256.ece

The Hindu - TRAI's regulation of media

The Telecom Regulatory Authority of India (TRAI) is all set to recommend the creation of an ‘institutional buffer between corporate owners and newspaper management’ to the government. TRAI, which is also the regulator for the broadcasting industry, will also suggest ways to restrict cross-media ownership in line with practices in ‘most other established democracies.’

TRAI chairman Rahul Khullar told The Hindu his recommendations would be based on the principle that corporate ownership of media must be separated from editorial management, as “the media serves public interest”.

Mr. Khullar said he had no problem with corporates investing in or owning media houses for profits. “But the problem arises when the corporate wants to abuse the media it controls to project a coloured point of view for vested interests. There is conflict of interest here.”

Mr. Khullar plans to recommend a special organisational structure in which the corporate owner — who may have multifarious business interests — would have only a financial interest in the company, restricted to owning of shares. The editorial operations would be done under a different structure where the corporate owner would have little say.

TRAI has earlier flagged the issue of a “growing number of undesirables, including builders and politicians” acquiring media interests. Mr. Khullar pointed out that even Vice President Hamid Ansari had spoken out about the “paid news menace” recently.

“The idea is to create an institutionalised buffer between the corporate owner and newspaper management to ensure the independence of TV channels and the print media to articulate impartial, free and fair editorial policy,” said Mr. Khullar. He, however, admitted that the process was still “in the works”. The “creative challenge” for TRAI was evolving the precise design.

Recommendations on corporate control will form a part of TRAI’s suggestions to the government on cross-media ownership. In a consultation paper on the issue, the authority also flagged the issue of certain media houses having interests in all forms — television, print, and radio — which led to “horizontal integration,” and asked whether there ought to be restrictions.

Mr. Khullar categorically rejected objections from media houses that any such restriction would violate the right to freedom of speech under Article 19 of the Constitution: “All robust democracies have some restrictions on cross-media ownership. This is absolutely necessary to maintain the plurality and diversity of media. Let us see what form it takes.”

TRAI is understood to be contemplating a “two out of three rule”, whereby a media house could have interests in two of three mediums among print, TV or radio. But no decision has been taken yet.

It plans to submit a report in eight to 10 weeks. Over the past few months, it has held open house discussions on the issue across the country, sought submissions on its consultation paper and spoken to stakeholders. It submitted a report on the issue in 2009. But since no action was taken and the situation had changed significantly, the government asked the regulator to come out with a fresh set of recommendations last year.

http://www.thehindu.com/news/national/media-veterans-activists-welcome-trai-proposal-to-curb-corporate-control/article4831113.ece

http://economictimes.indiatimes.com/opinion/editorial/stop-this-meddling-with-the-media/articleshow/20674480.cms

DB - Turkey affair

http://www.thedailybeast.com/newsweek/2013/06/19/will-turkey-s-protest-end-democracy.html?source=socialflow&account=newsweek&medium=twitter

How Erdogan after gaining 50 % votes started 'authoritarianism' and his AKP party introduced measures like mandatory Islam education in schools and restriction on alcohol sales, provoking Occupy Gezi protests and how he cracked down on them, offered a referendum and got rejected.

ET - India's trade deficit

The figures for May reveal that India's trade deficit has worsened further, what with exports declining and imports — notably of gold — rising.

Heightened imports can, of course, lead to much economic gain, but a persistent trade deficit needs to be addressed (and corrected) with proactive policy.

The data show that imports from tiny Switzerland have shot up an eyepopping 128% in April (over the like period last year), making it the top country of import, well ahead of China.

The figures seem questionable and call for a proper scrutiny, along with a medium-term plan to change the scenario of persistent trade deficits with our main trading partner, China. There is much scope to press for improved trade access.

But the latest trade figures also point at structural weaknesses in our international trade. Now the single biggest item in value terms in India's merchandise exports are petroleum products, but these are highly import-intensive, with quite minimal value-addition and thus hold little upside for export growth.

More important, for the next biggest item, engineering goods, which account for about 19% share of exports, the monthly figures show a markedly declining growth trend. The same is the case for textiles, which make up about 9% of the export basket.

We clearly need to strategise policy to boost competitive advantage in such high potential sectors like engineering goods, textiles and transport equipment. Other segments like pharmaceuticals and fine chemicals hold much potential.

But the biggest opportunity may well be in electronic goods, which account for barely 2% of our export share, about the same as ore and minerals. What is required is vision to chalk out and implement an eco-system that steps-up manufactures and boosts productivity in tandem. It would pay rich dividends, for years.

FRONTLINE - Slow regress in banking

he RBI, through its latest guidelines on private banks, seems to have attempted to ring-fence banking activity so as to ensure regulatory control and keep the number of new entrants low and their intent clean.
JULY 1 is the last date for receipt of applications in a third post-liberalisation call for grant of licences to private sector entities wanting to establish banks in India. In the first round, 10 banks were licensed on the basis of guidelines issued in 1993. This was followed by the grant of licences to another two, almost 10 years later, on the basis of the revised guidelines issued in 2001. This third-round call is based on the new guidelines issued on February 22 this year. It should be obvious why each call for applications has followed the issue of a new set of guidelines. Over time the kind of private entities that can enter banking has been redefined and the terms on which they can do so have been diluted. Experience, the government would argue, calls for revisions in policy. When policy is revised, eligible players must be given another chance to consider entering the banking sector.
Given this background, one tendency would be to dismiss the current call as just another step in the long liberalisation journey the Government of India embarked on in the early 1990s. However, there is one feature of the February 22 guidelines that do make this round of potential private entry special. This is that entities and groups in the private sector that are “owned and controlled by residents” are to be allowed entry into banking. Read otherwise, this means that business groups and other private corporate entities are also allowed to enter banking, subject to the conditions specified in the new guidelines.
Major shift in stance

Given India’s post-Independence banking history, this is indeed a major shift in stance. That history was one in which the government, through its designated regulator, the Reserve Bank of India (RBI), not only sought to strengthen a poorly developed banking system afflicted by periodic bank failures, but also attempted to impose a degree of “social control” over banking, so that the latter can serve a host of developmental objectives. For a little more than two decades after Independence, this attempt to gain control over private banking was reflected in a series of legislative and administrative initiatives. But in terms of the spread of banking, the growth in deposits and lending, and the distribution of credit across sectors, units and households, the writ of the government was noticeable more in its absence.

Nothing illustrated this more than the fact that the share of credit provided to the agricultural sector in total advances barely exceeded two per cent at its peak. A sector that accounted for between 40 and 50 per cent of gross domestic product (GDP) and two-thirds of the nation’s workforce was almost completely excluded from the formal credit system. The reason was obvious, a series of official committees found big business houses had a stranglehold over the private financial sector, with some directly owning and controlling banks. Punjab National Bank, Universal Bank of India and Bank of Lahore were controlled by the Sahu Jain group; United Commercial Bank by Birla; Oriental Bank of Commerce by Thapar group; Hindustan Commercial Bank by Juggilal Kamlapat; and Indian Overseas Bank by Muthia, to name a few. Many of these banks featured among the top 20 of that time.
Such corporate control over banking had resulted in the disproportionate diversion of credit to large industry, especially to segments of it that were directly in control of the banking system. The Dutt Committee found that in 1960 the top 20 private sector banks accounted for 61.7 per cent of all scheduled bank deposits and 73.2 per cent of scheduled bank advances. Around 10 per cent of the aggregate advances made by these banks went to companies in which their directors had an interest. This convinced the government of the time that public ownership was a prerequisite for both the spread of banking and the advent of socially relevant banking. It opted for the nationalisation of leading banks.
The results in terms of the spread of banking, the growth in deposits and advances and the distribution of credit were dramatic. Whatever else may be said of the nationalisation of banking, its success in terms of realising what the government did not manage to achieve between Independence and 1969 cannot be denied. This history had four implications. The first was that, despite some obvious inadequacies, the credibility of public sector banking was high in India, both from the point of view of ensuring financial stability and from the point of view of financial development and inclusion. The second was that the RBI as regulator not only shared this glory, but also grew accustomed to the power and the prestige that its role as banking regulator gave it. The third was that there were strong forces within the public sector, at the level of both bank officers and employees, which were interested in protecting the public banking framework and could find good arguments to support their cause. Finally, even when the advocates of liberalisation made a case for revisiting the question of permitting the entry of private banks, the need to keep the corporate sector at bay was more or less taken for granted.

One consequence has been the neoliberal transition in the banking area has been disappointingly slow from the point of view of the “reformers”. Two decades after the doors were reopened for private interests, not much has been achieved in terms of private presence. In the first round of private entry in 1993, 10 banks were allowed to emerge out of existing financial institutions or be set up anew, which included ICICI Bank, HDFC Bank, UTI Bank (which later became Axis Bank), Global Trust Bank (which failed and merged with Oriental Bank of Commerce), Times Bank (which merged with HDFC Bank) and IndusInd Bank. In the second round in 2004, Kotak Mahindra Finance Ltd was permitted to convert itself into a bank, and YES Bank was granted a new licence. Overall only 12 private banks were established. Of these a few have merged with other banks, both public and private.
This raises the question whether the current third-round call for applications for establishing private banks, by private entities which includes corporates, would be the final push that would transform Indian banking once again, restoring this time the control that big capital had and lost. The evidence seems to be that the RBI is trying hard to ensure this does not happen. While having to succumb to pressures that have been building since the Narasimham Committees of the 1990s and allow corporate entry into banking, the RBI has sought to “ring-fence” banking activity in the hope that it would ensure substantial control by the regulator and keep the number of new entrants low and their intent clean.
Governance structure

To that end it has opted for a specific corporate governance structure for banks being set up under the new guidelines. To start with, promoters and promoter groups seeking licences will have to create a “non-operative financial holding company” (NOFHC), which does not itself engage directly in financial activity. The NOFHC shall hold 40 per cent of the paid-up voting equity of the bank, which shall be Rs.5 billion at the minimum. Individual promoters (including their relatives and companies in which they have 50 per cent or more equity holding) cannot each hold more than 10 per cent of the voting equity shares in the NOFHC. In addition, the promoter group must include one or more companies in which the public holds no less than 51 per cent of the voting equity, and this company (or companies) must hold at least 51 per cent of the voting equity shares in the NOFHC. The idea is to diversify ownership.
However, promoters with 10 per cent voting rights can own a significant share and even controlling block (so long as it is less than 50 per cent of total voting equity) in the company/companies that are part of the promoters group, giving them substantial control over management of the bank. So the victory, if any, is only partial. The weapon the RBI has is its right to decide whether a promoter or promoters group is “fit and proper”, in the sense of having sound credentials, with that decision being “a matter of overall judgment” and not based on specified criteria.

The RBI has also sought to ensure the separation of bank and non-bank financial activities. To that end it has specified that the NOFHC established by potential promoter groups must as a holding company “hold the bank as well as all the other financial services entities of the Group regulated by RBI or other financial sector regulators”. Two separations are sought to be ensured here: one is between all regulated financial activities, and the other industrial, commercial and unregulated financial activities of individuals and entities in the promoters group; the other is between the banking and the regulated non-banking financial activities of these individuals and entities. The objective, according to the RBI, is that the corporate structure should be such that it does not “impede the financial services entities held by the NOFHC from being ring-fenced”, that the RBI “would be able to supervise the bank, the NOFHC, and its subsidiaries/joint ventures/associates on a consolidated basis”, and that, the RBI “will be able to obtain all required information relevant for this purpose, smoothly and promptly”.
There is a problem here too. Many regulated financial activities are subject to regulators other than the RBI, and the proposed structure does involve the RBI stepping beyond its turf. In the event, the RBI had to issue a clarification that “while the structure prescribed in the guidelines is the preferred structure, the intending applicants should approach the other financial sector regulators for bringing the entities regulated by them under the NOFHC”. Their decision would prevail, with the minimal requirement that all RBI-regulated entities will necessarily be under the NOFHC.
Thus, the process of liberalisation having begun, the loss of the RBI’s control and the restoration of private influence over banking is difficult to stall, let alone reverse. Perhaps for that reason the RBI has not kept its promise, made in the February guidelines, to come out with an overall policy discussion paper on banking structure in India within two months. Realising that structure may not be possible. All that the RBI has managed to do and is likely to strive to ensure is that the transition is slow and long drawn, much to the irritation of the “reformers”.
But the pressure is on. After the RBI issued its new guidelines in February it had to agree to issue a clarificatory note in response to queries that it chose to formally entertain. It received 443 queries from 34 individuals/organisations. As a result, while the guidelines themselves filled just 19 pages, the clarifications (including questions), released on June 3, run into 165 pages. It must be said that despite the unnecessary officialese in the RBI’s guidelines note, the answers to many of these questions are self-evident. The fact that they have been raised does not inspire confidence in the potential applicants concerned for bank licences. But, perhaps, the real intent of the questions is to keep the pressure on the RBI, so as to prevent it from turning down too many applications and being too overbearing as a regulator as and when the new banks commence business.

TOI - IITM and ParamYuva II India's supercomputers

http://www.economist.com/blogs/babbage/2013/06/supercomputers?fsrc=rss - Tianhe 2 and Titan (China and US) are first two.

Two of the four supercomputers in the country that feature in the top 100 in the list of 500 fastest supercomputers in the world, are from Pune. While the Indian Institute of Tropical Meteorology (IITM) supercomputer stands 36th in the list, ParamYuva II, developed by the Centre for Development of Advanced computing (C-DAC) has bagged the 69th position.

The IITM supercomputer is yet to be installed while the Param Yuva II became operational from February 8 this year.

The list of top 500 supercomputers in the world was announced on Tuesday during the launch of the opening session of the International Supercomputing Conference in Leipzig, Germany.

Rajat Moona, director general, C-DAC said, "This is a major step for the country (for two of its supercomputers) to figure in the top 100 fastest supercomputers in the world. Over the years, India was losing its position in the supercomputer area in the world. In 2008, India had 10 machines in the top 500, but after that there was a bit of a downfall. In contrast, in 2004, China was nowhere on the scene but in the latest list, its supercomputer has taken the top ranking."

Moona said that India has taken a major step in the latest rankings and has more potential to move up as there is a huge demand for supercomputing in the country. He said that the union government is also looking at making an investment of Rs 5,000 crore in this area over the next five years.

Moona said, "There is a so much of high-end work being done in the area of weather forecasting, fluid dynamics, air borne bodies, ship movement, disaster management, design of earthquake prone structures that need massive supercomputing infrastructure. As a result of this need, the supercomputing infrastructure is also improving and has led to an improvement in world rankings for the country."

The Param Yuva II has a capacity of 524 teraflops and within three weeks of launching it was already running with a load of 70% of its capacity. Precise weather forecasting, faster tapping of natural resources in the sea and designing of customised drugs for individuals are some of the applications possible using Param Yuva II. It also promises to be energy efficient with 35% reduction in energy consumption as compared to other supercomputers.

The IITM supercomputer will start functioning in the next two to three months, Suryachandra Rao, chief programme scientist, department of high performance computing, IITM said. Rao said, "The supercomputer, once installed, will boost research in weather and climate forecasting as well as air pollution." Rao said that the process of installing the supercomputer was in progress and within one week of installation, it will be running. All the institutes under the union ministry of earth sciences will be using the IITM supercomputer facility.

Pride of place

Four supercomputers from India make it to fastest 100, of which two are from Pune

Indian Institute of Tropical Meteorology (IITM) supercomputer stands 36th

Param Yuva II of Centre for Development of Advanced computing (C-DAC), gets 69th position

In 2008, India had 10 machines in the top 500, but had lost its position over the years

China, which was nowhere until 2004, got the top ranking this year

The Hindu - Telegram service in India closes after a century of service

When V. Karuppiah thought about his retirement next month, little did he realise that the department he has served for 30 years would also bid farewell along with him. With the death knell to be sounded for telegraph services on July 15, senior citizens are taking a nostalgic trip about the telegrams they sent.

“After the announcement, we have one or two people dropping in every day just to send a last telegram,” says Suresh Babu, who has been booking telegrams for 15 years. Before him, his father Kathiravel performed the same job.

Does anyone use the telegram these days, when text messages and e-mail can convey messages in less than a second? Employees at telegraph offices tell a different, albeit insightful tale. The Central Telegraph Office, which is now a customer care centre at Cantonment, sends and receives anywhere between 50 to 100 messages a day, says K. Raja, chief telegraph officer. “Wedding greetings and personal telegrams are rare, but most telegrams pertain to legal matters.”

But telegraph services today are not just limited to matters pertaining to litigations, says Vijayalakshmi, another chief telegraph officer. “Banks send telegrams intimating vehicle seizures in case of non-repayment of loans. A telegram always alerts people and spurs them to action.”

Insurance companies and even city corporation use the telegraph services occasionally to remind citizens to pay taxes on time or premium, says B. Ramamoorthy, section supervisor. “We have colleges sending bulk telegrams to parents if fees are not paid on time.”

In legal matters, be it sending a notice or court order or informing family of a person who has been arrested, the telegraph is the essential tool of communication, besides being a document of proof. “A telegram is considered as constructive notice in a court case as it is a proof of delivery,” says Jayanthi Rani, advocate. “Sending an e-mail or sms requires both sender and receiver to possess the gadget. But a telegram delivered by the public sector agency can reach anyone in any remote corner.”

Consumer activists, and lawyers, are inclined to fight to keep the century-and- a-half service alive. It is the illiterate and those in remote areas who are bound to suffer, says M. Sekaran, president, Federation of Consumer and Service Organisations.

The organisation has appealed to the Union Minister of Telecommunications to reconsider the decision to close telegraph services. In a representation, he says the BSNL, to whom telegraph services were handed over in 1990, had increased the telegraphic charges without justification from Rs. 3.50 to Rs. 27.50. The increase in cost and absence of delivery staff has led to the quandary.

Although many developed countries had done away with the telegram, they had ensured that modern means of communication had maximum reach, says P. Soundararajan, president, Tiruchi Philatelists’ Association. “Without ensuring such universal access, shutting down the service is a big blow.”

The Tiruchirapalli central telegraph office is one of the oldest telegraph offices in the South, according to the Tiruchi district gazetteer. It was established during the British rule in June 1882 at Tiruchi Fort under the charge of a telegraph master. The telegraph office was moved to a building in Cantonment occupied by the post office on January 31, 1886. Later, several local post offices in Srirangam, Teppakulam, and Tennur provided the facility.