Issues & Options October - 2012

Issue: I No: X

Should PM Visit Pakistan? Military Modernisation Programme Of China

Chinese Economy Facing Challenges Sudden Prosperity Of Robert Vadera

and many more ….

Published By : Vivekananda International Foundation 3, San Martin Marg, Chanakyapuri, New Delhi – 110021, [email protected], www.vifindia.org

Contents

ARTICLES

Conceding Pakistan The Upper Hand The Justice System And The Secular State 3 - Kanwal Sibal 57 - Dr. M.N. Buch Prepare Against Pakistan Nukes 7 Much Embarassment From An - Satish Chandra “Enterprising” Son-In-Law 64 103 The Economic Dynamics Of The Asia- - A. Surya Prakash Pacific Region After The Cold War 11 107 - PP Shukla Strategic Posture Along The India-China EVENTS Border: Is India Prepared? 22 Seminar On Strategic Posture: Sino- - Gen. NC Vij (retd.) Indian Border 69 Defence Reforms And Naresh Chandra Task Force Review 35 Interaction with Dr. Ing-Wen Tsai, Former Chairperson, DPP, Taiwan - Vinod Anand

74 In Bludgeoning Balochistan, Is Pakistan Vimarsha On National Security: Army Losing Support In Punjab? 46 Challenges and Responses 75 - Sushant Sareen

Indian Economy – Still On The Precipice

- Dr. V Anantha Nageswaran 53

VIVEK : Issues and Options October– 2012 Issue: I No: X 2

Conceding Pakistan The Upper Hand

- Kanwal Sibal

nother round of the the defensive, certainly vis a vis India-Pakistan dialogue its own public opinion, by A has been completed with claiming that it has taken the External Affairs Minister, several steps to reach out to Krishna’s visit to Islamabad on India, that it has moved away September 8. The agreement on from its traditional positions in relaxing the visa regime and significant ways, but that it is holding the meeting of the India that is not reciprocating. Pakistan-India Joint This explains the Pakistani Commission after a gap of 5 Foreign Minister’s spurious talk years seems consistent with our about “serious signals”, policy of making progress step- “breaking away from many by-step in normalising our positions we have held” and relations with Pakistan. “big leaps forward” and the “need to change the mindset”. Dialogue The sub-text of such pronouncements is that India Pressing Pakistan again at has entrenched attitudes. Islamabad to expeditiously bring to justice those Such claims by Pakistan are responsible for the Mumbai without substance. With its massacre apparently conveys parliamentary resolution in that we are not relenting on April this year, Pakistan has this key demand for retreated to its old mantra that determining the pace at which the Kashmir issue should be our relations will move forward. resolved on the basis of the UN resolutions. Pakistan wants us In reality, rather than this to withdraw from Siachen, implying that India has the without a binding delineation upper hand in dealing with on the Actual Ground Position Pakistan, it is actually the Line, it will not agree to a reverse. Pakistan has put us on rational compromise on Sir

* Kanwal Sibal - Member Advisory Board, VIF

VIVEK : Issues and Options October– 2012 Issue: I No: X 3

Creek and it will not end its today is the past”. Pakistan decade old opposition to the should, accordingly, cease Tulbul Navigation making untenable territorial project/Wullar Barrage. It claims on J&K and stop calling covers up its unwillingness to for- in the face of India’s known act against the anti-India jihadi position- associating the groups on its territory by the “Kashmiri people” with the phony argument that it is itself Indo-Pakistan dialogue on a victim of terrorism. It will not Kashmir. One would hope that put curbs on Hafiz Saeed as the next time she or the sufficient evidence to arraign Pakistani Foreign Secretary him in a law court is supposedly comes to Delhi, she will, abiding lacking. Its record of legal by her own sane advice, shed inaction against past habits of the perpetrators The irony is that barring confabulating of the Mumbai India’s demands on terrorism, provocatively carnage is there the agenda of normalisation with the rests on India satisfying to see. Hurriyet leaders Pakistan’s demands. Pakistan wants us to demonstrate our in Delhi. The irony is that commitment to peace by barring India’s conceding what it wants, The joint demands on failing which the “naysayers” statement says, terrorism, the in Pakistan will presumably somewhat agenda of continue to consider India a cryptically, that normalisation threat. the two sides rests on India satisfying reaffirmed the importance of Pakistan’s demands. Pakistan abiding by the provisions of the wants us to demonstrate our Indus Waters Treaty (IWT). commitment to peace by Pakistan would have wanted conceding what it wants, failing this inclusion, but India seems which the “naysayers” in to have worked on the language Pakistan will presumably to deflect any finger-pointing in continue to consider India a its direction. Pakistan has threat. We should ask Pakistan created an impression amongst to act on the basis of the glib its public that India is statement by the Foreign depriving it of its due share of Minister, Khar, at Islamabad water, making the issue that “whatever has happened another focal point of hostility

VIVEK : Issues and Options October– 2012 Issue: I No: X 4 towards India. It is determined Pakistan and linked to the ISI a to prevent India from terrorist outfit. constructing run of the river projects on Jhelum provided for PM Visit by the IWT by seeking international arbitration on the Disconnect at the political level Kishenganga project. Again, it in Pakistan between the reality is Pakistan that is objecting to of the country’s terrorist what India is legally doing, not affiliation and any honest India raising contentious issues recognition of it is staggering. with Pakistan about its projects She, of course, failed to mention on the rivers allocated to it. the word terrorism in her joint press conference with Minister Terrorism Krishna, laying bare the scant regard Pakistan pays to our India is legitimately asking claim that we raise the issue at Pakistan to curb terrorism from “every conceivable opportunity”. its soil directed at India. It is right in asking Pakistan to Minister Khar’s position on prove the anti-terrorist terrorism hardly opens the door credentials it claims for itself by for PM’s visit to Pakistan, as he not endlessly delaying the trial wants Pakistan to make of those responsible for the credible progress on trying Mumbai attack. It is truly those guilty of the Mumbai astonishing that the Pakistani attack, besides some Foreign Minister should be substantive results such as an “appalled” when told terrorism agreement on Sir Creek. While continues to be an issue, that the trade opening has occurred this is “old time” stuff, that because of Pakistan’s dire “terrorism was a mantra of the economic situation and the visa past”, not of the future and that regime relaxation benefits India should view the Mumbai Pakistan much more, progress attack trial “realistically” and in both areas should be “not emotionally”. Equally welcomed. Time is not, extraordinarily, she spoke however, ripe for PM’s visit, as about terrorism as a dated issue Pakistan wants to close the on the day the US declared the terrorism and Mumbai chapter Haqqani group sheltering in without real delivery. Minister

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Khar’s egregious statements despite his keenness to visit make this abundantly clear. Pakistan; he cannot do so for Even with regard to PM’s visit, the moment. We are both laying by pressing for it Pakistan has conditions for the visit and put us on the defensive. We are denying that any are being laid. now squirming to explain why, Back to contents

VIVEK : Issues and Options October– 2012 Issue: I No: X 6

Prepare Against Pakistan Nukes

- Satish Chandra

he rapidity of Pakistan’s adequate security systems to nuclear weaponisation in obviate such a development. It, T recent years has been however, concedes that ‘the under constant scrutiny in the collapse or near-collapse of the United States and has been Pakistani government is well-documented in articles in probably the most likely the ‘Bulletin of Atomic scenario in which militants or Scientists and the Nuclear terrorists could acquire Threat Initiative’ as well as in Pakistani nuclear weapons’. It numerous reports of the may be recalled that much the Congressional Research Service same point had been made by (CRS). Regrettably, this does former president Pervez not appear to have been the Musharraf. The attacks by subject of as much independent jihadi forces with inside help on analysis and comment in India Pakistani military bases, most as in the US despite the fact notably at the Mehran Naval that Pakistan’s nuclear weapon Base in May 2011 and more programme is clearly India- recently at the Kamra Air Base centric. Accordingly, the CRS’ on 16 August 2012, would latest report of June 26, 2012 suggest that the possibility of titled ‘Pakistan’s Nuclear nuclear weapons falling into the Weapons: Proliferation and hands of militants is much Security Issues’ merits higher than the CRS report attention. would have us believe.

Addressing widespread Significantly, the report places apprehensions, particularly in the Pakistani nuclear warhead the US, about the possibility of stockpile at 90-110 as against Pakistani nuclear weapons 60-80 for India and suggests falling into the hands of jihadi that vigorous moves are elements, the report suggests underway in order to effectuate that Pakistan has put in place a ‘quantitative and qualitative

* Satish Chandra - Distinguished Fellow, VIF

VIVEK : Issues and Options October– 2012 Issue: I No: X 7 improvement in Islamabad’s range under 400 kms), the nuclear arsenal’. Shaheen (Hatf-4, range over 450 kms) and the Ghauri (Hatf- These assertions echo those 5, range over 1,200 kms). In made in a 2011 Hans addition, it has three other Kristensen and Robert Norris ballistic missile systems likely report published by the Bulletin to see early induction notably of Atomic Scientists which, the Shaheen II (Hatf-6, range inter alia, said that Pakistan over 2,000 kms), the Abdali has the world’s fastest growing (Hatf-2, range 180 kms) and the nuclear stockpile and at current Nasr (Hatf-9, range 60 kms). rates of expansion its 90-110 Pakistan is also developing two warheads could, over the next nuclear capable cruise missiles 10 years increase to 150-200 namely the ground launched warheads; its stockpile of Babur (Hatf-7, range 600 kms) highly-enriched uranium and and the air/sea launched Ra’ad weapons-grade plutonium, as (Hatf-8, range over 350 kms). estimated by the International Panel on Fissile Material in Unlike India, Pakistan does not 2010, were sufficient to produce have a ‘no-first-use’ policy and 160-240 warheads; its current not only is its nuclear arsenal rate of production of fissile India-specific, but also the material is sufficient to produce threshold for its use is 10-21 nuclear warheads disturbingly low. This is annually. This capability will be corroborated by Pakistan’s enhanced as it is building two focus on short range nuclear new plutonium production capable ballistic and cruise reactors and an additional missiles. One may also refer to plutonium reprocessing facility; the interview given to the its two squadrons of F16 A/B Landau Network, an Italian aircraft with a range of 1,600 arms control organization, in kms have, for long, been January 2002, by General earmarked for delivery of Khalid Kidwai, the director nuclear bombs. In March 2011 a general of the Strategic Plans new squadron of F16 C/D was Division of the National also acquired for this role; it Command Authority of has three operational ballistic Pakistan, wherein he indicated missiles: the Ghaznavi (Hatf-3, that Pakistan’s nuclear

VIVEK : Issues and Options October– 2012 Issue: I No: X 8 weapons were ‘aimed solely at Pakistan and China as they India’ and would be used may well act in collusion. This against it if India attacked would call for a nuclear Pakistan and conquered a large warhead arsenal running at part of its territory, or if India least into the low hundreds that destroyed a large part of either can be launched from air, land its land or air forces, or if India and sea both by surface craft sought to strangle Pakistan’s and submarines. Land-based economy, or if India attempted missiles should be mobile and to destabilize Pakistan’s polity, located in camouflaged and or created large-scale internal hardened shelters. A subversion. sufficiently large, diverse, and survivable The rapidity of The rapidity of Pakistan’s nuclear arsenal Pakistan’s India-centric nuclear is essential in India-centric weaponisation, the low order to deter an nuclear threshold at which it is likely enemy from to resort to a nuclear attack, weaponisation, contemplating the low its propensity to military adventurism, and its readiness the resort to a threshold at to act as China’s cat’s paw, nuclear attack. which it is likely makes it incumbent upon us to to resort to a ensure that the credibility of The creation of a nuclear attack, India’s nuclear deterrent is chief of defence its propensity to never in doubt. This calls for staff, in order to military speedily undertaking a host of provide 24/7 measures. adventurism, leadership, and its readiness to act as guidance and oversight to our China’s cat’s paw, makes it strategic forces’ command, and incumbent upon us to ensure the speedy development of an that the credibility of India’s effective nuclear force must be nuclear deterrent is never in done. Fail-safe procedures for doubt. This calls for speedily the effective deployment and undertaking a host of measures. operation of our nuclear India should think of deterrent in all situations enhancement and upgrade of its should be established. nuclear weapon arsenal with a Alternative chains of command view to inflicting unacceptable should be made fully functional damage simultaneously on both so as to ensure an element of

VIVEK : Issues and Options October– 2012 Issue: I No: X 9 automaticity in the effectuation induce it to act as a restraining of a prompt and a devastating influence on it. retaliatory nuclear strike in the event of decapitation of our Finally, the fact that India’s nuclear command authority. nuclear arsenal is being assiduously nurtured and that Importantly, our ‘no first use’ India has the political will to policy needs to be tweaked by use it needs to be clearly suggesting that, if India is signaled. The former can be subjected to a achieved by nuclear attack Importantly, our ‘no first use’ holding regular policy needs to be tweaked by by a country suggesting that, if India is meetings of the aided by a subjected to a nuclear attack nuclear command nuclear weapon by a country aided by a nuclear authority and state, it would weapon state, it would not publicizing the not merely merely react with nuclear same as also the react with weapons against the country upgrade of our which initiated the attack, but nuclear may also do so against the nuclear arsenal. weapons abetting nuclear weapon state. The latter would against the be automatically country which signaled if we are initiated the attack, but may uncompromising in addressing also do so against the abetting all the security-related issues nuclear weapon state. with firmness and dispatch. Hopefully such a move may cause China to refrain from Back to contents such collusive action with Pakistan and perhaps even

VIVEK : Issues and Options October– 2012 Issue: I No: X 10

The Economic Dynamics Of The Asia- Pacific Region After The Cold War

- PP Shukla

Centre of gravity shifts to value of its exports in 1990 was China from Japan in the 1990s $288 billion, larger than all of ASEAN combined. It was only he period since the end of after 1995 that the stagnation the Cold War has seen set in. T significant changes in the economic dynamics and This was also the time that structure of the region, and this China was beginning its essay will attempt to highlight spectacular rise. The starting the nature of these changes. point was the devaluation of the Yuan in early 1994 by 40% At the end of the Cold War, in against the US $. At the same the late 1980’s and the early time, Japan was coming under 1990’s, the dominant economic sustained US pressure to raise presence in Asia was Japan. the value of the Yen. As a With a GDP of $3.02 trillion, it result, the Japanese went along was the second largest economy with the US advice and their in the world, and the largest in currency hit one of its highest Asia, by a wide margin. More values ever, rising below 80 Yen importantly, and contrary to to the Dollar for the first time the common impression, its in history. What this did for the GDP growth did not stagnate flow of investments is shown in after the dramatic collapse of the table below, which is taken its stock market in 1989, when from the ADB: it peaked at 40,000 [today, on a good day, it crosses 9,000]; indeed, its GDP continued to grow rapidly up to 1995 – from $3.0 trillion in 1989, it reached

$5.3 trillion in 1995. The total

*PP Shukla – Joint Director, VIF

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There is a marked rise in the FDI flowing into China, and a The second important sharp decline in Japan. The fall development, and the second in the value of assets and turning point in this narrative, labour costs in China as a was the Asian Financial crisis result of the weak Yuan, and, in that followed. The table merits contrast, the rise in asset a second look from this values and labour costs in perspective: until 1997, at least Japan, consequent upon the some of the South-East Asian sharp rise of the Yen, ensured countries managed to retain a this result. Equally noteworthy growing or steady trend in their is the effect of this currency respective FDI figures. realignment on FDI in However, after the Asian Southeast Asian countries too, Financial Crisis, there was as well as in Korea. Most of another sharp change in the them saw a decline in their FDI capital inflows. It reinforced the in either absolute or relative FDI trends outlined above, and terms, as more and more of the China emerged with still higher FDI was diverted into China. rates of FDI growth, while

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Japan remained a net exporter 1998 put this out in some of capital. Among Southeast detail. Asian countries, Singapore alone managed to maintain FDI The effect of this change in levels, while all the other major investment patterns in Asia economies suffered a decline. was reflected in the changed The same applies to South patterns of trade that followed Korea too. and was shaped over the two decades or so following the end The third major marker in the of the Cold War. The following shifting pattern of trade and table, also from ADB reports, investment was the entry of shows the change over the China into the World Trade period 1990 to 2007, the last Organisation in normal year, December 2001. The importance of FDI for just before the From this point China and its export global financial on, there was performance may be gauged collapse. It from the fact that, even as yet another early as 1997, the share of brings out jump in the FDI foreign-owned affiliates in clearly that into the country, China’s total exports had China switched as the last of the climbed to 41%. It only grew roles with Japan uncertainties stronger over the next few as the principal over whether it years. The UNCTAD World Asian exporter Investment Report for 1998 would be able to to the US and put this out in some detail. draw in FDI and the EU. Alone re-export the manufactured among all the major Asian goods that would be produced economies, its relative exposure were removed. The importance to these two markets went up of FDI for China and its export significantly – nearly doubling performance may be gauged to the EU and more than from the fact that, even as early doubling to the US [in terms of as 1997, the share of foreign- percentages of total exports]. owned affiliates in China’s total All the other economies, with exports had climbed to 41%. It the partial exception of only grew stronger over the Indonesia and Malaysia, next few years. The UNCTAD showed exactly the opposite World Investment Report for trend.

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In these countries, the share of Table 3 below, again from the Asia in their exports went up ADB. This shows that for China while that of the EU declined; alone, Asia dropped in in most cases the relative importance as a source of weight of the US also declined, imports; for all the other including for countries like countries covered here, Asia Japan and Australia. The rise grew in importance – meaning, in exports to the rest of Asia is of course, that imports from a confirmation of the export of China came to be increasingly intermediate goods to China important for these countries. that were finished and re- Another noteworthy point is exported from China to the rest that for China, in 1990, the of the world. Many Asian three main areas in the Table – companies set up finishing Asia, Europe, and North assembly lines in China to save America – accounted for close to on costs. India provides a 90% of its total imports; by partial exception, in that its 2007, this figure was down to exports to the US showed a 65%, as it sought raw materials marginal increase, though its in other parts of the world, exports to the EU showed the notably Africa and South same decline recorded for other America, to meet its industrial Asian countries ex-China. needs. It would be important to add To sum up, the period after the the picture of import patterns Cold War saw a marked shift in as well, and this is shown in the pattern of investment and

VIVEK : Issues and Options October– 2012 Issue: I No: X 14 trade, which placed China at took place. The investment the centre of the money flows figures for China alone show a (capital and trade flows, rather) 400% increase between 1995 linking Asia with the rest of the and 2007. Trade figures show a world, especially Europe and similar explosive growth. North America. In a sense, the Between 1990 and 2007, global pre-Cold War pattern of trade, dominated as it was by economic interaction in Asia, Asia and the OECD area, grew which had Japan at the centre, 300%; global GDP grew just was displaced by one that 50% over this period. brought China into that role. There were three important The ‘Triffin Dilemma’ and the turning points in this process: Dollar the first was the devaluation of the Chinese Yuan, and its These figures bring in the so- dollar peg, coupled with the called Triffin dilemma: that the pressure applied on Japan by currency required for financing the US to push up the value of trade will become debased over the Japanese Yen; the second time, since the country that was the Asian Financial Crisis, issues this currency must run which effectively set back the current account deficits, and investment-export model for hence the value of that currency most of the ASEAN countries; must steadily depreciate. That the entry of China into the has been the story of the US WTO in 2001 was the third dollar and of the US economy. factor that boosted both FDI Financing the demand for trade and its trade exchanges – and was thus a major challenge – again, the US was one of the and one that the US Federal principal promoters of this Reserve took the lead in development. meeting, though the European and even Chinese central banks Most of the data given in the also contributed. tables above are percentages – only the FDI figures are actual magnitudes. When we bring in the actual figures for all these activities, we see also the explosive growth that actually

VIVEK : Issues and Options October– 2012 Issue: I No: X 15

M2 M3”]. This in effect, gives a broad indication of the role of foreign money in the overall money supply in the US economy. The data show that this value – non-M2 M3 as it is called in the Fed data – was 1% Source: www.nowandfutures.com of the total in 1959, but by 2006, it stood at 35% of the This led to very high rates of total money supply. monetary expansion in the US, rates that were certainly higher In order to understand the than the GDP growth rates process of finding an outlet for would have justified. Under the vast sums of money and normal circumstances, one of savings being generated in this the results of this would have process, a little history would been inflation, but this period be useful. The kind of rapid saw, instead, a rapid rise in growth and concentration of asset values – particularly wealth generation in a few equities and real estate. In countries that the 1990’s and addition, there has also been a the 2000’s produced, had consumer boom, fed again by happened once before – in the easy money. In the chart above, 1970’s, after the rapid rise in oil it is important to point out that prices. The US archives of the the figures for M3 after 2006 late 1960’s and early 1970’s are derived from other data, bring out the dilemma that the because the Fed stopped country faced then. Demand for publishing these figures from liquidity to finance global trade early 2006, the time that a new was growing much faster than Chairman, Ben Bernanke, took the Federal Reserve could meet. over. The reason was that the US dollar was on the gold standard But there is another very and that placed a strict significant aspect that needs to discipline on the amount of be highlighted. Fed data on M3 liquidity that could be go back to at least 1959, and generated. the Fed also shows M3 figures after removing M2 values [“Non

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In the event, the Nixon to Latin America. Of course, it Administration took the dollar had also led to the high off the gold standard in 1971, in inflation that the Reagan- order to be able to finance the Volcker team was determined growing demand for liquidity to fight. for global trade; it also agreed, reluctantly, to the issue of It was not hard for Reagan and SDR’s as a supplement to the his team [chiefly the Chairman global liquidity. However, both of the Federal Reserve Volcker] the demand for further liquidity to squeeze Money supply in the and the pressure on the Dollar late 1970’s and early 1980’s continued; and finally, in 1973, because the affected parties the US allowed were the the dollar to The sharp rise in oil, and other Eurodollar free-float, thus commodity, prices led to the markets [which removing the well-known accumulation of did involve last restraints large surpluses by the OPEC many US banks, on the Federal member-states. At that time, mainly Reserve to i.e., in the 1970’s, Western commercial banks transferred the loosen the surpluses generated to East banks] and the monetary Europe and to Latin America. recipients of the aggregates. This Of course, it had also led to the loans were in allowed the four- high inflation that the Reagan- East Europe and fold jump in oil Volcker team was determined Latin America. prices to be to fight. The result of the absorbed, and monetary for trade to continue to expand tightening was a sharp rapidly, for otherwise such a recession in the early 1980’s. jump in the price of oil would This period also saw a decline have caused a severe recession. in oil prices, and a slowdown in The sharp rise in oil, and other global trade. In turn, this shows commodity, prices led to the that an accommodating well-known accumulation of monetary stance in the early large surpluses by the OPEC 1970’s was a necessary member-states. At that time, condition for world trade to i.e., in the 1970’s, Western continue its rapid growth, and banks transferred the surpluses to absorb the higher oil prices. generated to East Europe and

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A similar boom in trade [and oil still uncertain. At least as far prices] started again in the late as America is concerned, there 1990’s, but this time the big is no clear consensus even on trading power, as shown above, the diagnosis. Fixing the was China. And once again, the problem is still some distance US monetary policy away. accommodated the Export-led China economic requirements of the booming boom now over trade and the consequent rise in commodity prices. And once The foregoing provides the again, huge surpluses began to backdrop to the current be accumulated by the major economic situation. It is now exporters. Thus was born what possible to take stock of the Alan Greenspan situation as it was to call the It is now possible to take stock stands today. global savings of the situation as it stands The most glut. But, this today. The most important important time round, the conclusion that may be drawn conclusion that recycling was is that the Chinese economy is may be drawn is done within the facing two major structural that the Chinese US itself – in challenges. The first is that the economy is various financial period of easy money in facing two major instruments and America is coming to an end, structural the housing and is providing diminishing challenges. The returns. sector, including first is that the mortgages to period of easy customers who were unable to money in America is coming to pay off those mortgages – and an end, and is providing the most exposed were the US diminishing returns. Even investment and commercial though the Fed has embarked banks themselves. Hence, when upon another round of the sub-prime crisis broke, the quantitative easing, and it is US financial authorities had no open-ended, its results will be option but to do everything to disappointing, as they have contain the knock-on effects of been for the two earlier rounds. this crisis. This is why the cycle True, interest rates are this time is playing out effectively zero, as they are in differently and the outcome is Japan and the EU. However,

VIVEK : Issues and Options October– 2012 Issue: I No: X 18 the two rounds of quantitative it has seen a consistent decline easing have not been to the point where in 2011 it universally welcomed and their was down to $155 billion – or a results, as mentioned above, are near 50% decline in four years. definitely mixed. What is more, The Chinese leaders are clearly despite the QE, as the graph aware of this challenge and above shows, all the money have been trying to shift to aggregates have fallen in the domestic consumption as the period up to the middle of 2011. driver of the economy. But, the Necessarily therefore, the results so far have not been Chinese central bank has had encouraging. In 2010, the level to step up its liquidity injection, of domestic consumption was and it has done so with a will. just 33% of GDP, though it had Chinese M2 figures today have risen somewhat in the last year. reached close to 200% of the GDP. This monetary expansion One could go so far as to say is causing inflationary that this model of economic pressures, since the asset growth – heavy reliance on FDI, markets in China are not as and export-led growth spurred well developed as in the West. by that foreign investment, plus Secondly, they are also causing an accommodating monetary asset prices to go up, especially stance in the US – has run its in real estate, which accounts course. There is nothing for some 20% of the Chinese surprising in this. In their time, GDP. this was precisely the model adopted by Japan and Korea The second major structural and then by the Asian Tigers. challenge before the Chinese The fact is that this model gives economy is to cope with the very rapid rates of growth, but declining export markets. The cannot be sustained for more US market has held up well, than two decades or so. The and US imports are now higher Chinese are now facing the than in 2007, the last normal same limitations, and it would year before the financial be fair to say that this model upheavals began. Nonetheless, has run its course. China’s export performance has suffered: since its record trade The above analysis also allows surplus in 2007 of $295 billion, us to draw the conclusion that

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China remains more dependent to serious dangers to the on America for its continued Chinese growth model in the growth than the other way future. round. The clearest evidence for this may be seen in the fact India faces different challenges that, but for the surplus in trade with America, the A discussion of these two Chinese trade balance would be hurdles facing the Chinese negative. It is also worth noting economy is a natural prelude to that, in the period after 2008, a brief discussion of the Indian Chinese markets bounce economy. It has the advantage whenever the of being driven Equally important, the real Fed signals an economy in China is clearly by domestic easing, and slip running into trouble. Not only demand, with a when the are the figures for exports, level of domestic reverse happens imports and GDP growth consumption of – the causal indicating a clear slowdown, 65% of GDP. For relationship goes there are troubling signs of many years, it growth of inventories of one way only. industrial products, unsold was argued that housing and commercial units, India was not Equally and even declining sales in the doing enough to important, the auto industry. These are the develop its real economy in biggest sectors in the Chinese exports. In China is clearly economy, and together add up retrospect, the to serious dangers to the running into Chinese growth model in the fact that its trouble. Not only future. exports – while are the figures growing at a for exports, healthy pace – imports and GDP growth still did not dominate its GDP indicating a clear slowdown, has turned out to be a plus. there are troubling signs of Equally, its monetary policy has growth of inventories of been restrictive rather than industrial products, unsold expansionary in the past few housing and commercial units, years. As a result, it has the and even declining sales in the option of reducing interest rates auto industry. These are the when the time is right – i.e., biggest sectors in the Chinese when the fiscal deficit is under economy, and together add up better control and better

VIVEK : Issues and Options October– 2012 Issue: I No: X 20 managed by the Government. better equipped to deal with In fact, the fiscal deficit is the any economic downturns that most important weakness in the the global economy may face. Indian economy now and it is This will change over time, but admittedly hard to tackle for the process will be slow, political reasons. presenting a degree of insulation to the Indian The Indian economy is in need economy from global headwinds of infrastructure more than for quite some time. Put anything else and this is where differently, India’s challenges the Governmental effort really are mostly domestic and needs to be focused. political. Unfortunately, the pace of progress here has been slow. Back to contents This has been the most important factor holding back Indian growth and is tied to the fiscal deficit, which is crowding out investment in infrastructure. There is a clear understanding among Indian policymakers that this needs to be addressed. The largest items contributing to the fiscal imbalance are subsidies and a start has been made in the petroleum sector to lower these. Food and fertilisers are the other major items and these will clearly be the last to go. In the Asian setting, what this means is that India remains less exposed to international trade and capital flows than the

East Asians were, and hence

VIVEK : Issues and Options October– 2012 Issue: I No: X 21

Strategic Posture Along The India- China Border: Is India Prepared?

- Gen. NC Vij (retd.)

The Context – Strategic initiated the use of force; that Scenario means that the PLA will launch the “first strike”. China’s 1962 hina’s rise as a major War with India and Border War international actor is with Russia of 1969 fall under C certainly a defining this category. Some people may feature of the strategic still argue that China gains landscape of the 21st Century. nothing by attacking India but It certainly has ramifications the same was said even before for the entire world but most the 1962 war. definitely for the Far East and for India. If China has to Militarily, economically, or emerge as a global power, it politically, what time slot suits must first establish its Chinese the most? This could be unchallenged supremacy in its within the next 3-5 years block; immediate neighborhood. India wherein the Indian Armed is the only country in the Forces’ level of preparedness region, which is somewhat of a and readiness for war are competitor on both economic issues of hot and active debate and military fronts. So it has in the country or later. got to be put in place; the only Presently, the saving grace is question, is when. that the Chinese themselves are no-where close to their As far as offering a justification desired level of modernization to the rest of the world, they and are only half way through have evolved a widely to their modernization publicized strategy of “Self programme. Alternatively, this Defense Counter Attack”, which could take place after 2020-25, is a multipurpose formulation when they will be fully ready that they use to describe most and the capability gap would instances where China has have increased exponentially * Gen. NC Vij (retd.) - Distinguished Fellow, VIF

VIVEK : Issues and Options October– 2012 Issue: I No: X 22 between the two forces – if we character used for local wars should continue our can also mean regional wars. modernization progamme at this sluggish pace! It is President Hu Jintao, who had articulated the new To understand the level of guidance for the PLA in 2004 to threat posed by the Chinese in include missions extending either of these two beyond China’s immediate contingencies, we need to first territorial interests. The aspect analyze their level of of readiness to operate beyond preparedness. the immediate territory has its obvious China – Level of China is pursuing a long term portents. Modernization comprehensive military modernization programme Even more Goal – Mission designed to improve the importantly, of the PLA capacity of the PLA to fight and win, what they call local Chinese leaders wars of short duration under see this China is conditions of informatization, modernization pursuing a long or high intensity, information as a central term –centric military operations component of comprehensive (Note the word – short their strategy to duration because it has military advance China’s modernization implications for us). Local wars can also be interpreted as national programme “Regional Wars” as the development designed to character used for local wars goals in the first improve the can also mean regional wars. two decades of capacity of the the 21st century. PLA to fight and win, what they The implications are obvious. call local wars of short duration under conditions of Since Taiwan remains their informatization, or high principal priority focus, the intensity, information –centric Chinese modernization military operations (Note the programmes assign priority to word – short duration because the forces deployed opposite it has implications for us). Local Taiwan, the South China Sea wars can also be interpreted as (SCS) and the East China Sea. “Regional Wars” as the Work on troops deployed in the

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Tibet Autonomous Region increase to over a trillion (TAR) comes next but almost dollars worth of equipment in concurrently. the next six years i.e., 2018 and subsequently even more at the The desired time line of the present rates of allocations. Chinese to attain full preparedness level is 2020, but (c) And even more significantly, there are slippages, so it can the Chinese are incurring this easily go on to 2025 or so. level of expenditure when---

Budgetary Allocations (i) More than 80 percent of their weapon systems are being This is the most important part. produced indigenously at much The estimates lower cost. about China’s Even if one was to overlook Defense Budget, the widened gap over the (ii) On the other as per the US and last few decades and make hand, with an assessment only from Taiwan are here onwards, the budgetary virtually no pegged at approx gap between the two sides indigenous 180 Billion US will increase to over a production, India dollars for the trillion dollars worth of is paying two to year 2011. equipment in the next six three times the years i.e., 2018 and cost of the Three aspects subsequently even more at the present rates of equipment which merit allocations. because of emphasis in this imports. regard are:- So the conclusion is obvious, (a) Our budget is in the range of that the gap between the two 36 Billion US dollars. Funds for countries will exponentially modernization, amount to only increase with the passage of 12.87 Billion US dollars. time. Now, a quick analysis of the individual force structures (b) Even if one was to overlook of the Chinese follows. the widened gap over the last few decades and make an assessment only from here onwards, the budgetary gap between the two sides will

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Ground Forces vehicles and multiple rocket systems. The Z-10 attack These forces were quite helicopter is a significant antiquated in the nineties. addition, even though the Even today - Aviation Wing itself with the Army formations is of recent (a) They suffer from significant origin. shortcomings in command and control, air defence, Total Force Levels Available in communications and lack of TAR for Operations. 13 and 14 combat experience. Group Armies from Chengdu Military Region and 47 and 21 (b) From mid-2011, they have Group Armies from Lanzhou begun the military region process of They can concentrate up to can be deployed. transforming seven divisions in TAR within 21 Group Army parts of their one week; 12 divisions in 20-30 is designated as forces into days because of the QTR an offensive (Golmud to Lhasa – 1142 Km modular mobile force. combined arms and passes over 16-640 ft at Tanggula pass in Kunlun brigade focused mountain range). Both the Infrastructure force structure. QTR and the oil pipe line will This concept is be vulnerable to interdiction (a) They can yet to be tested operations from both ground concentrate up on the ground, and air. to seven especially in the divisions in TAR mountains. within one week; 12 divisions in 20-30 days because of the QTR (c) Presently growing numbers (Golmud to Lhasa – 1142 Km of modern heavy-armour, long and passes over 16-640 ft at range strike artillery and Tanggula pass in Kunlun increased range air defense mountain range). Both the QTR weapons are entering service in and the oil pipe line will be selected units, primarily those vulnerable to interdiction which may be deployed opposite operations from both ground Taiwan. The up-gradation and air. includes T-99, third generation Main Battle Tanks, new (b) What is equally significant generation amphibious assault is that they can mobilize a

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“Rapid Reaction Division” into and the nuclear type of Lhasa within 24-36 hrs and scenarios. They have also deploy up to two to three heli- acquired Tactical Nuclear lift battalions. This is a sizeable Weapons in large numbers. threat and needs to be catered for, provided they can attain There are many conflicting the air superiority of the kind views about the use of Tactical required to carry out heliborne nuclear weapons. The NATO operations. forces had found during the Cold War that the numbers (c) At the Nagqu logistics base, required for various they are in the process of contingencies were exorbitant building up a handling capacity and also that the results were of 3.1 million tons, which is not commensurate with the sizeable. desired outcomes and thus, their employment remained Second Artillery Corps somewhat questionable. In our case, in the mountains, the This force is peculiar to the efficacy of these tactical nukes Chinese Armed Forces, wherein may be further restricted, but they have concentrated, most of this aspect needs to be studied their rocket artillery and in depth by the Indian Army. It missiles systems. We have is quite on the cards that the these types of force under adversary may have very little different organizations but in compunction in the use of the much lesser numbers, which is tactical nuclear weapons. a crucial shortfall. Navy This force also has between 450-500 nuclear weapons. The They are primarily focusing on Taiwanese estimate that this anti-air and anti-surface number will increase to 800 in warfare capability, and are also this decade. These nukes are developing a credible “at – sea” over and above what the Navy nuclear deterrent. This force is and Air Force have. This force being transformed into a leaner will also be used for what they force equipped with more call, the resolute counter modern multi-mission attacks in both the conventional platforms.

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They have 79 Destroyers/ five more will be added in the frigates and 50 submarines. next 5-7 years. The Air Craft Carrier (KUZNETSOV – now Liaoning) They are developing DF-21D, will be functional by end 2012, the so called ‘Carrier Killer’ and but the air component will take the anti-ship ballistic missile at least 5-7 years more. In the (with a range of 1500-2700 Km) long run, they will develop this which will also be part of capability, but for the present, China’s nuclear deterrent their capability for carrier forces. It can also fire chemical based operations will remain warheads and Electro Magnetic limited in nature. It will, thus, Pulse (EMP). It will, however, limit them to operations only in take quite some time before the South China they are Sea and the The Chinese submarine fleet is operationally East China Sea, also developing fast and JIN effective. up to first and Class (JL2) submarines (2-3 second chain of years away yet) will provide its They have also islands. The Navy the first credible sea developed based nuclear capability. This Indian Ocean extensive mines program has faced many and torpedo will be outside delays already. They have their capability presently two nuclear denial for the submarines and five more will programme foreseeable be added in the next 5-7 years. under the ‘Anti future, provided Denial and Anti the Indian Navy develops as per Access Doctrine’ for a Taiwan the plans and in the desired scenario. Overall, the Navy is timeframe. still a work in progress.

The Chinese submarine fleet is Air Force also developing fast and JIN The PLA Air Force is in the Class (JL2) submarines (2-3 nascent stages of developing years away yet) will provide its ballistics missile defense and Navy the first credible sea air-space integration needed for based nuclear capability. This early warning. One most program has faced many delays noteworthy point is that in the already. They have presently nine airfields that they have in two nuclear submarines and the Lanzhou and the Chengdu

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Military Regions, there are no capabilities are still being built worthwhile hardened shelters up. for their aircraft and they will thus be vulnerable. The levels of education of the pilots, the leadership qualities, They are also continuing to etc. are under serious debate in modernize their ground based the Chinese Air force. At air defense ‘forces’ with the present, they lack the capability introduction of new medium to take on forces with good range Surface to Air Missile standard of training like the (SAM). They have acquired IAF, but are fast moving in that multiple battalions of S-300 direction. (latest Russian SAMs) and are also negotiating for SAM – 400 Their Areas of Excellence for in large numbers. Asymmetric Warfare

In the foreseeable future, they C4I2SR. Is being developed in a will have the capability for net- big way to:- centric operations and a robust electronic protection. This is an (a) Enable commanders to area, in which India needs respond to complex battle field considerable improvement. conditions with high level of agility and synchronization. They have a sizeable air fleet of 490 aircrafts of Second and (b) Will also lead to greater Third Generation, which integration amongst the three includes J-10, SU-27 and SU- services. 30. J-20, a fifth generation (c) They will continue to enjoy stealth aircraft, is being an edge over us in this field for propagated as a game-changing quite some time. offensive weapon in the making. However, it is still in Space and Counter-space its proto-type model. Badger Capabilities TU-16 Bombers from Russia are being upgraded and UAVs are (a) Have deployed satellites being imported from Israel. which enable real time transfer AWACs and mid-air refueling of data to ground stations.

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(b) Are also developing multi- Threat from Electro Magnetic dimensional programmes to Pulse. The US fears the limit or deny the use of space- possibility of tactics of nuclear based assets by adversaries. warhead bursts in the These provide them the atmosphere from an “electro capabilities of laser and micro- magnetic pulse” attack with the wave jamming. intention to temporarily or permanently disable the (c) Their effort will be to jam electronic circuits. They are the adversary’s, command and looking at this seriously and control and the fire-control India also needs to build up systems. counter capabilities in this regard expeditiously. (d) These programs are, however, still Nuclear. facing Intrusion and data theft are challenges and being used to collect strategic (a) While the their satellites intelligence. They can also try US, NATO are generally and disrupt enemy’s essential countries and services like air, railways, suffering from banks, etc. (Business the Russians malfunctions Continuity Process). This is have exercised and inadequate causing great concerns to the great reductions, performance. US and all other countries in the Chinese the region. continue to build Cyber Warfare up their arsenal. Capability. Even more worrisome is the fact that the use of nuclear Intrusion and data theft are weapons is being built up as a being used to collect strategic part and parcel of their strategy intelligence. They can also try for furtherance of operations. and disrupt enemy’s essential services like air, railways, (b) Their stated “No first use” banks, etc. (Business policy is not explicitly stated Continuity Process). This is and it commits them, in causing great concerns to the practical terms, to nothing. US and all other countries in the region. (c) There are questions as to whether ‘demonstration strikes’

VIVEK : Issues and Options October– 2012 Issue: I No: X 29 or ‘high altitude bursts’ world is a far cry and that is why it is constitute a first use or not. high time the Government of India issues the directive for (d) It appears that they will raising the Strike Corps. have no hesitation in the first Arguments that any raise in use of tactical nuclear weapons. our force levels will cause In any case, there is hardly a concern to the Chinese, is naïve doubt that against Taiwan, this and puzzling to the say the very policy of ‘No first use will not be least, especially in view of the applicable’. fact that the Chinese have built up far more potent and Indian Scenario threatening capability in TAR.

Role Envisaged for the Armed We also need to prepare for Forces unified operations in all five domains i.e., It is learnt that It is learnt that both China and Land, Sea, Air, both China and Pakistan are fine-tuning their Space and Pakistan are strategies to impose a war on Information/Cyb fine-tuning their two fronts against India. Thus, er. The strategies to in case a war breaks out, a two preparatory impose a war on front scenario will be almost a work on two fronts certainty. operational against India. plans also needs to be carried Thus, in case a war breaks out, out jointly. a two front scenario will be almost a certainty. We must also build up reserves in ammunition, missiles, spares In such a contingency, the and ancillaries for a minimum Indian Armed Forces will need period of 60 days at an intense to generate a punitive rate in crash time frame. This deterrence capability vis-à-vis remains one of the biggest Pakistan and an optimal areas of weakness. All other dissuasion vis-à-vis China. aspects warranting More simply put, it means that improvement have been we must have a ‘superiority projected by the three Services ratio against Pakistan and to the Ministry of Defense and optimal parity against China’. With our present force levels, it

VIVEK : Issues and Options October– 2012 Issue: I No: X 30 work on them must proceed changes in our Navy’s priority with a sense of urgency. of allocation of forces opposite the two adversaries. The Conflict Scenarios – proximity of Andaman and Possibilities Nicobar islands to Malacca Straits offers us tremendous Let us very briefly examine the advantages in terms of effective two possible conflict scenarios air-sea operations against the and the possible outcomes. Chinese.

A War in Next 3-5 Years (e) Our Air Force has the advantage of operating from the A balanced analysis of the ground level in the North-East, Chinese Armed which provides Forces will show (e) Our Air Force has the us far greater that :- advantage of operating from the ground level in the North- endurance. We (a) Their Armed East, which provides us far also have a huge greater endurance. We also Forces are still advantage in have a huge advantage in terms of number in varying terms of number of air fields. of air fields. stages of There is a strong possibility transition. that the IAF may inflict heavy There is a strong losses on the Chinese Air Force possibility that (b) Since their in TAR in the first 72 hours the IAF may priority focus of itself, as they are lying in the inflict heavy open development is losses on the towards Taiwan, Chinese Air there are still many facets of Force in TAR in the first 72 weaknesses in TAR. hours itself, as they are lying in the open (c) Their Navy does not presently have the capability to (f) The Chinese capabilities in take on the Indian Navy in the the asymmetrical operations Indian Ocean. This capability is are still developing, especially not likely to be achieved over in the mountains. Also, the next 10-15 years. efficacy of the modular mountain brigades in the (d) We can certainly choke them mountains is still to be tested. in Malacca Straits, with some

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(g) Finally, the Chinese after their task on the other themselves are seriously front is done. Similarly, the examining and attending to the Artillery allocations will have to problems of their lack of combat be planned afresh. experience and also leadership abilities at junior and senior However, most importantly, levels. This acts as a huge ‘force there is an urgent requirement multiplier’ for us. to carry out a “Joint Planning” for such operations on priority Progress of Operations. The by all the three Services assessment being offered here together in the same fashion, as pre-supposes that the Strike we have done for some other Corps will be in place over the contingences. With all such next two years and all the preparations, we should be able shortages in ammunition, to hold our own and leave the missiles and spares would have adversaries stymied. been made up. These are operational imperatives and not A Conflict Scenario after 2020- open to questions. In such a 25 case:- By this period, the Chinese (a) The terrain and the ground modernization programmes offer us the biggest advantage. would have fully fructified. On our side, if the projected (b) For the first twenty-thirty shortfall of equipments worth days, we can generate near 155 billion US dollars for the equal parity in forces, which three Armed Forces is not made will deny them the required up in these 8-10 years, the force superiority as an attacker potential gap between the and render their operations opposing sides would have most difficult and sluggish. increased exponentially, posing grave risks to Indian security. (c) With some changes in the ‘Grand Strategy’, in the mid- Even more than the term, there is a possibility of Conventional Operations, the being able to create upto two asymmetric warfare will pose a “Dual Tasked Divisions” for the grave threat. Therefore, we North-East and Ladakh Sectors must focus on the following in a certain time frame, e.g., aspects with renewed vigor:-

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(a) Technology must be the solutions offered by the Naresh watch word. Chandra Committee, in this regard, are like a cure which (b) A much higher degree of may be worse than the malady, proficiency in aspects related to and must be discarded without the informatization, like further ado. C4I2SR, counter cyber operations, optimum utilization (b) The Services must be made of space assets and Counter a part of the National Strategic EMP measures will be a pre- Planning Structure of the Govt. requisite. The prevailing system of the Ministries of the Government of (c) Ballistic Missile Defense India and the Services working must be built in isolated up. A greater degree of jointness in compartments the functioning of the three needs to be (d) Improvement Services, on the lines of the shelved for the recommendations of the ‘Group of infrastructure good of the in the North of Ministers’ is sine qua non. Some of the patch work country. East. solutions offered by the Naresh Chandra Committee, in this (c) The requisite Road Ahead regard, are like a cure which fund allocations may be worse than the malady, (155 billion US Alongside the and must be discarded without dollars in next operational further ado. 10 years preparedness, exclusively for there are certain other modernization) and equally improvements which need to be importantly the ability to brought about in our National utilize these funds are an Security apparatus. These have inescapable MUST. been pending for many decades:- (d) We must seriously move towards indigenous production (a) A greater degree of jointness by our DRDO – Industry in the functioning of the three combine and acquire at least Services, on the lines of the 50-60 percent capability over recommendations of the ‘Group the next 10-15 years. of Ministers’ is sine qua non. Some of the patch work

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Conclusion The friendships, develops only amongst equals. Any weakness These are challenging times. on our part can only provide The Armed Forces have been temptations to our adversaries crying hoarse about the gaps to to be adventurous. Eternal be covered. Our national optimistic that I am, I certainly leadership needs to take believe that India has the decisive steps and not bank sagacity and the requisite will upon the mirage of hope and power to rise up to the possibilities of better relations challenge. developing between us and our adversaries. The history has Back to contents proved that preparedness alone ensures security.

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Defence Reforms and Naresh Chandra Task Force Review

- Vinod Anand

n May last year, the strategic shock in the shape of government appointed a the Mumbai terror attacks of I Task Force led by Naresh 26/11 was delivered. The Chandra and composed of 14 Parliament’s Standing members to go into the Committee on Defence (SCD), recommendations and reassess in their report of February the reforms required for 2009, had lamented the lack of improving the national security a unified concept of command system. Over a decade back, the and the lack of integration of Kargil Review Committee had intelligence effort besides made many recommendations making a host of other regarding the defence reforms, observations. revamping of India’s intelligence set up, internal It also needs to be noted that security and border the government has as yet not management. A large number declassified the Naresh of recommendations have been Chandra report. However, brief implemented over the years. details of some of the However, some of the key recommendations made by the recommendations like creating panel have appeared in the a Chief of Defence Staff have media. not been implemented; other recommendations like Is Permanent Chairman of integrating Service HQs with COSC an optimal Solution? the Ministry of Defence have The Naresh Chandra panel has only been paid lip service. The recommended a permanent impetus for the defence reforms chairman for the Chiefs of Staff and some other reforms Committee which is expected to connected with intelligence and bring a certain degree of the internal security had stability to this post as the petered out when another senior most chief used to be in * Vinod Anand - Senior Fellow, VIF

VIVEK : Issues and Options October– 2012 Issue: I No: X 35 the chair with, on many the issue. .. The Committee had occasions, a limited tenure in also recommended to give his job. The post is to be staffed appropriate authority to the by a four star general for two Chairman COSC in the present years. This recommendation is set up to command and control definitely a climb down from the resources of the Defence the earlier GOM Services whenever the situation recommendation of the Chief of so demands till such time the Defence Staff. The UPA post of CDS is created.” government has been mentioning that a political Therefore, it is quite evident consensus is being obtained that Naresh Chandra report’s after having written to all the recommendation should be political parties regarding treated only as an interim instituting the post of CDS. The recommendation as the SCD of the 15th Lok Sabha in ultimate goal as suggested by their second report (2009-2010) the SCD and the earlier GOM had again dwelt upon the need report is to institute a CDS. On for CDS. Some relevant the other hand, there is also a excerpts from the report are view that due to lack of political given below: consensus the recommendation for the CDS can not be “ In the light of the fact that the implemented in times to come Chairman of the COSC has no and a permanent Chairman of command and control authority the Chiefs of Staff Committee over the Services other than his would be an optimal solution. own, the Committee had However, as the Naresh expressed doubts over the Chandra report is not in the efficacy of the system in public domain and it is not clear emergent situations by as to what powers would be ensuring quick response and entrusted to the incumbent of coordinated action…. The the new post. Unless the Committee had recommended permanent Chairman has to take timely and appropriate appropriate budgetary and steps to revise the composition certain other command, control of the COSC by creating a post and coordination powers, giving of CDS to act as Chairman of a fixed tenure of two years may COSC by evolving consensus on not serve much purpose.

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Further, the SCD had also report of December 2009 (after observed that merely writing of the current UPA government letters by the Defence Minister had taken over), had passed to political parties was not strictures against the non- enough; the issue could also be representative nature of the deliberated in the Parliament cross-staffing pattern in the through various mechanisms structure of the HQ IDS in available under the rules. which the Department of Defence (DoD), DRDO and Integration of Services with the MEA are not represented. MOD merely Cosmetic The staffing pattern in the The Naresh Chandra MOD was recommended to be Committee (NRC) has also suitably modified so that the recommended deputation of the Armed Forces personnel of Army, the Navy and the Air requisite expertise at the level Force officers to the MOD. This of Joint Secretary/ Additional is, by no means, a new Secretary could be appointed. suggestion; this suggestion was This was to ensure that the given by the GOM Report and Service HQs become intimately has been time and again involved in the national pushed by the SCD. However, security management at the the record of implementation of apex decision making processes. such a recommendation has Thus, the NC report has merely been less than satisfactory. For repeated what has been earlier instance, the SCD of 14th Lok recommended many times. The Sabha (the current one is the moot point is whether the 15th Lok Sabha) had ‘strongly’’ ‘babudom’ would implement recommended the change in this recommendation in letter MOD staffing patterns to and spirit. It also needs to be ensure that the Armed Forces noted that a MOD official were ‘‘intrinsically involved in deposing before the SCD had national security management categorically remarked that and apex decision-making “Renaming of Army and Naval process’’. Headquarters as Integrated Headquarters is merely Further, even the new SCD (of cosmetic, in the absence of th the 15 Lok Sabha), in its first posting of DoD cadre officers to

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Service Headquarters and vice first time had approved the 12th versa, for participation in policy Services Capital Acquisition formulation.” Plan (SCAP) and the 15 years Long Term Integrated The NC panel has also stressed Perspective Plan (LTTIP, 2012- the need for IAS and other 2027) for the modernization of officers running the MOD, the the armed forces. It needs to be National Security Council and noted that the 10th and the 11th other departments responsible FYDP had lapsed without being for the internal and the approved and the LTIPP external security being approvals were also not specially trained for the forthcoming. Since the previous purpose. The practice of Army Chief brought to the generalist officers running notice of the Prime Minister the everything under the sun needs lack of defence preparedness to to be stopped. This include deficiencies in recommendation is full of merit equipment and ammunition, and needs to be seriously put the government shifted gear into practice. and embarked Since the previous Army Chief on plan Defence Planning; brought to the notice of the Prime approvals and the Problems Minister the lack of defence has planned Persist preparedness to include for the fast deficiencies in equipment and track The Report has ammunition, the government acquisitions of made a number of shifted gear and embarked on artillery guns, recommendations plan approvals and has planned helicopters regarding defence for the fast track acquisitions of and other procurement, artillery guns, helicopters and equipment and defence other equipment and ammunition. ammunition. preparedness and The pressure connected issues. on the government was also felt However, most of the details of in the Parliament when both such suggestions have not been the opposition leader and the revealed to the public as yet. In ruling party leaders expressed April 2012, the Defence similar views on the need for Acquisition Council headed by shoring up the national security the Defence Minister, for the and the defence acquisitions.

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However, the above measures services’ plans. Integration do not absolve the would mean sacrificing one government/MOD from the service’s budget perhaps for charge of resorting to ad-hocism another service which cannot in defence planning. The SCD, really happen given the current in its report of August 2011, organizational structures. That had expressed its unhappiness is why a CDS with suitable over the ad-hocism in the whole authority is essential. As planning process in the Defence mentioned earlier, even the NC Ministry; the Committee had report’s recommendation of a strongly recommended that the permanent COSC could be LTIPP should be finalized useful if he was given without any further delay. appropriate budgetary and coordination powers. For Further, the Defence Minister instance, a proposal for raising and the MOD had averred that a Mountain Strike Corps in the a National Security Strategy North East by the Army has document would be made from been recently sent back (after which would flow the Defence one year of consideration at the Guidance and thereafter a MOD/government level) for National Military Strategy reappraisal by the COSC so would be formulated that would that the requirements of other be reflected in our defence services can also be taken into plans. But, this promise account. Under the present remains only on paper; the SCD system, this is bound to cause of the 14th Lok Sabha had further delay and this delay deliberated on the issue would be further compounded however, now even the current by the fact that there is no SCD of the 15th Lok Sabha has common view on the NSS and gone silent on it. threat perceptions; every service considers its own Another issue which has not concerns to be important and it been paid adequate attention is is only in some rare case that the question of an ‘integrated’ there could be some via media perspective plan as it is well or agreement. known that the LTIPP is not an integrated plan, but merely an Defence Procurement: aggregation of the different Bedevilled by Delays

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Our defence procurement As mentioned above, the SCAP system has been modified and and the LTIPP have been improved many times without approved in April this year resulting in any appreciable along with the enhancement of improvements on the ground. the financial powers of the Our procurement system, acquisition authorities, in order organisations, procedures and to inject speed and flexibility in mechanisms have not been able the procurement process. The to fast track the acquisitions Defence Minister has also which the armed forces need to stated on the floor of the narrow the capability gap Parliament that functionaries which exists with our potential at the Service HQ level have adversaries. Last year, the been delegated with the Comptroller and Auditor financial powers to process General castigated procurement the entire arms Our defence procurement cases upto procurement process system has been modified and Rs.50 crore, improved many times without and cited several resulting in any appreciable the capital incidents of improvements on the ground. cases above inordinate delays. Our procurement system, Rs.50 crore There have been organisations, procedures and and upto unacceptable delays mechanisms have not been Rs.75 crore in obtaining critical able to fast track the are approved acquisitions which the armed air defence forces need to narrow the by the equipment and capability gap which exists Defence spares for damaged with our potential adversaries. Secretary. Israeli aerostat There is a radars; the weapon packages proposal also to increase the for the MIG-29Ks meant for our amount further. aircraft carrier were not finalised, and as a result they It is yet to be seen how the were delivered without weapon above proposals will fast track systems and because of poor the proposed acquisitions. monitoring and inadequate attention to contractual clauses, However, in one of the additional problems arose in controversial recommendations acquisition of the Low-Level by the Naresh Chandra Transportable Radars. Committee, it was proposed

VIVEK : Issues and Options October– 2012 Issue: I No: X 40 that the practice of blacklisting armed forces than is the case at firms of suppliers should be present. Not that these are discontinued. It has also original recommendations but suggested that the Prevention nevertheless being a report to of Corruption Act be modified to the government reiteration of give a certain degree of such requirements possibly protection to officers dealing in would motivate the decision defence purchases as there are makers earmark funds and possibilities of making 'an error efforts for achieving such long of judgement'. This flies in the term goals. face of the procurement procedures which are based on Special Operations Command the principles of probity, integrity, transparency and so The Naresh Chandra panel has on. Without also recommended forming a Special doubt, there is a The NC report has also need to recommended that the Operations streamline the situation where we need to Command to procedures but import 70 percent of our take under its including the military hardware needs to be wing the special rectified. These include a above provisions forces of the greater role in indigenous Army, the Navy would only add production for the private and the Air to more flaws sector. and possibilities Force. The of wrong doing in the defence objective is to have a synergetic purchases. application of forces for strategic tasks by bringing The NC report has also them together in a unified recommended that the situation command and control structure; where we need to import 70 the SOC would be placed under percent of our military the COSC. The NC panel is of hardware needs to be rectified. the view that India needs to These include a greater role in enhance its unconventional and indigenous production for the special warfare capabilities to private sector. The Defence execute politico-military and Research and Development connected operations to meet Organisation should work in non-conventional challenges. closer cooperation with the According to the report, the full

VIVEK : Issues and Options October– 2012 Issue: I No: X 41 potential of the Special Forces National security Adviser; in is not being utilised, therefore, addition it has recommended a the need for bringing them National Intelligence Board together and employing them (NIB) for coordination of for effective covert operations intelligence. It needs to be including counter-terror tasks. noted that erstwhile the Joint After the raid by the American Intelligence Committee had Navy Seals on Osama Bin been merged with the National Laden’s hideout, some of our Security Council Secretariat military leaders had mentioned (NSCS). The moot point is how that similar raids would the could be carried out Coordination of the functioning by our Special intelligence and presenting one of the new joint intelligence picture to the Forces. Perhaps with apex decision makers has been NIB be better training, a major challenge for our different technical and special intelligence processes, from the equipment, weapon procedures and organizations. existing set systems and ISR The Naresh Chandra report up in the support, our forces has recommended a post of NSCS? intelligence adviser to assist would be in a the National security Adviser; Another position to carry out in addition it has such tasks. recommended a National issue, which Intelligence Board (NIB) for is acquiring coordination of intelligence. alarming Revamp of proportions, Intelligence and Cyber Space is the question of cyber security Protection with our critical infrastructure and other systems having Coordination of the intelligence already faced many cyber and presenting one joint attacks over the last one year or intelligence picture to the apex so. The National Technical decision makers has been a Research Organisation, the major challenge for our Defence Intelligence Agency intelligence processes, and the Computer Emergency procedures and organizations. Response Teams at various The Naresh Chandra report has levels need to be strengthened recommended a post of to face the challenges of Cyber intelligence adviser to assist the War which goes on even during

VIVEK : Issues and Options October– 2012 Issue: I No: X 42 peace time. Cyber Jihad would lead to efficient launched by some of the management of and timely Pakistan-based militants and response to the challenges in terror groups in July-August cyber space. 2012, to spread hate against the people of the North-East Other Recommendations by the working in the rest of India, Naresh Chandra report created panic and disruption. Our response was slow and The report recommends many limited. While the need for a other measures to be taken to Cyber Command (on similar improve the internal security lines to that of the U.S. Cyber mechanisms. For counter Command) to look after the terrorism, it has recommended military aspects of Cyber a National Counter Terrorism warfare has been felt, there is Centre (already recommended also a requirement of a central by the MHA), a National entity/organization to Intelligence Grid, strengthening coordinate the civilian efforts to of policing and distributed protect the cyber space. At deployment of the NSG. present, there are over a dozen The panel has emphasized the entities/organizations like the early setting up of the much Ministry of Home Affairs, the delayed Indian National Ministry of Communications Defence University (INDU) and and Information Technology, the creation of a separate think- the National Disaster tank for internal security. The Management Authority, the Kargil Review Committee and National Information Board the GOM Report had also made and the Computer Emergency similar recommendations for Response Teams at various the INDU; despite the levels besides some other have allotment of funds and the land been tasked with looking after for the project, nothing the cyber security. They are substantive seems to have been inadequately staffed and achieved so far even after a insufficiently funded; needless lapse of over a decade. to say there are turf battles and their mandates are Conclusion inadequately defined. Thus, coordination of their efforts

VIVEK : Issues and Options October– 2012 Issue: I No: X 43

Largely, the Naresh Chandra challenges and threats arising Committee has made from that direction. Periodic recommendations which have review of our defence already been made by either the preparedness and formulating KRC or the GOM or by the our National security Strategy, Parliamentary Standing the Defence Planning Guidance Committee on Defence. and the National Military Possibly, there are other Strategy in a formalized recommendations which are manner along with reappraisal new but as the report is not in of all the processes, structures the public domain it would be and the associated aspects is a difficult to evaluate the new must. Strengthening our aspects included in the report. military capabilities and However, the record of internal security efforts are implementation of the intricately linked with our recommendations by the broader political and economic government has been mixed. objectives. If India has to The report does serve the progress as a modern and purpose of bringing into focus developed nation that wishes to once again the inadequacies in achieve its long-cherished goal our national defence and of strategic autonomy, defence security system and thus, the and security reforms have to be imperatives to rectify them. At ushered in at a faster pace than the geo-political and geo- hitherto before. strategic level, it does talk about challenges being posed by Back to contents China and Pakistan on the military and security front and thus, the need to be fully prepared to meet such

VIVEK : Issues and Options October– 2012 Issue: I No: X 44

In Bludgeoning Balochistan, Is Pakistan Army Losing Support In Punjab? - Sushant Sareen

fter the huge furore in conspiracy theories in the Pakistan caused earlier capital city – did he return as A in the year by the part of an understanding with Congressional hearing on the establishment; is he Balochistan organised by US positioning himself for Congressman Dana becoming Chief Minister in the Rohrabacher who also moved a forthcoming elections; was he resolution in the US Congress representing the Baloch calling for the right to self- separatist leadership that is determination in Balochistan, currently in exile and paving the restive province was once the way for a reconciliation again the flavour of the week in between the establishment and Pakistan's political circles and the separatists; was he only media when the former Chief testing the political waters to Minister Akhtar Mengal see if he could return to returned for a sojourn from a mainstream politics; did he four year self-imposed exile to come to make a last ditch effort depose before the Supreme to keep the Pakistani federation Court of Pakistan which was intact etc. Regardless of his real hearing a petition on the motives for appearing before abysmal state of law and order the Supreme Court and and blatant violation of human presenting his arguments, what rights in the province. he has managed to do (whether wittingly or otherwise is hardly As was to be expected, Mengal’s the point) is to jolt the military presence in Islamabad provided establishment and perhaps also grist for the mills churning cause a tremor which could

* Sushant Sareen Senior Fellow, VIF

VIVEK : Issues and Options October– 2012 Issue: I No: X 45 potentially lead to tectonic words invoked understanding changes in Pakistan's political and sympathy among his system. interlocutors like Nawaz Sharif, Imran Khan and the Jamaat Mengal’s appearance before the Islami chief, Munawwar Hasan, Supreme Court wasn’t who endorsed almost something that happened out of everything he demanded. the blue. He had applied months back to become a party While Mengal very ably in the missing persons case that articulated the myriad was being heard by the apex grievances of the Baloch with court. Clearly then, this was a Pakistan in his interviews and well-thought out move. Of meetings – he cut the Pakistani course, the details of the establishment to the bone by political game-plan under calling the situation in which Mengal decided to use Balochistan worse than that in the Court to make his pitch and Palestine and Kashmir (in queer that of the military other words, pointing out that establishment and the civilian not even the Hindus and Jews government is shrouded in are as oppressive as Pakistani mystery. Without indulging in Muslims are to fellow Muslims) any histrionics, harangues or and even went to the extent of hysterics, Mengal, in his own calling for a peaceful parting of soft-spoken manner, adopted ways rather than a bloody quite a hard-line, not only divorce – it was his Six Point before the Court, but also in his charter of demands, or various TV interviews and joint recommendations, that he press briefings which followed placed before the Supreme his meetings with top Court which seem to have opposition politicians. What caught everyone in Pakistan in was most surprising, however, a quandary. These Six Points was that instead of outrage, are as follows: suspension of all Mengal’s tough and biting overt and covert military

VIVEK : Issues and Options October– 2012 Issue: I No: X 46 operations against the Baloch; establishment, asking for due producing all missing persons process of law is akin to before a court of law; rebellion against the Pakistani disbanding all death squads state. Not surprisingly then, being operated as proxies by the these innocuous looking Six ISI and MI; ending political Points are not only as interference by the intelligence unacceptable, but also as un- agencies in Balochistan and implementable, as the famous allowing all political parties to Six Points of Sheikh Mujibur function freely; bringing those Rehman of the erstwhile East responsible for Pakistan. torture and But in the context of Akhtar murder of Baloch Balochistan which has been Mengal political activists facing a very heavy-handed seemed to be and brutal crackdown by the to justice; Pakistan military quite aware of rehabilitating the establishment, asking for due this and that Baloch displaced process of law is akin to is precisely the rebellion against the Pakistani by the conflict. state. Not surprisingly then, reason why he these innocuous looking Six equated his On the face of it, Points are not only as Six Points these unacceptable, but also as un- with those of recommendations implementable, as the famous Six Points of Sheikh Mujibur Sheikh Mujib. are Rehman of the erstwhile East Mujib’s Six unexceptionable Pakistan. Points, had because they seek they been accepted, would have nothing more than application ended up restructuring the of fundamental and legal rights Pakistani federation; Mengal’s enshrined in the constitution of Six Points, if implemented, will Pakistan. But in the context of effectively emasculate the Balochistan which has been Pakistan Army and inalterably facing a very heavy-handed and shift the balance of power in brutal crackdown by the favour of the civilians. Pakistan military

VIVEK : Issues and Options October– 2012 Issue: I No: X 47

That such a thing will never be of crimes committed in allowed by the military Balochistan is not limited to establishment is a no brainer. only Gen Pervez Musharraf but This is so partly for what the also all those officers who were army would call ‘reasons of directly or indirectly state’ – i.e. it simply cannot responsible for the killing and countenance taking a back seat kidnapping of Baloch political and allowing Baloch activists. Small wonder then nationalists a run of the place, that the very next day, the even less so because these military and law enforcement demands are only a ‘confidence agencies submitted a statement building before the court measure’ that is While the Chief Justice and his and quite expected to pave colleagues are all sound and brazenly the way for a fury on the issue of missing denying any persons in Balochistan, they more substantial have just not been able to show involvement in dialogue on the the same steely determination either ‘enforced against generals and colonels future status of disappearances’ serving in Balochistan that Balochistan. they displayed when they or in running And partly, the convicted an elected Prime death squads Minister on charges of army will oppose that ‘kill and contempt of court. these demands dump’ the bodies for ‘reasons of person’ – i.e. from of Baloch activists. The Army top generals, including army also activated its proxy agents chief Gen Ashfaq Kayani, to to file a petition seeking a foot soldiers, scores, if not judicial enquiry into the events hundreds, will face prison, or surrounding the death of the worse – if these Six Points were iconic Baloch leader, Nawab to be implemented in earnest. Akbar Bugti. At least, this is what Mengal Of course, Mengal would never expects because he has made it really have harboured any clear that his demand for illusion that his Six Points will bringing to justice those guilty

VIVEK : Issues and Options October– 2012 Issue: I No: X 48 be implemented. He knows well Sharif’s PMLN, Imran Khan’s that the civilians, whether in PTI and the Jamaat Islami government or in the judiciary, signals a big shift in Pakistan's neither have the power nor the politics. All these parties will to deliver on these very receive the bulk of their support constitutional demands. Take, from Punjab, the province for example, the judiciary, on which has traditionally blindly which Mengal claims to have backed the army’s version of placed some faith because of its national interest. Today, these ostensible assertiveness. While parties which are expected to the Chief Justice and his attract the bulk of votes from colleagues are all sound and Punjab are challenging the fury on the issue of missing army’s definition of national persons in Balochistan, they security and national interest. have just not been able to show On the other hand, parties like the same steely determination the PPP, and to an extent the against generals and colonels MQM and ANP, which have all serving in Balochistan that they traditionally been seen as anti- displayed when they convicted establishment parties and an elected Prime Minister on which derive the bulk of their charges of contempt of court. support not from the heartland Forget about throwing some of of Punjab (i.e. the politically these persons in prison, the powerful Central Punjab and judges have had to show the military’s recruiting enormous forbearance on the ground, North Punjab) but from non-appearance of many of smaller provinces like Sindh these officials despite summons and Khyber Pakhtunkhwa and and threats having been issued. the marginalised part of Punjab (South Punjab) have today But the support, even if only become the biggest supporters verbal at this point in time, of the military establishment’s that Mengal has received from conception of national security opposition parties like Nawaz and national interest.

VIVEK : Issues and Options October– 2012 Issue: I No: X 49

One explanation for this sort of being drawn with the posturing a stance by these parties is that of Zulfikar Ali Bhutto during the PMLN, PTI and Jamaat the Bangladesh crisis and that Islami are in opposition and as of the PPP on Balochistan such they have much greater today. latitude for taking a contrary Equally important is the stand from that of the military political implication of this shift establishment. The PPP, ANP in the approach of the main and MQM, on the other hand, political parties in Pakistan. To are part of the coalition be sure, the PPP’s calculation government and hence cannot would be that both Nawaz afford to take a stand that is Sharif and Imran Khan would anathema for have spooked the Pakistan Already, the army did not seem the army quite Army because if to be very comfortable with the badly with their they were to do prospect of having either Nawaz Sharif or Imran Khan support for so they would running the next government. Mengal’s Six never be able to Their endorsement of Mengal’s Points. Already, deliver. Of Six Points would have only added to the army’s the army did not course, some discomfiture with them. seem to be very Pakistani comfortable with the prospect of analysts have also pointed out having either Nawaz Sharif or that despite its reputation as an Imran Khan running the next anti-establishment party, the government. Their endorsement PPP has always been far more of Mengal’s Six Points would obedient, subservient and have only added to the army’s supportive of the army – discomfiture with them. The whether it be during the PPP senses an opportunity to Bangladesh crisis in 1971 or in ingratiate itself further with Balochistan in 2012 [or the military establishment and earlier]– than the so-called pro- derive the benefit of this in the establishment parties like forthcoming elections. But what PMLN. Indeed, parallels are

VIVEK : Issues and Options October– 2012 Issue: I No: X 50 if the PMLN or even the PTI the reaction from the manage to get the numbers in separatists and anti-federation the next election to form the nationalists (arguably government in Islamabad? If representing the predominant these predominantly Punjab sentiment in the province) has based parties renege on the been more nuanced. While support they have extended to people like Hyrbyar Marri and Mengal, they will only end up Brahmdagh Bugti have so far further alienating the Baloch maintained a studied silence, and reaffirming the extremely others (which includes those negative perceptions among the who are either fighting the Baloch about the Punjabis. But Pakistani state or are lending if the PMLN or PTI actually moral, financial, and at times live up to their commitments, even physical support to those then it will pit them directly who are doing the fighting) against the army. This will have been quite critical of what tantamount to a Punjab versus they see as Mengal’s ‘last ditch’ the Army conflict, something effort to save the Pakistani that the army will not find easy federation. Unless Mengal has to handle especially if popular decided to ditch the separatist support in the province is with bandwagon and make his peace these parties. with the Pakistani state, something that he has In a sense then, Mengal has set consistently denied, he will the cat among the pigeons with have to play his political cards his Six Points. At the same very deftly to keep himself time, he has taken a high risk politically alive in his core gamble of his own by appearing constituency that swears by before the Pakistani Supreme Baloch nationalism and which Court. Although by and large has all but burned its boats as most Baloch nationalists who far as Pakistan is concerned. remain pro-federation have Any misstep and he stands to welcomed Mengal’s demands, lose his core constituency. But,

VIVEK : Issues and Options October– 2012 Issue: I No: X 51 if he manages to play this hand the elusive ‘single party’ that so well, then he could well emerge many Baloch nationalists say is as the rallying point for all required to spearhead the Baloch nationalists and create demand for independence of Balochistan.

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VIVEK : Issues and Options October– 2012 Issue: I No: X 52

Indian Economy – Still On The Precipice

- Dr. V Anantha Nageswaran

he Indian government deficit under control. It had has generated a lot of recommended, among other T excitement and things, monetisation of the controversy in the last few government’s land holdings, weeks with its foreign phased elimination of investment liberalisation petroleum subsidies, an measures and other measures immediate reduction in aimed at curbing the fiscal fertiliser subsidy and a phased deficit. The Trinamool Congress introduction of Food Security. withdrew its support; the The government has distanced government still did not roll itself from the last back its measures. The Prime recommendation. The Kelkar Minister spoke to the nation Committee has warned that, and declared that money did without immediate steps, the not grow on trees. He hinted fiscal deficit for the financial that focusing on the aam admi year ending March 2013 could could go against the country’s be as high as 6.1%. long-term interests. The government went ahead and The government is on the right announced a restructuring of track in some aspects. But, its bank loans to the State-level commitment to see through power distribution companies, tough reforms is still untested. with an aim of achieving With the Samajwadi Party healthier finances for the SEBs supporting the government in the long run. from outside, the government is technically in a majority. The In the meantime, on 28 majority, however, is fragile. September, an expert Many allies (e.g., DMK) are committee, led by Shri Vijay sitting on the fence and might Kelkar, recommended short- extract their pound of flesh on term and medium-term legal proceedings pending measures to bring India’s fiscal against former Cabinet

* Dr. V Anantha Nageswaran - Visiting Fellow, VIF

VIVEK : Issues and Options October– 2012 Issue: I No: X 53

Ministers belonging to the JP Morgan notes that party as a compensation for ‘Community and Social supporting the government. Services’ is a proxy for Limited reform measures government spending. We announced by the Government should note here that this have hardly touched the ‘sector’ has declined sharply in corruption ‘surplus’ and the the second quarter after a big governance deficit. The fiscal jump in the January-March deficit is but a symptom of quarter. That could be due to these two. the end-of-the-financial year ramp-up in the government In the meantime, India’s second spending. Hence, the growth quarter GDP growth was a rate recorded by this sector on rather modest 3.9% (y/y). This an annual basis is unlikely to is expenditure based. On a be sustained. quarterly basis, the growth rate contracted. However, India’s Sector-based GDP growth quarterly numbers are not numbers clearly indicate that seasonally adjusted. On a the economy is soft and sectoral basis, the growth rate softening further. All but two was 5.5% (y/y). Growth rates in sectors contracted sequentially construction and electricity in the second quarter of 2012. generation were reportedly The two sectors that defied the stronger at 10.9% and 6.3%, contraction were Electricity, respectively. Of course, these Gas and Water, and Finance, two have a combined weight of Insurance and Real Estate. only 10% in the GDP Hence, it is hard to be upbeat composition. Finance and allied about the 5.5% growth number. services have a weight of 19.1% Of course, we have to note here and ‘Community/Social services’ that even this number is a long has a weight of 12.0%. It is way off from the growth rates of difficult to comprehend the 8% to 10% recorded before the measurement of growth global crisis and its aftermath contribution by this sector. in 2008-10. These two sectors had allegedly grown at a rate of 10.8% and Net exports made a positive 7.9%, respectively. contribution to growth because imports declined faster than

VIVEK : Issues and Options October– 2012 Issue: I No: X 54 exports. However, that could deficit but mutes price signals change in the coming months for the end-user. Brent crude oil with exports dropping faster. price is to the north of $110 per Therefore, net exports will not barrel. Petroleum products contribute to economic growth need to be priced appropriately in the next few quarters, at for more reasons than least. In fact, they may well addressing the fiscal deficit bring down the growth rate. alone. Raising the price of Investment spending barely diesel by five rupees per litre or registered growth in the April- capping the number of June quarter at 0.7% (y/y). In subsidised cooking gas sum, the second quarter growth cylinders per family are good report presages more slowdown but small steps. in the quarters ahead. The Bernanke-led Federal Other economic data Reserve committed to an open- underscored the possible ended asset purchase stagflation that confronts India. programme in mid-September, The growth rate of production ostensibly to boost economic in the index of eight core growth in the United States. industries dropped to 2.1% in Unfortunately, these do not August from 3.8% in June. This bode well for India’s growth and index was growing at the rate of inflation. Risks to the former 7.8% in November last year. are firmly to the downside, while for the latter, it is on the While both imports and exports upside. It is not just the have slowed in the current monetary policy of the financial year compared to the American Federal Reserve (we last, the case of oil import bill is note here that Bernanke is interesting. Year-to-date up to visiting India in the second August, the oil import bill was week of October) that would US$66.69bn. In 2011-12 for the create headaches for India. corresponding period, the Other central banks emulate amount was US$64.87bn. The the Federal Reserve out of slowdown in economic activity conviction or compulsion. The is not reflected in oil imports Swiss National Bank is trying because of India’s oil subsidies to keep the Swiss franc from that result in higher fiscal appreciating. The Reserve Bank

VIVEK : Issues and Options October– 2012 Issue: I No: X 55 of Australia is Notwithstanding Notwithstanding the recent explicitly spurt of activity, it is unclear if the recent spurt concerned about the government is prepared to of activity, it is the strength of take and is ready to prepare unclear if the the Australian the nation for tougher government is dollar and cut measures. Credible leadership prepared to take that communicates effectively interest rates and is ready to and actively can carry the early in October. nation along during these prepare the Cumulatively difficult times. Suffice to say nation for and collectively, that policy measures in the tougher the monetary last two weeks do not go far measures. stimulus of the enough in restoring the Credible credibility (lost in the previous West will wash leadership that eight years) of the nation’s up on our leadership. Tough times are communicates shores. The chief not behind us, but still lie effectively and consequence will ahead. actively can be a rise in the carry the nation cost of living through a rise in along during these difficult the prices of essential goods. times. Suffice to say that policy Both the public and the measures in the last two weeks government have to abandon do not go far enough in their profligacy and embrace restoring the credibility (lost in prudence. the previous eight years) of the nation’s leadership. Tough times are not behind us, but still lie ahead.

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VIVEK : Issues and Options October– 2012 Issue: I No: X 56

The Justice System And The Secular State

- Dr. M.N. Buch

ujarat has been touted 1984 and at that time the around as a State Congress ruled at the Centre G steeped in and in many other States in communalism, with a India. Not a single conviction government which is right has been obtained for these wing, extremist Hindu, anti horrendous riots in which, in Muslim and totally communal Delhi alone, three times more in outlook. The Congress, on the Sikhs were killed than the other hand, projects itself as the number of Muslims allegedly party which is secular, pro- killed in Gujarat in 2002. The minority and, in particular, entire Hindu Pandit population totally protective of the of the Kashmir Valley was Muslims. The pro-Muslim driven out and they became secular stance of the Congress refugees in their own country. formed the main plank of its Not even one of the culprits of election campaign in the recent this ethnic cleansing has even elections in Uttar Pradesh, the been prosecuted, leave alone end result of which was that the been convicted. The Pundits, Congress got only twenty-six even today, are either living in seats in the State Legislative refugee camps or are scattered Assembly and trailed behind throughout the country. BJP to emerge as number four Neither the activists who claim in the electoral race. By secular credentials nor contrast, in the allegedly government has raised a finger communalized State of Gujarat, to help these refugees. the Mephistopheles of Indian politics, Narendra Modi gave In 1992-93 the worst rioting tickets to and was able to have post Babri Masjid demolition elected over a hundred Muslim occurred in Maharashtra, most candidates in local government notably in the city of Bombay. elections. Anti-Sikh riots took The State was then under place all over the country in Congress rule. No one has been

* Dr. M.N. Buch - Visiting Fellow, VIF

VIVEK : Issues and Options October– 2012 Issue: I No: X 57 convicted for these riots and the There have been Bodo Commission headed by Justice casualties also, but as it Shri B.N. Srikrishna gave a happens in many communal very categorical report, in conflicts, it is the Muslims who which officers who failed in had suffered the most. Even the their duty were identified and international community has named, but has been completely taken note of what has ignored by government. Both happened in Assam, with the Congress and NCP in their unfavourable comments about election manifestos promised to how we have handled the implement the situation. The Chief Minister of recommendations of the Assam, who is a Congressman, Srikrishna Commission, but had at an early stage reacted to nothing has press reports happened in this The latest in the series is the that Assam was behalf despite complete break-down of law burning by the fact that it is and order in four districts of stating that the Assam, with the Bodo tribal a coalition of the media had being in direct conflict with the Congress and Bangladeshi Muslims. exaggerated as NCP which is in Allegedly, these Muslims are usual and that power in illegal migrants from only three Maharashtra. Bangladesh, whose presence is districts were resented by the Bodos, which aflame. has resulted in direct ethnic The latest in the Considering the conflict. series is the size and complete break-down of law and population of an Indian district order in four districts of Assam, the Chief Minister virtually with the Bodo tribal being in confessed that an area direct conflict with the containing a population of five Bangladeshi Muslims. to six million people was Allegedly, these Muslims are seriously affected and that he illegal migrants from considered this as a fairly Bangladesh, whose presence is minor event. This could only be resented by the Bodos, which expected from a Chief Minister has resulted in direct ethnic who, in order to win the conflict. Several hundred election, had played the villages have been burnt down contrary communal card by and lakhs of people displaced. ignoring the Muslims to win the

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Hindu votes which otherwise playing the communal card and might have gone to the BJP. when it suited the LDF, it allied Can such a government be itself with the Indian Union considered secular? Muslim League. Surprisingly, in a State in which the BJP has What about our friends from a poor political presence, RSS is the Left? Undoubtedly, the Left quite strong, partly because of Front Government in West communal Muslim politics¸ Bengal had a popular image of which is why there have been a secularism, so much so that in number of communal clashes in 1984-85 the Sikhs as a Kerala, especially in the old community publicly honoured Madras Presidency Malabar the then Chief Minister, Jyoti District (now divided into Basu, for ensuring security for several districts). LDF did little the Sikhs and maintaining to oppose such communalism, communal which does not harmony. It is However, in Kerala the Left speak well for its also a fact that Front had no inhibition secular West Bengal whatsoever in playing the credentials. remained communal card and when it relatively free of suited the LDF, it allied itself Let us revert to with the Indian Union Muslim Hindu-Muslim League. Gujarat. No one conflict during can be an the Left Front rule. Towards apologist for what happened in the end, this image had begun 2002 and in one letter to the to change and that is because Prime Minister I have said that massive land acquisition in had I been Governor of the Nandigram largely affected State I would have strongly Muslim cultivators and the advised the Chief Minister and Trinamool Congress was able to actually ordered the Chief project this, at least partially, Secretary and the Director as the anti-Muslim policy of the General of Police to restore Left Front. The fact that this order immediately. I would was not true is not really have also gone around the State relevant in the electoral politics and if I saw any rioting I would of the India of today. However, have ordered my escort to fire in Kerala the Left Front had no on the mobs and disperse them. inhibition whatsoever in This would not have gone down

VIVEK : Issues and Options October– 2012 Issue: I No: X 59 well with the Government of of the 2002 riots and a large India and would have probably number of people have been resulted in my immediate convicted. This is as true of the removal, but nevertheless, this Best Bakery case as it is of the is how I would have interpreted Naroda Patiya case in which Article 154 of the Constitution thirty-two persons, including an which vests the executive power ex-minister, have been of the State in the Governor convicted. A great deal of credit and also acted according to the must go to the Supreme Court, oath sworn by me under Article which has forced the Gujarat 159 which required me to Government to act, has preserve, protect and defend activated the Gujarat Police the Constitution and the law. I which bore the brunt of the would have seen it as my duty investigation, and set up an to remind the Chief Minister impartial Special Investigation that the law required him to Team (SIT) which has maintain law and order and I spearheaded the investigation. would certainly consider it a Everyone is considering the breakdown of the Constitution convictions as a set back to if the State itself became a Narendra Modi. I disagree with party to lawlessness. At the this because the Gujarat same time, it is equally a fact Government has, however that neither in Delhi, nor in reluctantly, gone along with Maharashtra, nor in Assam, investigations and has neither nor in Rajasthan during the obstructed them, nor interfered recent conflict between the Jats with the course of justice. Even and the Meos has any in the Sohrabuddin case, where worthwhile judicial action been the ex-Minister of State for initiated and large-scale Home, a DIG and other police conviction of wrongdoers officers are facing murder obtained. No doubt, Nitish trials, the Gujarat Police has Kumar in Bihar, who is truly not destroyed the evidence and, secular, has been able to take therefore, the relevant SIT has effective legal action. been able to proceed with the Otherwise, Gujarat is the only investigation. The encouraging State in India where six thing about Gujarat is that a successful cases have been largely Hindu Supreme Court, fought against the perpetrators an overwhelmingly Hindu

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Gujarat Police and the SIT set substantial Muslim population up by the Supreme Court, there. The Central and Hindu judges such as Jyostna Southern Districts of Gujarat, Yagnik have brought justice to in particular Ahmedabad, the victims of the 2002 riots Kheda, Baroda, Panchmahals, and convicted a large number of Bharuch and to some extent, persons involved in these riots. Bulsar and Surat, were the So long as we have this example focus of the rioting. This region we can be assured that India has had communal conflict even has institutions which are during British days and the secular, though unfortunately worst communal riots in the one cannot say this about the history of Gujarat occurred in political parties. Real 1969 in Ahmedabad when secularism requires the political Hitendra Desai was the Chief class to also be on board. Minister. I had written to Dr. Manmohan Singh when he How communal is Narendra became Prime Minister that the Modi? To his opponents he is history of this part of Gujarat is the communal devil incarnate, such that regardless of which who is unrepentant about what party in power, this region will happened in 2002, who refuses remain prone to communal to apologize to the Muslims and tension. I suggested that a whose ministers interfered with person of the calibre of P.S. the maintenance of law and Appu, IAS should be asked to order during that crucial hold a free ranging period. But is there another administrative enquiry into the side to Modi? In the State of causes of communal unrest in Gujarat in 2002 the whole of these districts and to look into Saurashtra remained largely why the district administration peaceful and the district and the police did not react administration and the police strongly and positively to a intervened strongly and communal situation. If the root effectively to keep the area cause of Hindu-Muslim peaceful. This was true of animosity could be identified Kutch as well. North Gujarat, and then removed Gujarat mainly the Sabarkantha and would be peaceful. Narendra the Banaskantha Districts, Modi was a phenomenon, but remained peaceful despite the he was not the cause of

VIVEK : Issues and Options October– 2012 Issue: I No: X 61 communal strife in these them have prospered. Even districts of Gujarat. The though the Muslims are hardly underlying cause is much older ever likely to forgive Narendra and deeper. The Prime Minister Modi for the 2002 riots, there responded favourably but did are many of them who believe nothing and, therefore, we still that one must not remain in a do not know why this region of period of mourning for the past Gujarat has Hindu-Muslim and must move forward to a animosity. new future. That is why paradoxically Gujarat is the one Narendra Modi has not reached State with a BJP Government out to the Muslims as such, but where at least some Muslims he has kept have RSS, VHP, BKS Since 2002 there have been no participated in and the Bajrang communal riots in Gujarat and local Dal under strict whatever his detractors might government control since say, Gujarat is a relatively corruption-free State with a elections and a 2002, which is service oriented, efficient small section one reason why government which has has even voted rabble rousers accelerated the pace of for Narendra such as Pravin development. Although there is Modi’s party. Togadia dare not no special effort to bring the They certainly open their Muslims on board, Muslims have not been denied the fruits did not do so for mouths in of development and many of Sonia Gandhi’s Gujarat. Since them have prospered. allegedly secular 2002 there have Congress in been no communal riots in Uttar Pradesh. Gujarat and whatever his detractors might say, Gujarat is Amongst the so-called secular a relatively corruption-free parties, there is a mistaken State with a service oriented, notion that any secularism efficient government which has which is not pro-Muslim loses accelerated the pace of votes. The vast majority of the development. Although there is people of India are Hindu and if no special effort to bring the a polarisation of their votes Muslims on board, Muslims takes place in which the have not been denied the fruits present fragmented Hindu of development and many of votes get concentrated, can we

VIVEK : Issues and Options October– 2012 Issue: I No: X 62 ever keep extremist Hindu of Malta stood collectively with parties out of power? Therefore, the British against the India’s best bet is the politics of Germans in the Second World genuine secularism in which War and exhibited the highest government follows policies degree of gallantry under which give equal opportunities massive bombardment, the to all communities, without Island of Malta was collectively singling out one for opprobrium given the George Cross. On this and another for appeasement. analogy, the Supreme Court of Narendra Modi says that he India deserves the Bharat does not speak for any Ratna for the manner in which community but is concerned it has upheld, protected and only about the ‘asmita’ of six enhanced the status of the crore Gujaratis. Is it not about Constitution of India and in time that political parties begin particular the secular nature of talking about the ‘asmita’ of 110 this republic. My respectful crore Indians without dividing submission to the President and them into religion, caste, class, to the Government of India or region? would be that on the Republic Day awards to be announced on The Bharat Ratna is an 26th January 2013, they may individual award given to collectively award the Supreme individuals who have achieved Court the Bharat Ratna as a high distinction and merit in token of gratitude from this the service of the country. The nation for being the one pillar of George Cross is the highest the Constitution which has gallantry award during peace remained true to its salt. No time for defence personnel and greater tribute could be paid to for civilians during war and what I consider the best peace, which the British can Supreme Court in the whole give. It is an individual award world. and is equivalent to the Ashok Chakra in India. However, Back to contents because the people of the Island

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Much Embarassment From An “Enterprising” Son-In-Law

- A.Surya Prakash he United Progressive public domain recently. Alliance (UPA) T government, which is The IAC’s revelations about the reeling under the impact of massive real estate acquisitions several scams, has fresh trouble by the son-in-law of the ruling coming its way following dynasty raise many questions. revelations about the sudden The first charge is that over the prosperity of Mr. Robert last four years Robert Vadra Vadra, the “enterprising” son- has gone on “a property buying in-law of Ms. Sonia Gandhi, the binge” and has purchased at Chairperson of the alliance. least 31 properties mostly in and around New Delhi, which As per balance sheets of the even at the time of their companies he has floated and purchase were worth several the current valuation of the hundred crores. The second properties he has acquired, it is charge is that the balance estimated that Mr. Vadra, who sheets and audit reports of five invested just Rs 50 lakhs in companies launched by Vadra these firms a few years ago, is and his mother on or after now worth over Rs 500 crore. November 1, 2007 had a total This spectacular rise in the share capital of Rs 50 lakhs and fortunes of Mr. Vadra, whose that over a three year period family had a modest business in they acquired properties that brassware and handicrafts in were then worth Rs 300 crore Moradabad, had been in the and are currently valued at Rs realm of speculation for some 500 crore. time, but is now in the open thanks to Mr. Arvind Kejriwal So, how did Robert Vadra and and Mr. Prashant Bhushan of his mother manage to achieve India Against Corruption (IAC), such spectacular success in the who have put the facts in the real estate business? This leads us to the third charge, namely,

* A.Surya Prakash – Senior Fellow, VIF

VIVEK : Issues and Options October– 2012 Issue: I No: X 64 that Vadra got unsecured, 32 crore when the market value interest-free loans totaling Rs was well over Rs 150 crore”. 65 crore from the real estate major DLF to buy these These facts throw up the properties, which themselves following questions: Why did belonged to DLF. In other DLF give large unsecured words, DLF gave Vadra a “loan” interest free loans to Robert to buy its own properties, but Vadra? Why did DLF sell its there is yet another twist to properties to Vadra at this saga in that even these throwaway prices and on the properties were sold at basis of funds obtained by undervalued rates by DLF to Vadra from DLF itself? These Vadra. transactions need to be investigated because of the IAC says that “The bulk of the possibility of a quid pro quo. properties are also purchased IAC makes a strong case for from DLF at a price which is investigation when it says DLF shown far below the market has been given 350 acres of price. Thus 7 flats in Magnolia land by the Haryana apartments in DLF Gurgaon Government for development of are purchased for a total of Rs Magnolia project in Gurgaon 5.2 crores by Vadra’s companies (where Vadra was allocated 7 when the market price of each apartments) and has also been flat at the time of acquisition given various other properties was well over 5 crore and today and benefits by the Congress its price is between Rs 10 and governments in Haryana and 15 crores per flat. Delhi. Is that the quid pro quo for DLF giving Vadra the seed Similarly a 10,000 sq feet money for the purchase of these apartment in DLF Aralias massive properties worth (Gurgaon) is shown to be hundreds of crores?” purchased for Rs 89 lakhs when its market price at the time of Even more troubling is the IAC purchase in 2010 was Rs 20 assessment that this sudden crore and today is more than Rs acquisition of wealth of around 30 crore. Not just that, a stake Rs 500 crore may just be “the of 50% in a DLF-owned hotel in tip of the iceberg” and that in Saket (DLF Hilton Garden Inn) the year 2012 Vadra has is shown to be purchased for Rs already registered six new

VIVEK : Issues and Options October– 2012 Issue: I No: X 65 companies. It says, “It is clear government went on a studio- that there is a lot of hopping spree after the IAC unaccounted black money press conference on October 5 to invested in these properties of try and demolish the arguments Vadra. What is the source of of Kejriwal and Bhushan and to these funds? Are illicit funds of prove their loyalty to the the Congress party being Congress Party’s ruling funneled into this property dynasty. Some other ministers buying spree by the son-in-law chose to address the media, of the dynasty? The above defend Vadra and lambast IAC. acquisition of properties is only They argued that Mr. Robert what has come to light from the Vadra was a citizen like any documents submitted to ROC other citizen who had the right itself, and to float maybe just the Even more troubling is the IAC companies and tip of the assessment that this sudden to enter into iceberg. acquisition of wealth of around business deals Rs 500 crore may just be “the Preliminary with other tip of the iceberg” and that in information the year 2012 Vadra has citizens and indicates that already registered six new companies; that there are many companies. It says, “It is clear it is common other properties that there is a lot of practice to raise purchased by unaccounted black money loans to invest invested in these properties of him. It’s in businesses; Vadra. significant that and that 6 new companies have also been everything is above board registered by him in 2012.” IAC because all details of the says that, prima facie, these companies floated by Vadra are facts show commission of with the Registrar of offences under the Prevention Companies (ROC) and all these of Corruption Act as well transactions have been reported offences under the Income Tax in the balance sheets of the Act. In any case these questions companies concerned and are warrant a probe by an easily accessible. If Mr. Vadra independent agency. is just an individual, how come so many ministers were Strangely, several ministers in hyperactive on October 5 and the United Progressive Alliance even competing with each other

VIVEK : Issues and Options October– 2012 Issue: I No: X 66 to defend this individual? Also, measuring approximately 3.5 if Mr. Vadra is just a citizen acres just off NH 8 in Village like anybody else, why is there Sikohpur, Gurgaon District. that obnoxious order exempting “This was licensable to develop him from security checks at a Commercial Complex and the airports? LOI from the Government of Haryana to develop it for a A day after Mr. Kejriwal and Commercial Complex had been Mr. Bhushan made these received in March 2008 itself”. allegations, DLF issued a DLF agreed to buy the plot for statement and claimed that all Rs 58 crore and “as per normal their transactions with Robert commercial practice” a total Vadra were transparent. sum of Rs 50 crore was given as However, some responses of advance in DLF only throw installments up fresh If Mr. Vadra is just an individual, how come so many against the questions which ministers were hyperactive on purchase to must be October 5 and even competing Vadra’s answered by Mr. with each other to defend this company. Vadra. DLF has individual? Also, if Mr. Vadra sought to is just a citizen like anybody In other words, demolish the else, why is there that what IAC obnoxious order exempting him charges against from security checks at describes as Mr. Vadra by airports? “unsecured hitting at the loans” is very foundation on which the “business advance” in the eyes arguments are built, namely of DLF. That may be so, but the unsecured loans given by it this only puts the onus on Mr. to Mr. Vadra. The company has Vadra to explain how with a asserted that it did not give any capital of just Rs 50 lakhs, he unsecured loans to Vadra. came to acquire a property worth Rs 58 crore, which was All that it had given him was a given by his company to DLF. “business advance” of Rs 65 DLF also says that it was crore for purchase of land. DLF interested in another parcel of claimed that M/s Skylight land owned by Vadra’s company Hospitality Pvt. Ltd., owned by in Faridabad and advanced a Vadra, approached them in sum of Rs 15 crores to Skylight 2008-09 to sell a piece of land

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Hospitality towards its transactions distinct from those purchase. However, at a later relating to DLF. Since the stage, DLF decided against the statement does not address any transaction and Vadra returned of these substantive issues, it the money advanced to his does nothing to clear the air. company. The company also Nor does it do anything to put a offers explanations for the lid on the emerging scandal. If spectacular rise in Robert there is anything at all that Mr. Vadra’s net worth by claiming Vadra achieves through his that like other clients, Vadra irate response, it is to too got the advantage of price strengthen the demand for an appreciation on the properties independent inquiry. purchased by him. After remaining silent for two days, No amount of studio-hopping by Mr. Vadra decided to speak up. the Union Ministers can help He claimed that the allegations Mr. Vadra shake off these leveled against him were allegations, which are certain to “utterly false, entirely baseless haunt the UPA and inflict and defamatory”. He said his further damage on its political detractors had manufactured and electoral prospects. The lies against him to malign him ruling coalition may open one and his family and “to gain small window of hope to cope cheap publicity”. It was merely with this fresh scandal if it an angry protest in which he agrees to an impartial inquiry sought to attribute motives to by a member of the higher the IAC team. His statement judiciary. But, if it lacks the however did not get down to gumption to order such a probe, specifics and explain the it must remember that transactions between his retribution often comes in the company and DLF. Nor does he guise of a son-in-law! explain where he got the funds Back to contents to buy huge parcels of land in Haryana and Rajasthan –

VIVEK : Issues and Options October– 2012 Issue: I No: X 68

Seminar on Strategic Posture: Sino- Indian Border

he VIF held a Seminar on required it by nature, to “Strategic Posture: Sino- establish its unchallenged T Indian Border” on 3rd supremacy in the immediate September 2012. Eminent neighbourhood. India on its speakers with practical part has to respond to this experience on the subject made challenge by virtue of its presentations on specific geography and rivaling themes. While China’s Strategic competition, both in Posture in Tibet, economically and Infrastructure militarily. Development in Tibet, Ladakh and The Peoples Arunachal Republic of China Pradesh, PLA Air situates its rise Forces Posture in and power from a Tibet were the strategy of “Self- themes discussed Defence Counter- in Session I; Attack”. This Session II dealt multipurpose with PLA’s formulation Posture in Tibet, Situation in describes most instances where Ladakh/Aksai Chin and the China has initiated the use of Situation along the MacMohan force, and effectively implies Line. that that the PLA would launch a “first strike”. The 1962 War In his inaugural address Gen. with India and border war with N.C. Vij (Retd.), former Chief of Russia fall in this category. Army Staff, appropriated the There are various possibilities context of the strategic scenario pertaining to India that follow wherein China’s rise was a from this strategy. First, defining feature of the strategic possibility of an attack could landscape of the 21stCentury. arise within a near term of 3-5 Its supremacy as a global power years when Indian armed forces

VIVEK : Issues and Options October– 2012 Issue: I No: X 69 level of preparedness and based assets by readiness for is an issue under adversaries. debate. Second, a long-term iii. Cyber war capabilities - approach nearing 2020-2025 Intrusion and data theft is when the Chinese military used to collect strategic modernization is expected to be intelligence and attempts completed on the one hand, and to disrupt an enemy’s on the Indian side the essential services like air, capabilities gap would have railways, banks etc. form increased exponentially. part of developing this Gen. Vij analysed the Chinese capability. and India military capabilities iv. Nuclear dimension- a and posed questions in continuation of developing scenarios of conflict so as to their arsenal and blue assess counter-capability water fleet. The stated strategies by India. He “No first use” Chinese cautioned that some areas of policy is not explicit and it excellence by the Chinese can therefore commits them to only serve to increase the gaps nothing. over the years. These include; Brig. Gurmeet Kanwal focused i. Prowess in asymmetric on China’s Strategic Posture in warfare, particularly in Tibet as his central theme in C41ISR that can empower Session I. He observed that commander to respond to there was a steady complex battlefield improvement in India-China conditions with agility relations apart from the and synchronization. security relationship. And, while there is stability at the ii. Space and Counter-Space capabilities. The strategic level, China has been deployment of satellites showing signs of political, enables real time transfer diplomatic and military of data to ground stations aggressiveness at the tactical as also multi-dimensional level. There is an urgent need programs to limit, or to resolve the territorial dispute deny, the use of space- by creatively working around the stated positions of both

VIVEK : Issues and Options October– 2012 Issue: I No: X 70 countries, failing which the Air Marshal K. K. Nohwar security relationship would (Retd.) elaborated on the PLA deteriorate further. Air Force Posture in Tibet. He gave out details of the PLAAF Lt. Gen. Gautam Banerjee infrastructure in Tibet and (Retd.) presented a paper on their operational capabilities in Infrastructure Development in Tibet. He also dwelt upon the Tibet, Ladakh and Arunachal missile sites and the type of Pradesh. The central premise of exercises carried out by both infrastructure development PLAAF and missile forces. precludes the questions, logistic infrastructure for what and In Session II of the Seminar that the development of commenced with Brig. Arun logistics is military specific. He Sahgal’s (Retd.) analysis of averred that at present, India the PLA’s Posture in has a deliberate go-slow policy Tibet. India’s strategic concerns and crucial to this would be the regarding China arose from its efficacious management of lead emergence as the most time. The essential doctrine influential actor in Asia with should be of a Unified Logistic the ability to shape the future System which is in an regional balance of power. integrated manner to be able to Growing Chinese influence in ‘sustain war’; it comprises India’s South Asian backyard mobile warfare that can be and the extended Indian Ocean waged at the strategic and Region (IOR) were worrisome tactical levels, a purpose of trends, where it believes Beijing power projection, adequate fire to be severely depreciating its power and a modular system for area of influence. China backs RRFs. A joint logistics-support its aggressive assertions with a system is integrated to civilian steady build up of infrastructure, comprises a comprehensive national power multi-mode transportation and military capability in the element (land and air). There region. Its military budgets should be reserve logistic have annually grown in double support units and depots and digit figures over two decades, forward stocking. and the current 2012-13 Financial Year outlay crossing US $ 100 billion. Such

VIVEK : Issues and Options October– 2012 Issue: I No: X 71 enhanced military spending away and in some areas are and concomitant growth in its connected with tributary roads. military industrial complex The Indian reality and prowess continues to fuel apprehension is somewhat at a disadvantage of an assertive role in Asia and on these scales. At present, beyond. Among other things he there are several pockets of also spoke on PLA’s force disputes over claimed areas like deployment opposite India. Chushul, Demohon, etc., which fray the Chinese and Indian The Situation in Ladakh/Aksai relationship. There are three Chin was the subject of Lt. Gen. elements to the claims. i.) They Vijay Ahluwalia’s could be mutually agreed (Retd) exposition in the larger disputed areas, ii.) Areas of Strategic Posture at the Sino- differing LAC perception, and, Indian Border theme. He iii.) Emerging disputed areas. provided a detailed analysis with the aid of topographical Major Gen. Dhruv and illustrative maps of the Katoch (Retd.) made an precarious and delicate analysis of the Situation along geographical realities in the the MacMohan Line. The line Middle Sector and the Western extends from the Bhutan tri- Sector. The Line of Actual junction to the border with Control and demarcated Myanmar amounting to 1150 boundaries in inhospitable km in length with altitudes terrain is a constant tug ranging from 13000-20000 ft. between the Indian and The terrain on the Indian side Chinese counterparts. The comprises five main valleys – topographical boundary line is Lohit, Dibang, Siang, Subansiri often based on perceptions and and Kameng. Independent not actual calculations which operations take place along results in constant flagging of each valley through the existing territory. Infrastructure plays a communication links. The big role in military strategy and conflict between the two posturing which the Chinese countries exists because the have harnessed to their Line is not accepted by China advantage admirably. A and there are differences in national highway runs parallel interpretations, like the to the LAC some kilometers Wangdung incident illustrated.

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A further problem is created external affairs, academicians since the line is not demarcated and scholars. and rather based on Back to contents perceptions.

In the end, Ambassador Kanwal Sibal made the special remarks and summed up the discussions during the course of the Seminar. It was widely attended by serving and retired officers from the defence establishment and ministry of

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Interaction With Dr. Ing-Wen Tsai, Former Chairperson, DPP, Taiwan

On 20th September 2012, Fellow. Professor M. D. Vivekananda International Nalapat, Honorary Director, Foundation (VIF) hosted an Geopolitics and International interaction with Dr. Ing-Wen Relations, Manipal University Tsai, former Chairperson of the also participated in the Democratic Progressive Party interaction. (DPP), Taiwan and Presidential Candidate from the DPP in The nearly two hour long January 2012. Dr. Tsai was discussion mainly focused on accompanied by Mr. Antonio Chiang, columnist and former Deputy Director, National Security Council, Taiwan. H.E. Wenchyi Ong, Representative of the Taipei Economic and Cultural Centre in India was also present on the occasion.

The VIF team was led by its Director Mr. Ajit Doval, K.C. the Asia-Pacific region, on the and comprised of Jt.Director Taiwan economy and on India- Amb. P. P. Shukla, Taiwan relations and prospects Distinguished Fellow Gen.(retd) for enhancing cooperation and N. C. Vij, Distinguished Fellow growth. Lt.Gen.(retd) Ravi Sawhney, Vice-Admiral (retd) Raman Puri, Senior Fellow Mr. Sushant Sareen, and Brig. Back to contents (retd) Vinod Anand, Senior

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National Security: Challenges and Responses

he former Army Chief envisioning what may come General (retd) VK Singh, tomorrow. T addressed a distinguished gathering at the VIF’s monthly Giving a broad overview of what Vimarsha series of talks by encompasses India’s national eminent persons, held on 24 security, General VK Singh September, 2012. He enlightened highlighted that the concept of the audience about the broad national security, under the spectrum of security challenges changed circumstances, entailed a currently facing India, through a whole range of issues: economic, stimulating yet incisive talk, diplomatic, political, power captioned ‘National Security: projection and myriad other things Challenges and Responses’. that go into making the spirit of a Putting the session in perspective, nation. More specifically, it is Shri AK Doval KC, Director VIF, about transforming the nation into remarked that after independence a wholesome state that can India inherited a security doctrine withstand all kinds of threats and which was essentially Western; it challenges, whether external or had Western values and political internal. While the General philosophy superimposed on it and insisted that the core principles the entire security edifice was underlying India’s national built around one single political security remain intact, he urged philosophy i.e. protecting the the intelligentsia to take a wider colonial interests of the British. view of security. He also stressed He also alluded to the fact that that India’s national security that the failure to reform quickly needed to cater for her desire to led to the debacle some years carve out a distinctive place for later. The Director, however, herself in the broader regional and underlined the need for not just global arena. In this context, reform but the complete shaping up the immediate transformation of India’s security neighbourhood becomes a top apparatus, visualising changes national security imperative. He, taking place elsewhere as also however, regretted that India’s

VIVEK : Issues and Options October– 2012 Issue: I No: X 75 foreign policy vis-à-vis her national security challenges, neighbours were such that they including the Af-Pak situation and created more confusion and left its possible fallout for India, the neighbours confused. India insurgency in Jammu & Kashmir needs to be more cautious and and India’s Northeast, support to pragmatic when it comes to various terrorist and insurgent dealing with smaller neighbours groups from across the border, like Sri Lanka, Nepal and others. governance deficit leading to growth in left-wing extremism, Speaking of external threats, maritime security challenges etc., General Singh said that coping he also underscored the with China remained by far the imperatives for India’s military biggest challenge for India. The modernization, especially the need unsettled border provides a leeway for developing greater synergies to China. China’s between the civil growing proximity and the military, with Pakistan, removing however, poses potential even a greater bottlenecks in challenge to India. defence Growing Chinese procurements and infrastructure achieving greater development indigenisation in along India’s defence Northern borders has also created technologies through collaborative apprehensions about China’s efforts between the Government, intentions. Further, there is also a the private and the academia. possibility of Chinese goods Threats emerging in cyberspace flooding the Indian market via and outer space have added new Wal-Mart and other international dynamics to national security. retailers. He underscored the need India needs to develop robust for a proper policy response to mechanism to prevent these cater for any eventuality arising threats and also to launch counter out of China’s possible courses of offensive whenever needed, action. General VK Singh Said.

While the former Army Chief Gen. VK Singh’s talk was well touched upon a wide spectrum of received by the audience and

VIVEK : Issues and Options October– 2012 Issue: I No: X 76 resulted in a lively question long term and short term answer session. Gen. Singh again perspectives. emphasized the need for being well prepared to meet the likely Report prepared by Sanjay Kumar security challenges in both the

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