Fixing Sport

Background

  The amount of attention devoted in the media to the Cricket fixing scandal is an indicator of the amount of interest in sport, among those who watch TV. This is just a fact.  I disagree with the Moralists who draw all kinds of high minded lessons from this about sociological bias. It is however time to turn ones attention to possible solutions for cleaning up sport.  A number of people have proposed legalising of betting. Others have pointed out that this will not cure the fixing problem per see.   The other problem is the existence of huge rents in the system.  Economic rents arise whenever there are natural or created monopolies - in this case the latter.  This attracts rent seekeers and politicans into the game. In our view piecemeal solutions are not the answer. An integrated view is required.  This has to be based on two important elements: Competition and transparency.

A New Sports Law

The foundation of a new Sports law, must be a distinction between a commercial and a non-profit organization with strict rules for distinguishing between public limited companies and societies.  Thus one would expect all cricket related organizations like IPL (national) or State level cricket organization to be required to be set up as Public Limited companies (for profit or non profit) , while a National/State "Gulli Danda Association" or "Village Cricket society" could be a societies.  The essential difference between a for profit and a non-profit company is that the latter cannot distribute profits to its shareholders.

The law must also specify rules for competitive practice by these public limited companies:  We have seen in earlier years, how exclusive contracts with players and advertisers were used to drive competitors from the market.  The law must be carefully frames keeping these unfair practices in mind, so that the Competition Commission of India can ensure competition in future.  These corporations, like all others would have to have transparent accounts fully audited by independent auditors.  They would also have to pay all taxes on their commercial earnings (advertising, stadium fees, branding activities).  They could however be allowed to seek tax exemption from the tax department on their donations to non-profit sports societies.


 Rules would have also be framed with respect to player contracts and player obligations with respect to non-cricketing activities and receipt of payments for not performing their contractual obligation to play well (i.e. fixing matches). The contract would be nullified in such a case and penalties should become applicable.

As part of the sports law, betting on sports could be legalized.  However, the same level of transparency and competition must be ensured in the betting business.  By definition, the betting company cannot be classified as a non-profit.  However, it could be a private limited or a public limited company. Again the rules for transparent accounting and auditing must be clearly specified and applied to companies that run the betting business.  These companies would of course be subject to Tax Deduction at Source (TDS) rules for deduction of taxes on bet winners.  Special reporting rules, with respect to lottery winners,  may also be needed to ensure that this channel is not used for money laundering.

Conclusion

These measures will not eliminate either fixing, black money or the politician-business nexus.  They will however help reduce its prevalence.  The reason is that as long as the rule of law is so pathetic and general governance is so poor more laws can only be a palliative.

Acquire Drones & Develop Drone Bases

Introduction

"The military role of unmanned aircraft systems is growing at unprecedented rates. In 2005, tactical- and theater-level unmanned aircraft alone had flown over 100,000 flight hours in support of Operation Enduring Freedom and Operation Iraqi Freedom, in which they were organized under Task Force Liberty in Afghanistan and Task Force ODIN in Iraq." In addition to intelligence, surveillance, and reconnaissance missions, drones are used in "electronic attack, strike missions, suppression and/or destruction of enemy air defense." MQ-1 Predator UAVs armed with Hellfire missiles are increasingly used by the U.S. as platforms for hitting ground targets. Smaller weapons such as the Raytheon Griffin and Small Tactical Munition are being developed as a less indiscriminate alternative and development is underway on the still smaller, US Navy-developed Spike missile." (Wikipedia)

Drone Bases

   India has taken note of these developments in drone technology and warfare, purchased surveillance drones from various countries and started a drone research and development program. It however needs a bolder operational program for development of drone airfields and deployment of armed drones. Firstly, India should develop an airfield and supporting facilities in the Lakshadweep Islands, that can be used as a staging area for long endurance drones to cover the entire Arabian Sea.  We must have the capability to send advanced armed drones to take out identified and known Indian criminals and anti-India Jehadist based in the Arabian Sea littoral up to and beyond the north-west edge of the Persian Gulf. These drones should also have the endurance to reach Central Asia, so that we have the capability assist Governments of this region who may need or request our help in anti-terrorist operations.

Second, the existing airfield in the Andaman and Nicobar Islands should be augmented as necessary to develop a full fledged drone base.  This drone base would cover the entire Bay of Bengal, the Mallacca Straights and the N.E Indian Ocean.  It should also have drones of a range that can, in an emergency and at their request, provide support to friendly countries in S E Asia, such as Myanmar, Thailand, Singapore and Indonesia. If necessary, either drone base(s) can be used jointly with any country that is willing to give India 1st generation drones for the purpose for which each drone airfield/base is developed.

India-US Co-operation

 We should explore opportunities of co-operation with the USA, which has the most sophisticated and advanced program for use of drones for targeting terrorists. The Government of India should be willing to join USA in hunting down terrorists in return for helping us acquire the advanced equipment and skills necessary for track and hunting terrorists.

Post-Script (22/11/2015)

 News paper reports say that India has asked the US for 100 armed drones such as the Predator, to be followed by the latest Avenger drones. The paper speculates that this is necessary for meeting the threat from China. A week earlier, a news report had indicated that the Indian Govt had cancelled its Nishant drone program because of repeated delays in meeting deadlines. This suggests that the new Raksha Mantri has carried out a serious review of the drone R&D program and the defence forces requirements for armed drones and decided that these drones are urgently needed and thus need to be purchased from the US.

Food Security Bill: What Will it solve?

PDS and FCI 

  In the decade or so that I spent in the Planning Commission, the Food Ministry, under which the Public Distribution System (PDS) and the Food Corporation of India (FCI) run, was always one among other Advisory responsibilities on Development Policy.  It did not take very long to find out that the fundamental problem with the system was about so called “leakages” abetted by corruption:  One soon learnt that FCI was one of the most inefficient and corrupt organizations in the government. At that time available estimates of leakage plus administrative costs ranged between 40% and 55%. The other problem was of exclusion – some poor people did not have access to a ration card or subsidized food, whence the horrifying reports of starvation in remote and tribal areas of the country.  This led me to propose the introduction of a Food credit/debit card using smart card technology, which could be integrated with the food for work program and also have the inbuilt flexibility to change over to an income transfer system if desired (Planning Commission Working paper 5/2002).[1]  Instead of dealing with the very difficult political and bureaucratic problems that have stymied genuine reform of the food system, the “Food Security Act,” proposes to deal with these problems with, ”A stroke of the pen.” Unfortunately very little will change, besides providing lucrative new opportunities for bureaucratic and political corruption!

Hunger & Malnutrition

What are the real problems that are still awaiting serious government and NGO attention?  In 2004-2005, 2% of households suffered from hunger at some point during the year and about 25% of people were below the poverty line, but as many as  45% of children below the age of 3 (5) years were malnourished.  If we leave philosophy and politics aside, these facts suggest that,

(a) As hunger affects only 8% of the poor, the food security bill and anti-poverty programs are not the best way of reaching the hungry, who are dispersed across the country and in tribal and remote areas.  The hungry have to be individually and geographically identified/ located. Once this is done it would not cost much to eliminate this hunger through direct cash or food transfers, depending on whether there are or are not competitive food markets in the area where they live.  Thus in remote or hilly areas it is probably necessary to supply food.

(b) Malnutrition is a much bigger problem than poverty and the causes are unlikely to be the same, even though there may be some overlap.  Anti-poverty measures/programs are unlikely to solve the malnutrition problem.

Facts and Analysis

Analysis of the state wise 2004-5 NSS and 2005-6 NFHS data led to the conclusion that the most important cause of malnutrition in India was the abysmal state of ‘public health’ in terms of sanitation, pure drinking water and public knowledge about the importance of cleanliness (al la germs in dirty water, dirt and grime) and nutrition (basic food groups etc.).[2]  If this appears surprising, think about the simple act of eating and digesting food and absorbing energy and nutrition from it.  A child or adult who is sick with diahorea or dysentery can eat as much as (s)he wants but will not be able to absorb it effectively.  Recent medical research goes further, to show that even those children who are living in unsanitary conditions, but do not show any symptoms of gastro-intestinal disease, are infected with germs in their intestines that do not allow them to absorb nutrients from the food they eat.

Cross country analysis of malnutrition data confirms the conclusions of the India analysis.[3] The quality of public health, as measured by variables such as access to better sanitation and improved water sources, explains much of the cross-country variations in the prevalence of malnutrition and the high malnutrition in India relative to other countries with similar levels of per capita income and poverty.  Improvements in environmental sanitation are the clearest and most effective policy-program tool for the Central government to reduce if not eliminate the excessively high levels of malnutrition in India.  The cross country compliments the Indian Inter-state study by showing that female primary education, is an important factor in  reducing child malnutrition, by helping spread information and knowledge about personal hygiene, sanitation and nutrition.

Conclusion

     The Food Security Act will have little or no effect on malnutrition, poverty and hunger.   Hunger can be eliminated if and only if the government and/or NGOs identify the 40 lakh affected households and ensure that cash or food reaches the principle female (mother) of the household.  An, “Elimination of Hunger Act”, with severe penalties for officials in whose area a hungry family is found, could do this at a small fraction of the cost.  Child malnutrition can be dramatically reduced, if not eliminated within a decade, through a massive “public health” campaign: This would insure a modern sewerage and sanitation system in every urban, semi-urban and semi-rural area and pure drinking water, septic tanks and lavatories in rural areas.

A version of this note appeared on the Op Ed page of the Times of India, of Feiday 7th June, 2013, under the banner, "What we need is not a Food Security Bill but a Hunger Elimination Act. " http://timesofindia.indiatimes.com/home/opinion/edit-page/What-we-need-is-not-a-food-security-Bill-but-a-hunger-elimination-Act/articleshow/20465002.cms 

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[1] Arvind Virmani and P. V. Rajeev, “Excess Food Stocks, PDS and Procurement Policy,” Planning Commission Working Paper No. 5/2002PC, December 2001. http://www.planningcommission.nic.in/reports/wrkpapers/wp_pds.pdf.

[2]  Arvind Virmani, “The Sudoku of Growth, Poverty and Malnutrition: Lessons For Lagging States,” Working Paper No. 2/2007-PC, Planning Commission, July  2007. http://planningcommission.nic.in/reports/wrkpapers/rpwpf.htm

[3] Virmani, Arvind (2012), “Under Nourishment in Children: Causes of Inter-country variation,”  Working paper number WsWp 4/2012, October 2012. http://sites.google.com/site/drarvindvirmani/working-papers.

Indo-Pakistan Relations a la Nawaz Sharif

Introduction

     In an earlier note in this journal I had outlined how Pakistan policy towards use of Jehad against India is likely to evolve with the departure of US/NATO troops from Afghanistan in 2014 (http://dravirmani.blogspot.in/2013/02/pakistan-army-action-possible-motivation.html).  The recent fairly successful election in Pakistan has given rise to intense speculation of the changed prospects of better relations between the two countries.  Aggressive questions by Indian Media have forced Nawaz Sharif to express positive sentiments about peace with India and to invite the Indian PM for events normally not attended by foreign dignitaries.  This has already given rise to a counter statement by Syed Salahuddin, head of Hizbul Mujahideen(HM) and member of the Jehad Council warning him not to dilute Pakistan's anti-India policy. What is the likely policy orientation of a Nawaz Sharif led Civilian Pakistan Government and how if at all is it likely be to be different from policy under the previous Civilian Government?

Nawaz's Support Base

  Nawaz Sharif owes his clear victory in the election at least in part to, (a) The branding of PPP & ANP as "secular parties" by the Tehrik-e-Taliban Pakistan (TTP) and its deceleration of war on them during the elections (assassinations/bombing of their candidates, workers and supporteres). (b) Close relations with and support of the Jehadi parties in Punjab like the Jamat U Dawa(JuD) / Lakshar-e-Toiba(LeT) and the Jaish-e-Mohammad(JM).  Add to this the votes and seats won by Imran Khan's Pakistan Tehreek-e-Insaf (PTI) and the Jamat e Islami (JI), the religious fundamentalist base is large.  Like any good politician he is unlikely to openly challenge the objectives of these parties (e.g. Salafi/Wahabi Islamization of Kashmir), which he perhaps shares.  He may however, try to convince them to change their strategy and tactics in the interest of Pakistan's global image and failing economy. 

The other part of his support base, the lower middle class youth looking for jobs and earning opportunities and businessmen looking for profits, could in contrast provide him with an equally strong base for normalizing economic relations and exploring new avenues for mutual economic benefit.  To the extent that terrorist bombings and assassinations in Pakistan are a threat to foreign, non-resident Pakistani and even domestic investment (capital flight), the base could support strong measures to restore law and order in Pakistan.

Pakistan Army Objective

  As I wrote earlier, "As far as the Pakistan Army is concerned the most important event that will shape its behavior in the next two years is the accelerated withdrawal of the US from Afghanistan. This withdrawal provides it a golden opportunity to restore its hegemony in Afghanistan.  Ideally the Army would like to reestablish the dominant position it had before the Taliban was driven out of Afghanistan and established its headquarters and operating bases in Pakistan (Queta Shura, Wazirstan et al).  Failing this it would be happy with a regime that sub-serves the Pakistan Army’s interests.  This is likely to be the central and most vital objective of the Pakistan Army and its primary operational instrument the ISI, during the next two-three years."

I concluded that, " The hostile Pakistani army action across the LOC is a signal to the Pakistani jihadists that the Pakistan army and Government are not abandoning their anti-India policy, in their respective quests:  The Army for a dominant role in Afghanistan, financed and underwritten to the maximum extent possible by the USA and the Civilian Government for normalization of relations with India so as to remove the stigma of being dubbed “terrorist central” and to reduce the control of thee Army over the political system and government."

Democratically Elected PM

     Nawaz Sharif's assumption of the reins of government with a democratic mandate reinforces these conclusions and fleshes them out more clearly.  Nawaz Sharif in full co-operation of the Army is likely to promote a shift of Jehad related activities (promoting, training, organising, managing jehad), out of Pakistan and into Afghanistan and the badlands of the Af-Pak borders to increase deniablity.  As he said,  he will "not allow Bombay type attacks from the soil of Pakistan."  He may also try to moderate the Jehadi's anti-India & anti-US rhetoric and to keep it out of media that can be accessed easily by foreigners and foreign (including Indian) media. On the other hand he may give a freer hand to diplomats and Jehadi's on speaking about Kashmir related issues, while simultaneously stepping up the decibal level on the need for Indo-Pak peace.

Economic Relations

    If Nawaz Sharif and his party choose, they can bring about complete normalization of economic-business relations(including investment), trade and transit (to Afghanistan & Central Asia) policy and infrastructure connectivity between Pakistan (+PoK/AK) and India (including J&K). As these are mutually beneficial relations, on our side the need is to meet each other half way (there is no need for special concessions by either party).  many of these ideas were discussed at a Seminar that I attended at the Wilson Center in Washington with eminent Pakistani economists & retired bureaucrats in late 2012. If Pakistan chooses it could become the trading and transport hub for connecting thriving economies of  Central Asia, India, Afghanistan (mineral resource potential) and Iran/Gulf countries. The TAPI pipeline project could be brought more firmly on the agenda.  Permanent Normal Trading Status (MFN) is economically minor but politically important foundation on which this mutually beneficial relationship can be built. As noted by many observers, the two Punjabs could play a very important role in creating the positive narrative to smooth the political path.

     In this, I differ somewhat with Mr Shyam Saran (BS 15/5/13) who favors an incremental approach. I would favor an approach that asks the new government how quickly and how far they are willing to go on all economically related issues and be willing to move as fast as they are able to do.  I must warn that moving fast does not mean making asymmetric concessions: If the new democratically elected government of Pakistan cannot convince its on electorate of the benefits to Pakistan of economic normalization, then no amount of concessions can help in convincing the masses: They would merely be seen as attempts to bribe special interests to adopt anti-national policies.  Both bilateral and SAARC processes need to be activated to provide a greater flexibility.

        On our side, we need to isolate such non-concessional, mutually beneficial relations from becoming hostage to jehadist bombings in India.  Empty gesture that do not harm the Pakistan Military, its terrorist instrument the ISI, and the Jehadists managed by them, have no effect on their behavior.  We really have to be more innovative and bolder in disrupting the Jehad supply chain and taking the fight to them.

Conclusion

     In my view there is likely to be little or no substantive change in policy towards cross border Jehad, though it may be better nuanced and supported by a more credible civilian government narrative, which will again fool many analysts in the West (you can fool some of the people all of the time).  However, the new government has the support base and democratic mandate to take significant steps towards normalization of economic relations with India.  We should be prepared to meet them half way to wherever and however quickly they want to move on this area.

Chinese checkers in Arunachal and Ladakh: Good Cop Bad Cop?

Introduction

News reports (April 26, 2013) indicate that the People’s Liberation Army(PLA), has established a temporary post of five tents with 50 soldiers, 19 miles inside the Line of Control (LAC) .  Though Chinese patrolling outside its 1960 claim line and inside our LAC are not unusual, the establishment of a tent camp so far inside Indian Territory is noteworthy.  What is China’s motivation and what if anything should India do about it?  In my view the Chinese move in Ladakh is reminiscent of its earlier maneuvers on Arunachal Pradesh.  Both were designed to extend its (1960) claim line beyond what it had established in 1962. 

Arunachal Pradesh

    An earlier note titled, ‘China’s Foreign Policy under New Leadership’  (http://dravirmani.blogspot.in/2012/12/chinas-foreign-policy-under-new-leaders.html), stated that, “ in 2006 there were indications of the emergence of differences within the Chinese leadership on policy towards India.  On the one hand President Hu Jintao’s visit to India in November 2006, seemed to go pretty well, with a fairly positive Joint Declaration at the end of the visit. On the other hand, just before the visit, the Chinese Ambassador to India, Sun Yuxi gratuitously queered the pitch by bluntly claiming that the Indian State of Arunachal Pradesh was entirely a part of China.  Wiki leaks later reported that both the Indian and Chinese leadership were surprised by this undiplomatic (in your face) statement prior to a goodwill visit of the Chinese Party Chief and President.  A number of other pinpricks to India followed, such as refusal of visas to residents of Jammu and Kashmir.”

“ In May 2007 China refused to grant a visa to an Indian Administrative Service (IAS) officer from Arunachal Pradesh, suggesting that there was a viewpoint within the leadership arguing for a tougher stance on the India-China border issue.  It is possible that the hardline viewpoint, generally associated (by scholars) with the PLA, were drawing negative implications for China from the Indo-US Civil Nuclear Agreement signed in July 2005 and that this negative view took about a year to emerge and even longer to be heard and discussed in the Standing Committee.”

       Having laid down a clear marker of its changed claims in Arunachal Pradesh, China later reached a compromise with respect to multilateral loans to N E India, and also toned down its public professions of the same.  However, if the issue is ever raised again by anyone, expect to hear a loud and aggressive reiteration of the Arunachal Claims.

Ladakh

   It is highly likely that the recent incursion/provocation in Ladakh is an attempt to do on the Western sector what has already been accomplished in the Eastern sector in the second half of the 2000s.  The timing of the move is related both to the need for the Party General Secretary and Chairman of the Military Commission Xi Jingping to establish his hardline credentials vis-à-vis India and the forthcoming visit of the Prime Minister, Li Keqiang.  It needs to be recalled that, the PM belongs to the Hu Jintao faction of the party, both having spent a considerable part of their career in the Communist Youth League.  In my view Hu and therefore, probably Li have a relatively soft line view of India.  Thus it was necessary for the PLA, with the approval of the Military Commission Chairman, to lay down a clear marker for Li’s visit to India.  This is the Chinese version of the classic western “Bad cop, Good cop” routine of dealing with India.

Fore-Warned is Fore-Armed?

      The note of December 2012 said that, “In May 2012 China started issuing E passports , which it was later discovered (news broke only in November 2012)  contained  a map of China that included Arunachal Pradesh, Aksai Chin and the South China Sea as part of China.  Analysts have made statements down playing the significance of this move, but to the author it is the culmination of a process of a five year debate within the party and a signal of China’s international aspirations/agenda for the next 5 years.”

“India is in a somewhat anomalous position.  On the one hand, India is the third largest economy in the world. Even though it is 40% of the Chinese economy, it was the same size as China as recently as 2003.  Viewed from China’s perspective it currently looks like a very chaotic place that is unlikely to close the gap with China.  On the other hand it is home to the Dalai Lama and borders the Tibetan Autonomous Region of China, “a core national interest” of the Chinese leadership.  Thus policy has fluctuated between soft and hard line, depending on developments in Tibet and the international situation.  There is in our judgment a high probability that China’s approach to India will continue unchanged from one that has emerged since 2007, which is to lay down an extended claim (beyond what Premier Chou en Lai officially offered to settle in 1960), freeze the border discussions till such time as India concedes its bottom line demand and continue to develop relations on other fronts.”

Conclusion

     As analysts have pointed out the harsh Winter will in any case force the PLA troops to withdraw to their permanent camps within the Chinese area of the LAC in Ladakh (outcome B).  Whether they will do so well before the Winter (outcome A) or whether they will return next summer (outcome C) is still uncertain.  The army should prepare (or dust off) an appropriate contingency plan for both adverse possibilities (B & C) and be authorized to act on it.   It is likely that growth & fiscal deficit concerns and resultant cut in Defense budget have given a wrong signal to China.  India should therefor raise defense FDI limits to 74% and promote joint venture between Indian and USA, European and Japanese private sectors.  At the same time, we should not cancel the visit of premier Li to India.

      The two pronged approach outlined in the December 2012 note remains valid: “India must  continue to pursue greater economic and diplomatic interaction and co-operation with China so that those elements in China who still believe in “peaceful rise” are in a position to make a convincing case for a resolution of the border issue.” In the medium term it is also, “imperative for India to strengthen its defenses and diplomacy to effectively deter an attack, by raising the cost and risk to the attacker.”

Post Script

    Since this  article was written about ten days ago, the issue of China's incursion into the ODB area of Ladakh has been resolved, with the PLA dismantling their tents inside the LAC and returning to their earlier claim line(outcome B).  However, just as in the case of Arunachal, it should not be assumed that the issue is resolved permanently. Outcome C is still possible.  India must learn to pursue its relations with other countries such as Japan, USA (and even Taiwan) without obsessively worrying about what China will think. The new Japanese government provides a golden opportunity for co-ordinating our diplomatic, defense production and R&D co-operation with Japan.    On the other hand it is very clear that the policy of "Speaking softly but carrying a big(ger) stick" is the right one in dealing with China. In this context I am not convinced about the suggestion made by many analysts in the past month, to take a publicly aggressive stance on Tibet.

Post Script 2

     The good cop routine towards India started on May 8 with the release by the Chinese Academy of Social Sciences (CASS) of the Blue Book.  This was followed on May 10, with a commentary in Xinhua[i] about achieving “win-win results.” On May 13th Qin Gang, the Chief of the Information Department of the Foreign Ministry unfroze the issue of negotiating the “Framework Agreement” on the Sino-Indian boundary (that China had apparently frozen a couple of years back).  Though PM Li Keqiang will formally act as the Good cop during his forthcoming visit to India (May 19-21), it should not be forgotten that any proposals made by China have the approval of the Party Secretary, Xi Jingping, just as the PLA incursion had the approval of the Chairman of the Military Commission Xi.[ii]  It is therefore likely that the Chinese version of the “Good cop, Bad cop” approach for testing Indian intentions and resolve, was proposed and discussed in Beijing, in early 2013. 

    The objective of this whole strategy was to probe Indian weakness, resolve and determination and use it to determine the balance between a hardline and soft line approach. In other words to fine tune the balance between economic demands and political concessions.  The media has played an important role in warning the government that the public would hold the government accountable for its foreign policy towards China.  At the same, by not losing its cool under media pressure, the Foreign Minister and the Government have demonstrated that they will not be swayed by emotions, but are as firm on protecting (core) national interest as China.  A final judgment must however await a detailed examination of the agreements signed during Premier Li’s visit.

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[i] http://news.xinhuanet.com/english/china/2013-05/10/c_132372737.htm .

[ii] Chairman Xi outlined his five principles of Sino-Indian relations around March 20 (http://globalgeopolitics.net/wordpress/2013/03/28/xi-jinping-on-sino-indian-relations/ ), while the PLA incursion into Indian side of the LAC occurred on April 15 ( http://timesofindia.indiatimes.com/chinese-incursion-into-ladakh/specialcoverage/19857577.cms ).

An earlier version of this note appeared in the Indian Express op ed page on May 8, 2013, under the banner, "How to anticipate China". See, http://www.indianexpress.com/news/how-to-anticipate-china/1112731/