Nuclear Liability Bill : Government Protects Foreign Suppliers

The amendments to the Civil Liability for Nuclear Damage Bill, 2010 proposed by the Government not only goes against the grain of the crucial recommendations of the Standing Committee, but also seeks to further dilute the provisions of the original bill to protect the interests of the foreign suppliers of nuclear equipment and domestic private players.

The new formulation of Clause 17 (b) suggested by the Government reads as follows:

"(b) the nuclear incident has resulted as a consequence of an act of supplier or his employees, done with the intent to cause nuclear damage, and such act includes supply of equipment or material with patent or latent defects or sub-standard services;"

This makes any liability on the part of the suppliers, for supplying defective or sub-standard equipment or material, contingent upon proof that it was "consequence of an act.done with the intent to cause nuclear damage.". With this amendment, it will become impossible  to ascribe liability to the supplier.

This goes against the Standing Committee formulation of 17 (b), which does not require any such proof:

"(b) the nuclear incident has resulted as a consequence of latent or patent defect, supply of sub-standard material, defective equipment or services or from the gross negligence on the part of the supplier of the material, equipment or services."

Thus, in the name of removing the "and" in 17 (a), as suggested by the Standing Committee, the Government has rewritten 17 (b), effectively throwing the baby out with the bathwater. The formulation of 17 (b) proposed in the amendment is in fact worse than the provision contained in the original bill.

The dubious intent of the Government is further exposed by the addition of Clause 7 (1) proposed as an amendment, through which it seeks to "assume full liability for a nuclear installation not operated by it" (i.e. private nuclear installations) even as the Standing Committee had categorically recommended "that there will be no private operator of nuclear installation". This paves the way for a massive subsidization of the private players in nuclear power by the Government, as and when they are allowed to operate.

All this is clearly being done under pressure from the foreign nuclear suppliers and domestic corporate lobbies.

Siddharth Vardarajan of The Hindu gives the background to the Manmohan Singh Government's shenanigans: 

Despite assuring the Left and the BJP that their concerns on the government’s proposed nuclear liability law had been fully addressed, the final version of the bill – as cleared by the Union Cabinet on Friday – protects foreign companies in the event of a nuclear accident caused by gross negligence or defective supplies on their part.

It does this by raising a legal barrier against damage claims that is so high it will be impossible to scale. The amended version of the bill says the suppliers of any defective equipment involved in an accident can be sued by the Indian operator of a nuclear facility only if the supply in question was made “with the intent to cause nuclear damage”.

In other words, the operator, who is wholly liable in the first instance for any damages resulting from an accident caused by that faulty equipment, can recover his money only if it is proved that the supplier intentionally caused the accident.

Clause 17(b) of the original draft allowed a right of recourse for the operator in the event of an accident resulting from “a wilful act” or “gross negligence” on the part of the supplier. As reported by The Hindu on March 8 and April 1, U.S. nuclear suppliers want this clause deleted as they feel it would expose them to litigation.

Critics in India, on the other hand, saw these conditions as too weak. The Standing Committee on Science & Technology, whose report on the bill was released earlier this week, felt the “vague” language of 17(b) offered suppliers an “escape route” and needed strengthening. “In case an incident takes place, it would be difficult to prove and establish the fact that it was a wilful act or gross negligence on the part of the supplier”, the report said.

“Hence there should be clear cut liability on the supplier of nuclear equipments/material in case they are found to be defective”. The committee also quoted the testimony of the Secretary (Legislative Department) to argue the use of the doctrine of mens rea, or criminal intent, though common in criminal and tax law, “is grossly inadequate and misplaced” in compensation cases.

Accordingly, the Standing Committee expanded the scope of the right of recourse in 17(b) to include nuclear incidents resulting “as a consequence of latent or patent defect, supply of sub-standard material, defective equipment or services” in addition to gross negligence.

The government’s first attempt by stealth to indemnify suppliers from legal action came in June, when it circulated amendments to the Standing Committee deleting 17(b) altogether. When the Opposition cried foul, it backed off, seeking instead to negate the clause by making it contingent on 17(a), which grants operators a right of recourse against suppliers only if expressly provided for in a contract.

Forced to backtrack there too, the government now appears to have hit upon the inclusion of intent as the best way of ensuring foreign suppliers never face legal action in the event of a nuclear accident.

Thus, the amended 17(b) gives the operator a right of recourse where “the nuclear incident has resulted as a consequence of an act of supplier or his employees, done with intent to cause nuclear damage, and such act includes supply of equipment or material with patent or latent defects or sub-standard services”.

Since accidents resulting from the intentional acts of a “person” (including corporate entities like a supplier) are already covered by 17(c) of the original draft, the government is now proposing to replace the word “person” in 17(c) with “individual” to avoid the charge of redundancy.

If the earlier subterfuge was to merge 17(b) with 17(a), the attempt now is merge it with 17(c). Either way, the Manmohan Singh government’s aim is the same: to produce legal language that would shield foreign suppliers from civil suits.

The Myth of the “Sub-Prime Crisis”

CAPITALISM, like the proverbial horse, kicks even when in decline. Even as the current crisis hit it, it gave an ideological kick by attributing the crisis to “sub-prime” lending; and so well-directed was its kick that the whole world ended up calling it the “sub-prime crisis”, argues Prabhat Patnaik.

The idea, bought even in progressive circles, was that in the euphoria of the boom that had preceded the crisis, financial institutions in the US had given loans even to sections of the population who were not really “credit-worthy”, i.e. who were poor and had few assets of their own.

They would normally not get loans from banks; they were not “prime borrowers”. They got loans only because the boom had lowered guards everywhere and banks had started underestimating risks. But if you give loans to people who are not “creditworthy”, who are not “true blue”, then you inevitably come to grief, which is what ultimately happened, precipitating the crisis.

Remarkably, the idea appealed not only to the Right but even to sections of the Left. Sections of the Left liked it because they read into this explanation a basic contradiction of the system: to keep the boom going the capitalist system needs to give more and more loans, and therefore to bring an ever larger number of people into the ambit of borrowing, so that the level of aggregate demand is kept suitably up. This necessarily means that “sub-prime” borrowers have to be brought in more and more for the sustenance of the boom, which therefore must eventually lead to a collapse.

The Right saw in it an opportunity to argue that the crisis arose because capitalism had become “too soft”: people who should not be touched by financial institutions with a barge-pole had actually been given huge loans. The problem therefore lay not with the system as such, since it normally would never do such silly things, but with an aberration it had suddenly got afflicted with.

Some even saw in this aberration a muddle-headed humaneness which the system had suddenly developed. And they used the crisis as an illustration of the fact that all such humaneness is fundamentally misplaced, that there is, as they had always maintained, no scope for sentiment in the harsh world of economics.

In India, apologists of neo-liberalism worked overtime to use the fact of the crisis itself to discredit policies of “social banking”, such as priority sector lending and differential interest rates, that the country had embarked on after bank nationalization. All such policies, they argued, saddle banks with the responsibility of lending to “sub-prime” borrowers, and hence put on their shoulders an unbearable burden of “non-performing assets”. This ultimately makes them unviable and in need of substantial doses of government assistance to survive, as had happened in the US and elsewhere.

The moral of the story therefore was that in countries like India the markets should be left to work in their own pitiless manner without having to accommodate sentimental hogwash like “social banking” and “financial inclusion”. Hence by a curious irony, a crisis precipitated in the advanced capitalist world by the free functioning of the markets was used in the Indian context to argue for an unleashing of the free functioning of the markets.

The basic argument about “sub-prime” lending causing the crisis however was a flawed one. The banks had given loans to the so-called “sub-prime borrowers” against the security of the houses they had bought with these loans. If the values of the houses collapsed then banks’ asset values collapsed relative to their liabilities, precipitating a financial crisis.

The cause of the crisis therefore lay not in the identity of the borrowers, the fact of their being “sub-prime”, but in the collapse of the asset values, which in turn was because asset markets in a capitalist economy are dominated by speculators whose behaviour produces asset-price bubbles that are prone to collapse.

Indeed when the banks were giving loans against houses to the so-called “sub-prime borrowers”, they too were essentially speculating in the asset markets, using the “sub-prime borrowers” only as instruments, or as mere intermediaries in the process.

To attribute the crisis to sub-prime lending therefore amounted to shifting attention from the immanent nature of the system, the fact that it is characterized by asset markets, which are intrinsically prone to being dominated by speculators whose behaviour produces asset-price bubbles that necessarily must collapse, to a mere aberration, a misjudgement on the part of the financial institutions that made them lend to the “wrong people”.

It was a deft ideological manoeuvre. The identity of the people who borrowed, whether they were in rags or drove limousines, was actually irrelevant to the cause of the crisis, but it was presented as the cause. The blame for the crisis was put falsely on “sub-prime lending”; and a fabrication, a complete myth, called the “sub-prime crisis” was sold to the world, quite successfully.

Let us for a moment imagine that no loans were made to the so-called “sub-prime” borrowers, and that all loans were made only to “prime borrowers” against the security of the houses that were purchased through such loans. True, “prime borrowers” might not have been interested in taking more loans than they already had, in order to purchase houses, and that “sub-prime” borrowers had to be brought in. But, let us, just for a moment, assume that all the loans that the banks had actually made were made to “prime borrowers” rather than “sub-prime borrowers”.

With the collapse in house prices, which had to happen sooner or later, the “prime borrowers” would have found their balance sheets going into the red, and so would the banks who gave them the loans. The borrowers would have been hard put to keep to their payments commitments, and the same denouement that unfolded with “sub-prime borrowers” would have unfolded with “prime borrowers”.

The fact that the latter owned other assets would not have made any difference; they would not have easily or voluntarily liquidated those assets to pay the banks for the housing loans (and, besides, those other asset prices too would have collapsed if the “prime borrowers” had tried to liquidate them). And if such forced liquidation was insisted upon for paying off housing debt, then there would have been prolonged court battles to prevent it; the crisis certainly would not have been averted.

Hence the real reason for the crisis lies in the collapse of the house price-bubble (which was bound to happen no matter what the identity of the borrowers), and not the identity of the borrowers themselves.

Of course it may be argued that with consumer credit the matter is entirely different, since such credit has been given to large sections of the population without any security. In other words, it may be argued that consumer credit to “sub-prime borrowers” is necessarily crisis-causing, in a sense that consumer credit to “prime borrowers” is not, since it is given without any collateral. But the consumer credit bubble has not yet busted; so it is idle to speculate on this matter.

The fact remains that with regard to the bubble that has actually busted, namely the housing bubble, the identity of the borrowers, whether they are prime borrowers or sub-prime borrowers makes little difference.

To say this is not necessarily to deny that the sustenance of boom under capitalism may require bringing more and more people under the ambit of borrowing, including the so-called “sub-prime” borrowers who normally do not have access to credit. But this is not the cause of the crisis; the bringing in of “sub-prime” borrowers, the widening of the circle of borrowers, is merely the mechanism through which speculation may get sustained.

It may determine the size of the “bubble”, but the real cause of the crisis lies in these “bubbles” themselves, i.e. in the fundamental fact that in a modern capitalist economy, where fiscal deficits are sought to be restricted, booms are necessarily “bubbles-led” or at least “bubbles-sustained”; and the inevitable collapse of these “bubbles” necessarily produces crises.

Or putting it differently, if “sub-prime” lending had not happened, then the crisis would have occurred even earlier than it did, i.e. the bubble would have collapsed even earlier. This would of course have limited the size of the collapse relative to the top of the boom, since the bubble would have burst before it became too big; but by the same token it would also have limited the size of the boom itself that preceded the collapse, so that the unemployment rate, experienced with the crisis, would not have differed much between the two situations.

A modern capitalist economy is characterized by highly-developed and highly-complex asset markets, where it is not only the physical assets themselves, but, above all, financial assets, which represent claims on physical assets, that are bought and sold. Since the carrying costs of these financial assets are extremely low (rats do not eat them up as they eat up foodgrains for instance, and they do not need godowns for storage and for protection from the elements), they are particularly prone to speculation.

Their markets tend to be dominated by speculators who buy assets not “for keeps” but for selling at the opportune moment to realize capital gains. The prices of these financial assets therefore are determined largely by the behaviour of speculators. When there is a rise in their prices for whatever reason, speculators often rush in expecting a further rise and this pushes up prices even further. This process may go on for sometime, creating a “bubble”. But when, for whatever reason, the price rise comes to a halt, speculators start running away from this asset like rats deserting a sinking ship and the “bubble” collapses.

The real point however is this: the amount of the physical asset that is produced depends upon the price of the claims upon it, i.e. of the financial assets that represent claims upon this physical asset. If the price of these claims is high, then more of such physical assets are produced, and if the price is low then less. But while the price of these claims is determined by the behaviour of the speculators, the output and employment in the real economy is determined by the amount of physical assets that are produced.

Hence in a modern capitalist economy, it is the caprices of a bunch of speculators that determines the real living conditions of millions of people, their employment and incomes. When speculators are bidding up the prices of assets (or claims upon assets) employment and output start rising and we have a boom. When speculators leave assets like rats leaving a sinking ship and wish only to hold money (and in extreme cases, when confidence in banks gets impaired, only currency), we have a crisis.

John Maynard Keynes, acutely aware of the irrationality of this system that made the lives of millions of people dependent upon the caprices of a bunch of speculators, and yet extremely keen to prevent its transcendence by socialism, sought to alter this state of affairs by advocating “socialization of investment”. This would mean that how much of physical assets were produced depended not upon the whims of speculators but upon the decisions of the State, which made these decisions with the objective of keeping the economy close to full employment.

The Keynesian remedy was tried out for nearly two decades after the second world war; and the unemployment rate in the advanced capitalist countries was indeed kept at levels that were extremely low by the historical standards of capitalism. But with the ascendancy of international finance capital, and the consequent transformation in the nature of the nation-State, whose interventions now are meant exclusively for promoting the interests of finance capital, Keynesian “demand management” recedes to the background; and we are back to a regime of booms and busts associated with the formation and collapse of “bubbles”.

 

The current crisis is not caused by any aberration on the part of financial institutions; it is immanent to a regime of finance capital.

Trinamul Maoist Nexus Reconfirmed

THE rally held by the TMC – Trinamul  Maoist Combine – at Lalgarh on August 9 reconfirms, if ever such a reconfirmation was required, that the Trinamul Congress and the Maoists have, indeed, been political collaborators in creating mayhem and anarchy in certain areas of West Bengal.

The murderous assaults by this combine has already martyred 255 leaders of the CPI(M).  Most, if not all of these, belong to the poorest  of the exploited classes and tribals, whose interests, ironically, the Maoists claim to champion drawing the blind romantic adulation by some `intellectuals’ and `social activists’. 

An embarrassed and cornered Manmohan Singh-led government tried to duck, unsuccessfully, the issue of one of its cabinet members being caught red handed in the open political collaboration with the Maoists.  They took refuge behind the argument that they shall return to both the houses of parliament after having “ascertained the facts”. 

Ironically, the very next day, August 11, the minister of state for home affairs stood up in reply to a starred question in the Rajya Sabha on the involvement of Maoists in railway accidents stating: “Investigation conducted reveals that Police Santras Birodhi Janasadharaner Committee (PSBJC/PCPA), a frontal organisation of Maoists, was involved in damaging the railway track, thereby causing the accident.

The CBI has arrested 12 persons so far in this case”. It is the very same minister for railways, whose primary job, under oath of the constitution is to protect the life of passengers traveling on the Indian railways and to improve its safety standards, who is openly collaborating with the Maoists.

She has openly advocated the withdrawal of the operations of the security forces against the Maoist violence.  She, in fact, has gone to the extent of asserting that Maoist leader Azad was `murdered’ and not killed in an encounter as claimed by the security forces. 

The Trinamul-Maoist nexus became abundantly clear when, according to media reports: “Maoist politburo member Koteswar Rao alias Kishanji once again batted for Trinamool Congress chief Mamata Banerjee on Azad issue.

“There is no doubt that our politburo member and central committee spokesperson Charakuri Rajkumar alias Azad was treacherously killed by the members of Andhra Pradesh police special intelligence branch in a fake encounter. Mamata Banerjee spoke the truth and there is no reason behind the furore over the issue in parliament”. This comes from a Maoist leader whose party openly rejects parliamentary democracy and calls for a `people’s war’ against the Indian State! 

Unable to defend  the role of an important ally and cabinet colleague, the UPA-II government through its minister for home affairs, P Chidambaram, stated in the Rajya Sabha, “No one should support the Maoists and the government will certainly not encourage anybody who does so.”

However, the UPA-II government, in a crass display of political opportunism, requiring the numbers of TMC MPs in the Lok Sabha for the survival of this government, is tolerating such `support to the Maoists’ making a mockery of its commitment to safeguard India’s internal security. 

Indeed, there is an irreconcilable contradiction that continues to plague the UPA-II government.  The prime minister has repeatedly asserted that Maoist violence constitutes “the gravest threat to India’s internal security”.  Yet, its own cabinet colleague, under the leadership of this very prime minister, openly collaborates with Maoist violence and defends the attempted subversion of parliamentary democracy. 

The composition of the people gathered in Lalgarh clearly exposes the reasons for organising this meeting.  The overwhelming bulk of the people were brought by huge number of transportation vehicles from outside of Lalgarh.  The fact that the people of that area stayed away in large numbers shows the growing political isolation of the Trinamul Congress combine.  It is precisely in order to strike terror and browbeat the local population into supporting them that this rally was organised. 

Clearly, the Trinamul Congress has exposed itself to stooping to the lowest of levels in its quest to gain in the forthcoming assembly elections in West Bengal.  In the bargain, neither the safeguarding of innocent life nor strengthening the unity and integrity of India are of any concern.

If the UPA-II government and prime minister Manmohan Singh continue to turn a deaf ear to this threat, then India will have to pay a heavy price.  Brazen political opportunism to continue to remain in office cannot be allowed to sacrifice the interests of India’s unity, integrity and internal security.

From People's Democracy

CPI(M): Rout In Municipal Elections "Serious Matter"

Here is the Editorial from this week's People's Democracy explaining the Left Front's rout in the recent elections to 81 municipal bodies across West Bengal. The message: All is not lost; there's another 12 months to regain lost ground before the all-important Assembly election next year... 

IN the results of the elections to the 81 municipal bodies across the state of West Bengal held on May 30, 2010, the Left Front has won in only 18 municipalities. 

The Trinamul Congress has won 26, the Congress 7, the anti-Left alliance 4, while 23 are hung, 3 have resulted in a tie.  In whose favour these would be resolved will only be known in the future. 

In the finest traditions of democratic practice, the Left Front led by the CPI(M) has accepted the people’s verdict. The Left Front in West Bengal has declared that it shall make a proper assessment and review of these results to draw correct lessons for the future. 

There has been a massive media hype that these elections are a `semi-final’ for the so-called `final’ assembly elections in May, 2011. The politically conscious electorate in Bengal is discerning in the sense that it treats every election on the basis of its objective.

The Lok Sabha elections were to determine the government at the centre. The elections to the state assembly are to determine the government in the state. Likewise, the municipal and panchayat elections have their own objectives. Each election is, therefore, a different ballgame.

The Trinamul Congress has mounted a shrill campaign for the dismissal of the duly-elected state government and the holding of early elections.  This is not only patently undemocratic but completely irrational.

The total number of people eligible to vote in these municipal elections was 85,33,000 out of a total electorate in the state of 5,24,32,000, i.e., only 17 per cent of the total electorate. This makes up for less than 40 seats in an assembly of 294.

The rest of the 83 per cent constitutes the rural Bengal electorate or more than 250 assembly seats, which has predominantly determined the character of the government in the state in the past. Hence, it will be fallacious to conclude that the results of these municipal elections are a reflection of the state’s electorate as a whole. 

Nevertheless, it is a reflection of urban Bengal. To that extent, the Left Front is committed to undertake a serious introspection of these results. During the Lok Sabha polls in 2009, which saw a serious erosion in the Left vote, the Left Front had a lead in 525 of the 1766 municipal wards in the state or 29.73 per cent.

In these elections, the Left Front has won 603 out of 1791 municipal wards or 33.67 per cent.  Hence, the situation now shows, at best, a marginal improvement in the performance of the Left Front. 

Clearly, therefore, the setback suffered in the Lok Sabha elections has not been reversed but the downslide appears to have been partially arrested.

In the 2005 elections to the municipal bodies, the Left Front had won an unprecedented victory bagging 50 out of the 81 municipal bodies. In the 2009 Lok Sabha elections, however, it had led in only 19.  In these elections, it has won in only 18.

However, as noted earlier, the leadership of 26 municipal bodies will only be decided later.  The main reverses to the Left Front have come from Kolkata and its adjoining urban areas. North 24 Parganas district has 21 municipal bodies while Hooghly district has 12.

In 2005, the Left Front had won 26 of these 33 municipalities. This time Left Front has won only in 4 with a tie in 2 municipalities. This is a serious matter that needs to be properly reviewed in order to draw the correct lessons and apply the needed correctives. 

The CPI(M) and the Left Front are committed to undertake this task in right earnest. 

Condemn Israeli Massacre Of Innocent Civilians On Gaza-Bound Freedom Flotilla

On Monday May 31, Israel added another shameful chapter to its long history of blatant disregard of international law and the Geneva Conventions when its navy and air force attacked the Gaza-bound Freedom Flotilla in international waters, killing 19 international activists and wounding dozens of others.

In a wanton act of state-sponsored terrorism, Israeli warships encircled the aid ships, 150 kilometers outside of its territorial waters, and Israeli gunship helicopters dropped commandos onto the ships, who then began shooting the people on board without giving any prior warning.

The Free Gaza Movement website reported that the Israeli commandos were dropped from a helicopter onto the Turkish passenger ship Mavi Marmara and began to shoot the moment their feet hit the deck.

Live footage taken from the Turkish passenger ship, which was posted all over the Internet, showed black-clad Israeli commandos rappelling down from helicopters and clashing with activists, as well as several wounded people lying on the deck of the ship.

The flotilla of six small and medium-sized boats was on its way to deliver and distribute food items, medicines, electric generators, building materials, and children’s toys to the Gaza Strip, which has been under a relentless Israeli blockade since the Islamic resistance movement Hamas took control of the coastal territory in June 2007.

In that freest and fairest election ever held in the Arab world, the people of Palestine delivered Hamas a phenomenal mandate of 74 of the 132 seats in the Palestinian Legislative Council against Al-Fatah's 46.

Out of 1.3 million eligible voters, 77.7 percent thronged the polling stations in Hebron, Nablus, North Gaza, Tulkarm, Jenin, Gaza City, Bethlehem, and throughout the occupied territories to express their opinion.

However, instead of appreciating such a spectacle of democracy, in which the Palestinians showed a superb sense of political consciousness in bringing Hamas to power, the hypocritical Western powers, led by the United States, denounced the Islamic resistance movement and launched a dehumanization campaign against high-ranking Hamas officials, which provided an opportunity for the Zionist regime to impose a crippling siege over the ever-suffering people of Gaza.

However, Israel’s latest atrocity even shocked and outraged its closet allies like the United States, the United Kingdom, France, Italy, Spain, Sweden, Austria, Germany, Belgium, and the European Union, which all condemned Israel’s assault on civilians in the Mediterranean Sea.

The United Nations, the Arab League, Iran, Turkey, Syria, Lebanon, Bahrain, Egypt, Jordan, Kuwait, Malaysia, Indonesia, and Pakistan also condemned Israel’s crime against a humanitarian mission.

However, all this did not shame the Zionist regime.

Israeli Deputy Foreign Minister Danny Ayalon blamed the victim -- in typical Zionist fashion -- saying the activists themselves were responsible for the massacre and branding them allies of international terrorist organizations.

Had they got through, Ayalon said, they would have opened an arms smuggling route to Gaza.

Adding insult to injury, Israeli Defense Minister Ehud Barak insisted that there is no hunger and no humanitarian crisis in Gaza. The whole flotilla operation, he said, was “a political and media provocation by anti-Israeli organizations.”

Since 2008, the Free Gaza Movement and a coalition of human rights activists and pro-Palestinian groups have been sending boats and landing or attempting to land supplies to break the blockade of Gaza, including medical equipment and drugs and building materials.

This time the flotilla, the largest to date, carrying over 600 passengers -- believed to include the Swedish author Henning Mankell and the Irish Nobel laureate Mairead Corrigan-Maguire -- was organized by pro-Gaza groups in Greece and Sweden, the Malaysian-based Perdana Global Peace Organization, and the Turkish-based foundation for Human Rights and Freedom and Humanitarian Relief (IHH), all coordinated by the Free Gaza Movement.

After this incident, the world should realize it should stop kowtowing to Israel and should inform Tel Aviv that it can no longer flout international law.

All countries should send Israeli ambassadors packing and should call on the International Criminal Court to try the Israeli officials responsible for ordering the murder of unarmed civilians in an act of unprovoked aggression on the open sea.

And the international community should organize an enormous flotilla of aid ships from all over world and send it to break the siege of Gaza.

The Zionist regime understood the importance of this grand mission, and thus tried to instill fear in the hearts of the people of the Middle East with the massacre of unarmed civilians. But Israel’s bloody interception of the Gaza aid flotilla will highlight the continuing blockade of the Gaza Strip in the most dramatic way possible and will certainly increase the pressure to lift the siege.

So the blood of the men and women who sacrificed their lives on Monday for the cause of Palestine will not have been spilt in vain and will usher in a new era of hope for the oppressed people of Palestine.


Gul Jammas Hussain

UPA Report Card: Drifting From Tragedy To Farce

The Manmohan Singh government completes 6 years in office today. Alas, it has nothing to show by way of achievement except making India an American satellite. As the following assessment by Prakash Karat underlines, if there is an impression of drift and being directionless, the Congress government has only itself to blame for this plight. After thinking it can go ahead with its own policy prescriptions, it now finds itself in a position where its partners in Government often look at things differently and assert themselves.

The present UPA government is completing one year of its tenure on May 22. Unlike the first UPA government, its second edition did not spell out a common minimum programme. Instead, the Congress-led government began by reiterating its commitment to pursue the neo-liberal agenda. It announced that it would take up those policy measures which it could not push through in its first term in office.

The government also promised to bring in some welfare measures for the aam aadmi. On foreign policy, the government stated that it would adhere to the path taken by the first UPA government of aligning India's foreign policy in tune with the strategic alliance with the United States of America.

The one-year of the UPA government has been notable for the following:

Firstly, it has totally failed to tackle the relentless price rise of essential commodities particularly food items. This has been the biggest cause for people's suffering in the past year; for the poor it has meant less food and more hunger and malnutrition.

This is not a "failure" as such but an outcome of the determination to pursue neo-liberal policies. Food items and other essential commodities are traded and speculated in the market in a big way. The forward trading system is the playground for big trading companies and corporates. The government is in the least interested in curbing these interests who are making huge profits.

Secondly, the Congress-led government is in the grip of finance capital and the sway of big business. It believes in cutting taxes for the rich; providing a tax bonanza for big business and maintaining favourable terms for foreign finance speculators.

The Direct Taxes Code which the government proposes to usher in will make India one of the least taxed countries as far as the rich are concerned. In the last financial year, the government provided Rs. 80,000 crore of tax concessions to the corporates. The disinvestment of shares in the profitable public sector units is the favoured agenda of both Indian big business and the US corporate interests.

Every sphere of policy making, whether it concerns the pricing of gas, the allocation of telecom spectrum, opening up of mining and minerals, the financial sector, retail trade or allowing foreign educational institutions into the country - bears the imprint of a government pandering to big business and their foreign finance collaborators.

Thirdly, this type of growth under the neo-liberal regime has spawned crony capitalism. The nexus between big business and politics has become the hallmark of the Congress regime. The legitimacy provided to foreign capital flows from dubious sources through the Mauritius route and other tax havens; the huge illegal mining business flourishing under political protection; the refusal to discipline and penalize law breaking and tax evasions on a large scale on the part of the super rich - all this has promoted a unhealthy and perverted capitalism which is celebrated as India's growth story.

What this has produced is corruption and illegality on a large scale which affects every sphere of society. The first year of the government has seen the IPL affair, the 2G spectrum allocation scam and the mining scandal of the Reddy brothers. All this can be directly sourced to the nexus between big business and ruling politicians.

Fourthly, the UPA government's concern for the aam aadmi has proved to be shallow. The Congress and the UPA government are conscious that some relief has to be provided to the people who are the worst victims of the neo-liberal policies.

During the UPA I tenure, the National Rural Employment Guarantee Act, the farm loan waiver and the Forest Rights Act were some such measures. These were part of the Common Minimum Programme and came into being mainly due to the consistent pressure and struggles waged by the Left parties.

However, under the UPA II, the government has failed to legislate even one substantial measure for relief. The proposed Food Security Bill would have in no way enhanced food security for the people.

After one year, the government is still debating how to bring about such a measure. The Public Distribution System has been further weakened and curtailed. The plight of the farmers does not seem to concern the government which has cut the fertilizer subsidy by Rs. 3000 crore in the current Union budget.

The Common Minimum Programme of the first UPA government had promised to increase public expenditure in education to 6 per cent of the GDP and in the sphere of health to 2 to 3 per cent of the GDP.

As far as education is concerned the combined central and state expenditure is still below 4 per cent. In the case of health the combined budgetary allocation of the Union and state budgets was a meager 1.06 per cent of the GDP in 2009-10, far below the target of 2-3 per cent.

Fifthly, the UPA government has failed to utilize the favourable political atmosphere and the strength of the secular forces in parliament to push for firm anti-communal measures. It seems visibly reluctant to come to terms with the Ranganath Mishra Commission report recommending reservation for the minorities on the basis of their socio-economic backwardness. There has been a noticeable lack of political initiative in dealing with the simmering problem of Kashmir.

As far as tackling the Maoist violence is concerned, the UPA government tends to treat it solely as a law and order problem without realizing that some of its own policies like the licence for indiscriminate mining in the forest areas is alienating the tribal people.

Moreover, it finds itself hampered by its own partner in government, the TMC. Mamata Banerjee has declared that there are no Maoists in West Bengal and therefore there is no need for joint operations against them.

Sixthly, foreign policy under the Manmohan Singh Government has remained steadfast in its fealty to the United States. As a quid pro quo for the nuclear deal, India has agreed to buy billions of dollars of US arms and equipment.

The End Use Monitoring Agreement which would allow American inspections on Indian soil was signed. The Civil Nuclear Liability Bill which has been introduced in parliament to meet the demand of the United States is patently against the interests of the Indian people. The growing military and security collaboration with the US and Israel affects the pursuit of an independent policy.

India has gone along with the United States which is targeting Iran on the nuclear issue. It once more voted against Iran in the IAEA, unlike other non-aligned countries. India is not playing the role of a leading non-aligned country.

In contrast, President Lula De Silva of Brazil has stood up to the United States and refused to go along with the campaign for further sanctions on Iran. President Lula has visited Tehran for talks with the Iranian leadership to find a way out of the impasse and to come to some agreement with the help of Turkey.

One of the few positive aspects in foreign policy is the Prime Minister's refusal to adopt a confrontationist stance towards Pakistan despite what sections in his government and party wish.

The great potential of shaping an independent foreign policy and strengthening of multi-polarity by India's vigorous diplomacy and energising forums like the BRIC, IBSA and the trilateral meetings of the foreign ministers of Russia, China and India is being underplayed.

Politically, the striking outcome of the first year of the UPA government is its increasing vulnerability. In May 2009, the UPA won the elections but failed to get a majority. The Congress leadership ignored this reality and became complacent with the unilateral declaration of support by parties like the BSP, SP, RJD and the JD(S). By the end of the first year that complacency has been shattered.

During the last budget session, the Congress had to adopt the tactic of bargain and striking deals to garner support from amongst these parties. The last three weeks of the budget session have witnessed the manouevres to prop up the government's majority against the cut motions and the struggle to ensure the passage of legislations.

The cynical use of the CBI for political purposes is undermining the credibility of the agency. The wheeling and dealing that saw the postponement of the Women's Reservation Bill in the Lok Sabha and the introduction of the Civil Nuclear Liability Bill - all portend a tortuous path for the future.

If there is an impression of drift and being directionless, the Congress government has only itself to blame for this plight. After thinking it can go ahead with its own policy prescriptions, it now finds itself in a position where its partners in Government often look at things differently and assert themselves. There is growing opposition within parliament.

As far as the people are concerned, their experience is of a government increasingly callous to their sufferings due to price rise, while it showed great solicitude for big business and the corporates when it felt the impact of the global recession.

After the first six months of the government, there has been the rising tempo of popular struggles and movements. A peak in this struggle was reached with the April 27 hartal called by the 13 opposition parties. A spate of struggles of different sections of the working people have taken place. The struggle is on against the harmful policies of the government and to defend the livelihood and the rights of the working people. The question is whether the UPA government has learnt any lessons from its first year in office.

10 Top Robber Barons

The financial crisis has unveiled a new set of public villains—corrupt corporate capitalists who leveraged their connections in government for their own personal profit. During the Clinton and Bush administrations, many of these schemers were worshiped as geniuses, heroes or icons of American progress. But today we know these opportunists for what they are: Deregulatory hacks hellbent on making a profit at any cost. Without further ado, here are the 10 most corrupt capitalists in the US economy.

1. Robert Rubin

Where to start with a man like Robert Rubin? A Goldman Sachs chairman who wormed his way into the Treasury Secretary post under President Bill Clinton, Rubin presided over one of the most radical deregulatory eras in the history of finance. Rubin's influence within the Democratic Party marked the final stage in the Democrats' transformation from the concerned citizens who fought Wall Street and won during the 1930s to a coalition of Republican-lite financial elites.

Rubin's most stunning deregulatory accomplishment in office was also his greatest act of corruption. Rubin helped repeal Glass-Steagall, the Depression-era law that banned economically essential banks from gambling with taxpayer money in the securities markets. In 1998, Citibank inked a merger with the Travelers Insurance group. The deal was illegal under Glass-Steagall, but with Rubin's help, the law was repealed in 1999, and the Citi-Travelers merger approved, creating too-big-to-fail behemoth Citigroup.

That same year, Rubin left the government to work for Citi, where he made $120 million as the company piled up risk after crazy risk. In 2008, the company collapsed spectacularly, necessitating a $45 billion direct government bailout, and hundreds of billions more in other government guarantees. Rubin is now attempting to rebuild his disgraced public image by warning about the dangers of government spending and Social Security. Bob, if you're worried about the deficit, the problem isn't old people trying to get by, it's corrupt bankers running amok.

2. Alan Greenspan

The officially apolitical, independent Federal Reserve chairman backed all of Rubin's favorite deregulatory plans, and helped crush an effort by Brooksley Born to regulate derivatives in 1998, after the hedge fund Long-Term Capital Management went bust. By the time Greenspan left office in 2006, the derivatives market had ballooned into a multi-trillion dollar casino, and Greenspan wanted his cut. He took a job with bond kings PIMCO and then with the hedge fund Paulson & Co.—yeah, that Paulson and Co., the one that colluded with Goldman Sachs to sabotage the company's own clients with unregulated derivatives.

Incidentally, this isn't the first time Greenspan has been a close associate of alleged fraudsters. Back in the 1980s, Greenspan went to bat for politically connected Savings & Loan titan Charles Keating, urging regulators to exempt his bank from a key rule. Keating later went to jail for fraud, after, among other things, putting out a hit on regulator William Black. ("Get Black – kill him dead.") Nice friends you've got, Alan.

3. Larry Summers

During the 1990s, Larry Summers was a top Treasury official tasked with overseeing the economic rehabilitation of Russia after the fall of the Soviet Union. This project, was, of course, a complete disaster that resulted in decades of horrific poverty. But that didn't stop top advisers to the program, notably Harvard economist Andrei Shleifer, from getting massively rich by investing his own money in Russian projects while advising both the Treasury and the Russian government. This is called "fraud," and a federal judge slapped both Shleifer and Harvard itself with hefty fines for their looting of the Russian economy. But somehow, after defrauding two governments while working for Summers, Shleifer managed to keep his job at Harvard, even after courts ruled against him.

That's because after the Clinton administration, Summers became president of Harvard, where he protected Shleifer. This wasn't the only crazy thing Summers did at Harvard—he also ran the school like a giant hedge fund, which went very well until markets crashed in 2008. By then, of course, Summers had left Harvard for a real hedge fund, D.E. Shaw, where he raked in $5.2 million working part-time. The next year, he joined the the Obama administration as the president's top economic adviser. Interestingly, the Wall Street reform bill currently circulating through Congress essentially leaves hedge funds untouched.

4. Phil and Wendy Gramm

Summers, Rubin and Greenspan weren't the only people who thought it was a good idea to let banks gamble in the derivatives casinos. In 2000, Republican Senator from Texas Phil Gramm pushed through the Commodity Futures Modernization Act, which not only banned federal regulation of these toxic poker chips, it also banned states from enforcing anti-gambling laws against derivatives trading. The bill was lobbied for heavily by energy/finance hybrid Enron, which would later implode under fraudulent derivatives trades. In 2000, when Phil Gramm pushed the bill through, his wife Wendy Gramm was serving on Enron's board of directors, where she made millions before the company went belly-up.

When Phil Gramm left the Senate, he took a job peddling political influence at Swiss banking giant UBS as vice chairman. Since Gramm's arrival, UBS has been embroiled in just about every scandal you can think of, from securities fraud to tax fraud to diamond smuggling. Interestingly, both UBS shareholders and their executives have gotten off rather lightly for these acts. The only person jailed thus far has been the tax fraud whistleblower. Looks like Phil's earning his keep.

5. Jamie Dimon

J.P. Morgan Chase CEO Jamie Dimon has done a lot of scummy things as head of one of the world's most powerful banks, but his most grotesque act of corruption actually took place at the Federal Reserve. At each of the Fed's 12 regional offices, the board of directors is staffed by officials from the region's top banks. So while it's certainly galling that the CEO of J.P. Morgan would be on the board of the New York Fed, one of J.P. Morgan's regulators, it's not all that uncommon.

But it is quite uncommon for a banker to be negotiating a bailout package for his bank with the New York Fed, while simultaneously serving on the New York Fed board. That's what happened in March 2008, when J.P. Morgan agreed to buy up Bear Stearns, on the condition that the Fed kick in $29 billion to cushion the company from any losses. Dimon-- CEO of J.P. Morgan and board member of the New York Fed-- was negotiating with Timothy Geithner, who was president of the New York Fed-- about how much money the New York Fed was going to give J.P. Morgan. On Wall Street, that's called being a savvy businessman. Everywhere else, it's called a conflict of interest.

6. Stephen Friedman

The New York Fed is just full of corruption. Consider the case of Stephen Friedman (expertly presented by Greg Kaufmann for the Nation). As the financial crisis exploded in the fall of 2008, Friedman was serving both as chairman of the New York Fed and on the board of directors at Goldman Sachs. The Fed stepped in to prevent AIG from collapsing in September 2008, and by November, the New York Fed had decided to pay all of AIG's counterparties 100 cents on the dollar for AIG's bets—even though these companies would have taken dramatic losses in bankruptcy. The public wouldn't learn which banks received this money until March 2009, but Friedman bought 52,600 shares of Goldman stock in December 2008 and January 2009, more than doubling his holdings.

As it turns out, Goldman was the top beneficiary of the AIG bailout, to the tune of $12.9 billion. Friedman made millions on the Goldman stock purchase, and is yet to disclose what he knew about where the AIG money was going, or when he knew it. Either way, it's pretty bad—if he knew Goldman benefited from the bailout, then he belongs in jail. If he didn't know, then what exactly was he doing as chairman of the New York Fed, or on Goldman's board?

7. Robert Steel

Like better-known corruptocrats Robert Rubin and Henry Paulson, Steel joined the Treasury after spending several years as a top executive with Goldman Sachs. Steel joined the Treasury in 2006 as Under Secretary for Domestic Finance, and proceeded to do, well, nothing much until financial markets went into free-fall in 2008. When Wachovia ousted CEO Ken Thompson, the company named Steel as its new CEO. Steel promptly bought one million Wachovia shares to demonstrate his commitment to the firm, but by September, Wachovia was in dire straits. The FDIC wanted to put the company through receivership—shutting it down and wiping out its shareholders.

But Steel's buddies at Treasury and the Fed intervened, and instead of closing Wachovia, they arranged a merger with Wells Fargo at $7 a share—saving Steel himself $7 million. He now serves on Wells Fargo's board of directors.

8. Henry Paulson

His time at Goldman Sachs made Henry Paulson one of the richest men in the world. Under Paulson's leadership, Goldman transformed from a private company ruled by client relationships into a public company operating as a giant global casino. As Treasury Secretary during the height of the financial crisis, Paulson personally approved a direct $10 billion capital injection into his former firm.

But even before that bailout, Paulson had been playing fast and loose with ethics rules. In June 2008, Paulson held a secret meeting in Moscow with Goldman's board of directors, where they discussed economic prognostications, market conditions and Treasury rescue plans. Not okay, Hank.

9. Warren Buffett

Warren Buffett used to be a reasonable guy, blasting the rich for waging "class warfare" against the rest of us and deriding derivatives as "financial weapons of mass destruction." These days, he's just another financier crony, lobbying Congress against Wall Street reform, and demanding a light touch on—get this—derivatives! Buffet even went so far as to buy the support of Sen. Ben Nelson, D-Nebraska, for a filibuster on reform. Buffett has also been an outspoken defender of Goldman Sachs against the recent SEC fraud allegations, allegations that stem from fancy products called "synthetic collateralized debt obligations"—the financial weapons of mass destruction Buffett once criticized.

See, it just so happens that both Buffet's reputation and his bottom line are tied to an investment he made in Goldman Sachs in 2008, when he put $10 billion of his money into the bank. Buffett has acknowledged that he only made the deal because he believed Goldman would be bailed out by the U.S. government. Which, in fact, turned out to be the case, multiple times. When the government rescued AIG, the $12.9 billion it funneled to Goldman was to cover derivatives bets Goldman had placed with the mega-insurer. Buffett was right about derivatives—they are WMD so far as the real economy is concerned. But they've enabled Warren Buffett to get even richer with taxpayer help, and now he's fighting to make sure we don't shut down his own casino.

10.  Goldman Sachs
No company exemplifies the revolving door between Wall Street and Washington more than Goldman Sachs. The four people on this list are some of the worst offenders, but Goldman's D.C. army has includes many other top officials in this administration and the last.

White House: 
 Joshua Bolton, chief of staff for George W. Bush, was a Goldman man

Regulators:
Current New York Fed President William Dudley is a Goldman man

Current Commodity Futures Trading Commission Chairman Gary Gensler has been a responsible regulator under Obama, but he was a deregulatory hawk during the Clinton years, and worked at Goldman for nearly two decades before that.

A top aide to Timothy Geithner, Gene Sperling, is a Goldman man

Current Treasury Undersecretary Robert Hormats is a Goldman man

Current Treasury Chief of Staff Mark Patterson is a former Goldman lobbyist

Former SEC Chairman Arthur Levitt is now a Goldman adviser

Neel Kashkari, Henry Paulson's deputy on TARP, was a Goldman man

COO of the SEC Enforcement Division Adam Storch is a Goldman man

Congress:
Former Sen. John Corzine, D-N.J., was Goldman's CEO before Henry Paulson

Rep. Jim Himes, D-Conn., was a Goldman Vice President before he ran for Congress

Former House Minority Leader Dick Gephardt, D-Mo., now lobbies for Goldman

And the list goes on.

Zach Carter/AlterNet

Oppose The Nuclear Liability Bill

The recent radioactive poisoning death in Delhi has once again highlighted the fact that the Civil Nuclear Liability Act being foisted on the nation will only help American companies get away with murder just as Union Carbide did after killing and maiming thousands in Bhopal. In the Mayapuri case one person died after coming into contact with a radioactive pencil that was disposed of by Delhi University as scrap, the vice chancellor appeared on TV to offer only an apology. No talk of compensation. This is going to be repeated on a horrific scale in case of an accident at nuclear power plants proposed to be built across the country. Sitaram Yechury argues why this the Civil Nuclear Liability Bill must be opposed 

On the last day of the budget session of Parliament, the government hurriedly introduced the Civil Nuclear Liability Bill amid largescale protests by the Opposition.

The Left had opposed the introduction of the Bill itself on the grounds of violation of Article 21 of the Constitution, which guarantees protection of life and personal liberty.

Former Attorney General Soli Sorabjee says, “In view of Supreme Court judgements which are part of Indian jurisprudence and whose thrust is for the protection of victims of accidents as part of their fundamental rights under Article 21 of the Constitution there is no warrant or justification for capping nuclear liability.”

However, it is precisely such a cap that the Civil Nuclear Liability Bill introduces.
The proposed Bill has sought to limit all liability arising out of a nuclear accident to only 300 million Special Drawing Rights (about $450 million) and the liability of the operator only to Rs 300 crore.

The difference between $450 million and Rs 300 crore (about $67 million) is the government’s liability. Given that a serious accident can cause damage in billions, the small cap of $450 million that’s been proposed shows the scant regard the the UPA has for the people.

The Bhopal Settlement of $470 million reached between the government of India and Union Carbide and accepted by the Supreme Court, has been shown to be a gross underestimation. Even today, gas victims are suffering and have received only meagre compensation.

It is unconscionable of the UPA government to suggest that all nuclear accidents, which have the potential of being much larger than Bhopal, be capped at a figure that has already been shown to be a gross underestimate. Since the government wants to allow private operators in the nuclear power sector, this low level for compensation is meant to serve their interests too.

Apart from this, the minuscule liability of Rs 300 crore for the actual operator is tantamount to encouraging the operator to play with plant safety.

The Indian legal regime is quite clear: for hazardous industries, the plant owners have strict liability. Neither does the law accept any limits to liability — the party concerned must not only pay full compensation but also the cost of any environmental damage that any accident may cause. The Oleum leak from Sriram Food and Fertility settled the liability regime in India and any legislation seeking to cap liability will be completely retrogressive.

Contrary to the claims being made, the Vienna Convention — the basis of the proposed Nuclear Liability Bill — does not cap nuclear liability but only puts a minimum floor. It also allows countries to operate their liability regimes. For example, Germany, Japan and Finland all have unlimited liability, the same as current Indian law.

The US has a liability cap of $10.2 billion. Not only is the Indian government proposing to cap liability of nuclear plants, but it is also proposing a cap of only $450 million, way below the consequences of any serious nuclear accident. It appears that in order to promote private nuclear power and foreign suppliers, the UPA government is willing to sacrifice its own people.

The suppliers’ liability is also being considerably weakened by the proposed Bill. Instead of the normal contract law, where recourse of the operator to claim damages is inherent, the Bill limits this recourse only if it is explicitly mentioned in the contract. Otherwise, the nuclear operator cannot claim compensation from the supplier of equipment even if it is shown to be faulty.

It is evident that contracts for buying US nuclear reactors will explicitly exclude any liability on the part of the suppliers and, therefore, by the law to be adopted, they will go scot-free even if an accident occurs due to a defect in the equipment supplied by a US company. 

In fact the UPA-II government wanted such a legislation, which the prime minister could carry with him to the Nuclear Security Summit that President Obama convened in Washington in April. However, following the controversial passage of the Women’s Reservation Bill in the Rajya Sabha with the help of marshals, the crucial support of 47 Lok Sabha MPs belonging to the BSP, SP and RJD was not forthcoming.

This obstacle, however, appears to have been overcome now through possibly some ‘bargain’ similar to what happened at the time of the passage of the Indo-US nuclear deal.

The US is insisting that this law be enacted to protect US suppliers of nuclear equipment from liability to pay compensation in the case of a nuclear accident. Currently, only the State-run Nuclear Power Corporation of India Ltd. under the existing Atomic Energy Act can operate nuclear power plants. But with the opening up of international nuclear commerce, US companies have sought a civil nuclear liability framework to be put in place before they enter.

The US government has linked the completion of the Indo-US nuclear agreement to India’s capping of nuclear liability. The UPA-I government, prior to the ratification of the 123 Agreement, had given a written commitment that India will buy nuclear reactors from the US totalling 10,000 megawatt of capacity.

This Bill has now been referred to the parliamentary standing committee for its consideration. It will now be tabled in the monsoon session. It is imperative for all political parties to ensure that the government is not allowed to disregard the life and safety of the Indian people through such a legislation. Article 21 of the Constitution and the various judgements of the Supreme Court cannot be allowed to be violated.

Higher Education As Profit Centre

The case for allowing foreign players in the higher education sector in India is weak and controversial and simply a ploy to create a window for foreign players and then changing the rules of the game in ways that persuade them to exploit the opportunity.

HRD Minister Kapil Sibal finally managed on May 3 to introduce in the Lok Sabha the Foreign Educational Institutions (Regulation and Entry and Operations) Bill 2010 amid protest by Left MPs to the proposed law.

The bill proposes that institutions aspiring to set up campuses in India will have to deposit Rs 50 crore as corpus fund. They will have to be registered with with UGC or any other regulatory body in place.

The bill, however, gives exemption to reputed foreign institutes from the tough conditions set for opening up campuses in India. The reputed universities will not have to go through the rigorous process of approval.

An advisory board will will recommend permission for such universities like Harvard, Yale, Cambridge, Oxford and similar institutions. They will not be required to deposit any corpus money.

However, the clause that foreign institutions cannot take away surplus money back to their respective countries also applies to all foreign institutions, including the reputed ones.

The bill stipulates a number of criteria for ensuring quality. The aspiring institute need to have minimum 20 years of standing in the country to which it belongs. It should have adequate finance and other resources to conduct the courses in India.

The bill says that an aspiring institution will apply for recognition as Foreign Education Provider in India. The application will be scrutinised by the accreditation authority and the UGC or any other commission in higher education. The commission will recommend to the government on whether the institute should be given recognition.

However, the bill, which is being referred to a parliamentary Standing Committee, raises more questions. My friend CP Chandrashekhar, professor of economics at JNU in New Delhi, argues that the case for allowing foreign players in the higher education sector in India is weak and controversial and simply a ploy to create a window for foreign players and then changing the rules of the game in ways that persuade them to exploit the opportunity.

There are two arguments, among many, that are being advanced to justify this desire for the foreign. The first is that it would substantially enhance quality in both the new institutions that would be set up by these foreign entities and, by example and the pressure of competition, in old and new institutions created by public and private Indian promoters. The second is that it would close the supply-demand gap.

The supply of higher educational facilities relative to requirements in this country is seen as so large that the government or Indian private players would not have the resources to fill the gap.

To clarify, the resources that the foreign entities would bring could not be real resources like faculty, administrators and material inputs like classrooms, libraries and labs. Foreign providers would have to find these resources largely from within the country, just as Indian promoters would have to, since importing all of it would make things so expensive that the investment would not make sense unless the intention is merely to throw away the money. “Resources” here means the requisite money.

Neither of the arguments—enhancing quality and augmenting supply—is particularly convincing even for those who are enamoured by these foreign brands and what they could contribute to the making of the modern Indian mind.

It is not that foreigners were barred from coming into the country in the past. They could through many routes subject to certain rules. But either because of the rules or because of mere disinterest not many big names even gave a thought to have an independent presence here (as opposed to collaborating in different ways with domestic institutions).

On the other hand, it is not true that no foreign institutions came into this country. Some did. But they were not the well known and what they offered here did not compare at all with the best or even less than best that Indian educational providers were offering. Both in terms of presence and quality history does not give cause for optimism.

The question then is, are the rules being changed to accommodate the foreign? The government states that it is only clarifying the rules and regulatory framework that would apply to foreign educational providers, and that in itself would serve to attract them to the country.

It is true that if foreign institutions are to be allowed at all, to provide education of any kind in the country, it is better that they operate within an appropriate framework of regulation. If not, unscrupulous operators can use the “foreign” tag to exploit poorly informed students who do not have the scores to enter a good national educational institution or the finances to travel abroad to acquire a good education.

In an environment where good higher educational facilities are in short supply, such operators could get away with charging high fees for courses backed by inadequately qualified faculty, inferior infrastructure and substandard equipment.

This has in recent years been a reality in India because of a mismatch between the law on foreign investment in educational provision and the law with regard to the functioning of “recognised” educational institutions.

The foreign investment law in this country does allow foreign educational providers to enter India under the automatic route in the educational services area. It therefore allows for commercial provision of educational services by foreigners and the repatriation of surpluses or “profits” earned through such activity.

However, the nature of such services must be “informal”. If an educational service provider (foreign or domestic) chooses to establish an institution that is termed a university and is recognised as such by the University Grants Commission (UGC) or if it awards a degree or diploma that is recognised by a range of institutions such as the All India Council on Technical Education (AICTE) or the Medical Council of India, then it would be subject to regulation just as any other Indian institution engaging in similar practices. That is, there is no separate set of rules to recognise and regulate foreign institutions.

This implies that recognised foreign educational institutions cannot (like private Indian ones) operate on a “for-profit” basis. Surpluses can be generated based on fees charged, but those surpluses have to be ploughed back into the institution.

This distinction in the regulatory framework, applying to institutions seeking recognition of their degrees and those that do not, did result in the proliferation of courses that are not recognised by government, in institutions that were, therefore, not subject to regulation under laws governing the higher education system.

Most of these institutions were in the private sector, with a majority being domestic private institutions and a few foreign. Some were good, many extremely bad. These institutions were not all avowedly “for-profit” entities, but there were many that made large surpluses legally and otherwise and distributed them in various ways to their promoters.

In some ways, what the Foreign Educational Institutions Bill does is that it seeks to bring certain of those foreign institutions within a separate, clearly defined regulatory framework, requiring institutions providing diplomas and degrees to register under a designated authority, making them subject to regulation and seeking under such regulation to ensure that the promoting institution has a proper pedigree, brings in adequate resources, employs quality faculty, offers adequate facilities, and reinvests all surpluses in the institution, which cannot function for profit.

However, even though these are not considered for-profit institutions, the government is not seeking to regulate the fees they charge the students they take in, set parameters for compensation for faculty, or impose demands such as reservation of seats for disadvantaged sections as it does in its own institutions.

There are three questions which arise in this context. One is whether the implementation of the Bill amounts to skewing further the inequality in access to higher education and tilting the playing field against public institutions. Clearly, the Bill does not allow for the application of laws with regard to affirmative action in the form of reservation of admissions to private institutions, domestic or foreign.

But if the infrastructure for higher education is inadequate, this is true not just for those who fall in what is termed the “general category”, but for those in the reserved categories as well, who need adequate numbers of seats to be reserved for them.

So if private, including foreign institutions, are seen as entities that would help close the demand-supply gap in higher education, they would need to service students in the categories eligible for affirmative action as well.

Since the aim of promoting private education, including that offered by foreign providers, is to make up for the shortfall in public education, the demand that reserved category students be admitted to these institutions with support from the state is bound to rise.

State money would provide access to the socially and economically disadvantaged to private institutions. That is, while the state is not going to regulate fees, it may be forced to demand some reservation by covering the fees charged by these institutions for those it wants to assure the access they are deprived of because of the social discrimination they face.

The obvious question that would then arise is whether it may not be better to use these funds to expand quality public education at lower cost per student. Hence, clarity on the government’s use of these institutions for closing the demand-supply gap would be useful.

If the direction of policy in other areas is indicative, the public-private partnership mantra would be used to justify supporting private provision by funding access to the disadvantaged with no regulation of costs or prices. In fact, the likelihood is that the implicit control would be on the “subsidy” offered to needy students, who then may have to make do with entry into poorer quality institutions.

A second question that arises is whether the better among foreign educational providers are likely to choose not to come into the country if stringent regulations are imposed on them.

With budgetary cuts for education in developed countries and with demographic changes affecting the size of the domestic college-going population in these countries, universities there may like to go abroad if they can earn surpluses to support domestic operations.

But if regulation includes the “not-for-profit” condition, which prevents them from extracting surpluses and transferring them abroad, they may see no reason to be in India.

Perhaps for this reason, the Act for the possibility that its provisions can be diluted. For example, as of now the Act provides for the constitution of an Advisory Board that can exempt any foreign provider of all requirements imposed by the Act except the requirement of being a not-for-profit body.

It also exempts institutions conducting any “certificate course” and awarding any qualification other than a degree or diploma to be exempt from most of the provisions of the Act, making them subject only to certain reporting requirements.

This amounts to saying that if a foreign provider enters the country, reports its presence, and advertises and runs only such “certificate courses” (as opposed to courses offering degrees and recognised diplomas), it would have all the rights that many of the so-called “fly-by-night” operators exploit today.

Once that possibility is recognised the only conclusion that can be drawn, based on the experience hitherto, is that this Act in itself is unlikely to either bring high quality education into the country, or keep poor quality education out. What motivates it, is therefore, unclear.

This raises the third question as to whether this bill is just the thin end of the wedge.

If foreign providers do not come in requisite measure, would the government use that “failure” to dilute the law even further and provide for profit and its repatriation by foreign operators in this sector?

Some time back, the commerce ministry had put out a consultation paper clearly aimed at building support for an Indian offer on education in the negotiations under the General Agreement on Trade in Services (GATS). The paper, while inviting opinions on a host of issues, was clearly inclined to offering foreign educational providers significant concessions that would facilitate their participation in Indian education.

In its view: “Given that India’s public spending, GER (gross enrolment ratio) levels and private sector participation are low, even when compared to developing countries, there appears to be a case for improving the effectiveness of public spending and increasing the participation of private players, both domestic and foreign.”

GATS is a trading agreement and therefore applies to those engaged in trade in services for profit. Providing such concession would force a fundamental transformation of the face of higher education in the country.

Put all of this together and both the motivation and the likely outcome of this bill remain unclear. If the intent is to attract new, more and better foreign investment in higher education to close the demand-supply gap, then the specific framework being chosen is likely to subvert its intent.

If the idea is to regulate only those who have been coming and would come, then a separate law just for foreign operators as opposed to all non-state players is inexplicable.

This suggests that the process underway is one of creating a window for foreign players and then changing the rules of the game in ways that persuade them to exploit the opportunity. This may explain the fear that the field would be skewed against domestic private players.

Thus, the case for this Act is weak and controversial. If the supply of educational facilities is low and of poor quality because public spending is low, the emphasis must clearly be on increasing allocations for education. This is likely to be extremely effective since India has the requisite institutional framework.

But there is no reason to believe, especially given past experience, that just allowing private entry, whether domestic or foreign, and the resources associated with it would indeed improve access and ensure quality. Unless the state pays the bill, which it claims in the first place it cannot.