Backwards into the future

Punjab opposing the WTO policy on constitutional grounds shows how low the state has sunk

AT the time of the Kandahar crisis, people wondered why the government didn’t announce its decision to free militants like Masood Azhar and Ahmed Omar Saeed Sheikh for the hostages of flight IC 814 during the day, but waited till late in the evening to declare this. Well, the story goes, the government didn’t want anyone filing a public interest litigation (PIL), and then getting a stay against releasing the hijackers!

Another version of the story, and this could be apocryphal, is that the Cabinet even debated on whether it could get someone to file such a PIL — saying the government had no right to release the terrorists — so it could tell the Taliban-backed hijackers it couldn’t release the militants as the courts had ruled against it.

That story which looked ridiculous in December 1999, sadly, appears to be coming true now, in October 2001 — the duly-elected government in Punjab has decided to challenge, in the Supreme Court, the Union government’s signing of the WTO accord under Article 131 of the Constitution. The state’s cabinet decided on this two days ago, and if you think this is a joke, just look at Friday’s newspapers. An official spokesperson told the media (the press is called that nowadays) that some areas in the accord — such as agriculture and small-scale industries — come under either the sole jurisdiction of the state governments (this is called the ‘state list’) or under the dual jurisdiction of the centre and the states (the ‘concurrent list’). As such, the Union government had no right to sign away the rights of the states at the altar of the World Trade Organisation without consulting the states.

And you wonder why investors, especially those from overseas, think India’s a country full of jokers, and that it reneges on its commitments all the time. All you need now, to take this to the ultimate in ridiculousness, is for some crackpot individual to take even the simplest government rule to some court or the other, on some ground or the other, and get it stalled. The government’s forcing us to pay taxes, I’m sure it could be argued, goes against the principle of choice, for instance. Or did the government get the approval of the people of India, through the hallowed portals of Parliament, to sell Hindustan Teleprinters Limited, one of the jewels of its crown (zirconium, surely). And if it didn’t, is the sale legal?

Do you know, and this is not a joke, at the height of the problem the Maharashtra government was having with Enron’s Dabhol Power Company project, one of the suggestions was the state scrap the project while saying the price of power agreed to in the agreement was violative of rule XYZ (or is that ABC?) of the Electricity Act — this rule specifies the kind of returns that a generating company can get, and clearly Dabhol was getting much more than this. Now I am in favour of scrapping the project if it can be done without incurring an exorbitant cost (in which case it would be cheaper to carry on with the project, no matter how flawed it may be), but this suggestion is truly ridiculous. After all, the same ‘violation’, if indeed it was one, was countersigned by both the state and the Central governments.

What’s even more frightening is that this action has been taken by Punjab which is arguably one of India’s most progressive states. This is the state which will benefit the most from the WTO agreement, and any further agreements that will flow from it. Currently, the developed world, especially the European Union, has huge subsidies that protect its farm sector — once these are reduced and agriculture is truly freed up, and that’s what future WTO rounds are aimed at, India will benefit as its agricultural exports can increase dramatically. Naturally, unless the Punjab farmer’s legendary enterprise is completely exhausted by now, it is Punjab whose exports will go up the most.

Similarly, for all the pious nonsense dished out by politicians about small-scale industries, it’s well-established that they’re inefficient, and that over half the products reserved for manufacture by these units are not even produced by them. Cloth produced on powerlooms in the small sector, it is true, is much cheaper than that produced by the larger mill sector, but that has nothing to do with relative levels of efficiency. It has a lot to do with the fact that powerlooms pay no taxes while the mills do.

India, or possibly just Punjab, could walk out of the WTO, but that still won’t prevent inexpensive Chinese goods from flooding the markets here — the Chinese, you see, don’t believe in small-scale, but produce even toys in factories whose volumes run into several million pieces a year. India’s textile sector, today largely in the small sector, is largely obsolete and once protection under the WTO goes (that’s right, this sector is actually protected by the current WTO-type agreement), India’s textile exports will suffer badly. The only way forward is to modernise dramatically, to make both industry and agriculture efficient. Going backwards into the twenty-first century isn’t going to help.

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