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8 ISSUES AND INSIGHTS

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NEW DELHI | MONDAY, 13 MARCH 2017

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The impending rate hike Why a hawkish Fed no longer bothers the market

WORLD MONEY ABHEEK BARUA & BIDISHA GANGULY

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ell, we have heard from the horse’s mouth now. Following a week of what appeared to be carefully coordinated statements from senior officials of the US central bank’s (the Fed) all powerful monetary policy committee that an immediate hike in the Fed’s policy rate is warranted, Fed

Chairperson Janet Yellen made a surprisingly categorical statement on Friday at a public meeting in Chicago. “At our meeting later this month, the Federal Open Market Committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the Federal funds rate would likely be appropriate,” she said. This might not sound quite so “categorical” to the lay reader but this is standard Fed-speak when it’s about to hike rates. The Fed meets on the 14th and 15th of this month and this means that the US Fed funds rate could move up by a quarter of a percentage point from its current range of 0.5 to 0.75 per cent. Until about a fortnight ago the markets were factoring in a hike only in June.

A decision to hike the rate in March instead of June could also imply that the central bank is interested in more frequent hikes. That means that instead of the two policy rate hikes that the markets were pencilling this year, the Fed could hike three times and accelerate the pace in 2018. The funny thing about this is that the markets took the change in the Fed’s stance in its stride. The US equity markets actually gained post Yellen’s speech and the dollar gained a tad but did not jump up sharply. The dollar’s stability mirrored the calmness in emerging markets (EM). The Indian stock market climbed up and the rupee gained. Clearly the fear that higher rates in the US would suck liquidity out and wreak havoc on non-dollar asset markets has dissipated. Why would this be? As a signal, a

policy rate hike is read differently at different times. Earlier, when markets were almost entirely driven by cheap money created by programmes like quantitative easing (QE) by central banks without the support of underlying growth, markets panicked whenever they perceived a risk of rates moving up or the money machines slowing down. At the present moment, however, the Fed’s seeming rush to hike interest rates in the US is seen as validation of the fact that the US economy is on a steady wicket and it does seem to have a case. If one goes by the macroeconomic data prints of the last few months that seems to be indeed the case. A whole bunch of indicators ranging from manufacturing indices to retail sales to consumer confidence indicators have been strong. The February jobs report indicated a robust pace of hiring and a rise in wages, making a rate hike almost a certainty. And for the markets, this comes as a confirmation of the reflation story that is now a global theme. Besides, the Fed also takes the glob-

al economic scenario into account when it arrives at a rate decision. Some market analysts see the Fed’s increased hawkishness as a sign that the worst of China’s woes are over and the risk of a sovereign crisis in Europe has diminished. Commodity prices including oil have rallied since the beginning of the year in recognition of better global growth prospects though they took a plunge recently with the prospect of a US rate hike. The big question is how long the rally in equity markets worldwide can continue in the face of successive rate hikes by the US Federal Reserve. Wall Street celebrated its eighth anniversary of a bull run earlier this week. Many now consider the US markets to be overvalued though opinions differ. Much would now depend upon Donald Trump’s ability to deliver on his promises of fiscal stimulus and deregulation and how long these take to implement.

> CHINESE

Abheek Barua is chief economist, HDFC Bank. Bidisha Ganguly is chief economist, CII

The great Indian debate around mobile tower radiation

While doubts should be addressed, punitive action against vested interests needs to be considered so that digital progress is not stymied

T V RAMACHANDRAN

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hese days, frequent are the controversies due to “fake news” in diverse fields. Away from the limelight of these debates, a governmental campaign has been working to demolish misinformation and inadequate information in a vital area impacting Digital India, viz, the electromagnetic field (EMF) emissions from mobile towers, commonly referred to as “mobile tower radiation”. The Odyssey of Greek lore lasted 10 years. So it is with the Indian EMF odyssey, which started 10 years ago with the first appearance of media reports on adverse EMF perceptions fuelled by inadequate information and vested interests. Regrettably, no concerted official action to counter these adverse perceptions was undertaken for years. However, an education movement to improve public awareness of the scientific truths and authenticated facts about mobile tower EMF radiation is now being rolled out by the Department of Telecommunications (DoT). In the first phase, two-day workshops were conducted in six state capitals — Dehradun, Hyderabad, Mumbai, Chandigarh, Jaipur and Guwahati — over six months, led by the DoT secretary, with presentations by him and his team of senior officers and experts, doctors and medical experts, scientists and academic experts from the IITs and reputed institutions. Every event was attended and supported by the chief secretary of that state, and in some cases like Chandigarh and Guwahati, even by the chief secretaries of adjacent

states. Minister of State (Independent Charge) for Communications Manoj Sinha presided over the workshop in Jaipur, the epicentre of mobile tower EMF-related issues several years ago. The high point of each of these workshops is the one-hour open Q&A session after the expert presentations. In this, an array of experts (usually nine or 10) form a panel on the dais and questions from the audience on policy, technical, medical, standards or compliance issues are welcomed and responded to. Positive and enthusiastic feedback from the audience — “Why were such workshops not done earlier?”, “We urge the government to provide us more towers urgently for improved connectivity”, “You must carry these useful programmes to other locations in the state” etc — show the effectiveness of these sessions. Government-prepared, crisp and easy-to-read leaflets providing tower EMF-related authenticated information were also distributed to all attendees (on average 250) at these events. The attendees included state government officers, municipal commissioners and councillors, members of resident welfare associations, tower site landlords, doctors, academicians and industry representatives. The participation of the chief secretary and his senior officers concerned conveyed strong messages of support for the creation of more mobile tower infrastructure to enable the realisation of the vision of Digital India for which good mobile connectivity is necessary. For example, in Jaipur where Sinha presided, VIPs who participated included Rajasthan Industry Minister Rajpal Singh Shekhawat, Member of Parliament Ram Charan Bohra, Jaipur Mayor Ashok Lahoti and the chief secretary all spoke unequivocally of the need to shed concerns arising from false and incorrect information and to go forward to create the direly-needed digital infrastructure of mobile towers. Having completed phase 1 of the

SPREAD THE MESSAGE In 2015-end, the Telecom Regulatory Authority of India started large-scale consumer awareness programmes in Bengaluru, Gurgaon, Pune and Kolkata to disseminate correct facts and scientific evidence regarding electromagnetic field emissions from mobile towers PHOTO: iSTOCK campaign by January-end, DoT launched phase 2 smaller format workshops led by the deputy director general, TERM, in various cities and towns of states in February. It started with workshops in Udaipur, Shillong, Jorhat and Hyderabad. Several workshops every month are scheduled to take place over the next 12 months. While DoT is conducting its intense and sustained campaign, other agencies have also contributed. It was, in fact, the Telecom Regulatory Authority of India (TRAI) that kick-started the exercise, in 2015-end itself, with large-scale consumer awareness programmes in Bengaluru, Gurgaon, Pune and Kolkata to disseminate correct facts and scientific evidence regarding EMF emissions from mobile towers. These featured twohour interactive sessions following a lead presentation by the TRAI expert officer. TRAI amplified these efforts with the

Old ~500 and ~1,000 currency notes were scrapped last year, but that hasn’t been stopping devotees from dropping these notes in the donation boxes at temples and gurdwaras. The Shiromani Gurdwara Prabandhak Committee, responsible for managing gurdwaras, and temple trusts across India, have been sending representations to the finance ministry to explore the possibility of launching a special amnesty scheme for the committee to exchange the stacks of old currency notes for new ones.

distribution of leaflets giving correct information regarding mobile tower radiation as well as the placement of prominent advertisements on different aspects of mobile towers in English and five other major languages in about 54 publications across nine cities with a reach of over 24 million readers. The TRAI campaign continues in a smaller format through its regular consumer outreach programmes. The larger policy question: The above-mentioned initiatives of the government and the regulator represent outstanding efforts to interact with the public on a matter of great socio-economic importance for India. The bigger question is why they and other independent institutions have to conduct such expensive programmes on a defensive basis while scaremongers and parties with commercial interests continued spreading incorrect and misleading informa-

tion about mobile towers. In fact, mobile tower radiation reaching us is more than a thousand times weaker than that from the handsets we use and the Indian standards are 10 times more stringent than the global norms recommended by the World Health Organization. The cumulative damage to the country through gross domestic product loss due to inferior connectivity caused by insufficient number of towers could amount to several thousands of crores of rupees per annum. While honest doubts should be welcomed and addressed, punitive actions against vested interests, scaremongers and damage creators need to be seriously considered so that the digital progress of the nation is not stymied. The author is hon. fellow of IET (London) and president of Broadband India Forum. Views are personal

Taking a dig at Uttar Pradesh Chief Minister Akhilesh Yadav and Congress Vice-president Rahul Gandhi for the poor showing of the Samajwadi Party-Congress alliance in the Uttar Pradesh Assembly polls, someone did a bit of photo editing and put up a picture of the two leaders holding placards, a la Gurmehar Kaur, on a social media platform. Every placard carried an apology: “I am sorry dad!” read Akhilesh Yadav’s placard (purportedly apologising to his father and SP leader Mulayam Singh Yadav for sidelining him). Gandhi’s placard said, “I am sorry mom!” In another doctored shot, Yadav Jr was seen holding a placard that said, “Modi didn’t defeat me. He did”, with an arrow pointing towards Gandhi.

When celebrations become tough Already understaffed government-run libraries in West Bengal are facing a new challenge. As per a new directive issued by the Directorate of Library Service, all state-assisted libraries are required to celebrate a total of 51 days every year on occasions such as birthdays of famous personalities, government holidays, religious festivals and so on. However, the library staff are finding it difficult to reach the 51-day target of celebrations. With a meagre grant of ~1,000 for every occasion, they are wondering how the deficit that is likely to arise in the course of celebrations would be financed.

> LETTERS

Pick up some grilled tilapia atthe fuel station

Restaurantsatsuchvenuesarecapitalisingonarisingdemandforfresh,roadfood BRYAN MILLER

Around 10 per cent of the 154,000 convenience stores across the US could be described as food-forward PHOTO: iSTOCK from gas pumps to take advantage of a steady stream of customers. The locations “are now cool to discover and tell others about”, said Jeff Lenard, vice-president for strategic initiatives at the National Association of Convenience Stores. It certainly hasn’t always been this way. In fact, convenience store food regularly stood in as a joke. In the 1983 film National Lampoon’s Vacation, a hapless dad behind the wheel of a station wagon, played by Chevy Chase, laments, “I’m so hungry I could eat a sandwich from a gas station.” Major oil companies still tend to shy away from the complicated and risky food business. But in the early 2000s, when a long-term decline in revenue from food, gas, cigarettes and other products approached troublesome levels, many gas station and convenience store owners started to rethink their business models.

SGPC wants to exchange notes

In the line of fire

BUSINESS LIFE

Last summer, when two women were looking for a restaurant space in Leesburg, the northern Virginia town of 48,000 people, one of the options held multiple enticements: It was affordable, it had a good location, the kitchen was fit for Asian cooking and it was in a gas station. They signed on the dotted line and retained the name of the previous business, Thai Pan. Now, while the brick exterior is connected to a Liberty gas station and resembles a wellfortified bunker, the authentic Thai fare served in a charming dining room is drawing locals and adventuresome foodies from throughout the region. “People come in here and say, ‘Wow, I never expected something like this,’” said Wilaivan Kammoongkun, one of the women behind the new Thai Pan. The restaurant is part of a wave of gas stations and convenience stores capitalising on a growing demand for fresh, healthful and convenient road food. Encouraged by the changing tastes of consumers and the potential for profit, a metamorphosis has taken place in at least 1,500 locations nationwide: At independent gas stations as well as those owned by oil giants like Shell and Exxon and convenience store chains like 7-Eleven. As a result, roller-grilled hot dogs and little packaged cakes of indefinite shelf life are, in many places, giving way to fresh produce, elaborate sandwiches and even grilled tilapia and Korean bibimbap. Popular food trucks and food carts are adding to the variety, many setting up shop just feet

WHISPERS

Now, an estimated 10 per cent of the 154,000 convenience stores across the country — a $31-billion industry — could be described as food-forward, the National Association of Convenience Stores says. The largest chain, 7-Eleven, with 10,900 stores in North America, has been polishing its game for more than a decade. Nearly all of its fresh food, heavy on fruits and vegetables, is prepared in regional commissaries. The service station strategy appears to be working: In 2015, about 34 per cent of in-store profits at convenience markets came from food and beverage service, up from 22 per cent in 2010, according to the trade organisation. Food industry analysts now consider convenience markets competition for some of the most powerful names in the restaurant industry. © 2017 New York Times News Service

Morale boost for BJP The Bharatiya Janata Party’s win in the Uttar Pradesh Assembly polls — apart from its victories in Uttarakhand and Goa — is a huge morale boost for the party, as a lot was riding on the crucial state. The victory in UP is not only a win for Prime Minister Narendra Modi and BJP President Amit Shah but also for the strong organisational skills of the party. It also signifies that merely an anti-Modi message will not help the Opposition. Proof: In UP, the Samajwadi PartyCongress alliance formed to defeat the BJP, along the lines of the Grand Alliance in the Bihar Assembly polls of 2015, did not help. The BJP should not start assuming that the 2019 Lok Sabha elections will be a cakewalk; it should not become complacent. Rather, the party needs to make UP a model state for good governance, growth and development, along the same lines as in Gujarat and Madhya Pradesh where it is already in power. The next litmus test for the BJP is the Gujarat Assembly polls. In UP, the BJP has to select a CM candidate, who can take everyone along with him and who is acceptable to all. The BJP’s victories in UP and Uttrakahand are also testimony that demonetisation has been accepted by voters. Although the Congress has won in Punjab, it is not the party’s victory, rather it is that of state party chief Amarinder Singh. The least Congress Vice-president Rahul Gandhi can do now is to step down from his post and take responsibility for the defeats. It is a lesson for the Aam Aadmi Party as well, which fought elections in Punjab and Goa and hoped to replicate its victory in Delhi. Bal Govind Noida

Becoming ‘redundant’ In the article, “Situations vacant” (March 11), Kanika Datta has elegantly portrayed

a computer in a super-speciality hospital in some corner of the world is waiting for a soft touch on our android screens to handle our chest pain, too. M G Warrier Mumbai

Political drama

the growing disconnect between writer and reader, teacher and student, everyone on social media who interacts with an unknown person, employer and employee, master and servant, commandant and soldiers and so on — where “meaningful communication” is relevant for achieving desired results — using LinkedIn as a peg to hang her hat. The debate the short article brings to the fore is relevant in several other contexts, too, where technology is being brought in to replace human brains and hands. We are talking about driverless cars and doctorless surgeries. While lamenting about the adverse impact of even the abuse of science is not fashionable, I, who spent a major portion of my life in the 20th century, feel heavy in my chest when I find science and technology offering apps, cookies, robots and algorithms capable of taking over functions traditionally done by human beings. Of course, some software installed in

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With reference to the Chinese Whispers item, “JD(U) seeks liquor ban in Delhi” (March 9), the purpose behind holding a day-long dharna by the Delhi unit of the Janata Dal (United) at Jantar Mantar in New Delhi is beyond comprehension. Moreover, the dharna was held to mark International Women’s Day. While the JD(U) leadership’s attempt to highlight the success of prohibition in Bihar, particularly in reducing crimes against women, is understandable, it is beyond reason to rake up such a demand in the national capital. Of course, Delhi Chief Minister Arvind Kejriwal (of the Aam Aadmi Party) is known to be close to his Bihar counterpart Nitish Kumar. I wonder if all this was planned by the JD(U) top leadership to enact a political drama and to make its presence felt in Delhi on Women’s Day. Kumar Gupt Panchkula Letters can be mailed, faxed or e-mailed to: The Editor, Business Standard Nehru House, 4 Bahadur Shah Zafar Marg New Delhi 110 002 Fax: (011) 23720201 · E-mail: [email protected] All letters must have a postal address and telephone number

BY MIKE FLANAGAN

https://telegram.me/TheHindu_Zone

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OPINION 9

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Volume XXIII Number 235

NEW DELHI | MONDAY, 13 MARCH 2017

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ILLUSTRATION BY AJAY MOHANTY

The audacity of hope Mr Modi should press on with economic reforms

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ith resounding election victories in Uttar Pradesh and Uttarakhand, Narendra Modi is now the monarch of all he surveys in North India. Never before has the Bharatiya Janata Party (BJP) secured the kind of numbers in UP that it has this time under Mr Modi’s leadership. Coming as they did — smack in the middle of Mr Modi’s five-year term as prime minister — the FebruaryMarch elections to five states can easily be viewed as a mid-term referendum on the PM’s rule. The result underscores the fact that Mr Modi is today the tallest political leader in the country, and, by extension, the BJP the sole political pole. The Congress did manage to win Punjab and became the single-largest party in Goa and Manipur, yet these victories pale in comparison to what Mr Modi and Amit Shah, his cup bearer, managed to achieve in UP. The BJP won a total of 312 seats, after improving its tally by a whopping 265 seats over the last state election in 2012. The 57 seats won (out of 70) in Uttarakhand completed the sweep. Just as the growing popularity of the BJP across India is evident so is the decline of the Congress. There are several reasons why the UP victory is the centrepiece of these electoral results. For one, they represent an even better performance over the overwhelming victory that Mr Modi achieved in the 2014 general election, in which the BJP won more than 70 Lok Sabha seats. This is an astonishing achievement indeed, specially in a state that is possibly the toughest state to crack since it is dominated by several caste-based regional parties. However, by all accounts, it appears that Mr Modi has been able to convince people cutting across various disparate, and often antagonistic, groups by focusing on the hopes and aspirations of the poor to have a better, more prosperous future. The victory will help turn the Rajya Sabha arithmetic in the BJP’s favour, though not immediately. Besides, winning UP was necessary for Mr Modi and his party as they look ahead to the 2019 Lok Sabha polls. With a contribution of 73 seats, the state played a big role in the party’s 2014 victory. From the perspective of economic policy making in the country, the results of the polls place an enormous responsibility on a stronger Mr Modi, who can now easily look favourably at his chances of a re-election in 2019. There will be an increased expectation from him to deliver on economic well-being in terms of income, employment, health and education. There will also be the hope that Mr Modi and his party will utilise this newly acquired political capital to undertake hard policy changes in areas such as liberalisation of the foreign investment framework with a focus on local manufacturing, a thorough clean-up at debt-laden banks, etc. The massive vindication of the demonetisation decision is expected to encourage the government to renew the war on black money and continue with measures to widen the ambit of the formal economy and shrink the informal economy. The overriding consideration, of course, will be that Mr Modi will aspire to be the prime minister of all Indians and not just of his own party and of one religious community.

A bigger fiscal worry

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Reining in states’ fiscal deficit must be priority

n the last four years, the Union government has done reasonably well with regard to fiscal consolidation. In each of these years, the Centre’s fiscal deficit has declined over that in the previous year, and in the current year as well it is set to decline to 3.5 per cent of gross domestic product, or GDP. The target set for 2017-18 is still lower at 3.2 per cent. While this is commendable in itself — even though it could be argued that the quality and pace of fiscal consolidation in the Union government’s finances could have been better — a concern that is growing almost alarmingly is the widening fiscal deficit of the states. In contrast to the Centre, the states have seen their combined fiscal deficit rise from 1.93 per cent of GDP in 2011-12 to 2.46 per cent in 2015-16, and is likely to rise to 2.8 per cent in 2016-17. While this is within the 3 per cent target set by the Finance Commission, analysts point out that the current year’s deficit figure could be an underestimate as it was arrived at without taking into account the impact of higher borrowings by states as a consequence of their participation in the Ujwal Discom Assurance Yojana, a financial turnaround and revival package for state-owned power distribution companies. A sharp rise in the combined fiscal deficit of the states can easily undermine the Indian economy’s overall macroeconomic performance and neutralise the gains that would have otherwise accrued from the Centre’s attempts at shrinking its deficit. The concern about the states’ fiscal deficit has gained more importance because the combined size of the states’ budgets today is much bigger than that of the Centre and, as such, the slippages in fiscal consolidation by states deserve urgent attention. Three factors are likely to make the threat to the health of state finances even more serious. One, the key reasons for an increase in the fiscal deficit at the state level are lower growth in revenue and a faster rise in expenditure. These, in turn, make the task of bridging the gap more onerous. Two, the impact of the Seventh Central Pay Commission’s recommendations on the states is not yet fully evident. Only a few state governments have decided to increase the wages of their employees in tune with the recommendations of the commission. More states will follow suit in the coming months. Consequently, the states’ fiscal deficit for the next couple of years is likely to worsen. Finally, the launch of the goods and services tax, or GST, from July this year will introduce an element of uncertainty to the flow of tax revenue to state government coffers. Until the new tax regime is fully rolled out and clarity emerges on the anticipated revenue loss as a consequence, the combined fiscal deficit of the states is likely to take a hit. The consequent rise in the demand for higher borrowings by states will thus be a tough, new challenge and the Centre and the Reserve Bank of India will have to tackle it without allowing it to do more damage to the Indian economy’s macroeconomic performance.

After a landslide

The BJP, at Centre and states, now has the political space – and the motive — to reform

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he Bharatiya Janata Party’s magnificent vic- some important reforms — including the banktory in Uttar Pradesh gives the central gov- ruptcy Bill and the goods and services tax — these ernment enormous political space going for- have fallen well short of the slate of legislation and ward. The 2019 general election is now its to lose; rule changes that seemed possible shortly after it was unless it errs on a truly monumental scale — and per- sworn in. The pressure on the government to reform haps not even then — it will come back to power. This has slackened since then, as more and more people means that now, for the first time since the early realised that it was unable or unwilling to implemonths of the administration, it has the opportunity ment that slate of legislation and rule changes. But to implement meaningful change. a government’s ability to legislate In some ways, the BJP has been depends crucially on its perceived playing defence since it was obliterpolitical heft, and thus the payoff to ated in the Delhi Assembly elecopposing it — and this government’s tions, less than a year after it came political heft at the moment is great into office. It was forced further on indeed. Thus expectations of reform the back foot by the Bihar assembly should now be reset to the pitch that elections in 2015. But, with its comthey were at the beginning of the prehensive victory in UP behind it, government’s term. there are few political hoops left It should go without saying what through which it must jump in the constitutes the sort of broader reform years leading up to the general electhat would be expected. But here is a tion. In addition, the BJP's massive short and partial list: Labour law superiority in narrative-building MIHIR S SHARMA reform at the Centre, towards which over the Opposition has been effecsome very limited, halting progress tively demonstrated. Given that as has been made; privatisation of some politically problematic a move as demonetisation white elephant public sector units; direct tax reform, has redounded instead to its benefit, it can hardly including addressing the question of agricultural feel now that it is constrained by regular political income; changes to the public distribution system necessities. and the Food Corporation of India; and proper How will the central government respond? At arrangements for healthcare. Many of these have best, Prime Minister Narendra Modi could avoid the been suggested by the BJP’s 2014 manifesto, by errors and timidities of his earliest months and re- Union ministers, or by the prime minister himself as commit to the kind of broader reform that gives him being feasible or desirable in the past. Some would a chance of following up on the promises that he has say only the desire to avoid spending valuable politmade. A less sanguine possibility is that this opening ical capital was preventing the government from will once again be squandered, with less excuse than moving on them and related reforms. If so, that can in the first months of a new government’s term. no longer be a constraint, after UP. While the government has indeed introduced It is important to note that, if BJP statements are

POLICY RULES

BOOK REVIEW BHUPESH BHANDARI BringingtheRainbow is not a potboiler. But then, R K Somany, whose HSIL (owner of the Hindware brand) is the largest player in sanitary-ware with a market share of 40 per cent, has never been involved in headline-grabbing controversies: Takeovers, family feuds et al. Yet, a careful reading of his memoirs throws light on some key aspects of family businesses in India, especially how the Marwari eco-system works. Like hundreds of others from his community, Mr Somany’s grandfather, Ram Prasad, left his home and a thriving money-

[email protected] Twitter: @mihirssharma

Wolf at our door T

he big bad wolf will come. This is what has dictated the global climate change narrative for so long. The world has tiptoed around actions that need to be taken at a certain speed and scale to curtail emissions; global agreements have been bent out of shape to appease climate deniers. And in Paris, the world literally scraped the bottom of the barrel to tie up a weak and unambitious agreement to control climate change. All this, because it believed that doing anything more would get the opposition, particularly in the US, riled up. As a result, the US has made the multilateral world change rules and reconfigure agreements, mostly to reduce them to the lowest common denominator. Then when the world has stitched together a weak and worthless deal, the US has walked out of it. All this while its powerful civil society and media have hammered home the point that the world needs SUNITA NARAIN to be accommodating and pragmatic. “Our Congress will not accept” or, worse, “Republicans will come” has been the common refrain. This happened in 1992, when in Rio, after much “accommodation” the agreement to combat climate change was whittled down; targets were removed; there was no agreed action. All this was done to bring the US on board. But it walked out. Then came the Kyoto Protocol, the first and only framework for action to reduce emissions. Here again, in December 1997, when climate change proponents Bill Clinton and Al Gore were in office, the agreement was reduced to nothingness — the compliance clause was removed, cheap emission reduction added and loopholes included. All to bring the US on board.

Once again, they rejected it. Then came Barack Obama and his welcome commitment to climate change actions. But what did the US do? It made the world completely rewrite the climate agreement so that the targets are based on voluntary action, not science and the contribution of each country. Each country is allowed to set targets, based on what they can do and by when. It has led to weak action, which will not keep the planet temperature rise below 2°C, forget the guardrail of 1.5°C. This was done to please the Americans, who said they would never sign a global agreement which binds them to actions or targets. Paris, fatally and fundamentally, erased the historical responsibility of countries and reduced equity to insignificance. At all times, we have censored the truth of the urgency of climate change; or the need for effective and drastic action by the more powerful and rich countries; or the need to curtail emissions by curtailing or changing lifestyles so that efficiency gains are not lost because of more consumption. The world has restrained its language so that it could get the participation of the most unwilling — the proverbial, and now the real, big bad wolf. Now that the big bad wolf has come to power, what will the world do? There is no doubt that Donald Trump is of another shade of this grey. He denies that climate change is happening. He is also certain that the US needs to dig more coal, build more power plants and do everything to ramp up production, which will increase greenhouse gas emissions. What do we do now? This is the zillion dollar

DOWN TO EARTH

TheascentoftheMarwarieco-system lending business at Chirawa in arid Rajasthan in 1905-06 to seek a better future in Calcutta, as Kolkata was known then. He got into the trading of opium (it was legal then), raw jute and hessian. Within 10 years, he had made enough to start a school at Chirawa. Thefamily’sascentisareflectionofhow the Marwaris made a mark in trading in the first half of the 20th century, often riding piggyback on the community network, and from there graduated into manufacturing. For the sake of business, Marwaris readilymakesacrifices.Murlidhar,MrSomany’s father,sufferedaheartattackin1932,which left him very weak. Thus, in 1936, he asked his eldest son to give up studies and take up businesssothathissiblingscouldbelooked after. Though still in his teens, the lad was admitted as a member of the Calcutta Stock Exchange on the basis of his family’s repu-

to be taken at face value, the party believes it won a mandate in Uttar Pradesh for governance and job creation — an extension, if not a replication, of the mandate it received in 2014. It should be clear by now even to the most hardened supporter of the government that business-as-usual is not creating the jobs that were hoped for, or that these voters have been led to expect. Indian competitiveness simply has to increase if jobs are to be created at home. And that requires a more radical programme of structural change. In other words, the UP mandate not only provides the means for reform to take place, it should also remind the BJP of the importance of carrying out such reform as soon as possible. It could be argued that the UP verdict, while a shot in the arm for the BJP, does not change anything fundamental in terms of numbers at the Centre. In other words, the Rajya Sabha is not immediately going to turn in the government’s favour. The Opposition still has a loud voice there, and will for a while longer. But that misses the point. First of all, governments with minorities but with big election victories behind them find it less difficult to manage parliamentary business than even those with majorities but which appear unstable and weak. However, even more important is the fact that, with the addition of UP and Uttarakhand to the BJP’s stable of states, a vast contiguous swathe of India has the BJP in power at both central and state levels. The BJP and Mr Modi have so far ignored the opportunities for co-ordination that this has provided. Yet in UP the PM campaigned explicitly on the plank that a national party would provide a perspective to the state’s development that regional parties have not. Similarly, control of state governments and legislation give power to a national government to implement its agenda — the sort of power that can easily make up for being a few votes short in the Rajya Sabha. I have argued earlier that the saffron belt in India’s north and west, which controls such a large proportion of India’s gross domestic product, can be revitalised whenever Narendra Modi wills. Minimal political capital is involved. And as the UP victory demonstrates, it is he who is personally popular enough to win state elections now even though he is not on the ballot, and even if there is a popular state leader standing against the BJP, and even if there is no BJP “face” for the chief minister’s post. The BJP’s CMs know it would be foolish to resist policy suggestions from the PM’s office at this point. The Centre has been quite forbearing with BJP states in terms of determining their policy choices so far, but that must now come to an end. “Competitive federalism” is all very well, but the PM has made a specific promise to the electorates in these states: That having the BJP in power at state and Centre would be good for governance. The party must act like it intends to live up to that promise. Greater regulatory co-ordination, a common commitment to particular kinds of fiscal restraint and governmental responsibility, shared physical and social infrastructure — these can all be brought into existence fairly swiftly in the BJP states. At one end of this saffron corridor, from the mountains to the sea, lie the unemployed masses of UP; at the other end lies the capital and promises of the coast. The BJP’s job is to connect them, and it now has the power to do so.

tation. His entry was facilitated by fellow Marwari RK Bangur, the doyen of Lyons Range at that time. During World War II, commodity prices, including jute and hessian, went up sharply,andtheMarwaritradersofCalcuttaamassed a sizeable fortune. The Somanys too benefited and came to control as much as 99 per cent of the gunny market in Karachi. The reputation of the family began to rise, often leaping ahead of its actual business. From here, the family first bought a small engineering outfit and then set up a company called Somany Glassworks. This was its tryst with manufacturing. The family also acquired RB Rodda & Co, the largest gun merchant in the east. DuringthePartitionriots,awell-dressed man came and bought 2,000 rounds of ammunition from Rodda. It was Amiya Nath Bose, nephew of Subhash Chandra Bose. The Somany family, which lived close

to a Muslim neighbourhood, had stocked 5,000 rounds at home to defend itself in case it came under attack. Soon after Independence, when Vallabhbhai Patel was in the process of annexing the princely states, the Somanys received an urgent missive from Ghanshyamdas Birla in Shimla. The armed forces were preparing for action in Hyderabad but had run short of ammunition; could Rodda supply the required quantities? The Somanys, who had by now made excellent contacts with ICI, agreed. Mr Somany started his career in businesswithRodda.Hehadaflairformechanics and was soon able to fix problems in guns on his own. In 1957, when he was all of 20, Mr Somany was encouraged by his brothers to think of a new manufacturing venture.Aftermuchdeliberation,hesettled for sanitary-ware made of vitreous China, which was an improvement over the earthenware China products then available. The naysayerssaidsuchsanitary-warewouldbe too expensive for India. But Mr Somany stayed the course.

question. Climate change is happening as seen in extreme weather events. It is impacting the poorest in the world, the ones who have least contributed to the stock of emissions in the atmosphere. Will the world now call a spade a spade? Or will it engage in more meaningless censorship so that it woos the undesirable and, in my belief, unchangeable? I cannot speak for the US civil society, which seems to relish its beltway games. But I do know that we have no option but to push for greater attention and action on climate change. Our priority in India is to reinvent growth without pollution: Find ways to urbanise without first investing in private transport systems and then investing in cleaning up the air; or find ways to provide the energy-poor with clean power without first investing in electricity grids that do not reach them. These are our imperatives. Countries like India have the opportunity to do growth differently and we must. But it is also a fact that the coming of Mr Trump will make it harder for all environmentalists, particularly those working in the emerging countries of the South, to argue that we must stand different. The protectionist agenda will push against globalisation and encourage all to dig deeper and harder to get to the last lump of coal to burn. Forget the climate change crisis. It is tomorrow’s problem. It is also clear that the coming of Mr Trump will also stop us from scaring ourselves into restraint and self-censorship. The big bad wolf is not coming; it is here. The only way ahead is to confront the reality that the world is getting warmer and the future more insecure and catastrophic. Only then can we hope to change our future. The writer is at the Centre for Science and Environment [email protected] Twitter: @sunitanar

Once again, the family entered a sector of which it had no experience. This is what Marwari enterprise is all about. It was perfectly possible for Mr Somany to thrive in the family business but the trait of exploring uncharted territory overpowered all inhibitions. For the factory, he chose Bahadurgarh on the outskirts of Delhi and relocated there, leaving the comforts of Calcutta behind. Mr Somany tied up with Twyfords of England for technology. Thus was born HSIL. The Somany brothers collectively owned all the businesses, though each handled a separate company. Mr Somany realised this state of affairs could not last for long, especially when the next generations got into the business, and thus initiated an exercise to separate out the holdings. The process proved far from simple and led to a fair share of acrimony, which Mr Somany recounts with all honesty. Mr Somany suspects one of his siblings provoked the Haryana sales-tax department to raid his office in 1975 and take away all the books of accounts. As the depart-

ment refused to return the books, HSIL was likely to miss the deadline to publish its statutory accounts, which would have triggered a serious penalty. Mr Somany fought it out in the courts, got the books and put out the accounts before the deadline. This is a good example of how the Licence Raj was open to manipulation, often to settle personal scores. Businessmen are known to be cautious people. They hide far more than they tell, haunted as they are by the fear of retribution. Mr Somany writes with rare candour, which is refreshing. This includes the mysterious deaths of his first and second wives. Read the book also to learn how kids from different communities would interact in Calcutta’s public schools. Bringing the Rainbow is a good insight into the mind of a Marwari businessman.

BRINGING THE RAINBOW R K Somany Rupa 199 pages; ~595