Tag Archives | policy

Why is India hesitant in its policy towards Iran?

 The slow progress on Iran policy can have long term strategic implications for India

With sweeping changes occurring in West Asia after the lifting of sanctions against Iran by the US on 16th January, Iran is all set to play a major role in the geopolitics of this region. But India’s Iran policy seems to stuck in stasis. In May 2015, the long standing Chabahar port deal was finalised with Iran. The port is slated to be operational by the end of 2016. This will link India with Afghanistan and Central Asia. Calling off the sanctions is a welcome opportunity to be seized.  All indications towards the end of 2015 pointed towards this development and India should have been ready. It seems the government did not think that sanctions would be lifted so soon.

In a speech delivered at the India International Centre, Delhi on 18th January, Mr Gholamreza Ansari, Iran’s ambassador to India said, “In the changed circumstances in West Asian region, India cannot follow a policy of patient waiting any more. I have often been advised to be patient on big India-Iran projects. Does India want to wait for centuries before capturing the right opportunities?” Iran had asked India to conclude the bilateral agreement quickly at the Joint Commission Meeting(JCM) on 28th December 2015.  The main hitch was amendment to ‘withholding tax’ with which India exempted crude payments to Iran, if it was done in Rupees. There was a sense of urgency for this to be done before lifting of the sanctions. With sanctions gone, the need no longer exists as payments will have to be done in dollars. During the sanctions regime, Iran could not trade in dollars. It is free to do so now. There are no barriers to trade. The Indian products like Basmati rice, soyameal, sugar, and pharmaceuticals will have to compete with other countries.

Lack of coordination between ministries is also affecting the important Chabahar project. Iran wanted a loan for developing the rail network from port. In spite of the ministry of external affairs stressing the urgency, the department of financial services and ministry of railways did not move with the desired speed for reasons unknown. As per the deal in May 2015, the contract was supposed to be signed by November last year. If the government does not have the money, could it not invite the private sector? If sufficient guarantees of security is given, then private players will be willing to get involved. After all, there are other projects in Iraq and Syria worth thousands of crores that would interest them. The government only needs to give a push to get this going. After all, Modi is known for his clinical efficiency to get things done.

 

Guru Aiyar is a Research Scholar at Takshashila Institution and tweets @guruaiyar

Featured image: Holy shrine of Abdulazim in Tehran by David Stanley, licensed by creativecommons.org

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Kudos to TRAI—India ain’t a banana republic

The TRAI letter to Facebook on the issue of Free Basics has demonstrated that our institutions have enough discretion to stall veiled attempts in shaping public policy  

Asserting itself, TRAI in a strongly worded letter on 19th January, criticised Facebook calling its Free Basics campaign a “crude” attempt. It accused the social networking site of turning the consultation over differential pricing of data services into an “orchestrated opinion poll” to push its Free Basics. The company had run an aggressive campaign with full page newspaper ads. Reportedly, it spent more than Rs 300 crores. Free Basics allows users to access certain sites without data charges. However, there is nothing free about it. In addition, Facebook reworded the TRAI’s questions in its consultation paper into template responses which reduced users’ choice. The regulator had sought the views of stakeholders on differential pricing on data services being offered by operators. The responses sent by Facebook did not adequately cover the issues that TRAI was bringing out. The regulator pointed out that such interpretations as done by Facebook would have dangerous ramifications for policy making in India.

The number of responses received by TRAI is also bone of contention. TRAI said that it received only 1.89 million responses. Facebook on its part, stated in an email on 13th January that no mails could be delivered to the TRAI id after 17th December, 2015 and contested that it had sent more than 11 million responses. TRAI promptly replied as to why Facebook had to wait for 25 days before bringing this to notice. There was a certain degree of coercion and a lack of transparency in the manner that Facebook took the consent from its subscribers. The regulator had asked Facebook to tell its users to specifically answer queries raised in the paper. The responses sent by Facebook were not relevant to the questions posed by the regulator and instead it was a veiled attempt for its ‘Save Free Basics’ campaign. However, the regulator has stated that it will consider all the relevant responses sent by Facebook.

This stand off between the regulator and Facebook has come at a time when the social media giant is trying to vigorously establish its footprint in India. With this approach, TRAI has effectively demonstrated that it will not stand for being bullied by a multi national corporation trying to have its way. Whether Facebook backs off, or escalates this further remains to be seen.  On 21st January, TRAI is holding an open house on differential pricing and net neutrality involving all stakeholders. It will be interesting to watch the development as it will have a major impact on the internet services.

 

Guru Aiyar is a research scholar with Takshashila Institution and tweets @guruaiyar

Featured image: Uniqeulycat(Cathy) Smith licensed from Creativecommons.org

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FDI- A classic example of why policy reforms are difficult to implement in India

Ankit Agrawal

The government wishes to allow FDI in multi-brand retailing to the tune of 51 percent which is being vehemently opposed by opposition/coalition parties and various interest groups. According to the rational actor model, the state is a monolithic unitary actor, capable of making rational decisions based on preference ranking and value maximisation.

In reality, the organisational behaviour model and the government politics model supplement this model and the latter only provides guidance to the ideal scenario. India follows a parliamentary system of governance which has a collective executive in the form of a cabinet so policy-making is joint decision-making. Decision-makers refract every policy through the prism of ideology and interest. A policy emerges only if harmonisation of multiple policy preferences can be achieved. India has had coalition governments for almost two decades now which makes persuasion and bargaining central to all policy-making and often results in no outcomes. Various parties weigh the potential benefits and impact on their electoral base while adopting positions on issues.

The same is being observed in the case of this reform proposal. Parties dependent on farmers, traders or the economically backward for votes are vehemently opposing the proposal. FDI in multi-brand retail may be economically rational on grounds of efficiency. But relative weights assigned to equity and efficiency and the question of what constitutes equity are points of contention between those advocating a neo-liberal approach and those who advise a people-centred approach to economic reforms. Currently, advocates of the latter seem to be enjoying the upper hand, even though it could be a matter of debate whether the supporting narratives they promote are spurious and irrational.

One can’t treat the government, its operating environment and the external environment in which the government is embedded as black boxes. The “window of opportunity” for reform is open only when the three streams of problem, solution and politics come together. Electoral compulsions like upcoming elections in states, threat of withdrawal of support by recalcitrant coalition partners and refusal on their part to negotiate has stalled this reform at various stages.

Given the current dominance of the politics of transparency and stakeholder consultation, public interest groups have acquired considerable influence on decision-making in the government. This is being observed in the FDI case where lobbies of traders, middlemen and farmers have sought to pressurise the government through high-visibility tactics ranging from demonstrations to outright violence. Technically, the proposed reform is an executive decision which by definition doesn’t need ratification by the Parliament and is non-binding on individual states since retail is a state subject. Yet, sustained pressure exerted through media outlets and the potential sweep of the policy has forced the government to suspend the proposal.

Even so, strategic incrementalism in the form of allowing cash-and-carry format stores and upto 100 percent FDI in single-brand retail is being practised, aimed at bringing elements from the realm of context of appreciation to context of influence. In sum, divergent interests and electoral compulsions of coalition partners, public interest groups, the reigning paradigms of governance and a free but hyperactive and sometimes irresponsible media, form a potent mix and make implementing reforms difficult.

Ankit Agrawal is an Equity Research Analyst based in Delhi

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