Demonetisation

                                                                     

Demonetisation—The Economists Speak ; Edited by Uma Kapila ; Published by Academic Foundation ; Pages 150 ; Price Rs. 595/-

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The Indian Prime Minister made an announcement on November 8, 2016 demonetising Rs.500/- and Rs 1000/- notes. This entailed removing of 86.4 per cent of the currency in circulation. The reasons offered for this draconian measure were to combat 1. Black money , 2. Financing terrorism and 3. Counterfeit currency. An after thought reason was to enable a transformation into a " less cash / cashless economy ".

Dr.Uma Kapila who has distinguished herself as a Reader in Economics from the Delhi University and is author of several valuable books on Indian economics has assembled a galaxy of scholars, each an authority in his / her field.

The book has 20  articles written by eighteen economists, scholars and policy makers--each offering his / her impressions on this imbroglio thrust upon an unprepared nation.

To begin with Prof .Y.K.Alagh provides a historical account of Demonetisation and its repercussions during 2017. He quotes with approval Dr. I.G.Patel, the then RBI Governor warning Prime Minister Morarji Desai—“This demonetisation of the Thousand Rupee Note will not work; Black money is held in land, gold and dollars. They appreciate in value and not in currency.” Eighty per cent of our economy works with cash ; financial intermediation is for the remaining 20 per cent. Patel called for speedy restoration of faith in currency, The economy will have to tackle problems like expanding demand, utilising surplus capacity and checking rising costs in some sectors.

Bibek Debroy reviews legislative measures and studies demonetisation comparing Indian experience with that of other countries. According to him, ”Demonetisation is only one of the various steps, not the only one to resolve “ black problems “ under the sun. The stock of black money can be in the form of gold,real estate and other properties.

Dr.Manmohan  Singh, while supporting the sentiment behind the decision is skeptical of its implementation. The introduction of the Rs.2000/- note has made it easier to generate unaccounted wealth. The macroeconomic impact of the move is likely to be hazardous.He is convinced that demonetisation measure has the makings of  mammoth tragedy.

Suyash Ray asserts that a cost-benefit analysis suggests that benefits  from demonetisation were relatively small compared with the costs. He analyses several parameters—Fake currency, black money,the poor, rights of the individual citizens, rule of law, society and institutions and asserts that the measure will make only a small dent on  the black money problem and it is not a good bargain considering the long-term consequences.

Radhika Pandey and Rajeshwari Sengupta study at length the impact of demonetisation on growth. They state that in emerging countries an important driver of GDP growth is investment. The demonetisation measure will act as a massive negative shock for consumption demand resulting in affecting investment. This could lead to a fall GDP  growth rate.

Sekhar analyses the impact of demonetisation on agriculture. According to him, it is unlikely to affect agricultural growth  since most of the agricultural transactions are carried out using cash, demonetisation is  bound to affect agriculture relatively more in the short to medium term. it is likely to hit farmers badly unless the public procurement of pulses improves and distress sales of perishables are addressed.

Ila Patnaik highlights how demonetisation and its handling has undermined the public confidence in the Reserve Bank’s capabilities and its commitment to to the inflation target.

Parthasarathy Shome opines –“ Policy makers would realise that not just tax evaders, smugglers or terrorists use cash but also the poor. The leaders of democracy have not been observed to queue at banks like the urban commoner. Thus it is ironic for political representatives proclaim that the entire country is with them.Whatever occurs ahead, a monitoring cell should be established to minimise adversity, reflecting its gravity, for honest taxpayers and the vulnerable.”

TCA Srinivasa Raghavan and S.L.Rao assess black money and how to eliminate its impact by rigorous investigation and honest  prosecution.

The Editor Dr.Kapila sums up that a country like India where corruption is all pervasive, fighting black money and its continuous generation is a major task for any government. Widespread corruption harasses the common man and acts as a deterrent to development. The way it has been implemented black money and corruption will not be eliminated so speedily. 

Quite recently an I M F Official Paul Cashin who is Assistant Director of the IMF's Asia and Pacific Department declared -- “It ( Demonetisation) is sucking in  with a vacuum cleaner cash from the economy. Cash is being replaced at a fairly modest pace. That led to lot of cash shortage that have adversely affected consumption”. He warned the authorities against build-up of NPAs and elevated corporate, sector vulnerabilities.

One wishes that the Editor had included articles from the Establishment with contributions from Arvind Panagariya, Arvind Subramanian, Urjit Patel—so that both sides would have been properly given an opportunity to present their case.

This volume is a highly valuable source book on the hottest topic of the day-Demonetisation.

P.P.Ramachandran.

05—03--2017

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Essays On Inclusive Growth by C.H.Hanumantha Rao;  Published by Academic Foundation ; Pages 292 ; Price Rs. 995/-

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Hanumantha Rao is Chancellor of the University of Hyderabad .He was a distinguished member of the Seventh and Eighth Finance Commissions, Planning Commission, Economic Advisory Council to the Prime Minister and of the Central Board of Directors of R B I. He was connected with a whole host of Committees. He bagged the Financial Express Award for Lifetime work in the field of Economics. A grateful nation honoured him with the Padma Vibhushan.

The book under review draws pointed attention to how rising regional disparities in development and slow growth of agriculture, rural non-farm sector and manufacturing combined with scant attention to health care and education resulted in increasing income inequalities and rural distress. The Twelfth five Year Plan gave a conceptual framework for achieving inclusive growth through reduction in regional and intra-regional disparities in development, step-up of  growth of agriculture and manufacturing.

The book is a testament to the faith of one man in finding a solution to the problem of inclusive growth. There are 49 chapters , 28 of them dealing with deficiencies in infrastructure, technological fatigue, marketing constraints and sustainable use of water or irrigation.

The First Section is devoted to “ Growth and Inclusiveness “ and has eight chapters. The global financial crisis left India fairly untouched because of prudent management of the financial sector by the   R B I. Also due to harmonizing of reforms in the financial and  external sectors along with progress in fiscal and real sectors. What is called for is inclusive growth and measures for raising domestic demand that provides a safety net against the vagaries of global markets.

Governments, both Central and State, stepped up public investment in infrastructure and other expenditure on agricultural and social sectors leading to a high G D P  growth. Rao stresses the need to evolve a more comprehensive and active social policy to facilitate inclusive growth and arrest inequitable distribution of gains from growth. Further, he emphasises that financial inclusion is indispensable for achieving inclusive growth.

Economic reforms to be successful have to become participatory, especially at grass roots level to improve both efficiency and astute management of natural resources.

                                                                                                                                                    One chapter concentrates on the comparative experience of rural transformation in India and China and emphasizes the role of socio-political factors in accentuating in income inequalities in the wake of globalization. The social change under way in India is faster than before thanks to the rising awareness of the common people.

The Second Section is dedicated to “Agricultural Growth and Sustainability “ and has 11 chapters. The chapter on “ Crisis in Agriculture” is a masterly analysis of the ramifications of this critical area in our country. The neglect of the agricultural sector became evident during the early 1980s. Public investment had started declining. The concern for backward regions and for small and marginal farmers was fading away. “The Green Revolution” era touched only the developed pockets of the country. Declining growth of agricultural output, sinking profitability and burgeoning rural unemployment were the reigning forces. Indebtedness of farmers increased, especially from informal sources. All this led to a spate of farmers’ suicides—which is analysed in a full chapter. Much needs to be done to instill confidence among the vulnerable groups of farmers Effective implementation of Employment Guarantee Scheme will mitigate rural distress by raising the incomes of the poorer people in rural areas and improving their socio-economic position and their bargaining power.

Prof. Rao has highlighted the importance of biotechnology for raising productivity of crops and animals and lending stability to yields. Another crucial subject is Agricultural Prices and here the author recommends that our approach should be from the point of agricultural development, overall economic growth and social justice. Efficient allocation of resources is one of the major functions of agricultural prices. Agricultural pricing is essentially an exercise in balancing / reconciling the conflicting objectives cutting across sectional interests viz.,farmers interests, manufacturers’ interests, consumer interests, etc.

An excellent chapter -- “ Strategy for Soil and Moisture Conservation through Watershed Development”  is dedicated to Prof A.Vaidyanathan—who is the foremost authority on the subject. Watershed development aims at protecting the livelihoods of people inhabiting the fragile eco-systems experiencing soil erosion and moisture stress, Scientific watershed development can lead to conservation of natural resources and easing pressure on such resources.

Section Three is dedicated to Andhra and has four chapters that give a succinct analysis of Andhra during the last fifty years—its rate of growth, potential of agro-business and a detailed analysis of the major issues in land reforms.

“Telengana ‘ –the new State has been covered in Section Four and has five chapters. The SriKrishna Committee which dealt with the demand for a separate State is analysed in depth. Scales of justice got tilted against Telengana on account of vehement opposition from Seemandhra and the Committee’s own fears about the demands for smaller States cropping up as well as Telengana becoming a stronghold for Naxalism and religious fundamentalism. Prof.Rao has provided  an acute analysis of the problems faced by the fledgling State.

A delightful Section is “Some Reminiscences”. We have a lilting account of the author’s interaction with prominent politicians like Indira Gandhi,  Narasimha Rao, etc. Intellectually pleasing are the accounts on Sukhamoy Chakravarty, P.C.Mahalanobis, Abid Husain, etc.

This is a volume to be carefully read and dipped into often for its intellectual vigour and to learn of one man’s dedicated efforts to lift the downtrodden.

Tit  Bits

 Rajiv Gandhi during a meeting of economists, members of the Planning Commission and government officials declared “… with all respect to the senior economists present here, I would like to mention a saying that economists are those who are heavily paid for making forecasts which often go wrong “. At this, Dr.Raja Chelliah who was equally forthright and relaxed gently retorted, “Sir, since we are not paid heavily our forecasts can never go wrong’”The PM greeted the remark with a heavy laugh. ( Page 229)

P.P.Ramachandran.

26 / 02 / 2017

                                                        

Public Debt Management ---Separation of Debt from Monetary Management in India  Edited by Charan Singh ; Published by Springer ; Pages 211; Price Rs. 10,099/-

 ( Import, 25 Nov 2016)

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The Editor Charan Singh is former RBI Chair Professor of Economics at the I I M, Bengaluru. He was for over two decades in the Reserve Bank where he dealt with debt management and fiscal policy implementation. His credentials for editing a book on public debt are impeccable.

The book contains papers discussed at the Debt Management Module under the aegis of the Ninth Annual  International Conference on Public Policy and Management organised by the I I M, Bengaluru in 2014. The Conference was aimed at exchange of ideas among international scholars, academia and policy makers connected with debt management.

The Keynote address was given by H.R.Khan, then Deputy Governor of R B I. There are seven other contributors including two experts from Asian Development Bank.

Public debt management is the process of evolving and implementing a strategy of managing government debt which garners the requisite amount of borrowings, achieves cost / risk aims and also attains  governmental goals. In this direction measures have to be taken to promote efficient primary and secondary markets for government securities.

The position as it is obtaining in India is that public debt management is divided between the Central and State governments and the  R B I. The R B I  manages the market borrowings of both Central and State governments. External debt is managed directly by the Central government. The R B I  is statutorily entrusted with the maturity pattern, calendar of borrowings, instrument design and other related issues in close consultation with Government.

A Middle Office was set up in the Finance Ministry in 2008 to formulate debt management policy for the Central Government. There were some steps taken to set up an Independent Debt Management Office in the Finance Ministry. However there was a serious reluctance to accept this by R B I  since there exists in R B I a separate Department and during critical economic periods need for coordination would be intense and Government lacks the expertise in this field.

The inaugural address of H.R.Khan explores the historical background and asserts the success of R B I  in achieving the objectives of debt management. According to him, R B I took adequate care of rollover risk, exchange rate risk and interest rate risk. R B I  has also contributed to a strong government securities market. He argues for a continuation of the existing system as involvement of the central bank in managing market volatilities and market expectations becomes necessary and central bank’s hands-on involvement is much better as is clear from the experience in recent years.

Peeyush Srivastava explores the aims and strategy  of debt management of the Government. Government should ensure meeting the financial requirements in a sustained pattern and cost-effective manner. He discusses in depth debt restructuring, consolidation of securities, market management mechanism and management of government cash surplus.

The cash and debt management in States are discussed in detail by Ritvik Pandey. He presents an analysis of State debt, sources of their borrowings and related issues. He explains Ways and Means and overdraft facilities available to the States. He throws light on debt cycle, inflexible sources of borrowing and interest rates on State Government securities.

Kanagasabapathy, who has immense first-hand experience in the  R B I , calls for a holistic approach to debt management. He strongly commends an Independent Debt Management Office (IDMO)  that should be a policy-oriented agency and allot the operational part to the   R B I as a banker and fiscal agent to  Government. The IDMO should handle both Central and State loans. A separate debt management office on the basis of the Financial Sector Legislative  Reforms Commission would result in debt management becoming wholly subservient to the Finance Ministry without any independent status. He suggests a Debt Management Corporation as an R B I  subsidiary with share holding of  Central and State Government and handle the debt of both Centre and States.

The Editor Charan Singh has given a lucid history of debt management. Separation of debt management from monetary policy is essential to preserve the integrity and independence of the central bank. Such a separation is in the interest of the economy as it grows and facilitates the development of financial markets.

The  two experts from the Asian Development Bank study the evolution of fiscal balances and public debt ratios in developing economies of Asia covering 24 countries. Countries in this region have reacted responsibly to increasing debt ratios through fiscal tightening and prudent fiscal policies.

A final chapter called “ Round Table” offers a discussion on debt sustainability and its separation from monetary policy authority. There is a vigorous and healthy discussion of the pros and cons of making debt management agency function of the government.

The volume—which has a valuable number of tables, charts and graphs -- is a very useful, meaningful discussion of the problem of public debt and is of immense use to policy makers, economists, bankers and students of India economics.

The volume is a part of the India Studies in Business and Economics dealing with research in areas of economics, business and management science.

P.P.Ramachandran.

19 / 02 / 2017

                                                                

Counting The Poor In India—Where Do We Stand by C.Rangarajan and S.Mahendra Dev ; Published by Academic Foundation ; Pages 150 ; Price Rs 895/-

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Dr.Rangarajan  is Chairman of the Madras School of Economics  and Chancellor of the University of Hyderabad. He was the Chairman of the Twelfth Finance Commission, Governor of Reserve Bank of India and Chairman, Economic Advisory Committee to the Prime Minister. He was President of the Indian Economic Association in 1988 and President of the Indian Econometric Society in 1994.  He was awarded Padma Vibhushan in 2002. 

S.Mahendra Dev is the Director and Vice Chancellor of the Indira Gandhi Institute of Development Research. He is the recipient of the coveted Malcolm Adiseshiah  Award for outstanding work on Development.

The book under review contains the Report of the Expert Group appointed by the Government of India to review and take a fresh look at the methodology for the measurement of poverty chaired by Dr. Rangarajan. A number of issues cropped up after the Report was released and these are studied in four articles.

How does one measure poverty?. The most appropriate is the one prescribing a minimum level of income or consumption expenditure. Households not achieving this level can be treated as poor households . This is based on the minimum expenditure on food and non-food items. Non-income indicators such as education,health, situation, drinking water, child mortality, etc can be monitored over time along with income or consumption poverty.

Many committees studied the methodology to measure poverty. The original methodology evolved by Prof.Y.V.Alagh was modified by the Lakdawala Expert Group and again by the Tendulkar  Expert Group. The latest Expert Group has Dr.Rangarjan as the Chairman and it makes several improvements over the Tendulkar committee’s poverty line. It reverts to the practice of having separate All India rural and Urban basket lines and deriving state level rural and urban estimates from these. The Tendulkar Committee took urban poverty as given and used it as the common basket for rural and urban household.The Rangarajan Committee derived the food component of the poverty line basket by reference to the average requirements of calories, proteins and fats based on the ICMR norms differentiated by age, gender and activity for all-India rural and urban regions to derive the minimum normative levels of nourishment.

Accordingly, the energy requirements was arrived at 2155 kcal per person in rural areas and 2090 kcal per person in urban areas. The Committee computed a fresh basket in the light of the most recently available minimum requirement of food. Also minimum non-food requirements for certain categories were included in determining the basket.

The Rangarajan Group recommended that the beneficiaries under target group oriented schemes of the Government may be selected from the deprivation specific ranking of households.

The Group noticed a two-fold approach to ameliorating poverty. First—Growth. Poverty ratios come down faster during periods of higher growth.As growth occurs it affects  all sections of society. A strong growth increases the resources available to the public authorities  and this leads to higher social sector expenditures. The Group affirms that the very fact that poverty ratio still hovers around 30 per cent means that growth by itself will not be adequate to reduce poverty. It is imperative that Governments launch specific programmes which go directly to help poorer groups and vulnerable sections of society.

Policy should work towards not only to reduce the number of people below the poverty line but also ensure that people in general enjoy a much higher standard of living. Policy makers must follow the twin strategy of letting the economy grow fast and directly attacking poverty through poverty alleviation programmes.Increased public expenditure on health,education and other social services will have to be taken into account while assessing trends in poverty.

The four special articles deal with comparison of Social Economic Caste Census data, Estimates of Poverty using different cut-off points and the impact of public expenditure on health and eradication of poverty and Poverty estimation.

According to the Rangarajan Group, the MOCC (Monthly Per Capita Consumption Expenditure) of Rs 972 in rural areas and Rs 1407 in urban areas is treated as the Poverty Line at the All India level in 2011-12.

A number of tables throw light  on the parameters analysed in the Report of the Rangarjan Group. There is an excellent bibliography of immense use to those who wish to study more of the subject.

This is a very valuable book which enables us to understand the level of poverty and the steps taken to alleviate poverty.

P.P.Ramachandran

12/02/2017

COLIN POWELL

                                              

it Worked For Me by Colin Powell ; Published by  Harper Collins ; Pages 283 ; Price US $ 27 /99.

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Colin Powell  is the former American  Secretary of State and a Four Star General. His book “It Worked for Me “ is a gold mine culled out of his remarkable experience and  the lessons he  learned.

 Powell gives  details his early life living with his Jamaican-born parents in the South Bronx of New York, working summers and Christmases at a furniture store , his experiences during two tours of duty in Vietnam, his philosophy on separating home and work, and his regrets and triumphs as a military and political figure over a span of 45 years. His life has truly been an impressive  journey and he puts forth many life lessons and advice for personal success and career satisfaction. Some of these are of universal value.

 The quintessence of the book are  Powell's "Thirteen Rules"— which became  the basis for his universally popular  lectures the world over. His short but sweet rules are illustrated by exquisite  personal stories that form the foundation for  his principles for effective leadership--: conviction, hard work, and, above all, respect for others.  Powell declares "It's about how we touch and are touched by the people we meet. It's all about the people."

 Powell is a born story teller and keeps us glued to his  parables loaded with advice on succeeding in the workplace and beyond. "Trust your people," he advises his subordinates in the State Department . "Do your best—someone is watching," he advises those just starting out, recalling his own teenage summer job cleaning floors in a factory making soda.

He  combines the insights he has gained serving in the top ranks of the military and in four presidential administrations with the lessons he's learned from his immigrant-family upbringing in the Bronx, his training in the ROTC, and his growth as an Army officer. The result is a powerful portrait of a leader who is at once a lofty thinker, wholly bereft of pride and highly appreciative of the role of those he worked with.

 Powell distilled ideas and anecdotes are an entertaining read and quite  charming.A few illustrations. A woman “in a local mall” who approached him in the parking lot, said, “I recognize you. You’re? …” After giving her some time to recall  his name  he thought better to erase  her misery with, “Ma’am, I’m Colin Powell,” to which she said, “No, that’s not it” and drove off.

When a London newspaper suggested that Princess Diana and Powell shared a genealogy that could be traced back to the Earl of Coote in the 1500s,  he “pocketed the news immediately” for future use. He subsequently had occasion to claim, at a charity gathering where Henry Kissinger was also appearing, “a relationship” with the princess. Whereupon Diana began her remarks, “Dr. Kissinger, ladies and gentlemen and Cousin Colin, good evening.”

 A persistent theme is how “Kindness Works” , in which he endorses a clergyman’s advice, “Always show more kindness than seems necessary, because the person receiving it needs it more than you will ever know.” A second theme concerns how important it is for leaders to listen to the ranks. He notes without elaboration how, on three occasions during his time at the State Department, he had to act on information he had received through informal channels to remove an ambassador quietly “before formal channels woke up to the problem.”A third theme is the importance of family or “tribe”: “Children need to be taught early in life what is expected of them and how they must never shame their family. They must be taught to mind their adults. If a kid isn’t spoken to properly, read to, taught numbers, colours, time, how to behave, how to tie his shoelaces, play nice, share, respect others, and know the difference between right and wrong, he will be miles behind by the time he reaches the second grade.”

Powell  explains how he came to give the infamous presentation to the United Nations justifying the invasion of Iraq on the basis of what proved to be faulty intelligence about weapons of mass destruction. He still broods about those  who accuse him of “knowing the information was false. I didn’t. And yes, a blot, a failure, will always be attached to me and my UN presentation.”

He also notes that, four months after the fall of Baghdad, “even as their sources collapsed and no WMDs had been found, the CIA continued to formally report that based on what they knew and believed at the time they were made, they stood by their original judgments.”

 In “Tell Me Early” Powell emphasizes the importance of keeping your supervisors informed about any challenges or issues with which you’re faced. Powell recalls the 2003 revelation that American soldiers and interrogators in charge of Iraqi prisoners in Abu Ghraib prison in Baghdad had abused, tortured and humiliated these prisoners. Later that year, pictures taken by the soldiers themselves showing the level of abuse surfaced and were shown to ground supervisors, but this information was never conveyed to senior leadership. The state department, the chair of the joint chiefs of staff and President Bush all looked foolish in the eyes of the world.

 Powell  stresses the importance of creating a work environment in which healthy competition is encouraged so each individual can be the best at whatever they do.

 He reminds us that, “A life is about its events; it’s about challenges met and overcome—or not; it’s about successes and failures. But more than all these put together, it’s about how we touch and are touched by the people we meet. “

This is an extremely absorbing memoir by one who held the highest military posts in USA and learnt lessons the hard way.

P.P.Ramachandran

05 / 02 / 2017

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Choices: Inside the Making of India’s Foreign Policy by  Shivshankar Menon ; Published by Penguin ; Pages  224 ; Price Rs 599/-

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 Shivshankar Menon was Foreign Secretary from October 2006 to July 2009 .He was a career diplomat, who  has served as India's envoy to Israel (1995-97), Sri Lanka (1997-2000), China (2000-03), and Pakistan (2003-06). He was the NSA from January 2010 to May 2014.He has brought out an insider’s account of the decision-making process of India’s foreign policy in the book under review.

 Menon dissects  five absolutely crucial moments in recent history  that have had a crucial  impact on current events in  India. These are some of the most crucial scenarios that the country  encountered  during his long career in government and how key personalities were compelled to  make choices based on incomplete information under the pressure of fast-moving events.

Menon refers to important  Indian foreign policy decisions with which he was closely connected with.

These include 1) India-US nuclear agreement, 2) the first-ever boundary-related agreement between India and China, 3) India's decision not to use overt force against Pakistan in response to the 26/11 terrorist attacks in Mumbai, 4) the 2009 defeat of the brutal civil war in Sri Lanka and 5) India's disavowal of the first-use of nuclear weapons. Menon devotes one chapter for each item and one for summing up.

In each case, Menon lays out the context, discusses the choices that Delhi had to make and the broader lessons from those decisions. This framework gives the reader a panoramic view as well as the granular texture of each issue area. Menon’s clear prose and command of the essential detail makes each account riveting. Even more important, Menon successfully captures the melancholy of modern statecraft.

Menon thoroughly discusses the parameters that dictated choices that throw light on   India's strategic culture and decision-making, its policies toward the use of force, its long-term goals and priorities and its future behaviour.

"Choices will be of interest to anyone searching for answers to questions about how India, one of the world's great, rising powers confronts and arrives at decisions on the world stage, and the tough choices that sometimes have to be made,"

According to him ,”The real threats to India are ‘internal’ and emanate from communal and social violence, not from outside forces such as Pakistan or China “. There’s no existential threat to India’s existence today externally, unlike in the 50s or when we were formed. And for many years till late 60s there were actual internal separatist threats, not any more. I think that we have actual dealt with,”

His long career in public service spans diplomacy, national security, and India’s relations with its neighbours and major global powers.

This is Menon's first book post  after retirement. “If you look at violence in India, deaths from terrorism, from left wing extremism, declined steadily throughout this 21st century until 2014-2015. Even now the basic trend for terrorism, left wing extremism is down. What has increased is since 2012, communal violence, social violence, internal violence has increased. That is something we need to find a way in dealing with,”

This is not a traditional law and order problem, which our traditional instruments, the police, the states know how to deal with. You look at violence against women, communal, caste violence, if you look at those firms of violence, these are all a result of tremendous social and economic change of uprooting of population, urbanization-- various forms of change, which we still need to learn how to deal with.”

According to Menon  these are the threats, which in the long run, have  a ‘potential to make real difference’.“India has changed. It is normal. It happens to most societies where there is change. But you also have to learn new ways of dealing with.” He  attributed the new threats to the rapid and fast development of the country.

According to Menon this  is a consequence of the change that the Indian society is undergoing now.

He has written in his book that the ‘real threat’ to Pakistan’s nuclear weapons is from rogue elements inside its military rather than from the terrorist outfits.Noting that terrorists have easier and cheaper ways of wreaking havoc, Menon said the nuclear weapons are complex devices that are difficult to manage, use and deliver and require very high level of skills.

‘To my mind, the real threat (to Pak nukes) is from insiders, from a Pakistani pilot or a brigadier who decides to wage nuclear jihad, with or without orders,’ Menon writes. ‘The risk increases as Pakistan builds tactical nuclear weapons for battlefield use, control of which will necessarily be delegated down the command chain.’

Menon says Pakistan is the only nuclear weapon programme in the world that is exclusively under military control.

Menon writes that India has nuclear weapons for the contribution that make to its national security in an uncertain and anarchic world by preventing others from attempting nuclear blackmail and coercion against India.

While India has a declared policy of no-first use of nuclear weapons, Menon  warns that if Pakistan were to use tactical nuclear weapons against India ‘even against Indian forces in Pakistan,’ it would effectively be opening the door to a massive Indian first strike, having crossed India's declared red line. ‘Pakistani tactical nuclear weapons use would effectively free India to undertake a comprehensive first strike against Pakistan. There are several responses short of war available to a state like India,’.

Regarding the 26/11 atack on Mumbai, Menon was in favour of retaliation, overt action against LeT Headquaters in Punjab and LeT camps in POK. But he candidly concedes now that “ …on sober reflection and hindsight I now believe that the decision not to retaliate militarily and to concentrate on diplomatic and other means was the right one for that time and place.”

This is a very significant contribution to the making of public policy in thr Country, at once useful to politicians. Policy makers and students of Indian polity.

P.P.Ramachandran.

29—01--2017