Wednesday, July 21, 2010

GDP growth with growing poverty

The forecasts for India’s high economic growth have been coming thick and fast. Only late last year the Paris-based Organisation for Economic Cooperation and Development predicted a 5.9% growth for India in 2009 and 7.2% 2010. In his budget speech earlier this year the Finance Minister, Pranab Mukherji, had promised to put the economy on a trajectory of high growth and there have been several occasions when he predicted that India’s GDP would grow at the rate of more than 8%. Now, even the International Monetary Fund (IMF) has predicted that India was likely to grow at 9.5% during fiscal 2010. The projection was based on “robust corporate profits and favourable financing conditions” that were likely to fuel investments. The corporate tax collections registered a growth of 21.7% in the first quarter of the current fiscal and already the job-market is opening up. Reasonably good rains, despite an indifferent start, have raised hopes of a bumper harvest. Things for the country, everyone says, seem to be looking up.

That is all very well but there are issues attached to a consumption-led GDP growth. In chasing double-digit or near-double digit growth rate the country is consuming natural resources at a fast clip without corresponding benefits, as will be seen later, to a very large section of its population. According to a report prepared by the Confederation of Indian Industries (CII) and the California-based Global Footprint Network (GFN) in 2008, “With a per person footprint of 0.75 global hectares and per person bio-capacity of 0.4 global hectares, India is running an ecological deficit of approximately 100 percent". (The ecological footprint measures human demand on the biosphere in terms of the land and sea area required to provide the resources we use and to absorb the waste we generate. Bio-capacity refers to the capacity of a given biologically productive area to generate an on-going supply of renewable resources and to absorb its spill-over wastes.)

Like per capita emission of green house gases per capita ecological footprint of an average Indian is much lower than the world average. The per person ecological footprint of an average Indian was 0.75 global hectare in 2003 when the world average was 2.2 global hectare. At the same time, because of rising population India’s total national ecological footprint has doubled since 1961, contributing to the degradation of its natural capital. As a corollary, while India’s overall wealth as measured by GDP has risen for reasons of better exploitation of resources over the years, its per capita bio-capacity has shrunk reducing its per capita ecological footprint. More and more people are sharing a shrinking bio-capacity. As the need for development grows natural resources like forests come under threat, jeopardising the livelihood of the poor, especially the tribal poor, who sustain themselves on the forest resources. As most of the densely forested areas sit on mineral-rich mines these have become conflict zones – whether in Orissa, Jharkhand, Chhattisgarh or anywhere else. What is more, these have become the reasons for conflicts between the Ministry of Environment and Forests and other ministries which relate to economic development. The catchy phrase “India now consumes two Indias”, therefore, says it all about the Indian “resource overshoot”.

Releasing the CII-GFN report, Jamshed Godrej, the then Chairman of CII-Godrej Green Business Centre, said almost two years back that it was important to “impress upon policy makers and business that no country can continue being unsustainable”. Countries with ecological deficits consume more than what the ecological systems within their borders can provide. In order to economically grow, they can either use up their own natural resources before starting to import from abroad or do vice versa. China is doing precisely that as it scours the world for natural resources. From Australia to Africa, from Latin America to the conflict-ridden Afghanistan, no place is far away for it for importing resources with its couple of trillion dollars of currency reserves. Sometimes it does so for want of those resources at home, at others it saves the domestic resources for a rainy day and gets them from abroad. What, however, is compelling is that it must run its well-oiled “factory of the world” for achieving that double-digit growth howsoever ecologically and environmentally unsustainable it happens to be. Ecologically speaking, the world has to pay the price as China chases for its citizens a life which, if not better, is at least comparable to that of an average American.

The CII-GFN advisory for policy-makers seems to be important as India’s demand driven growth is not only gobbling up the country’s natural assets and making us behave like China in looking for resources abroad, it is also skewing up the societal balance widening the gulf between the rich and the poor. The numbers of Fortune 500 Indian companies are relentlessly growing along with the numbers of Indian Dollar billionaires – 52 by the latest count, holding combined assets worth 25% of our GDP. No wonder, virtually every luxury automobile brand, from Rolls Royce, Mercedes, BMW to Audi and Harley Davidson to Yamaha motorbikes, all have set up shops in the country finding a ready market. The super-rich gift away private jets to spouses and covet helipads on top of their luxurious multi-storied residences, the kind of which one used to associate with the West-Asian oil-Sheikhs. And yet the government grants incentives and tax-concessions to them amounting to hundreds of thousands of crores. Having entered the national and state legislatures in fair numbers protagonists of big business have developed a cosy relationship with political and bureaucratic classes to be able to facilely swing policies in their favour.

As the few make hay in the Indian sunshine a vast majority are racked by malnutrition and hunger. The United Nations Development Programme update for 2009 shows that 320 million Indians, almost 25% of the population, live in extreme poverty. The World Bank’s global economic prospects show that 827 million of the Indian population live on less than $ 2 a day. This is somewhat more charitable than the findings of Arjun Sen Gupta-chaired National Commission for Enterprises in the Unorganised Sector according to which 836 million Indians (77% of the population) live on Rs. 20 ($ 0.45) a day. Even the government’s own Suresh Tendulkar Committee has, to its surprise, thrown up a figure of 37% of the population that still lives below the poverty line. A few more millions will be pushed below it with the recent deregulation of petro-product prices. Figuring at 66 out of 88 in Global Hunger Index, India lags far behind in respect of many indices (in some respects below sub-Saharan Africa), whether it is maternal or infant mortality rate or underweight or undernourished children. Clearly, the government will not be able to meet the UN Millennium Development Goal of halving poverty by 2015. With such stark facts staring it at its face, the government, according to experts, has surprisingly been trying to project a reduced incidence of poverty so as to be able to spend less under its ambitious Food Security Act. Looking at it and the incentives and other freebies for those listed in “Fortune 500” one gets the government’s drift.
It is needless to say that the progressively increasing Gross Domestic Product is not being distributed equitably among all. A few – rich, powerful and influential – are making the most of it and a vast majority remains helpless and deprived. Economic progress of this kind is meaningless – particularly when the natural world is being plundered and ravaged and, yet, most continue to live out a life of misery and want.

Wednesday, July 14, 2010

Gas on Bhopal gas

Any natural or man-made disaster raises controversies. A disaster of the scale that Bhopal witnessed because of the leak of the lethal methyl isocynate (MIC) on one cold December morning in 1984 was sure to raise controversies of huge proportions. That is precisely what it did, and more so after the June7, 2010 ultra-mild verdict handed out to the accused officials of Union Carbide of India Ltd. (UCIL). In the process, facts and fiction got merged and one doesn’t really know what is true and what is not and what to believe and what not to. A few of these are subject of this article.

From its very genesis the Union Carbide Corporation (UCC) plan to set up the pesticide plant at Bhopal was surrounded in controversies. It submitted its proposal for establishment of this factory to the then Department of Industrial Development in 1970. Finding it unacceptable on account of the obsolete technology that was proposed to be “dumped in India” the proposal was put on ice. The entire department was against granting an industrial licence to the company. Curiously, more than five years later the proposal was suddenly approved during the Emergency in September 1975. Officials were horrified and the air was thick with talks of political intervention. Looks like the UCC knocked on the doors of somebody powerful and influential – whose identity can only be guessed.

Land for the factory was allotted in Bhopal away from the town. There was no habitation in a radius of around two kilometres. The Madhya Pradesh (MP) government also declared the area as an “obnoxious Industrial zone” and that no settlement would be allowed in it. But as generally happens with governments, over time all declarations, assurances and decisions were forgotten. Soon slums sprouted around the factory and later they even got attached to the factory compound wall. Keen as he was on their votes, Arjun Singh, the then Chief Minister (CM), instead of taking steps to resettle them elsewhere, generously handed to the slum-dwellers their rights to the land they illegally occupied, as it turned out a few months later, to their own serious peril. The tragedy, perhaps, would have been of far less magnitude had the initial assurances of keeping the area free of habitation been kept.

That the UCC and its Indian offspring, Union Carbide India Ltd (UCIL), were very close to the state’s official establishment is a fact that is talked about even today. Arjun Singh was obliged to them for helping him kick-start the state’s industrialisation. The Company officials are reported to have had easy access to him and the movers and shakers had their children and cronies appointed in the factory. It was considered a privilege for the state’s politicians and bureaucrats to get an invite for parties at the UCC Guest House. The UCIL factory and its top brass were, therefore, held positions of importance in Bhopal.

No wonder, Arjun Singh did not react to the reports of a veteran journalist of Bhopal, Raj Kumar Keshwani, who, having seen the inadequacy of safety arrangements in the UCIL plant, repeatedly wrote in newspapers about how Bhopal was sitting on a powder keg. He even had questions asked in the state assembly about the inadequate safety measures at the plant. These were subjected to vehement denials. Whether the Company fed wrong information to the state government is not known. The warnings, however, were not heeded either by the government or the UCIL.

According to the local lore the number of casualties was much more than what was officially acknowledged. There was a distinct attempt by the state administration to keep the numbers down. It is corroborated by the figure of 3000 dead that was used in 1989 – five years after the tragedy – for an out-of-court settlement. If one takes only the figures of deaths, there is a wide variance between the official and unofficial figures. Officially, 15000 died; the unofficial figures are in the range of 20000 to 25000. Even Fali Nariman, the reputed counsel for the UCIL, recently accepted that the figures of casualties cited at the time of settlement of compensation were not dependable. No real or methodical count was ever taken.

Countless words have been written about the assurance of “safe passage” to and from Bhopal given to Warren Anderson and his arrest and subsequent release. Who gave the assurance is not quite clear. The Centre now claims that there are no records and that it must have been an oral assurance but it is not known who gave it. Likewise it is not known who gave the orders to MP government to bail him out and fly him to Delhi. The fact, however, is that an assurance was given and that Anderson was quickly released and flown to Delhi. He even met the then Foreign Secretary, MK Rasgotra, who was the Centre’s interlocutor and has admitted as much. Arun Nehru, then a Minister, said that Anderson had, reportedly, also met the Home Minister and the President.

A perceptible effort has been made to keep the then Prime Minister, Rajiv Gandhi, out of this particular controversy. Spokespersons and leaders of Congress had earlier blamed Arjun Singh for bailing out Anderson. However, having watched the proceedings for sometime Singh broke his silence and cryptically (and perhaps erroneously) said that he had no “locus standi” in the affair. Obviously somebody ‘very big’ had intervened. Although the Group of Ministers (GoM) (constituted in May 2010 to recommend action on various “Bhopal” issues) maintained that even the “contemporary media reports” indicated that Gandhi was briefed about Anderson only after the latter had left India a report in the respected newspaper Hindu stated otherwise. It categorically said in its report from New Delhi dated 7th December 1984 that PC Alexander, Gandhi’s Principal Secretary, brought the facts of arrest to Gandhi’s notice before the Centre intervened. Gandhi was campaigning in MP for the ensuing elections and it was, as the report said, “highly unlikely that the CM would have taken action without informing him”. The “needle of suspicion” for letting off Anderson unquestionably points to someone who ... well, you’ve guessed it right!

The 1989 settlement between UCC and the Government of India (GoI), too, was not free from controversy. Having assumed in 1985 the sole power to represent the victims in civil litigation against UCC the GoI filed a $ 3 billion compensation suit on behalf of the victims in the US Federal Court. After the case was sent to Indian courts in 1986 the GOI in 1989 settled out-of-court with the UCC at the Supreme Court, without ever consulting the victims, for a compensation of only $ 470 million – around only 15% of the original amount – for 3000 dead against the official figure of 15000. Hearing of the settlement was held by the then Chief Justice RS Pathak in camera at the Supreme Court where the lawyers and representatives of UCC came, reportedly, straight from the Prime Minister’s house. The settlement also extinguished all financial liabilities of the UCC and the rights of the victims to file civil and criminal cases against it, though the last was later overturned by the same Court. Soon after the “settlement” Justice Pathak was nominated for appointment at the International Court of Justice at The Hague. The Centre’s “settlement” for an amount much less than what was claimed earlier in the US Federal Court has all along been suspect.

Many would have later escaped their suffering from the contaminants and toxic wastes that were left by the UCIL authorities on the plant site had the then MP government allowed completion of the work of cleaning it up. The Eveready company, successors of UCIL, were cleaning and remediating it and they continued to do so until 1998 when the state government decided to over the land. The UCC had taken the land on lease and the government should have insisted on taking it back only in its original condition, free of all contaminants. The take-over was highly suspicious and has needlessly burdened the state exchequer, now as it seems, by 350 crores (Rs.350 billion).

The June 7, 2010 decision of the Chief Judicial Magistrate, Bhopal handing out 2 years’ imprisonment to the UCIL accused that triggered a host of controversies brought into sharp focus the judgement of September 1996 of the then Chief Justice of the Supreme Court, Justice AM Ahmedi. The judgement watered down the charges against the accused in the Bhopal Gas case from that of “culpable homicide not amounting to murder” to “causing death due to negligence”. His contention that he could not support such a charge (that of culpable homicide) unless it indicated prima facie that the plant was run on that fateful night by the accused with the knowledge that it was likely to cause deaths of human beings. As if storing MIC in thousands of tons in an inefficiently run neglected plant that had obsolete technology to start with and with run-down safety measures were not enough to prove that and the culpability of the accused! The decision was felt to be suspect. The feelings gained support when Justice Ahmed was appointed life Chairman of the UCC-funded Bhopal Memorial Trust Hospital.