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TheIndian
EXPRESS
www.indianexpress.com
10
Forthepeople?
THISrefersto‘UPA3’(IE,September19).TMCchief MamataBanerjeeseemstobetryingtodepictherselfasthecommonman’ssaviour.OpposingtheUPAgovern-ment’spolicieshasbecomeahabitwithherandshehasacquiredanameforcourtingcontroversy.Ifacoalitiongovernmentistowork,measurestakenbyitmustbewell-coordinatedandhavetheconsensusofallpartners.IntroducingFDIinretailisthefirstboldsteptakenbytheUPAgovernmentafteritpoweredthroughwiththeIndo-USnucleardeal.ItistimeBanerjeeexpandedherfocusfromBengalandthoughtofthelargerna-tionalinterestaswell.
 —KanishkaPathak 
Dhanbad
Roadtofreedom
APROPOS‘Theyallfallapart’byAmitaBaviskar(IE,September21),ittookanum-beroffactorstomakeanex-haustedBritainleaveIndia.Gandhi’smovementwasoneamongthem.Now,AnnaHazareequateshimselfwithGandhiandfeelshecansingle-handedlychangeacorruptsystem.However,hismainsupportbaseseemstocomefromtheaffluentmid-dleclassandhehaslimitedinfluenceonawidercrosssectionofsociety.Asocialmovementworksbestwhenitdrawsstrengthfromthepolity,ratherthanwhenitholdsParliamenthostage.TheyoungergenerationinIndiabelievesstronglyinaparticipatorydemocracy.
 —AbhishekPuri
Chandigarh
Friendorfoe?
SPCHIEFMulayamSingh Yadavseemstobemakingabidforthepostofprimeministerin2014(‘AsMamataexits,Mulayamspellsitout:We’llsupportUPA’,IE,September21).Ifnot,heseeshimselfatleastasakingmaker,abletodictatewhocomestopowerandextractfavourabletermsforhisownparty.Atthemoment,hehastakenaconfusingstance.HeopposesFDIinretailasheclaimstobeforthepeople,buthehasalsosaidhewillsupportthegovernment.Meanwhile,itwillbeinter-estingtoseewhetherhisnewfoundbonhomiewithcertainmembersoftheLeftwillstandthetestoftime.
 —PrashantP.Singh
Lucknow
ASEXPECTED,MulayamSinghYadavhassaidthattheSPwillcontinuetosupporttheUPAgovernmentinordertokeepcommunalforcesatbay.ParticipatingintheBharatbandhwithasectionoftheLeft,hedeclaredthathispartywillnottolerate“anti-people”decisionslikeahikeindieselpricesandFDIinretail(‘Bharatbandh:Mu-layamSingh,Leftforge“commonfront”ondiesel,LPGcap,retailFDIfire’,IE,September20).GiventhattheUPAseemsquitedeter-minedtoimplementitsdeci-sions,onewondersifMu-layamwillendupdoingaMamataBanerjee,eventhoughhehasassuredthegovernmentofhissupportforthetimebeing.
 —A.K.Saxena
Gwalior
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EDITOR
 A 
RE the new big-bangreforms necessary forIndia? If yes, why isthere so much politicalopposition? The firstisa relativelystraightforwardeconomicquestion,thesecondrequirescomplexpoliti-calreasoning.
 Ageneralpointfirst.IfeconomicpolicyinIndiaremainsunchanged,there is a real danger that India’sinvestment rate will fall below 30per cent of the GDP. That will bequite calamitous. It will, quitelikely,leadtoanannualeconomicgrowthrateoflessthan6percent.With India’s youth entering thelabour force in ever larger num-bers, employment generation willnotreachthenecessarylevels,and with tax revenues decelerating,therewillbelessavailableforwel-fareprogrammes—foreducation,healthandpublicworks.WhileIn-diacannoteasilygettoaChinese-styleinvestmentrate,touching47-50percentoftheGDP,asystematicattempt is needed to keep the in- vestment rate above 35 per cent.Investment is critical to growth,employment generation and wel-fare programmes. Viewed fromthat perspective, the recently an-nounced reforms are a step in therightdirection.Foreigndirectinvestment(FDI)in multi-brand retail has becomethe centrepiece of the proposednew reforms. There are two waysto think about its implications —statisticalandconceptual.Since 1995, Indian agriculturehasgrownatroughly2.5percenta year,whereastheoveralleconomicgrowthrateinthisperiodhasbeencloseto7percentperannum.De-pendingonhowoneestimatesthesizeofthenon-agriculturalpartof the rural sector, the urban sectorhas grown at roughly 8-9 per centper year. Thus, compared to thecountryside, the growth in urbanincomesislikelytohavebeenthreetofourtimeshigher.Onecouldsaythat India’s cities have boomed atChinese-style growth rates, whereasruralIndiaisstillstuckatthe historical annual growth rateof2.5percent.This difference mattered less when India’s economy itself wasgrowing at 3.5 per cent per an-num, which was true for the pe-riod 1950-80. Essentially, urbanincomes were not growing muchfaster than rural incomes in thefirstthreedecadesofIndianinde-pendence. But the urban-ruralgap is now huge. For their owngood, India’s villages need to bebetter linked to the rising eco-nomicfortunesofthecity.ThatiswhatFDIinmulti-brandretail—retail,forshort—caneas-ilyachieve.In thefuryofpoliticaldebate, it is not often noted thatFDIinretailwillonlybeforcities with a population of more than amillion. According to the 2011census, there are 53 such cities inIndia. That means Kanpur, not Aligarh; Bangalore, not Bellary;Nagpur and Pune, not Wardhaand Satara. Even if one assumesthatneighbourhoodstoreswillbehurt — an assumption that re-quires demonstration, not belief — we are not talking about Wal-mart all over urban India, only inmillion-pluscities.We should, however, note thatthese bigger cities have been theengineofIndia’seconomictrans-formation since 1991. Farmerscanbemoreefficientlyconnectedtotheurbaneconomyifthetradechains, for example, provide re-frigerated storage and transport.Otherwise, the farmer is prima-rilydependentonthelocalmandi,the traditional marketplace which, in most of India, has not yetwitnessedanysignificantmod-ernisation. Has anyone seen re-frigeration in many rural mandisofIndia?Andhow manyfarmerscan afford refrigeration of theirownproducts?For my first book, which dealt with agriculture-industry linkagesand urban-rural issues, I spent anenormous amount of time in vil-lages,mandis,andagriculturaluni- versities in Punjab, Haryana, UP,MaharashtraandKarnataka.Therotandwaste— especiallyinfruitandvegetables—couldnotescapethenakedeye.Onthewhole,farmincomesarebetterservediffarmersmovefromlowvalue-addedfoodgrainstohigh value-addedfruit,vegetables,fish-ery,dairyandcashcrops.Whateverelse it achieves, FDI in retail willreduce the waste and rot that is aspecialafflictionofthelattersetof agricultural products. It connectsfarmers to the economic opera-tionsofmoderntimes.Mandisandtraditionaltradersjustcan’tdoit.Conceptually, too, it is a simpleandundisputedprincipleofdevel-opmenttheory thatruralincomessimplycannotgoupmuchifvillagesarenotmeaningfullyconnectedtothe city. No society has even beeneconomicallytransformedwithoutthat link. Not connecting villagesand cities in a mutually beneficialmannerisasurewaytohurtthevil-lage. Trade and transport are twoof the best ways known for creat-ingurban-rurallinks.In short,FDIin retailisnotpri-marily about Walmart and Tesco.Itisaboutbringinggreaterincomestothecountryside.Whateveritsim-plicationsforthetraditionaltrader,it can only benefit the farmer. A farmerlefttothevillagetraderandmandisapoor,ormake-do,farmer. A farmer connected to boomingurban economies and moderntradeisaricherfarmer.Why,then,aresomanypoliticalpartiesopposed?Forlongyears,Ihavebeenasso-ciated with an argument thatdivides the politics of economicreforms into two parts: masspolitics and elite politics. Thatdistinction is hugely relevant forthe currentdevelopments.In thelast version of the argumentpublished in
 Foreign Affairs
(March-April2007),Iargued:“Itis helpful to think of India’s ref-orm politics as following twotracks: what may be termed elitepoliticsandmasspolitics.Thisdis-tinction is absolutely crucial inunderstanding India’s reformdynamics. In India, the elite con-sists mainly of English-speakingupper-caste and urban citizens.Elite politics in India typicallytakesplaceintheupperrealmsof the public sphere: in the interac-tions between business and gov-ernment and in the dealings bet- ween New Delhi and foreigngovernmentsandinternationalfi-nancial institutions... The upperend ofthe publicsphere includesEnglish-languagenewspapersandtelevision and the Internet... ButIndia’smasspolitics(dealswith)...the plebeian social orders thatmakeup(its)politicalconstituency.Streets and the ballot box are theprimary sites of the mass politics,and voting, demonstrations, andriotsitsmajormanifestations.”Ialsowrote:“Threefactorsaretypically critical in determining whether any particular policyenters the arena of mass politics:thenumberofpeopleaffectedbythe policy, how organised thosepeople are, and whether the ef-fectisdirectandimmediateorin-direct and over a long time hori-zon.Themorepeopleaffectedbya policy choice, the more organ-isedtheyare,andthemoredirectthepolicy’seffects,themorelikelyit is that a policy will generatemassconcern.”Consider now what has gener-ated the greatest political fury —notFDIincivilaviation,broadcast-ingorthepowersector,butFDIinretailandalsoreductioninfuelsub-sidies. The former sets of reformsareallintheelitesector.Howmanysmall farmers, after all, fly King-fisher Airlines? And how many watchCNN-IBN?AndhowmanycantellwhetherFDIinpowerwillmake electricity for their khet(farm) and ghar (home) cheaperandmoreplentiful?Incontrast,FDIinretailandre-ductionoffuelsubsidydirectlyaffectmillionsofpeopleintheshortrun, whatevertheirlong-termbenefits.The inverse relationship betweenWalmart and the welfare of thesmalltrader—orthefear,ifnotdi-rectevidence,thereof—affectsmil-lionsofkiranashopkeepers.TheconnectionIhavedrawn—between FDI in retail and rural welfare — is an indirect one. Thefact that it is indirect does notmean it is not real, but its realityrequiresdemonstrationandpolit-ical communication. It is the best wayrightnowtolifttheeconomicfortunes of India’s farmers.NREGAwon’tdoit,foritwillonlyallow thediggingofditches,anotunworthy welfare operation, butNREGA cannot be the founda-tionforalong-termeconomicup-lift.Itisaholdingoperation.India’s farmers need to be con-nectedtothenation’srisingcities.The government should stick tothe reforms it has announced.Whatitneedsisbettercommunica-tionabouthowWalmartisnotthemain point of its retail reforms.Ruralwelfareis.
ThewriterisSolGoldman ProfessorofInternationalStudiesandtheSocialSciences atBrownUniversity,where healsodirectstheIndia InitiativeattheWatson Institute.Hisbooksinclude‘Democracy,DevelopmentandtheCountryside:Urban-RuralStrugglesinIndia’. Heisacontributingeditorat‘TheIndianExpress’ 
express@expressindia.com
P
RIME Minister Manmo-hanSinghfinallybrokehissilenceonFridaybutitwillbedifficultforhisreasonable,reas-suring words to fill the echoingwellofsilencethathasdevelopedover the UPA’s second term. Hadhespokenofhardchoicesearlier,he could have arguably softenedthe blow when he actually madepolicy ostensibly to protect thecommonman.Forinstance,inhisspeech on Friday, he explainedthat deficits remain even afterhiking fuel prices and cappingsubsidies, but the aam aadmi headdressed is already focused onthe added hardships that havebeen imposed on him, withoutappreciating that it could havebeenmuchworse.If the government had beenmorecommunicative,itwouldnothaveattractedthechargethattheCongress has acted unilaterally,withouttakingthepeople,theop-positionorevenitsownalliesintoconfidence.Theoppositionisnowtaking advantage of this lapse tochallenge the government to putthe reforms agenda to the test intheHouse.Sopervasiveisthecul-ture of silence in UPA2 that evencommunicationwithinthegovern-ment has begun to a suffer signaldrop.Leadershavetakentohedg-ing and second-guessing the highcommand, instead of speakingtheirmindontheissuesthatmat-ter. When the government hasfacedinclementweather,asinthesituations raised by MamataBanerjee over the presidentialelection and FDI in retail earlier,the UPA’s top leadership has ap-peared to respond with stoic si-lence,thoughthesewereopportu-nities to lay down the line. Morerecently, even in the controversyover coal allocations, the econo-mist prime minister could havemade an attempt to deflate someof the speculation over numberswithalittlecleartalkingonprofitandloss.Agovernmentthathasstakeditsfutureonvisibledevelopmentandwelfareinanadverseeconomiccli-mate cannot be run out of a Trap-pistmonastery.Theessenceofpro-gressivepoliticsiscommunication,askillthisgovernmentmustlearnfast.Inthisseasonofreforms,thisonecannotwait,ifthegovernmentwantstorepairthedamagecausedbyitsunwillingnessorinability,orboth, to reach out and talk tothepeople.
 Abrightcorner 
The world markets send out mixed signals — but there may be more reason for hope
TheIndian
EXPRESS
BECAUSETHETRUTHINVOLVESUSALL
WeneedretailreformasIndia’sfarmersmustbeconnectedtoitsrisingcities
 A 
SHUTOSH
 V 
 ARSHNEY 
Farmerscanbemoreefficientlyconnectedtotheurbaneconomyifthetradechainsproviderefrigeratedstorageandtransport.Otherwise,thefarmerisdependentonthelocalmandi,which,inmostofIndia,hasnotyetwitnessedanysignificantmodernisation.
T
HESupremeCourthascommencedfinalhearingsonacasebroughtbeforeitbytheSwisspharmaceuticalcom-pany,Novartis.ThecasedisputesthedenialofapatentonNovartis’santi-cancerdrugGlivec.Novartis’spositionisthatincentivestophar-maceuticalinnovationrequirestringentpatentprotection.Butthecompany’sdefinitionofinno- vationisnotonethatwillserveIn-dia’sneedsinresearchanddevel-opment,industrialdevelopment,orpublichealth.
 AtissueisakeyprovisioninIn-dia’s2005Patent(Amendment) Act—section3(d).IntroducedbyParliamentasahealthsafeguard,thisprovisiondisallowsproductpatentsonmodificationsofexist-ingdrugs(apracticeknownas“evergreening”),unlessthosemodificationsdemonstratesignif-icantlyenhancedtherapeuticeffi-cacy.Novartisisarguingincourttoweakentheinterpretationof thisprovisiontosuchanextentthatitwouldendupbeingadeadletter.Itsclaimisthatbycurtailingthescopeofproductpatents,sec-tion3(d)reducesincentivestoin- vestintheresearchanddevelop-mentofnewdrugs.Thissuggestsasimplecorrela-tionbetweenstrongerpatentsandmoreinnovation.Buttherecenthistoryofpharmaceuticaldevel-opmentpresentsamorecompli-catedpicture.Inspiteofstringentintellectualpropertyprotections,themultinationalpharmaceuticalindustryisnotparticularlyinnova-tive.Whilethisindustrypresentsitselfasaninnovatoringlobalpol-icydebatesaroundintellectualproperty,the“innovationdeficit”isacknowledgedwithinindustrycircles.Forinstance,a2008surveyof360seniorpharmaceuticalin-dustryexecutives,conductedbyDeloitte,predictedthatoverthenextdecade,mostresearchanddevelopmentwouldnotbecon-ductedwithinlargepharmaceuti-calcompanies.Indeed,thetrendhasbeentowardsin-licensingpromisingmoleculesfromsmallercompanies,oracquiringasmallercompanyaltogether.Mergersandacquisitions,ratherthanresearchanddevelopment,increasinglyconstitutethecornerstoneoftheindustry’sbusinessmodel.Furthermore,mostrecentproductinnovationintheWest-ernpharmaceuticalindustryhasbeenenabledbyresearchuniver-sities,andunderwritteninsignifi-cantmeasurebypublicandphil-anthropicmoney.Takethecaseof Glivecitself.Novartisinsiststhataproductpatentonthedrugisjustacknowledgementofitsrolein“inventing”thedrug.Undoubt-edly,NovartisplayedanessentialroleinGlivec’sdevelopment.Butonealsohastoconsidertheroleof academicmedicalcentreswhereclinicaltrialswereconducted—theimportantresearchofBrianDrukerattheOregonHealthandScienceUniversity,whichshowedthiswasamoleculethatcouldbeeffectiveinthetreatmentofchro-nicmyeloidleukemia,andthefundamentalresearchonchrom-osomaltranslocationconductedbyJanetRowleyattheUniversityofChicagointheearly1970s, whichwasnotdonewithdrugde- velopmentinmindbutwhichpro- videdthemechanisticunder-standingwithoutwhichGlivec wouldhavebeeninconceivable.Nevertheless,Novartis’sargu-mentsgettractioninthecontextoftheprevalentstructureofphar-maceuticaldevelopment.Thisisbecausethepharmaceuticalin-dustrytendstobetheonlyentity withthecapitalresourcesandin-frastructuretotakedrugsthroughclinicaltrialsandbringthemtothemarket.IntheUS,forin-stance,therehasbeentremen-douspublicinvestmentinaca-demicresearchthatenablesdrugdiscovery;butdrugdevelopmentitselfhasbeenleftalmostentirelytotheprivatesector. Aslongaswearedependentonhighlycapitalised,privatisedstructuresofpharmaceuticalde- velopment,wewillbetrappedintheFaustianbargainthatNovartispresents,whereinnovationbydefinitionrequirescorporatemo-nopoly.Insuchasituation,accesstoessentialmedicinesdependspurelyonthewill,privilegeandgenerosityofpharmaceuticalcompanies.WhatisneededinIn-diaisaninnovationpolicythatcanprovidemoreopenmodelsof pharmaceuticaldevelopment.Suchalternativesmustinvolvese-riouspublicinvestmentinresear-chaswellascreativemechanismsthroughwhichsuchinvestmentscanleadtonon-proprietarymodesofdrugdevelopment.Thisisinconceivableunlessthereispublicfundingofclinicaltrials,andanactiveattempttobuildandsustainapublic-sectorpharma-ceuticalindustry.Farfromattendingtothepublicinfrastructureneededforpharm-aceuticalinnovation,theIndianstatehasprogressivelyabdicateditsresponsibilitiestowardspublichealth.Ithasletpublic-sectordrugmanufacturingcapacitywi-ther.Itdoesnothaveafunctionalsystemofpricecontrolsonessen-tialmedicines.Itprovidesnonati-onalisedhealthinsuranceschem-es,leavingdrugpricingandaccessentirelytomarketmechanisms.Ithasliberalisedregulationforclini-caltrialsinamannerdrivenbytheinterestsofprivateentities.And whiletherehasbeeninvestmentinbuildingcentresofresearchexcel-lenceinthelifesciences,therehasbeenlittlestrategicconceptualisa-tiononhowtheseinstitutionscanfunctiontofacilitatepublicinter-estorpublichealth.Whilethejudicialthrustof Novartis’sargumentsaboutinno- vationisonaparticularprovisionofthePatentAct,therearebroaderimplicationsforpolicy. AnadequatepolicyresponsetoNovartiscannothappenaslongaspharmaceuticalresearchandde- velopmentisbeholdentocorpo-rateinterests.Innovationinthepublicinterestcanonlyhappenif  wearewillingtoconsidermecha-nismsbywhichtherapeuticdevel-opment,manufactureandaccesscanbesocialised.
Thewriterisassociate professorofanthropology,UniversityofChicago
express@expressindia.com
Talkingitout
Inthisseasonofreforms,thegovernmentcouldconsiderthisone:becomemorecommunicative
T
HE notoriously secretiveNorth Korea makesstrange forays into inter-nationalnews.Recently,picturesofamysterywomanstandingnextto its leader Kim Jong-un gaverisetoweeksofspeculation,untilthe state media clarified she washis wife. Now, in an unprece-dentedfitofcaprice,ithaspostedonitsofficialwebsiteaclipparo-dying“GangnamStyle”,theenor-mously popular video by theSouth Korean pop star PSY. Py-ongyang used the video to take adigattheSouthKoreanpresiden-tial candidate, Park Geun-Hye,whobelongstotherulingSaenuriparty.Onlylastmonth,NorthKo-rea had threatened “all-out” waron its southern neighbour, afterthe US and South Korea con-ductedjointmilitaryexercises.Itnow seems to have abandonedbelligerenceforsatire.“GangnamStyle”,whichman-aged to stir the tight-lipped Py-ongyang,isoneofthefewKorean videos to have broken out of theAsian market. The US navy did aparody of it, lifeguards in ElMontegotfiredaftertheytriedtospoof it, Ellen Degeneres im-portedPSYintohershowtoteachBritney Spears his signaturedance. Perhaps it is no coinci-dence that Pyongyang picked a video feted in America to parodySouthKorea,whichhasclosetieswith the US. The original videoshowsthestockypopstaremerg-ingfromthestablestobreakintoa jig that roughly imitates riding ahorse.TheNorthKoreanversionhas Park’s face tacked on to thedancing figure, mocking her forendorsing the actions of her fa-ther,ParkChung-Hee,whoseizedpowerin1961,gothimselfelectedin1963andruledtillhisassassina-tionin1979.This is unexpected, comingfromNorthKorea,whereleader-ship has been passed down fromfather to son since 1948 andwhere the last elections, held in2009, saw the late Kim Jong-il voted“unanimously”intopower.Couldthisvideobodeachangeof heartinPyongyang?
 Pyongyangstyle
North Korea betrays a humorous streak,parodying a pop single for propaganda
l MONDAY l SEPTEMBER 24 l 2012
Ruralwelfare,notWalmart
 AUSHIK 
S
UNDER 
 AJAN
A bitter pill
TheNovartiscasehighlightstheneedfor
innovation in the public interest
WORDLYWISE
ToryBurch
Iwantedtocreateanewwayof lookingatretail.
T
HElastweekwasacuriousonefortheworldeconomyas every indicator sent outbothnegativeandpositivesignals.For investors, this makes thingslook unpredictable and treacher-ous, even as, at the beginning of anewweek,nonewriskscanbeiden-tifiedontheglobalhorizon.Instead,there is room for cheer, given thatemerging markets like India havebeguntoshowstrongpositivevibes,whileinEuropespeculationaroundSpainislargelypositive—itisseentobeoncourseforabailout,whichmeansitislikelytoacceptthefreez-ing of pensions and the raising of retirementage.ButlateonFriday,Germany said it did not thinkMadridneededanyfurthersupportatthispoint,spookingthecurrencymarketsagain.Raising fears about falteringglobalgrowth,theWorldTradeOr-ganisation cut its forecast for thegrowth of global trade to 2.5 percent from 3.7 per cent on Friday.The numbers are less than half of the average growth rate of tradeseen in the last two decades. Butevenasanalystsworkedouttheim-pact,theyweresurprisedtoseetheUSmarketssoartolevelsnotseensinceDecember2007.TheS&P500indexclosedouttheweek16.1percentupfromtheendof2011.Whilesome investors would want to be-lieve that the bright trend couldpersisttilltheendoftheyear,othersarepointingtotheECB’snewplanto provide unlimited support tostruggling countries and to theFed’sQE3programmeassignsthattherecoveryisfarmorefragilethananticipated,whichiswhyitneedssuchrobustsupportmechanisms.Fortheglobaleconomy,thesignsofstabilisationwillbeinthethirdquarterreportcardsforcompanies,due from early October, and theywill also depend on how the newtensionsintheMiddleEastimpactoil prices. Thomson Reuters datashows the outlook for the top 500companies is at its most negativesince2001,yetthatiscounteredbymacro economy numbers for USGDPgrowth,housingmarketsandconsumerspends,allofwhichhaveshed more red than at any time inthe recent past. September is stillthemonththathasproducedsomeofthemostcriticalepisodesintheworld economy since 2008. Notsurprisingly,nooneiswillingtobetthat this month might also be theone when the economic orderturnedthecorner.

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