Editorial 1/ Pressure Points
Editorial 2/ Elusive Vision
Dream credit policy
This above all/ Closer than parents and wives
Injecting life into ailing banks
Letters to the editor

The budget has been passed. A debate on the finance bill when Parliament reconvenes and resultant changes are not precluded. The present round of changes or sops is more unilateral in nature, the government having decided these on its own. Some direct tax sops were expected and one cannot complain. Examples are hikes in standard deduction or deductions for interest income. It was also expected that the tax deduction at source provisions on interest payments would be rolled back and Rs 5000 is a reasonable compromise. Stock exchanges have been exempted from capital gains taxation on transfer of assets and this helps corporatization of stock exchanges. There is also the provision that charitable trusts with income up to one crore rupees need not publish accounts.

On direct taxes, the somewhat unexpected provision concerns rollback of taxation on export profits from 40 per cent to 30 per cent. Clearly, commerce ministry pressures (indicated in the export-import policy speech) have worked and with export growth having dipped in February, the government is no longer certain about 18 per cent dollar export growth this year. Historically, export profits were tax exempt and there were no World Trade Organization compulsions to eliminate such subsidies, since India was below the designated threshold of 1000 US dollars per capita income. That a five-year phase-out of tax exemption on export profits was announced two years ago, was due more to internal reform pressures. The five year phase-out involved taxing 20 per cent of export profits the first year, 40 per cent the second, 60 per cent the third, 80 per cent the fourth and 100 per cent the fifth. Since this schedule has now been thrown out of gear, 30 per cent will be taxed the second year, 50 per cent the third, 70 per cent the fourth and 100 per cent the fifth.

On indirect taxes, the finance minister has stuck to his guns on excise and yielded to pressures on customs. There were considerable pressures to eliminate the 16 per cent central value added tax on branded readymade garments, with arguments that there would be disputes about what was branded and what was not. Rightly, the finance minister has not yielded to pressures and has extended the tax to all readymade garments (below a threshold turnover of one crore rupees). Since India has agreed to reduce import duties on information technology to zero per cent in 2003 and since import duties on these were 15 per cent, no reductions were initially proposed in the budget. For some telecommunications parts, duties have now been reduced to five per cent. Nor can one complain if the five per cent customs duty on ships has been scrapped. But Mr Yashwant Sinha has yielded to pressures from the domestic automobile sector. Customs duties on completely built units and two-wheelers have been hiked from 35 per cent to 60 per cent. Admittedly, there was an anomaly, because basic duties on second-hand cars and two-wheelers were 105 per cent. But the right way of removing this anomaly was to reduce import duties on the secondhand category. Domestic auto lobbies refuse to recognize that there is excess capacity and a shakeout is inevitable. Lobbying against import competition can only postpone the inevitable. Paradoxically, Mr Sinha has yielded to pressures on automobiles, but resisted them on soda ash, where import duties continue to be 20 per cent. The answer lies in countervailing pressure exerted by the American National Soda Ash Corporation. Unfortunately, multinational car producers in India also want high import duties.


Uncertainty and instability continue to plague Pakistan. Not only is there little evidence that there will be a restoration of democracy in the country in the foreseeable future, but there are still few signs that General Pervez Musharraf is willing to take the hard steps essential to resuscitate Pakistan�s economy and civil society. Instead, there are increasing signs of desperation. The crackdown on workers of the umbrella alliance, the Alliance for Restoration of Democracy, is just one example. The ARD was planning a series of protests in Karachi on May 1, and is determined to go ahead with the demonstrations despite the military regime�s actions. But the military regime, which seemed initially to be willing to provide space for political and civil protests, is increasingly becoming more intolerant.

Under the circumstances, it is difficult to imagine General Musharraf calling a general election before October 2002, the deadline imposed by the supreme court of Pakistan. Public opinion in Pakistan, disillusioned with existing political parties, would not react very strongly to the continuation of military rule had General Musharraf provided a clear road map for revitalizing Pakistan. The military regime has proved to be as incompetent as civilian leaderships and just as ad hocist and short-sighted in its policies. Pakistan�s economy continues to be on the verge of collapse, dependent on the small doses of oxygen injected by multilateral financial institutions. There seems to be no attempt to control the activities of jihadi groups, which routinely threaten to besiege Islamabad unless Islamic laws are enforced in the country. And there is little improvement in relations with India. Even if the foreign secretaries of the two countries meet in the forthcoming South Asian Association for Regional Corporation meeting, no normalcy can be expected as long as Pakistan continues to fan militancy in Kashmir. It may be that General Musharraf has used this time to acquire political control, and will now begin exercising his authority with a greater measure of confidence and vision. If that happens, it will augur well for Pakistan as well as for the rest of south Asia.


Bimal Jalan�s tenure as the governor of the Reserve Bank of India has been marked by progressive demystification of the timing and substance of credit policy announcements. He has, on occasions, made changes in the credit policy without waiting for the scheduled dates. This is eminently reasonable considering that the international practice also justifies the central bank intervening as and when appropriate and not merely on pre-specified occasions.

This time, Jalan went one step further and declared well ahead of April 19, 2001, that there would be no change in the critical variables, that is the bank rate and the cash reserve ratio. This did help in reducing the speculation around his policy announcement.

The substance of the credit policy is pragmatic, proactive and pro-growth. Jalan recognizes the political reality that, in spite of Yashwant Sinha�s announcement of fiscal responsibility, the fiscal deficit continues to be a heavy burden. It is because of this that Jalan has refrained from cutting interest rates further, although there were indications that he was being persuaded to think of such a decrease.

There have also been opinions expressed, subsequent to April 19, that he should have followed the example of Alan Greenspan, who tried to counter the effect of a United States stock market meltdown in the impending recession in the economy by reducing their interest rates further. The two situations, namely, the Indian and the American, are not equivalent. The US treasury has a huge budgetary surplus, instead of a deficit, to contend with. In the US, there is no demand for bank funds from the government. The pressure on interest rate exercised by fiscal conditions in the US is downwards rather than upwards, which is the position in India.

In India, with the government demanding nearly Rs 100,000 crore as contribution to its borrowing programme, bankers will be in dire difficulties if the interest rates are reduced further. First of all, reduction of interest rates will affect the inflow of bank deposits. Secondly, arbitrarily cutting the yield on gills will adversely affect the bottomline of banks, fragile as they already are. Nor is there any reason for reducing the CRR. The financial sector is already floating on excess liquidity. The governor has reason to consider that the supply of credit is adequate. It is, therefore, right and proper that he has not adjusted the CRR downwards. But, he has obliged the banks by offering a reasonable rate of return on the cash, which the banks hold with the RBI. This is a long-pending request, which the governor has conceded.

The governor�s focus on the credit policy statement is rightly informed by a concern over the volatility in the markets. While he has taken account of the situation in regard to the misdemeanour of one or two cooperative banks, he has not gone overboard in his reaction. He has recognized that the three auditors � Central, state and the RBI � are presently involved in regulating and administering the urban cooperative banks. While the accounts of the UCBs are required to be audited by the state governments, the RBI conducts inspections normally once in two years in respect of scheduled UCBs and once in two or three years in respect of non-scheduled UCBs. The governor has recommended that the supervision of the UCBs should be vested with an apex organization of cooperative banks, for which he has submitted a proposal to the government.

The governor has proceeded with further tightening of prudential norms in regard to treatment of overdues. He has brought the Indian norms in line with international norms, which require overdues beyond 90 days to be considered sub-standard, instead of 180 days. It is good to note that the governor is continuing the reform process in spite of distractions on account of capital market anomalies.

He has also tightened the norms for financial institutions, bringing in convergence to the norms the asset classification with the financial institutions and banks. While tightening up norms is desirable in the interest of conforming to the international standards, it is important that the legal infrastructure in respect of enabling quick recovery of bank dues should also be reformed because otherwise the operating conditions are wider, different between those abroad and in India.

The governor has devoted considerable attention to the balance of payments situation and exchange rate management. He has pointed out how the foreign exchange markets are governed substantially by inter-bank transactions, which have no relationship with the fundamentals of the economy. The primary objective of the RBI in regard to management of exchange rate, the governor states, continues to be the maintenance of orderly conditions in the foreign exchange market, meeting temporary supply-demand gaps, which may arise due to uncertainties or other reasons. This is an assurance, which should enable market operators to respond intelligently to fluctuations in forex markets without going overboard on the basis of inter-bank transactions.

On exchange rate management, the governor is optimistic considering the fact that the reserves have increased substantially to stand at nearly $ 42 billion as in March 2001. He concedes that there is a strong case for continuing the current regime of exchange rate policy of focussing and managing volatility with no fixed rate target, while allowing the underlying demand and supply conditions to determine the exchange rate movements over a period in an orderly way. The governor�s formula to follow the same approach of watchfulness, caution and flexibility will be welcomed.

The governor does not seem to be overly concerned with inflation. Retail price inflation, as assessed by the standard units of measurements, moderated to three per cent by February 2001 from 3.6 per cent during the corresponding period of the previous year. This explains the relatively relaxed stance on monetary easing shown by the governor. While he has not indicated any reduction in the interest rate or CRR, he has thrown sufficient hints to show that he is not unwilling to consider further easing if circumstances permit, as also tightening in case conditions demand it.

The credit policy is important for the decisions indicated by the governor in regard to rationalizing export credit structure. Export credit will henceforth be available at a rate of interest, which will be less by one to 1.5 per cent. The governor has also taken an important step to rationalize credit refinance by relating the amount of bank refinance to the gross credit advanced to the exporter sector, as against the earlier practice of being linked to incremental advances. This step should be welcomed by the export community and should help in boosting exports.

Importantly, the RBI has declared itself in favour of divesting itself of the ownership of institutions, such as the State Bank of India, National Housing Bank, whose shares are today held by the central bank. While the motivation behind this decision is right, namely, to distance the regulator from the ownership of the institutions regulated, the mechanics of transfer of shares to the government of India, suggested by the governor, seem to be riddled with complexities.

First of all, the question of valuation of shares, especially of the SBI, will arise. This is, in effect, a reverse divestment process. The government has to buy back the shares from the RBI. This process may also involve a large outflow of government funds to the RBI. A cynic might well remark that the solution lies in the RBI extending equivalent credit to the government of India. Both the government of India and the RBI will come out even.

Regarding banks� exposure to the equity markets, the governor has laid stress on the recommendations of the Securities and Exchange Board of India or the RBI committee. He has obviously not responded to the temptation to reduce the equity exposure in view of the volatility in the market. In fact, as he points out, the overall exposure of banks to the capital market continues to be modest, less than two per cent. The problems with equity exposure will arise when banks start lending to capital market operators in increasing measure.

While the issue of prudential guidelines are important, it is the quality of the human material involved in exercising discretion on lending to market operators which has become critical. This would require special attention to the quality of human resource development in banks and the top management�s guidance and direction. Considering prior experience, especially with bank mutual funds, we have still a long way to go.

One of the interesting features of the credit policy is the concern shown by the governor with regard to the nuts and bolts of the credit delivery mechanism, especially for exports. He has taken seriously the various points of view urged by the exporters� association and tried to sort out the procedural and other problems involved. The governor�s credit policy is, therefore, an important step forward in rationalizing the procedures of the banks through prompt corrective action.

The credit policy has been welcomed generally by all sections of the financial community. Such a welcome is understandable, considering the pragmatism and practicality of the governor�s approach to policy formulation and implementation. What is important is that Jalan does not make �independence� a fetish. He does not lecture the government on fiscal responsibility nor the markets on volatility. He recognizes his role as part of the system of governance in which no instrument can claim to be independent of the other.

The central bank is deeply aware of the commitments of the government of India to attain higher growth with stability. He policies are well-articulated to achieve these targets, provided, of course, the weather gods play kindly and international growth does not suffer unduly on account of tremors in the US economy. The policy initiatives of the governor are grounded in pragmatism and economic prudence. They deserve to succeed. Here is to hoping that Jalan�s dream credit policy is not followed by unforeseen developments, such as those that marred Yashwant Sinha�s feel-good budget.

The author is former governor, Reserve Bank of India


The institution of guru-chela is unique to the Indian subcontinent comprising India, Pakistan and Bangladesh; to the best of my knowledge it does not exist elsewhere in the world. We have had it in India since time immemorial; it became institutionalized with the Bhakti movement and became the central doctrine of the Sikh faith. It also became an essential feature of Sufi Islam.

Over a dozen orders of Sufi silsilahs (successive leaderships) flourished in India. The most prominent being Chishtiah, Naqshbandhi and Qadiri. Among the Chishtis, we had Farid Shakarganj, Mueenuddeen Chishti and Nizamuddin Aulia. A remarkable feature of relationships between gurus and chelas, pirs and their chosen followers, was that they were closer to each other than they were to their parents, wives and children.

Chelas regarded their gurus as gods. The language they used for them was often the language used for lovers: khasam (husband), preetam (beloved), maalik (master); and their adoration was always loaded with sexual terminology. A good example is the relationship between Hazrat Nizamuddin Aulia and Amir Khusrau. Khusrau was away from Delhi when Nizamuddin died.

Pir sahib�s dying instructions to his followers were that Khusrau should not be allowed to come close to his grave lest he break the ordinances of Allah and rise from beneath the earth to embrace his friend. So a very tearful Khusrau was halted a few paces away from his pir sahib�s grave. He composed a memorable elegy:

Goree Sovai Sayj par
Mukh par daarey kes;
Chal Khusrau ghar aapnai
Saanjh paee chaun des
(My beloved sleeps on her bed
Her black hair scattered over her head;
Come Khusrau for you its also time to go
Shades of twilight over the land have

Nearer our homes we have examples of Bengal mystics, Ramakrishna Paramhansa (1836-1886), and his chosen disciple and successor, Swami Vivekananda (1863-1902). Ramakrishna remained totally absorbed in mystical practices in his math in Dakshineshwar. Vivekananda gave his teachings practical shape, travelled across India and the Western world delivering sermons everywhere.

Vivekananda was disgusted with the wretchedness of his countrymen: �Like so many worms on a rotten, stinking carcass...�; and with Hindu practices: �Our religion is in the kitchen. Our God is in the cooking pot and our religion is � don�t touch me, I am holy.� Vivekananda set up a chain of Ramakrishna Missions to spread the message of Hinduism and social service.

Sudhir Kakar is an established psychoanalyst who has taught in many Indian and foreign universities and published several books including Tales of Love, Sex and Danger, The Analyst and the Mystic, The Colours of Violence, and a novel, The Ascetic of Desire, a fictional biography of Vatsyayana, the author of Kamasutra.

Kakar has turned his psychiatric insights and skills as storyteller to unravel relationships of gurus with their chosen chelas in his latest novel, Ecstasy. He is of the view that there is a strong element of sexuality, albeit unexpressed physically, in the guru-chela relationship. His main character, Gopal, develops breasts at the age of 12, and, when he attains puberty, begins to menstruate.

Gopal wears women�s clothes, is more relaxed in the company of females than among males, and when he finds the guru he is looking for, falls headlong in love with him as a woman with the lover she has been pining for. His chosen mentor is a naked sadhu, Nangta, who accepts him as his chela. �I am your guru now,� Nangta said, bringing his face close to Gopal�s and looking deep into his eyes, �Your Rama and Sita, your Krishna and Radha, your Shiva and Shakti. I am your mantra and I am your tantra. Wherever you will ever want to go, all paths will lead through me. Always remember that worship of the guru includes the worship of all deities.�

Gopal is given a new name, Ram Das. In due course of time, he becomes a guru with a following of his own. His chief patron (and disciple) is a wealthy jeweller, Dhamani, who builds a temple for him, looks after his worldly needs and addresses him as Baba (father). The story is set in Jaipur and its environs, at about the time of independence and the merger of Jaipur with India. Among those who came to seek Ram Das�s darshan, is Indira Gandhi. Kakar describes the fiasco:

�It was Indira Gandhi who made him famous. This was in the spring of 1966. Indira Gandhi had come to Jaipur for a session of the all-India Congress committee six weeks after becoming the prime minister. Here, someone told her about Ram Das Baba and his visionary trances. Unlike Jawaharlal Nehru, her agnostic father who was more enamoured by Marxist than Hindu idols, Indira Gandhi was attracted by the spiritual side of life.

Later, as her personality hardened, her nascent spirituality was debased by superstition and occultism; she consulted astrologers and soothsayers and is reputed to have carried out rites of propitiation and performed special prayers for political purposes. In early 1966 though, when she came to Jaipur, she was intrigued enough by the tales she had heard about the ecstatic mystic to ask the chief minister of Rajasthan to arrange a private visit to Sitaram temple.

�Baba was sitting with his disciples when Indira Gandhi, accompanied only by her social secretary, another woman, entered the garden early in the evening. The rest of her retinue, including her security detail, was left outside. Familiar only to readers of newspapers, her face was not as instantly recognizable then as it was to become in the next twelve years of her imperious rule. Her head covered by the pallu of her sari, she walked up to Baba with a firm stride and bowed as if to touch his feet. And then something very peculiar happened. Baba stumbled back as if stung by a wasp. Turning his back on her, he rushed into his room. Displaying an iron control over her emotions for which she was later justly famous, Indira Gandhi smiled wanly at the disciples, nodded to her secretary and walked out of Dhamani�s garden with measured, dignified strides.�

Ecstasy is as eminently readable as other books written by Sudhir Kakar. Some buffoons who know no better have lampooned him (and me as his ardent admirer) as purveyors of pornography. This is arrant nonsense. Kakar is a serious writer who deals with serious subjects. His latest book deserves the attention of all serious people.

Starry-eyed about education

As political clowns invade education,
By scholars and scientists forsaken
Murli Manohar Joshi brings in
A giant leap backward for the new

Last year in December, banking operations across the country came to a grinding halt when employees observed a one-day strike against the move to reduce government equity in public sector banks. Ever since the nationalization of banks in 1969, the performance of public sector banks has been the subject of debate among policy-makers as well as the general public. The enthusiasm with which nationalization was greeted soon faded away. With the setting up of more and more private sector banks in India, the government has finally decided to do away with a policy that backfired, despite mounting criticism by a section of the political class and the trade unions.

The objectives of nationalization as enunciated by Indira Gandhi have now been lost . It is a fact that over the last three decades public sector banks have grown, constantly expanding their functional reach, so much so, that they now constitute 91 per cent of the total number of banks in India and constitute 86 per cent of the total bank business.

However, they are also floundering in areas of profitability, productivity and efficiency. Deteriorating service, trade union pressures, political interference, mounting overdues and ineffective loan appraisal are some of the major problems that are now being faced by them. Critics of the government�s latest move say that if evaluated in terms of ownership and control, deposit mobilization, provision of advances and branch expansion, sectoral deployment of credit and a host of other related issues, it is difficult to conclude that bank nationalization was a failure. The question is � should these be the basis for evaluating the performances of commercial banks?

There seems to be some kind of misconception in the public mind that in spite of social obligations, public sector banks are after all commercial entities. It must be remembered that the criteria for the nationalization of banks were based on the financial condition of the banks. The government had wanted to nationalize those banks that were financially sound so that they could serve the national purpose more effectively once they were brought under government control. This move has, however, backfired.

An analysis of the performance of banks both in the private and the public sector will give a clearer idea of the difference in their mode of functioning. The nationalized banks are nowhere near the foreign and private sector banks so far as the rate of growth of credits and investment is concerned. Surprisingly enough, the advocates of nationalization often claim that public sector banks are actually profit-making units. Many of these banks have claimed to be so despite the fact that they are not doing that well. Two important factors that have contributed to the declining profitability of public sector banks are directed credit programmes and investments. In most cases, the priority sector lending shoots up to a maximum of 47 to 48 per cent and after meeting the statutory liquidity ratio and cash reserve ratio of 50 per cent, their commercial lending capacity is affected. The interest rate being rigid, there is hardly any scope for optimizing returns.

There has been an increase in the number of banks, many of which have turned out to be non-viable. Most of these banks are plagued by an excess of staff and outdated technology. The habit of calling frequent strikes and the existence of a weak management have further complicated matters. Moreover, small scale industries and agricultural sectors have often delayed the repayment of loans. As a result these banks have incurred heavy losses. The loangiving sprees have also proved costly.

In the post-nationalization period, most of the loans were never repaid and debts were written off during the elections. As a result, the banks started avoiding the economically and socially weak borrowers as they usually defaulted on payments. Moreover, huge losses were incurred by the regional rural banks which were established in 1975 to cater to the credit need of the rural areas. Each rural bank is sponsored by a public sector bank and out of 196 banks, 156 of them have become economically weak.

The banking sector needs a clear cut long term and medium term policy. Its working is based on ad hoc measures and regulations issued from time to time by the government, the Reserve Bank of India and the Indian Bank Association. The government should also use fiscal measures and tap into the market for fund requirements. It is imperative that the liquidity ratio is deployed to serve the intended prudential requirement and not used for feeding the public sector. The increased fund therefore available could be used for consumer financing which would ensure high returns. The banks are currently in a position where they are required to increase the deposit rate and at the same time reduce the lending rate. Therefore, there is an urgent need to reexamine the interest structure and restructure it in such a way that it conforms to the existing market rates.

Public sector banks should also look for new avenues such as merchant banking and venture capital where they can provide prompt services. Customer service should also be given a priority. The recommendations of the Narasimham committee, if implemented, would help matters. It has recommended that all concessional rates of interest should be removed. Priority sector lending should be reduced to 10 per cent of total bank credit. Moreover, branch expansion should be strictly based on commercial principles. The denationalization of public sector banks will help in raising levels of profitability and efficiency.



Sentimental politics

Sir � It was most surprising to read about Sonia Gandhi�s outburst in Parliament (�Sonia�s anguish explodes on Atal�, April 27). Completely devoid of any substance, her statements largely came across as sentimental and naive. This sort of behaviour hardly portends good governance from this lady. She should remember that out of nearly 60 years of our independence, the Nehru-Gandhi dynasty has ruled the country for more than 50 years � and this has resulted in a situation where we have ended up becoming one of the most corrupt countries in the world. The divide-and-rule policies of her mother-in-law, which were learnt from the British, have virtually left an entire section of the populace, the Sikhs, feeling alienated from the mainstream. The riots of 1984 are still fresh in the memory of the people. We are one of the poorest countries in the world; the public sector that Indira Gandhi was proud of has continued to be a drain on the country�s economy. It was also during this family�s rule that Sanjay Gandhi could enforce his programmes, some of which were alarming. The seeds of the Kashmir problem were also sown under the aegis of Jawaharlal Nehru and his Congress. He was also, to a large extent, responsible for the partition of the country. Did he not accept the partition because he wanted to come to power at any cost? The list of the Nehru-Gandhi family�s misadventures is very long. If Sonia Gandhi had any sense she would refrain from such emotional outbursts.
Yours faithfully,
Manish Chowdhary, Moscow

Calcutta then and now

Sir � In �Oh! Calcutta� (April 20), Laveesh Bhandari has tried to make Calcutta almost solely responsible for the backwardness of eastern India. Bhandari also compares two regions � New Delhi between Uttar Pradesh and Haryana, and Calcutta between Bihar and Orissa � to argue that while the boom in New Delhi has been responsible for industry in western Uttar Pradesh and Haryana picking up, the decline of Calcutta has caused the slump of both Bihar and Orissa.

What is not clear is what Bhandari means when he talks about the �historical lack of industrial skill base� in Haryana. Does he think that the only difference between the eastern states, West Bengal, Bihar and Orissa and the northern states, Haryana, Delhi and Uttar Pradesh is because of the two cities, Calcutta and New Delhi?

The eastern states are backward for various reasons and Calcutta is just one, and among the less significant, of them. Attributing the backwardness of eastern states to Calcutta is not logical, considering the socio-economic and geographical locations of these states. They all have different problems.

As rightly mentioned by Bhandari, in the Fifties, Bihar was considered the best-governed state in India, but as he should be aware, it has the most inefficient and unstable government today which has made the situation in the state miserable. In Bihar, more than half of the population is illiterate, the economy is shattered, law and order have lost meaning, corruption is the only way of life, bullets dominate over the ballot. For decades, politicians have played the dirty game of mixing caste and politics, and now Bihari society can never rid itself of caste and class divisions.

In the case of Orissa, it is a different story. Orissa�s agro-based economy is always upset by natural calamities like flood, draught and cyclones. These have caused widespread damage to Orissa, which has resulted in a huge section of the population living below the poverty line. How can one relate all these developments with Calcutta? On the other hand, ever since its birth in 1966, Harayana has been one of the fastest growing states with the third highest per capita income in the country. It is the first state to electrify all its villages. Good governance and efficient administration are the key to success of the southern and western states.

Bhandari has said that the attitude of the people is very important for development. But should we not mention here the opportunities the government has to provide as its duty? If one has no opportunity in the country, one is bound to be lured away to some distant land which offers those opportunities. That is why over 25 per cent of the population in Silicon Valley is Indian, about 40 per cent of the hi-tech jobs in the valley are held by Indian Americans and more than 40 per cent of the annual H1-B visas granted by the United States government are given to Indians.

Bhandari has also ignored other important factors. The graphics of the northeastern states have no mention of Nagaland. Those of the northern states have no mention of Jammu and Kashmir. And for reasons unknown, Sikkim and Gangtok are not included in the graphics whereas in the east, Calcutta and West Bengal both are included, and in the south, both Chennai and Bangalore are mentioned along with Tamil Nadu and Karnataka.

Yours faithfully,
Basant Narayan Singh, Jorhat

Sir � Kudos to Laveesh Bhandari for describing and analysing the causes of the woes of Calcutta and thereby the whole of eastern India. The writer hits the nail on its head when he says that it is time Calcutta changed its attitude and put together its act to quicken the pace of progress in the region. A nation or a city cannot progress as long as it continues to cling to its past.

Yours faithfully,
Rajan Pande, Calcutta

Off with that flab

Sir � The report, �Daring downsize agenda drawn up� (April 5), talks of the recommendations made by the ministry of personnel � phasing out of officers beyond the cut-off age to abolition of the pay commission � in order to downsize the government. This appears to be a bold move by the government. However, the government reportedly has also declared in the Rajya Sabha that there was no proposal to reduce the retirement age of Central government employees from 60 to 58, although it would go ahead with the targetted two per cent downsizing of the staff.

The reduction of the retirement age, with the provision of extension only in cases where the employee was both sincere and efficient, should have been the first measure contemplated by the government. The possibility of an extension would have enthused government servants to serve the administration more efficiently.

If the government wishes to seriously consider the question of increasing productivity in the administration, it should also think of reducing the number of holidays. The editorial, �Holiday fever� (April 16), rightly points out that the enormous number of holidays in India is a serious hindrance to productivity, something the nation needs to rev up in an age of globalization. Public holidays should be restricted to the Independence Day, the Republic Day and the birthday of Mohandas Karamchand Gandhi. Religious or quasi-religious holidays should be struck off. Or, employees could have these holidays while allowing the office to function with a skeletal staff.

Yours faithfully,
B.C. Dutta, Calcutta

Sir � The National Democratic Alliance is doing a good job by cutting down its flab and saving public money, although it may be committing political hara-kiri. But then it is fairly confident, since the next polls are a long way off. The communists and the socialists are going to bay for the government�s blood. What is reassuring is that the babudom of India, which the two represent, has hardly ever stirred itself in matters which concern the masses.

Yours faithfully,
Sush Kocher, Calcutta

Sir � The Union government is reportedly thinking of suspending leave travel facilities for its employees for a couple of years in a bid to contain the bulging administrative expenditure. But that is not enough. What about the jumbo ministries both at Central and state levels? Are all trips abroad by numerous bureaucrats unavoidable? Is the security cover for a large number of politicians compulsory? Why are former prime ministers sent to the United States and the United Kingdom for treatment?

Departments of the government have manpower in excess. A friend of mine noted that the Indian Embassy in Nepal has about 260 personnel, whereas the Pakistan embassy has only 13. A larger number of people in the department does not ensure efficiency. There should be a motivation to work hard. The upper rung should set the example for the lower rungs to follow..

Yours faithfully,
V.A. Gopala, Bangalore

Bordering on bad manners

Sir � There is a strong belief in Bangladesh that the implementation of the 1974 border agreement between the then prime ministers of India and Bangladesh can resolve the border dispute. This agreement dealt with some enclaves belonging to Bangladesh which fell within Indian territory and some belonging to India which fall within Bangladesh. But it was sad that while Bangladesh immediately ceded to India the enclave of Baroibari, India took more than 20 years to reciprocate with the Tin Bigha corridor, access over which remains limited even today (�Khaleda�s Feni in border bottleneck�, April 26).

The role of India in our liberation war is an unforgettable event. Bangladeshis have the most profound respect for India for its contribution during our time of need and its recognition of our struggle. But it is up to the civil societies of each nation to raise the morale of Indo-Bangladeshi exchange through active lobbying in favour of good relations.

Yours faithfully,
Samina Tasnim Ruchi, Dhaka

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