Is the thunder so very distant ?

New Delhi: People woke up in the morning of 24th February, 2022 with the news of the Russian attack on Ukraine. The impact was immediate and overwhelming. Europe had not seen a war of this scale since World War 2. Shockwaves were felt across nations and institutions.  Crude Oil shot up to 105 $ a Barrel, Markets all over the world crashed, Gold touched a 9 months high   and investors in India  lost close to Rs 10 Lakh Crores in a day. The swiftness of the Russian attack, reminiscent of recent developments in Afghanistan, caught many, even powerful world leaders, a trifle unawares. An immediate concern to India was the plight of 16,000 Indians, mostly students, still  in Ukraine. Advisories to evacuate notwithstanding   these Indians were stranded in a war-torn country which was not their homeland. With Ukraine airspace being closed there is now talk of moving Indian citizens by land routes through western Ukraine and nations like Poland, Rumania etc. There is talk of the capital city of Kiev being surrounded and Chernobyl Nuclear Waste Zone being bombed. All these have frightening implications for the entire world as well as India..With large scale war revisiting Europe a new world order seems to be unfolding.  USA, NATO, EU could not stop the invasion despite their high flaunted diplomacy. Apart from obvious geopolitical fallouts, the invasion has a colossal human component.  Just when the world was on the path of some sort of recovery from repeated Covid onslaughts, war has raised its ugly head. The entire affair is complicated, confusing and full of scary portends. The whole world waits with baited breath as the drama unfolds and not so slowly. Many in India currently go about their daily lives without much concern since the theatre seems to be far far away. Actually in Europe, not in Asia, Middle East or even Far East but is this complacency quite right ?

For Indians, apart from those who are stranded in the war torn country; others are not really insulated from the vagaries.  Like an Indian Businessman, from Kashmir having business in Ukraine said on Indian media:- ” It’s War and in War  all get impacted”. How very right he is, after all,  the world is today a global village and no one can remain unscathed from untoward incidents happening anywhere; Wuhan aptly proved it. Though wars help no one, they do happen from time to time. This time round,  it may impact India severely. Apart from the immediate threat of  price rise and scarcity of products there are huge military and strategic issues which India may have to come to terms with. While many countries in the western world have condemned the move of Russia;  China, Pakistan and Iran have supported Russia. Response from India obviously has to be measured and it may be a tight rope walking. Apart from the predicaments of investors, Oil & Gas which plays such an important part in India’s economy any increase in crude prices has a huge inflationary impact on commodities. It has been stated that March 10th, 2022  is the date till when the prices of Oil & Gas products will not be raised. With elections being held in several states it’s an obvious move. However, post that date if the situation does not improve the prices are sure to go north. Although, in India immediate measures will inevitably have to be taken its high time that robust, workable long term policies which can reasonably insulate India from disruptive events like Covid and War needs to be formulated. Military strategy apart, India needs to urgently carry out a deep introspection on what’s the way forward. In crisis situations like the ones seen in last couple of years.

One thing which has come out clearly, whether it is climate change, public health threats, disruption in civic services, war, economic challenges etc. each country essentially is on its own, irrespective of friends and well wishers. Co operation and mutual help gets sacrificed in face of severe challenges and a country is left alone to fight its own battles; just as what is currently happening in Ukraine. Thus, India cannot sit back calmly and believe that it will never be faced with a similar situation. India has a a hostile and unstable neighborhood which sees India as some sort of regional dada . It is particularly vulnerable as it is multi cultural, multi religious, multi linguistic, multi ethnic and diverse society. The equilibrium is dynamic also due to the fact that many neighboring countries have fledgling democracies prone to giving way to dictatorship.   Incidentally, the Pakistan Prime Minister, Mr Imran Khan is currently in Russia and has had a meeting with President Putin. Along with China and Iran, Pakistan has supported Russia in the current war against Ukraine. It is being said jokingly that the Pakistani PM and his Generals may take inspiration from Russia in justifying an attack on its erstwhile Eastern part, Bangladesh and reclaim it. The same logic used by Russia  that Ukraine was part of  erstwhile Soviet Union can be used to telling effect. In such a scenario, China may assist Pakistan directly and Russia tacitly. USA and Europe not being obliged to help, can offer lip service and at best impose sanctions which like Russia, Pakistan will give two hoots about. It will manage with Chinese and Russian help. This may make for a good gaffe but what if Pakistan is actually inspired to make renewed attempts on taking over Kashmir militarily? Will we still want to laugh it off?

Jokes apart, India needs to do some serious thinking.  It has to put in place a strategic group taking experts from Defense, External Affairs, Finance, IT, Think Tanks, Academics, Civic Bodies, Border Infrastructure Professionals along with representatives of Corporates from Pvt & PSUs  to chalk out working strategies and long term plans. This is time for a business like, result oriented, cross functional task force which can both predict and formulate future deliverable actions and operate from a war room. Execution by relevant bodies and bureaucrats have to be in built in the plans with scope for ongoing course corrections. The unfolding of events in last 24 hours are too serious, complex and nuanced to be left to bumbling babus alone. It’s said that in modern world only the paranoid survive and India cannot afford to be complacent.  The Russian – Ukraine war has in a span of a very short time laid bare the vulnerabilities of both strong and weak countries. It has shown that a determined individual can bring the world to the cusp of 3rd World War with an imminent possibility of usage of nuclear weaponry. The shift of world attention to Europe has left Asian countries exposed to likely fallouts of events not under their control at all.

In view of the sudden turn of events, India must also review its policy on PSU disinvestments. For the sake of its physical and economic security continuance of  PSUs is essential. I seek indulgence of readers in examination of three seemingly un related issues which have bearing on PSU disinvestment and need to be seriously focused upon. First, the need for control on market forces regarding prices of mass consumer products like Food, Oil & Gas, Essential Commodities and Services. Second is the recent Union Budget announcement of Capex driving Indian economy. Third is CSR activities being carried out by Corporates. Let us view few recent illustrations from each of these factors to drive home the point. Students wanting to return to India from Ukraine were reportedly asked by Air India, a private airline, to shell out up to Rs 65,000 for a single Air Ticket which used to cost Rs 26,000 even a week back. There is now talk that Indian Air Force will be tasked to carry out evacuations while there is silence over  Air India carrying out Vande Bharat flights. Even a few months back, during the Afghanistan crisis, Air India carried out evacuations. What then has changed ? Is the crisis faced by Indian citizens today in Ukraine not the same as that faced in Afghanistan ? Only thing which has changed is that from being a PSU, Air India has been privatized and the citizens need to pay a price for this change. The same fate will befall consumers when BPCL will get privatized. In a crisis situation; a private BPCL  may not want to supply POL unless it can make an extra buck. They may well say,  pay up or we close our outlets. That may lead to dry outs, long queues before petrol bunkers and  riot like situations. The call will then have to be taken whether the consumers should bear the additional cost or the government should subsidize it. So much for removal of subsidies. Obviously, Government will be reluctant to give any direct instructions to a private BPCL as it would  tantamount to interference in a private corporate body’s functioning. Constitutional rights may get invoked, as a last resort declaration of emergency by the government may bail out the situation. It’s well known that in crisis situations, profiteering by private companies is resorted to as a ‘legitimate’ business opportunity. Therefore, the Government is once again cautioned to re consider full scale wipe out of PSUs. With regard to the second issue of Capex;  it was announced in the recent Union Budget that Capex would be a major driver of economy. This is actually a very welcome thought for a country like India. The Budget  has sought  to increase  public investment by raising Capital expenditure by 35.4% to Rs 7.5 lakh crore which is nearly  2.9% of the GDP, in the next financial year. It is well known that ultimately it’s the Government and PSUs which will have to undertake activities to make this a reality. Private Companies are usually averse to spending capital on projects which have long gestation periods or uncertain returns; how so ever important it may be for nation building. Many PSUs have the wherewithal to not only invest but manage these projects to completion. The broad  line of demarcation of who primarily should  be providing infrastructure, the government  or private sector often gets obliterated when it comes to PSUs doing the spending. PSUs can take a clear cut lead on this front.  So if PSUs stand obliterated the future of Capex in India will get affected  . Third is the issue of CSR.  The felt need of developing the border states of India economically, structurally, culturally, from defense point of view  and ensuring total social & emotional  integration has been centre staged by the current war. The inclusive and impartial nature of PSUs comes in very handy for developing and integrating border areas. This role has been played out successfully by PSUs like ONGC, Oil, IOCL,HPCL, BPCL, NTPC, PowerGrid , NHPC ,PFC,et al. There is a severe need to ensure that these companies not only  continue to do the good work but increase the same manifold. CSR can in fact be a very potent, fast,  visible and direct  tool which PSUs can leverage for making the border areas secure and stable. Just as the PSUs played a stellar role in Swachh  Bharat Mission,  It should now be made mandatory for them to allocate, let’s say, 15 % of CSR funds to development of infrastructure in Border Areas and 10% of CSR funds to development of Civil Defense, Shelters Building, Health Infrastructure, Education, Sports,  and Communication, Transportation etc. In case of emergencies like war, natural calamities and pandemics securing our border areas is a must today. Mind you these may seem to be simplistic,  knee jerk reactions just ask those who are in the war zone today and who till about 24 hrs back felt relatively safe. It’s better to be prepared then be repentant. All in all, it’s not the time for PSU disinvestment but a time for consolidating  their economic and intrinsic worth.

Friends, what  may appear to most Indians as not even distant thunder should not become the shriek of a missile or high octave rumble of a rocket !

(By Sidhartha  Mukherjee)