📰 6,000 sq.km Antarctic iceberg splits
Scientists have tracked a crack in Larsen C Ice Shelf for ten years and will monitor the breakaway berg
•One of the biggest icebergs ever recorded has just broken away from Antarctica. The giant block is estimated to cover an area of roughly 6,000 sq. km, a quarter the size of Wales. An U.S. satellite observed the berg on Wednesday while passing over a region known as the Larsen C Ice Shelf.
•Scientists were expecting it. They had been following the development of a large crack in Larsen’s ice for over a decade. The rift’s propa-gation had accelerated since 2014, making an imminent calving ever more likely.
•The more than 200 metre-thick tabular berg will not move very far, very fast in the short term, but will need to be monitored. Currents and winds might eventually push it north of the Antarctic where it could become a hazard to shipping. An infrared sensor on the American space agency’s Aqua satellite spied clear water in the rift between the shelf and the berg on Wednesday. The water is warmer relative to the surrounding ice and air — both of which are sub-zero.
•“The rift was barely visible in these data in recent weeks, but the signature is so clear now that it must have opened considerably along its whole length,” explained Prof. Adrian Luckman, whose Project Midas at Swansea University has followed the berg’s evolution most closely. The new Larsen berg is probably in the top 10 biggest ever recorded. The largest observed in the satellite era was called B-15. It came away from the Ross Ice Shelf in 2000 and measured some 11,000 sq. km. Six years later, fragments of this super-berg still persisted and passed by New Zealand.
•In 1956, it was reported that a U.S. Navy icebreaker had encountered an object of roughly 32,000 sq. km. That is bigger than Belgium. But there were no satellites at the time to verify the observation.
Shelf spawns icebergs
•It has been known also for the Larsen C Ice Shelf itself to spawn bigger bergs. An object measuring some 9,000 sq. km came away in 1986. Many of Larsen’s progeny can get wound up in a gyre in the Weddell sea or can be despatched north on currents into the Southern Ocean, and even into the South Atlantic.
•The Larsen C shelf is a mass of floating ice formed by glaciers that have flowed down off the eastern side of the Antarctic Peninsula into the ocean.
•Scientists think Larsen C is now at its smallest extent since the end of the last ice age some 11,700 years ago, and about 10 other shelves further to the north along the Peninsula have either collapsed or greatly retreated in recent decades.
•The two nearby smaller shelves, Larsen A and Larsen B, disintegrated around the turn of the century; and a warming climate very probably had a role in their demise.NYT
📰 NASA’s Juno probe brushes past Jupiter’s Great Red Spot
The Great Red Spot is a 16,000-kilometre-wide storm that has been monitored since 1830
•NASA’s solar-powered Juno spacecraft has successfully completed the closest flyby of Jupiter’s iconic Great Red Spot - a massive storm that has been raging on giant planet for over 350 years.
•All of Juno’s science instruments and the spacecraft’s JunoCam were operating during the flyby, collecting data that are now being beamed back to Earth.
•Raw images from the spacecraft’s latest flyby will be posted in coming days, NASA has said.
•“For generations people from all over the world have marvelled over the Great Red Spot,” said Scott Bolton, principal investigator of Juno from the Southwest Research Institute in San Antonio.
•“Now we are finally going to see what this storm looks like up close and personal,” said.
•The Great Red Spot is a 16,000-kilometre-wide storm that has been monitored since 1830 and has possibly existed for more than 350 years.
•In modern times, the Great Red Spot has appeared to be shrinking.
•Juno reached perijove - the point at which an orbit comes closest to Jupiter’s centre — on July 10.
•At the time of perijove, Juno was 3,500 kilometres above the planet’s cloud tops.
•Eleven minutes and 33 seconds later, Juno covered another 39,771 kilometres, and passed directly above the coiling crimson cloud tops of the Great Red Spot.
•The spacecraft passed about 9,000 kilometres above the clouds of this iconic feature.
•On July 4, Juno logged one year in Jupiter orbit, marking 114.5 million kilometres of travel around the giant planet.
•Juno launched on August 5 in 2011. During its mission of exploration, Juno soars low over the planet’s cloud tops — as close as about 3,400 kilometres.
•During these flybys, Juno is probing beneath the obscuring cloud cover of Jupiter and studying its auroras to learn more about the planet’s origins, structure, atmosphere and magnetosphere.
•Early science results from NASA’s Juno mission portray the largest planet in our solar system as a turbulent world, with an intriguingly complex interior structure, energetic polar aurora, and huge polar cyclones.
📰 India-China trade talks deadlocked
Decision on market access deferred
•Trade talks between India and China remained deadlocked with neither side willing to offer concessions to end the impasse, official sources said.
•Recent bilateral talks on issues relating to farm products, which took place in the backdrop of the military standoff in the Doklam area of the India-Bhutan-China tri-junction, failed to make any headway, said the trade officials. China deferred taking a decision on grant of market access to Indian rice, pomegranate, okra and bovine meat, while India opted to stick to its ban on imports of apple, pear, milk and milk products from China, the sources said. The details of the talks will soon be shared with the Embassy of India in Beijing, they added.
•The discussions were held with visiting officials from the General Administration of Quality Supervision, Inspection and Quarantine of China (AQSIQ) – the body “in charge of national quality, metrology, entry-exit commodity inspection, entry-exit health quarantine, entry-exit animal and plant quarantine, import-export food safety, certification and accreditation, standardisation, as well as administrative law-enforcement.”
•“India has an alarming trade deficit that in our view emanates from obstacles to market access in China,” Foreign Secretary S. Jaishankar said in a speech in Singapore on July 11. Pointing out that negotiations on the long-standing boundary dispute also still continue, Mr. Jaishankar had said, “When the leaders of the two countries met at Astana, they reached consensus on [the point that]... India and China must not allow differences to become disputes. This consensus underlines the strategic maturity with which the two countries must continue to approach each other.”
📰 Five-judge Bench to hear Aadhaar pleas
The case has been in a limbo despite several reminders from the petitioners
•A five-judge Bench of the Supreme Court will hear a bunch of petitions challenging the constitutionality of the Aadhaar scheme, primarily whether there is is a violation of the right to privacy as it requires citizens to part with their biometric details to access welfare and benefits.
•Attorney General K.K. Venugopal for the Centre and senior advocate Shyam Divan joined forces on Wednesday and made an urgent mention before a Bench led by Chief Justice of India J.S. Khehar for setting up a Constitution Bench to hear the petitions at the earliest.
•Mr. Venugopal submitted that the scheme touched the lives of millions and its validity required immediate adjudication by an appropriate larger Bench.
•The Chief Justice then said the hearing would begin on July 18.
•The Supreme Court had referred the case for hearing before a Constitution Bench in October 2015. But it has been in limbo ever since despite several reminders from the petitioners. This is the first time the Centre has formally joined the petitioners’ side to mention the case for an early hearing by a larger Bench. One of the petitions being heard is filed by former NCPCR chairperson and Magsaysay winner Shanta Sinha.
📰 Bitcoin trade may come under SEBI
•The government is considering the introduction of a regulatory regime for virtual or crypto currencies, such as Bitcoin, that would enable the levy of the Goods and Services Tax on their sale.
•The new regime may possibly bring their trading under the oversight of the stock market regulator, Securities and Exchange Board of India (SEBI).
•The idea is to treat such currency in a manner similar to gold sold digitally, so that it can be traded on registered exchanges in a bid to “promote” a formal tax base, while keeping a tab on their use for illegal activities such as money laundering, terror funding and drug trafficking.
📰 Bitcoin — to ban or not to?
Currently, the crypto-currency is neither illegal nor legal in India
•The government is considering the introduction of a regulatory regime for virtual or crypto-currencies, such as Bitcoin, that would enable the levy of the Goods and Services Tax on their sale.
•The new regime may possibly bring their trading under the oversight of the stock market regulator, Securities and Exchange Board of India (SEBI). The idea is to treat such currency in a manner similar to gold sold digitally, so that it can be traded on registered exchanges in a bid to “promote” a formal tax base, while keeping a tab on their use for illegal activities such as money laundering, terror funding and drug trafficking.
•Crypto-currency is a digital currency that allows transacting parties to remain anonymous while confirming the transaction is valid. It is not owned or controlled by any institution – governments or private. There are multiple such currencies — Bitcoin, Ethereum and Ripple are some of the popular ones. Currently, they are neither illegal nor legal in India. “One bitcoin today is worth as much as 60 grams of gold. The market cap for all crypto-currencies has just crossed $100 billion, with most of the increase coming in the past few months. On April 1, 2017, the total market cap was just over $25 billion, representing a 300% rise in just over 60 days,” said a senior government official.
•“The discussion on whether crypto-currencies should be banned or regulated has been on for some time. The pros and cons for both aspects were put forth in the meeting chaired by Finance Minister Arun Jaitley last month,” the official told The Hindu .
•A proposal to ban such currency altogether was also considered at the meeting, but found few takers among top officials from the Ministries of Finance, Home Affairs and IT as well as SEBI, the Reserve Bank of India, the State Bank of India and NITI Aayog.
•Bitcoins were in the news recently when during the two global cyber ransomware attacks — WannaCry and Petya — attackers sought about $300 in bitcoin as ransom. Crypto-currency can also be used for a lot of legal activities depending of which retailers accept such currency.
📰 Nod for Bangladesh JIN pact
Agreement involves promotion, protection of investments
•In a bid to boost bilateral investments between India and Bangladesh, the Cabinet on Wednesday gave its approval for the Joint Interpretative Notes (JIN) on the Agreement between both the nations for the Promotion and Protection of Investments.
•The JIN would impart clarity to the interpretation of the existing agreement between India and Bangladesh for the Promotion and Protection of Investments.
•The JIN includes interpretative notes to be jointly adopted for many clauses, including, the definition of investor, definition of investment, exclusion of taxation measures, Fair and Equitable Treatment, National Treatment and Most Favoured Nation treatment, expropriation, essential security interests and Settlement of Disputes between an Investor-and a Contracting Party, an official statement said.
•Joint Interpretative Statements, in general, play an important supplementary role in strengthening the investment treaty regime.
•With increasing Bilateral Investment Treaty disputes, issuance of such statements is likely to have strong persuasive value before tribunals, the statement said, adding that such pro-active approach by States can foster a more predictable and coherent reading of treaty terms by arbitration tribunals.
📰 Too early to settle the Aryan migration debate?
With genetic data currently available, it is difficult to deduce the direction of migration either into India or out of India during the Bronze Age
•On June 17, The Hindu published an article by Tony Joseph (“How genetics is settling the Aryan migration debate”) on current genetic research in India and stated that “scientists are converging” on the Aryan migration to the Subcontinent around 2000-1500 BC. This conclusion was mainly based on the results obtained from the paternally inherited markers (Y chromosome), published on March 23, 2017 in a scientific journal, BMC Evolutionary Biology , by a team of 16 co-authors including Martin P. Richards of the University of Huddersfield, which compiled and analysed Y chromosome data mainly from the targeted South Asian populations living in the U.K. and U.S. However, anyone who understands the complexity of Indian population will appreciate that Indians living outside the Subcontinent do not reflect the full diversity of India, as the majority of them are from caste populations with limited subset of regions.
Under-representation
•A recent paper by Dhriti Sengupta and colleagues (‘Genome Biology and Evolution 2016’; 8:3460-3470), showed that the South Asian populations included in the “1000 Genomes Project” under-represent the genomic diversity of the Subcontinent. Tribes are one of the founding populations of India, any conclusion drawn without studying them will fail to capture the complete genetic information of the Subcontinent.
•Marina Silva/Richards et al. argued that the maternal ancestry (mtDNA) of the Subcontinent is largely indigenous, whereas 17.5% of the paternal ancestry (Y chromosome) is associated with the haplogroup R1a, an indication of the arrival of Bronze Age Indo-European speakers. However, India is a nation of close to 4,700 ethnic populations, including socially stratified communities, many of which have maintained endogamy (marrying within the community) for thousands of years, and these have been hardly sampled in the Y chromosome analysis led by Silva et al., and so do not provide an accurate characterisation of the R1a frequencies in India (several tribal populations carry substantial frequency of haplogroup R1a).
•Equally important to understand is that the Y chromosome phylogeny suffered genetic drift (lineage loss), and thus there is a greater chance to lose less frequent R1a branches, if one concentrates only on specific populations, keeping in mind the high level of endogamy of the Subcontinent. These are extremely important factors one should consider before making any strong conclusions related to Indian populations. The statement made by Silva et al. that 17.5% of Indians carry R1a haplogroup actually means that 17.5% of the samples analysed by them (those who live in U.K. and U.S.) carry R1a, not that 17.5% of Indians carry R1a!
Genetic affinities
•Indian genetic affinity with Europeans is not new information. In a study published in Nature (2009; 461:489-494), scientists from CSIR-Centre for Cellular and Molecular Biology (CCMB), Hyderabad, and Harvard Medical School (HMS), U.S., using more than 5,00,000 autosomal genetic markers, showed that the Ancestral North Indians (ANI) share genetic affinities with Europeans, Caucasians and West Asians. However, there is a huge difference between this study and the study published by Silva et al., as the study by CSIR-CCMB and HMS included samples representing all the social and linguistic groups of India. It was evident from the same Nature paper that when the Gujarati Indians in Houston (GIH) were analysed for genetic affinities with different ethnic populations of India, it was found that the GIH have formed two clusters in Principal Component Analysis (PCA), one with Indian populations, another an independent cluster. Similarly, a recent study (‘Neurology Genetics’, 2017; 3:3, e149) by Robert D.S. Pitceathly and colleagues from University College of London and CSIR-CCMB has analysed 74 patients with neuromuscular diseases (of mitochondrial origin) living in the U.K. and found a mutation in RNASEH1 gene in three families of Indian origin. However, this mutation was absent in Indian patients with neuromuscular diseases (of mitochondrial origin). This mutation was earlier reported in Europeans, suggesting that these three families might have mixed with the local Europeans; highlighting the importance of the source of samples. Another study published in The American Journal of Human Genetics (2011; 89:731-744) by Mait Metspalu and colleagues, where CSIR-CCMB was also involved, analysed 142 samples from 30 ethnic groups and mentioned that “Modeling of the observed haplotype diversities suggests that both Indian ancestry components (ANI and ASI) are older than the purported Indo-Aryan invasion 3,500 YBP (years before present). As well as, consistent with the results of pairwise genetic distances among world regions,
Indians share more ancestry signals with West than with East Eurasians”.
•We agree that the major Indian R1a1 branch, i.e. L657, is not more than 5,000 years old. However, the phylogenetic structure of this branch cannot be considered as a derivative of either Europeans or Central Asians. The split with the European is around 6,000 years and thereafter the Asian branch (Z93) gave rise to the South Asian L657, which is a brother branch of lineages present in West Asia, Europe and Central Asia. Such kind of expansion, universally associated with most of the Y chromosome lineages of the world, as shown in 2015 by Monika Karmin et al., was most likely due to dramatic decline in genetic diversity in male lineages four to eight thousand years ago ( Genome Research , 2015; 4:459-66). Moreover, there is evidence which is consistent with the early presence of several R1a branches in India (our unpublished data).
•The Aryan invasion/migration has been an intense topic of discussion for long periods. However, one has to understand the complexity of the Indian populations and to select samples carefully for analysis. Otherwise, the findings could be biased and confusing.
•With the information currently available, it is difficult to deduce the direction of haplogroup R1a migration either into India or out of India, although the genetic data certainly show that there was migration between the regions. Currently, CSIR-CCMB and Harvard Medical School are investigating a larger number of samples, which will hopefully throw more light on this debate.
📰 Game of chicken in the high Himalayas
With no thaw in sight, much will now depend on wider geopolitical factors. But the costs of conflict are high
•Another face-off at the Himalayan border has surprised few. Since 2010, nearly 2,500 Chinese “transgressions” have been recorded on the Line of Actual Control (LAC), the undefined border between India and China. But this is not a typical stand-off. The point, or area, of discord is unrelated to the India-China territorial dispute. The present stand-off is near the India-China-Bhutan tri-junction, and in an area where both China and Bhutan hold competing territorial claims.
The significance
•According to the External Affairs Ministry’s June 30 press release, Indian involvement is aimed to prevent China from changing the status quo by building a road on territory claimed by Bhutan, India’s closest ally in the subcontinent. By upholding the rights of its ally, Indian actions are intended to convey the importance Delhi attaches to its special relationship with Thimphu as well as to signal that it intends to preserve its traditional military advantages in the overall Sikkim sector.
•Beijing’s motivations have been speculated to range from big power bullying as part of a general pattern of China’s approach to its periphery, and driving a political wedge between India and Bhutan, to more mundane operational anxieties in a sector where India has traditionally held the higher ground. What makes the crisis particularly dangerous compared to previous episodes on the border is the absence of an agreed definition of what is at stake. For China, it is about “territorial sovereignty”; for India, it is about “security implications” emanating from a potentially deeper Chinese foothold in the lower Chumbi valley.
•There are two broad schools of punditry. One argues that the unresolved Himalayan dispute, China’s sensitivity over Tibet and the ensuing security dilemma is the main cause of recurring friction; the other claims that wider geopolitics and threat perceptions have converted the frontier into an arena of competition to keep the other side off balance. Ideally, conflict management strategies should seek to address both these levels of the India-China dynamic. But with the level of mistrust and animosity at record highs, it seems improbable that either side is interested in reassurance gestures. The indivisibility of the object of discord — in this case China’s territorial claims and India’s conception of security in the Northeast — makes an exit ramp or de-escalation difficult. As it stands today, both sides have dug in their heels and signalled a commitment to their respective positions, the Chinese more explicitly and through a flurry of official pronouncements.
Breaking the stalemate
•Where do we go from here? By interposing itself in close proximity to Chinese border guards, India has created a stalemate that can only be broken via one of three ways: one side backs off, either side tries to dislodge the other by force, or quiet diplomacy allows both sides to save face. The first scenario seems improbable given the crescendo of rhetoric surrounding the crisis. Rolling back the opponent’s position is also unviable because it would produce an escalation, whether in the local Sikkim theatre or along a wider front on the 3,488 km LAC. Some commentators have been thinking in highly tactical terms where India’s local military advantages are deemed to provide the ingredients of a compellence posture. However, unlike in the eight disputed pockets of the LAC where brinksmanship can be entertained, coercing the People’s Liberation Army (PLA) in an area where Beijing is convinced of its sovereignty and India’s own territorial stakes are not even at play would almost certainly involve fierce reprisals in the form of vertical or horizontal escalation in military and other domains. So we are left with a prolonged stand-off with little prospect for a thaw. Much will now depend on wider geopolitical factors and how each side evaluates its relative position in the international environment.
•The Chinese seem to exude more confidence on this front. Beijing’s relationships with its main rivals, the U.S. and Japan, seem to be stabilising. While Washington is a divided entity today, the relationship with China has robust bipartisan support with little traction for a new adversarial posture. Dense economic interdependence and a renewed awareness of security interdependence in northeast Asia imply that the Sino-American equation will maintain its complex stability. More broadly, American grand strategy remains focused on the Eurasian heartland threat from Russia rather than a rimland challenge from China. Japanese Prime Minister Shinzo Abe’s bilateral encounter with Chinese President Xi Jinping at the G20 summit was also instructive. Mr. Abe is reported to have responded positively to China’s Belt and Road Initiative. Japanese officials noted that Mr. Abe held a “very friendly” meeting with Mr. Xi and Beijing had shown “goodwill from the top level” towards Japan.
The calculations
•In sum, while China’s eastern front remains a zone of geopolitical competition, Chinese leverage in East Asia has reached a threshold where it can blunt a containment posture from the U.S.-Japan alliance. As Chinese scholar Long Xingchun confidently opines, “Though the U.S. and other Western countries have the intention to contain China through supporting India, they have a wide range of common interests with China.” The West is unlikely to “unconditionally stand on the side of India”. When combined with the strategic depth that China enjoys because of a stable strategic equation with Russia, the international environment from Beijing’s eyes seems comfortable and a far cry from the isolation China faced in the lead-up to the 1962 war or even the 1967 border crisis.
•Ironically, the reasons for China’s reluctance to escalate the crisis emanate from its strength and rising international profile. Outbreak of hostilities on the Himalayan border would taint China’s image and undermine the internationalism surrounding the Belt and Road discourse. It would also fuel anti-Chinese sentiment in India, which both Washington and Tokyo would almost certainly profit from. Even on a sub-regional level, a conflict with India would steer China further towards an irredentist Pakistan as its sole partner, a suboptimal outcome for Beijing, which prefers a wider profile in the subcontinent.
•From Delhi’s vantage point, calculating India’s relative position is less straightforward. Too be sure, policymakers have successfully navigated the uncertainty around Indo-U.S. relations after the interlude of suspense since January this year. The bilateral relationship is stable and poised to grow. The ongoing Malabar exercises involving the Indian, Japanese and U.S. navies in the Indian Ocean also offer psychological comfort to Delhi in the backdrop of the continental stand-off in the north. Some observers, however, exaggerate the geopolitical setting and impute a wider dimension to Indo-U.S. ties that might have faded since the Obama period. Further, with the U.S. inclined to resist Iranian and Russian influence in Afghanistan and further west, a Himalayan Cold War would be a distraction from more pressing geopolitical challenges elsewhere.
•The situation in the subcontinent is equally complex. Given Pakistan’s unabated proxy conflict in Kashmir, an escalation with China will truly bring the two-front situation back into play after decades. On the other hand, the rest of the neighbourhood would prefer a stable India-China equation. Each of India’s neighbours has adopted a dual track foreign policy where special or friendly ties with India are supplemented by geo-economic linkages with China. A Sino-Indian conflict disrupts this triangular dynamic and impels these states to make choices they would rather not make. This sub-regional reality cannot be wished away by India, or for that matter China.
•It should be clear that both countries have much to lose in an armed clash and a new Cold War in the region. Hopefully, the virtues of restraint would be obvious to both Delhi and Beijing.
📰 Don’t fly into the same storm
If the mistakes of the past are a guide, the purpose of the Air India sale bid should shape the rules
•Air India’s disinvestment, first attempted by the Atal Bihari Vajpayee government, is being revived. The sale bid the last time was a flop, shelved prematurely after all the bidders were either disqualified or dropped out. The many factors that were and may still be at work against the sale are not widely understood. Unless overcome, they may again endanger the sale.
•In May 2000, bids were invited for a 40% stake in Air India, with a cap of 26% on foreign investment. The airline had reported losses for six straight years, had $70 million debt on its books and was fast losing traffic. More than 18,000 workers were on its rolls for a fleet of just about two dozen planes. Its employee-aircraft ratio, 750, was among the worst. Singapore Airlines, in contrast, had 91 employees per aircraft. Inefficiency, typical in a government-controlled set up, was bleeding Air India. Yet, the quantum of stake on offer made it clear that the government intended to retain a crucial stake, appoint its own directors and continue to have a say in running the business. Put off by the substantial degree of control the government wanted to retain in the airline after the disinvestment, several potential bidders stayed away from the sale, including, possibly the worthiest contender. Plus, in a sale carried out through competitive bidding, reduced interest can impact the valuation.
Doomed from start
•The sale’s stated purpose was to bring on board a strategic partner who would turn around Air India. But the sale’s rules were loaded against candidates with a proven track record — foreign airlines. Lufthansa, Swissair, Emirates, British Airways and Air France-Delta in combination were among those to have expressed interest formally in buying the stake. However, a bidding rule that required foreign airlines to team up with a local partner forced them to opt out. Singapore Airlines, which had also expressed interest formally, roped in the Tatas to proceed with its bid.
•Those who remained in the fray had their expressions of interest evaluated; those ineligible were disqualified. In the end, the contest was down to two bidders — the Hinduja group and the Singapore Airlines-Tata joint venture. Both were invited to inspect Air India’s books. The Hindujas’ bid was already under fire from the Opposition over allegations related to the Bofors arms scandal. After studying Air India’s financial records, the group presented to the government a whole set of conditions on management control, threatening to withdraw if these were not met. The government barred the Hindujas from pursuing its bid, leaving a sole bidder: the Singapore Airlines-Tatas combine.
•Private airline owners who had so far orchestrated resistance to the sale from the background, now openly pointed out that the majority stakeholder in Singapore Airlines was a foreign government. The unmasked attack made Singapore Airlines pull out. The airline said in a statement that the intensity of opposition to the privatisation from political groups and the trade unions had surprised it and that in such an adverse climate, it was not confident it could play a useful role.
•The then Disinvestment Minister, Arun Shourie, clarified that the Tata group, Air India’s erstwhile owner before its nationalisation in 1953, could proceed with its bid without a partner. But the Tatas too withdrew, forcing the government to abort the disinvestment.
•If the government was eager to retain its hold over Air India, the private airline owners were anxious that foreign airlines should not gain control over it. Both the motives succeeded. The back story of how the mood against foreign airlines was whipped up was retold at a public meeting by Mr. Shourie. A Delhi-based chamber of commerce wrote to the Prime Minister lobbying against foreign investors being allowed to acquire more than 25% stake in Air India, as this was the rule in the U.S., China, Thailand and Mexico. Senior parliamentarians had sent similarly-worded recommendations. The comparison sought to be drawn was unfair. Under Indian law, investors owning fewer than 26% shares cannot move special resolutions, a restriction that did not apply in the countries the letters cited. After the sale was scrapped, private airlines flourished. Although Air India’s fleet — which includes its subsidiaries — has now grown to around 150 aircraft, it has lost traffic and market leadership to competition.
A level playing field
•If the mistakes of the past are a guide, the sale’s purpose should guide the sale’s rules. Air India’s debt, now about $8 billion, is growing unsustainably. It was bailed out with $5.8 billion of taxpayer money in 2012. The sale’s purpose should be to compensate taxpayers for shouldering the burden of keeping the national carrier afloat. Air India’s disinvestment could deliver this if it results in reduced government interference and increased competition. Remember, most taxpayers are also flyers.
•Competition in the air travel market will not increase if Air India gets acquired by a private airline in India. The rules should provide foreign airlines a level playing field. Sharp scrutiny of objections can expose and thwart hidden vested interests.
•Selling only a part of the government’s holding will not free Air India of the ills of public ownership. The government will have to exit the airline cleanly and completely. The reform demands political courage, economic wisdom and business-like shrewdness.
