Taliban’s Chaos Theory

“You need three qualities today if you want to fight the terrorists. Number one, you must have the military with you… Number two, you shouldn’t be seen by the entire religious lobby to be alien. The third element: don’t be seen as an extension of the United States.” These words of Parvez Musharraf, uttered a few weeks after the death of Benazir Bhutto in January 2008, show the kind of politics he espoused during his tenure as Pakistan’s president. Musharraf was a man who knew the presence of jihadist outfits in his country could be used to enhance Pakistan’s “strategic importance in Western eyes”, writes Ahmed Rashid in “Descent into Chaos”. And the General did the same, like other allies of the US in the “region” (Pakistan, Afghanistan and the five Central Asian Republics). For Rashid, author of the best selling “Taliban”, the region is “vital for global stability”. But the misguided “war on terror” of the US and the inability of the Western powers to contribute to nation building in these countries, particularly in the post-9/11 Afghanistan has created nothing but chaos.

Who made things worse? Rashid says even the Clinton administration bears some responsibility for the present chaos. It was during the Clinton presidency, the Taliban mobilized resources, consolidated power in Afghanistan and grew in strength in the region. But the Clinton administration failed to foresee the lurking dangers and come up with a vision to fight Taliban. George Bush, who actually started a war against Taliban, eventually played it into the hands of the same Islamic fundamentalists, thanks to the strategies of Defence Secretary Ronald Rumsfeld. It was Rumsfeld who insisted the inclusion of tribal warlords in the Afghan cabinet, says Rashid. Moreover, Bush’s defence secretary was against the idea of expanding the western-backed security system beyond Kabul, a strategy which later proved to be a blunder.
President Bush, who opened another war front in Iraq before accomplishing his “mission” in Afghanistan, made things complicated. The mounting military challenge in Iraq diluted the US engagement in Afghanistan, which eventually helped the Taliban regroup with the help of ISI. Though Pakistan, which supported the Taliban when it was in power, had to change its position in the wake of the 9/11 attacks, the country’s controversial spy agency, the Inter Service Intelligence, continued its dubious policies, writes Rashid. President Bush thought Musharraf was “indispensable” in his war on terror. This was a strategic limitation for the US. The Bush administration, finding itself in a catch-22 situation, completely gave up its efforts to push for political reforms in the military-ruled Pakistan and the Central Asian dictatorships and continued to pumping millions of dollars to support these regimes in the name of the alliance against terror.

What should have been down? “Afghanistan had to be rescued from itself. Autocratic regimes in Pakistan and Central Asia had to change their repressive ways sand listen to their alienated and poverty-stricken citizens…The West had to wake up to the realities and responsibilities of injustice, poverty, lack of education, which it ignored for too long,” writes Rashid. But nothing of these happened. The al-Qaueda and Taliban became more powerful, Afghanistan fell into deeper chaos, Pakistan, though the military rule came to an end, is now fighting itself and the Central Asian republics are as bloody as ever. Understanding the existing complexities and dangers, Rashid urges the international community to “face up to our collective future”.
“Descent into Chaos” is a well-written, detailed description of what happened to the War on Terror in the South-Central Asia. The analysis of Rashid, who has covered the region extensively as a reporter, looks stunningly authentic and his style of writing ensures an enjoyable reading. Still, it lacks the in-depth analysis of an academic. Rashid’s admiration for leaders like Hamid Karzai and Benazir Bhutto may not go down well with many readers. Blaming only Musharraf for Pakistan’s problems may not a proper diagnosis.

Ahmed Rashid (2008), “Descent into Chaos: How the war against Islamic extremism is being lost in Pakistan, Afghanistan and Central Asia”, Penguin: London. (Reviewed for Purple Beret)

The Great RBI Tightrope-Walk

It’s a difficult time for central bankers across the world. They need to be extremely vigilant and take visionary policy decisions, so that the gradual but still fragile recovery of the global economy doesn’t get derailed. During boom years, the central bankers would have the freedom to take risks to ensure high growth rate. During crises, they would not have many options but to adopt non-conventional policies to pump prime the crippling economies. But the recovery period is different. Any monetary or fiscal mis-step could undermine everything.

The Reserve Bank of India Governor, D Subbarao, who will announce the central bank’s annual monetary policy on April 20, also faces the same challenge. While formulating the monetary policy, the RBI chief will have to give utmost importance to at least two things – the government’s growth expectations and the rising inflationary monster.

Beware excess liquidity
The RBI has taken several bold decisions in the past. It is not an institution which shies away from taking risks that might disrupt the status quo. When the economy was in perils following the collapse of Lehman Brothers and recession in the advanced economies, the RBI stepped in with radical measures to stimulate domestic demand and ensure cash flow through the financial system. It had lowered the reverse repo rate, at which it absorbs excess cash from the banking system, by 275 basis points and repo rate, at which the RBI lends to banks, by 425 basis points since the global financial crisis broke. It had also lowered the cash reserve ratio by 400 basis points.

These moves were widely appreciated by economists in India. Lower rates encouraged banks to lend more to consumers, who kept the domestic demand steady. This was the growth mantra during the crisis period, which proved to be a huge success.

But excess breeds collapse. One of the key reasons for the fall of the US financial market, according to many liberal critics, was the cheap monetary policy of Alan Greenspan during the boom years. His decision to keep Fed rates at record lows spawned excess, which developed into asset bubbles only to bring down the entire financial industry eventually. Moreover, excess liquidity will also send inflation northwards, which is a nightmare for every government. So, what will Subbarao likely do on April 20?

Given his credentials as an orthodox economist and an interfering central bank head, the last thing Subbarao will prefer would be to don the mantle of Greenspan. He has made it clear earlier that he would not support long lasting cheap money policy. This was evident when the RBI sprung a surprise in the last week of March by announcing a 25 basis point each hike in both reverse repo and repo rates. The apex bank had started tightening liquidity earlier by raising the cash reserve ratio, the portion of deposits banks are required to park with the RBI, by an unexpected 75 basis points to 5.75 percent. The message was clear – excess liquidity should be sucked out of the system for its financial health.

Who will tame inflation?
Now, when Subbarao reviews RBI’s monetary policy, the macro economy is better placed. Most of the top government officials are optimistic that the economy would grow over 8 percent in the current fiscal. Industrial production is also growing steadily, indicating that the economy is on a firm track. IIP expanded by 15.1 percent in February.

On the other hand, inflation is soaring. Food inflation has been hovering around 17 percent for quite some time now. Despite the government’s promise to remove supply side bottlenecks, food prices are still high. The headline inflation in March rose to 9.90 percent from 9.89 percent in February, higher than the RBI’s projection of 8.5 percent.

The RBI cannot turn a blind eye towards this reality. If inflation is not bridled, it will put down growing demand and endanger even the recovery. But a sharp rise in interest rates will prompt banks to increase lending rates which could squeeze credit flow and cripple the purchasing capacity of domestic consumers.

So, many expect the RBI to increase the repo and reverse repo rates by 25 basis points each. The reverse repo rate is now at 3.5 percent while the repo rate is at 5 percent. A hike in these rates of a quarter of a percentage point each and 50 basis points rise in the cash reserve ration would suck out roughly Rs 23,000 crore from the system. This, according to financial experts, would rein in the inflationary expectations.

A higher hike in rates is unlikely given the fragility of the global economic recovery. The economies outside Asia are still struggling with several challenges. Moreover, the debt crisis in Greece is threatening the new normal prevailing across Europe. If it spills over to other economies, a new wave of crisis will emerge. So, dangers are still lurking. The RBI Governor should keep that in mind.

The Race in the East

China and India, according to many, are two major pillars of the global market economy and potential “trade super powers”. Once enemies, these Asian giants that house two-fifth of the world’s population turned to economic reforms almost at the same time, though the pace of its implementation was not same. However, these reforms, writes Jonathan Holslag in his recent book, ‘China and India: Prospects for Peace’, changed the contours of the bilateral relationship between the two countries. The transformation from closed socialist economies to liberal market economies also marked the transformation of India and China from enemy states to “trading states”, argues Holslag.

This change is a radical departure from the “zero-sum thinking that was predominant during the cold war” and led to “new opportunities for cooperation” between the two countries, which had fought a bloody war in 1962 and seen near-war scenarios at least five times ever since. In China, the post-Mao leadership was conscious not to repeat the “failures of the Great Leader”, while in India a reform-minded prime minister, Rajiv Gandhi, laid the foundations for “constructive nationalism”, rejecting his mother’s and grand father’s “negative nationalism”. This shift is what set the stage for India and China to emerge as trading states and to enhance cooperation.

Since the opening up of the economies, there is a remarkable improvement in the bilateral cooperation between India and China – trade boomed over the last three decades, the number of top level visits rose, discussions on contentious border issues have been held frequently and cooperation at the global level, bet it WTO or climate talks, also strengthened. The talk of war has been “put to one side”. Euphoric Western liberals lost no time to praise free market economics, claiming more trade will spawn more interest groups, which will lobby for “broader and deeper relations” with other trading states. Did that really happen in Indo-China relations?

Holslag agrees that there are visible changes. But did the enhanced economic cooperation helped India and China put aside the historic rivalry and become ideal trading states? Like many other rational India-China watchers Holslag retains his apprehensions about the claims of “neofunctionalist liberalism”. He discusses in detail why these steps toward a comprehensive partnership between India and China “will not succeed”. According to him, the existing “complementarity between India and China will disappear once they achieve their economic ambitions”. The traditional rivalry will likely spread to the economic sphere as well, challenging the concept of “Chindia”. The still unresolved border issues, the military security dilemma and the suspicion in public perceptions about the “other” power are the other major impediments India-China ties face with. The economic drivers are too weak to reverse these challenges. “In the short-term, we will therefore observe a continuation of the great power contest,” writes Holslag.

The 234-page book is rich with historical facts, economic data and diverse perceptions of experts from India and China. The 13-page bibliography underlines the authenticity and seriousness of the research Holslag undertook to write this comparatively small book. His key argument that strategic rivalry would continue to dominate Indo-China relations irrespective of the improvement in economic cooperation looks rational given the complex history of bilateral ties between the two countries. Holslag could have placed this hypothesis in the larger geopolitical context. The race for influence in Asia is going to be the race for world domination in a changing world. How the love-hate diplomacy of India and China is going to influence international politics? Unfortunately, Holslag leaves this untouched.

Jonathan Holslag (2010), “China + India: Prospects for Peace, Columbia University Press: New York (Reviewed for Business World)

Is Google Greater than God?

It is difficult for 81 million web-browsing Indians even to imagine a life without Google. Indians, like billions of other web users around the world, are so addicted to Google that it is actually difficult for them to replace the search engine giant in their online expeditions. If John Lennon, who unleashed an uproar by saying, “Beatles are more popular than Jesus”, was alive today, he would have sung ‘Google is Greater than God’. But for the godless Chinese, Google is just a search engine.

Now it’s almost certain that the US Internet giant will shut its Chinese search engine, Google.cn. Though the company has not confirmed its pullout from the world’s largest Internet market, China’s state-controlled official media have reported that it will happen in April. Whether Google will shut its entire China operations or just pull the plug on Google.cn and let its other operations continue is not yet clear. The search engine is expected to unveil its plans on March 22.

The crisis started two months back when Google threatened to pull out of China, a market of around 400 million web users, accusing Chinese hackers backed by the government of attacking its email system. The US internet giant, which launched Google.cn to provide censored search services for Chinese users in 2006 said it detected “highly sophisticated” attack on its email services originating from China. These attacks and the Chinese government’s attempts to “limit freedom of speech on Internet” led Google to adopt a “new approach” to the Dragon, the company’s chief legal officer David Drummond wrote on his blog on January 12.

China rejected the allegations, but defended its censoring, saying Google has to obey the rules of the land. The US soon seized the opportunity to score against its global rival and asked Google to refuse “politically motivated” censoring. Rights groups around the world once again deplored the “Great Firewall of China”. Well, what will happen if Google pulls out?

Lose-lose scenario
According to analysts, it would be a lose-lose scenario. "If Google leaves, it`s a lose-lose scenario, instead of Google loses and others gain," Edward Yu, president of Analysys International, a Beijing research firm, told Associated Press. China sans Google will stand increasingly isolated in a rapidly expanding web world. Popular social networking sites like Facebook and Twitter, and Google’s Youtube are already banned in China. It’s still unclear how China’s educated, outward looking middle class youth would respond to the disappearance of the “all-loving” Google in their web space.

Google’s withdrawal will also hit the Chinese mobile market, which is highly dependent on the search engine. China Mobile Ltd, the world’s largest telecom service provider with 527 million subscribers, uses Google for mobile search and maps. Google’s android operating system is also popular among mobile phone users in China.

So what will China do? Despite this expected setback, the Chinese authorities appear to be defiant in dealing with Google. The reason, many think, is the (over)confidence that the local search engine, Baidu, would be able to rise up to the occasion if Google leaves. China has developed domestic equivalents of all the major popular internet companies -- Baidu for Google, Taobao for eBay, Renren for Facebook, QQ for instant messaging, games and social networking. The Economist magazine, a severe critic of China’s web censoring policies, admits these companies “are doing well”.

On the other hand, the end of operations in China will lead to a sharp fall in Google’s net revenue. Therefore, according to reports, Google will likely shut only its Chinese search portal and continue other services, leaving some options on the table for a possible future reconciliation. Apart from its search and mobile phone applications, the US firm has two research and development facilities in China and is running a popular music portal.

The Chinese government’s tough stand vis-à-vis Google is also a strong message to other companies operating in the country. If the Communist Party-led government is not ready for an inch of compromise on “sensitive issues” like censoring with a giant like Google, other companies will be thrown out of the mainland even without a negotiation if they avoid Beijing’s diktats. Most of them are more interested in the vast potential of Chinese market than the so-called liberal principles. Google was also not different till January 12, 2010.

Will China survive the departure of Google, the God of the Web World? Well, that could be the most interesting question of coming years.

Consistent Inconsistency

The Suez crisis of 1957 marked the beginning of a new era in the US’ Middle East policy. The British debacle in the Suez and President Dwight Eisenhower’s decision to have deeper engagement with the Middle East seemed to bring in changes in the political landscape of the region. However, that did never happen. Despite being the largest power in the post-war world, the US has never shown strong will to bring in peace into the region even as the policy makers in Washington seemed to have obsessed with the security fears of Israel, the most reliable Middle Eastern ally of the US, writes Patrick Tyler in his book, “A World of Trouble: America in the Middle East”. Tyler, an experienced journalist, who has covered the Middle East politics for years for the New York Times and Washington Post, writes in rich details in the over 600-page book how the “inconsistent” US policy in the Middle East was caught between Washington’s aspirations for a higher position in the Muslim World and its ideological commitment towards the Zionist state.

The book covers the US involvement in the Middle East during 10 presidents – from Eisenhower to George W Bush. According to Tyler, Washington’s policy towards the Middle East, a strategically important region for the superpower, was “consistently inconsistent”. President Eisenhower had pragmatic vision about the region. He wanted peace between the Arabs and the Israelis and more prosperity and development in the region. But he could not make any effective move towards those goals after an intelligent intervention during the Suez crisis. But the successive presidents did not share this vision. President Lyndon Johnson did not do anything when Israeli’s occupied Palestinian land during the Six-Day war and Henry Kissinger’s pro-Israeli policies did harm in the long term to the US interests in the region. During the Yom Kippur war, President Nixon sent Kissinger to Soviet leader Brezhnev with a message, calling for a joint super power action to end the war and find a “just” settlement for the Palestinian issue. However, Kissinger, in pursuit of an entirely different outcome to the Middle East conflict, dumped his president’s message. A joint super powers’ intervention, writes Tyler , would have left Israel with a less powerful position, making it easier for world powers to seek peace in the region. However, Kissinger tactfully undermined this move and even encouraged the Israeli leadership to violate the ceasefire terms to better its military position. Nixon’s statesmanship was further battered by the Watergate scandal.

Jimmy Carter’s Middle East policy was more peace-oriented than his predecessors. He even secured peace between Israel and Egypt. But the Iranian revolution and the subsequent US embassy siege destroyed the Middle East policy of the Carter administration. In a radically changing Middle East, Washington had to make policy priorities to secure its own interests. Iran, one of its trusted allies in the region till the other day, turned out to be the worst enemy. When Iran-Iraq war broke out, Reagan supported Iraq, a country against which his successor George Bush launched a major offensive. President Clinton tried for peace in the Middle East, but he lost focus after the Levinsky incident and did not use his firm hand to make the Israelis compromise. And George W Bush made everything worse.

Tyler says Washington was not singlemindedly supporting the Israeli lobby always. There were clashes of interests and hard maneuvers within administrations. It was this contradiction that made the Middle East policy of the US inconsistent. If the occupants of the White House could think beyond Israel while taking key policy decisions, the US’ position in the Muslim world would have been better.

Tyler version of history is largely based on personal interviews and declassified documents. While Tyler keeps the sharpness of a journalist in narrating incidents that shaped the US Middle East policy in the post-war world, the in depth analyses of an academic is missing. Though the security of Israel is one of the key driving factors of the US foreign policy, from the US’ point of view, the strategic importance of the Middle East is beyond Israel. All presidents except Bush Junior gave utmost importance for America’s relationship with the friendly countries like the Gulf monarchies and there was a continuity in this “friendship”. Above all, the civilisational angle plays a key role in the estranged relationship between the Middle East and the US. This was evident during the George Bush II presidency.

The book ends abruptly. The last chapter deals with the policies of Bush II, whose unwise and unimaginative moves made the US-Middle East relationship complicated than ever. The fact that President Obama had to start his Middle East venture with a confidence building speech in Cairo underscores Tyler’s analysis that Washington has to seek a new paradigm and build trust to deal with a changing Middle East. More errors will make things more complicated. Good luck, President Obama.

Patrick Tyler (2009), “A World of Trouble: America in the Middle East”, London: Portobello Books, Pages: 638 (Reviewed for Purple Beret)

China: The new economic hegemon

When it comes to economics, the last thing the Chinese rulers will do is boasting. They usually avoid rhetoric while making key policy announcements, and set lower-than-expected targets for coming years. Prime Minister Wen Jiabao’s annual speech in the Great Hall of the People Friday was not different. "We must not interpret the economic turnaround as a fundamental improvement in the economic situation," said a cautious Wen to nearly 3,000 party-appointed members of the National People’s Congress (NPC). He further set a target of 8 percent growth rate for the current year.

Many experts feel Chinese economy can grow much faster than the government projection. Contrary to what Wen told the NPC, there are fundamental improvements in the Chinese economy. The country has seen 8.7 percent growth in 2009, a rate beyond the imagination of many advanced developed countries. According to most analyses, the unique economic model of China has helped the country weather the global economic crisis effectively and it is set to become the second largest economy in 2010 surpassing the crisis-struck Japan. Its exports, after 13 straight months of fall, started growing again from December, making the country the world’s second largest exporter.

Beijing Consensus
China is among a few countries that weathered the global economic meltdown. Despite embracing free market policies three decades earlier, the unconventional approach of the state towards the economy helped country decouple itself from the great collapse of the global finances. Joshua Cooper Ramo, the former editor of Time Magazine, calls this unconventional policy making “Beijing Consensus” -- a combination of mixed ownership, basic property rights, and heavy government intervention.

Will the Beijing Consensus prevail? The history of China’s economic expansion shows this approach has had astonishing results. Ever since China started opening up its Socialist economy in 1978, it has grown at nearly 10 percent every year. China’s per-capita GDP is now 12 times greater than it was three decades ago. It’s now the world`s second-largest recipient of foreign direct investment. According to Goldman Sachs, China will overtake the US as the largest economy in the world by 2027. Renowned British thinker Martin Jacques writes in his latest book, ‘When China Rules the World’, China is on its way to replace the US as the world’s greatest super power. Robert Fogel, recipient of the Nobel Memorial Price for Economics in 1993, recently wrote in Foreign Policy magazine that China “goes from a poor country in 2000 to a super rich country in 2040”.

It seems everybody except the Chinese leadership is busy forecasting where China would stand some 20-30 years from now. China’s speedy recovery from the Great Recession even when the entire Europe is still battling has prompted many to rethink about the prospects of the Dragon. The crisis has indeed left China more powerful and relatively stronger than many other Western powers, which till the other day were considered key players in global politics. It may be ironic that China, a country ruled by Communist dictatorship, stands tall in a world where Communism’s death was celebrated years ago.

The Bliss is missing
But the bliss is missing in Beijing. The policy makers remain wary even when the whole world says China is rising. It’s true that Chinese economy has spawned miracles, set new standards and proved many predictions wrong. But it all came with riders. The Chinese Communist Party is still suffering from a “deficit of legitimacy” in a world where liberal democracy is considered the ideal governing system. The Beijing Consensus has been under attack from within as the social balance of Mao’s China was disrupted with the rise of a new super rich class in the supposedly socialist society. China is now a country with the largest rural-urban income disparities.

This is one of the utmost concerns of the government, which still claims to be Socialist. If the rich-poor divide gets widened, the very claims of socialism from which the state draws legitimacy will be in trouble. The government’s efforts to spread the fruits of development to inner areas were hit by several limitations. Moreover, China’s decision to keep its currency’s rate fixed against US dollar – a move to help its crisis-hit exporting community -- has drawn flak from many quarters. This has prompted Paul Krugman, a severe critic of neoliberal economics, to write that “China is not behaving as a great power”.

So far the coastal areas are the most developed regions in the mainland China. Many fear one of the end results of the Beijing Consensus is this widening disparity. Stratfor founder George Freedman writes in his latest book, ‘The Next 100 Years’, that this widening contradiction will lead to the eventual collapse of the Chinese state in 2020s.

So, there’s no cakewalk for China, as many of us think, to the super power’s slot. Of course the Dragon is rising, but its challenges are too.

Politics, Populism and Partnership

Sachin Tendulkar’s legendary innings against South Africa might have occupied most of the front-page space of every newspaper Thursday, leaving Mamata Banerjee’s Rail Budget to a corner, but the celebratory mood over the maestro’s iconic double century should not discourage us from taking a critical look at the Budget Banerjee presented in Parliament.

Now that the proposals and the minister’s future plans for the Railways are out in the open, as a routine the Congress, the ruling party, has welcomed the Budget, while the Left, Mamata’s bête noire, and the BJP, her former ally but now opposition, have criticised it. The key feature of the Budget, as the media have already reported, is the minister’s decision to hold the fares and freight charges. She even cut the freight rate of some essential commodities -- grains and kerosene – keeping in mind the rising food inflation.

This was widely expected. Though the Planning Commission had recommended a revision of the fares to streamline the railway’s revenues, Banerjee, already in an election- mood for the Left-controlled West Bengal, avoided biting the bullet. Speaking to reporters at the Rail Bhavan before the Budget presentation, Banerjee used the famous Lincoln quote to express her “generosity” towards the public: “Railways is of the people, by the people and for the people,” said an upbeat Banerjee, dressed in white cotton sari and with a cream shawl over her shoulders.

Did she keep her promises? From a common man’s point of view, the minister’s decision to leave the fares untouched is a great relief. Furthermore, the cut in freight rates on essential commodities will likely lead to an ease in the food inflation, which is hovering around 18 percent now. Banerjee has also announced 52 new long distance trains and most of the new trains she announced in her last budget will be flagged off by March this year. Moreover, the Railways plans to add 1,000 km of tracks every year (pretty ambitious, isn’t it considering the current average of 180kms?) and 25,000 km by 2020.

Where’s the fund?
So far so good. But what about the Railway’s modernization? From where will the ministry mobilize resources to expand the world’s second largest rail network? What plans does Banerjee have to stabilise the finances of the public sector undertaking, the largest employer in the country? Sorry to say that Banerjee left many key questions unanswered. “In China, the railway system becomes bigger every year, in India, Railways Minister’s speeches become longer by the year,” writes a Business daily in its editorial on Banerjee’s budget, painting the grim picture of the Indian Railways.

It’s worth noting that the Budget comes almost three months after China, the largest Asian economy and a potential competitor for India in many fields, launched the world’s fastest train. Though Banerjee has announced 10 more Durontos, she failed to roll out any massive plan to modernise the railways and improve the security of the passengers. Instead of focusing the security issue, he’s proposed to spend massively on non-core areas like setting up sports academies, cultural centres and bottling water plants. Banerjee’s decision to slash the Railway Safety Fund by Rs 597 crore from last year has also drawn flak from political quarters.

Moreover, several of the key infrastructure projects the minister announced are for West Bengal – over half a dozen factories and workshops, two museums, and one cultural centre among others. In a bid to keep the Congress leadership in good rapport, Banerjee has proposed a coach factory in Rae Bareli, the Lok Sabha constituency of the UPA chairperson Sonia Gandhi and a drinking water plant in Amethi, which the Congress heir apparent Rahul Gandhi represents in the House.

Financial mismatch
The financials are also not so promising. The Railway’s net revenue after dividend is expected to fall to a mere Rs 951 crore this fiscal from the earlier budget estimation of Rs 2,642 crore and from Rs 4456 crore during Lalu’s time. The operating ratio (working expenses as a portion of traffic receipts) for 2009-10 is 94.7 percent, up from 92.5 percent projected earlier. This stands is in sharp contrast to 75.9 percent in 2007-08.

Her tilt towards public-private partnerships and appeal to the private sector to come forward to make investments expose the financial limitations of the railways. But how is Banerjee going to woo them is still not clear.

In summary, Banerjee appears to have failed to walk a tight rope. And the problem of falling revenues and the challenge of modernisation of the Railways, which according to her own words is the “lifeline of the country’s economy”, will continue to haunt Banerjee and her successors. It’s high time the ministry came out with the strategic plan to make over the railways.