The India-US deal on nuclear power has seen opposition from some familiar and some strange quarters. Now that it has been referred to a committee, its future appears uncertain. The debate has been interesting and throws up some fascinating aspects.
Let’s look at three basic issues that emerge. First, it was the then BJP (Bharatiya Janata Party) government, led by former prime minister A.B. Vajpayee, which launched the initiative in 2001. Second, it is a deal that focuses on using nuclear power for civilian purposes. It enables the production of electricity using nuclear power, which at the moment accounts for less than 3% of Indian electricity generation. Third, the Hyde Act passed by the US Congress allows the US government to negotiate the 123 Agreement and forbids further nuclear bombs being tested by India.
India is not a signatory to the Non-Proliferation Treaty. Critics in the US have argued that India can be dangerous if provided with nuclear fuel and technology. This is particularly because India is close to Iran and is helping the country in developing its military. The Chinese have reason to be unhappy—their large neighbour will have access to nuclear fuel and technology and can always go against the agreement and test nuclear bombs. The same logic holds true for Pakistan.
Why are some Indians unhappy? Does it signal a pro-American policy? A cursory analysis of India’s stances vis-à-vis the US in various international forums will clarify this misapprehension. India leads the diatribe against the US at the World Trade Organization against its domestic subsidies in agriculture. India has been bitterly opposed to the US visa and migration policy. Within the US, India is seen as the big devil that is taking away local jobs to Hyderabad and Bangalore. With presidential elections scheduled for 2008, it is the US President who should be worried about the deal.
The most important argument for the deal is that it will give India nuclear power. The Indian economy is growing at more than 8% per year and the additional demand for electricity is, therefore, huge. There is already a big shortfall and anything done towards improving electricity supply should be welcomed. Nuclear power is a clear technological option that will help generate the 20,000MW of power required in the next 10 years.
Electricity can be produced using hydropower, but large dams have already been condemned by a large number of people. Thermal power uses fossil fuels and causes environmental damage; therefore, not much can be done to augment the thermal power plants in the country. Nuclear power plants are indeed a feasible option.
The deal allows for greater investment in nuclear power as now plants can be imported and set up in partnership with foreign firms. These plants are capable of generating more than 1,500MW of power, thus allowing for large scale production which could bring down rates of electricity supply. India’s economic growth and its importance as a strong geopolitical power centre is gaining acceptance. The isolation that India has faced since the first nuclear test in 1974 is history. The strategic importance of India’s control over sea trade in the Indian Ocean, its clout over various governments in West Asia and impressive growth in trade make India occupy centre stage in the US foreign policy.
Also, with Foreign Direct Investment coming in and going out of India, the stakes are indeed high. The big aircraft deals that will see at least a hundred civilian planes and a similar number of military planes being bought by India act as a strong incentive for the US to develop strong economic links with the country. The domestic market for automobiles and telephones is really large and has a handsome potential. It is in its interest that the US cultivates India. The argument being made is that this deal will disallow India from testing nuclear weapons. Now, the last time a nuclear device was tested, most people were appalled. It resulted in a major fall in foreign investment, several projects had to be put on hold, India’s global position became weak and foreign aid almost entirely died out. The 123 Agreement prevents India from reprocessing the imported fuel to produce plutonium, but India has its own uranium deposits if it indeed wants to develop bombs. The final argument that is being made is the old one based on selling the country away. These are familiar arguments that have been made at least twice in the past 15 years.
Kind observers now see the sloganeering against the Dunkel draft and the rubbishing of liberalization in the early 1990s as quaint and sentimental. There were strong objections and imagined political fallouts then, too. However, economic reforms have clearly worked well and were taken forward with great enthusiasm during the last 15 years at the Centre and in West Bengal in the last five years with great enthusiasm.
Amir Ullah Khan is an economist at the India Development Foundation. Comments are welcome at email@example.com