The three–day visit of the United States President Barack Obama to New Delhi as chief guest of the Republic Day celebrations has proved to be highly significant in several ways. Even if one were to overlook the symbolism of the visit, it will stand out as an outstanding event because of the ease with which long–standing roadblocks over the civil nuclear agreement that had remained stuck for the past five years got removed at a stroke. It will be recalled that an agreement signed during the UPA regime had remained entirely ineffective mainly because the question of liability in the event of nuclear accidents had not been settled. There is no denying that all civil nuclear agreements are fraught with the very important question of who would be held liable in the event of something going wrong with a nuclear reactor supplied by another country. Even though there is a Convention on Supplementary Compensation (CSC) for nuclear damage—an intertiol treaty that seeks to establish a worldwide liability regime—there were experts who believed that though India had signed the convention, the terms were rather stiff for a country like India. What US President Obama’s visit and a 20– minute walk with Prime Minister rendra Modi achieved was a swift resolution of the differences the two countries had over India’s Nuclear Liability Law that had been holding US companies back from building nuclear reactors in India. Indian officials announced a bilateral “understanding” that would cap five years of negotiations centred on the Nuclear Liability Law, which deals with the compensation to be paid after any nuclear accident.
What needs to be understood is that any nuclear ‘accident’ has catastrophic consequences and the compensation can be astronomical. At the same time, one also needs to appreciate that an omelette cannot be cooked without breaking an egg. So far, what had evidently defied a satisfactory agreement was the question of who would take on the liability in the event of a nuclear accident. The latest meeting between US President Barack Obama and Indian Prime Minister rendra Modi has sorted out this logjam after US and Indian officials had worked on the details for a few weeks. The agreement that has been reached stipulates four Indian public sector insurance companies taking on this liability. They will build a corpus of funds, capped by the Liability Law at Rs 1,500 crore, to be paid in the event of a nuclear accident. The four public sector companies will contribute Rs 750 crore, with the government providing the balance. According to Amandeep Singh Gill, a key negotiator and a joint secretary in the disarmament division of the Foreign Ministry, “This is a complete risk magement solution for both the (nuclear) operators and (nuclear) suppliers without causing undue fincial burden.” According to Gill, 26 other countries had similar insurance pools, but the details of the Indian pool’s operatiol procedures were yet to be worked out. In the United States, where there are no public sector insurance organizations, the corpus of funds in the insurance pool comes from private insurance.
However, it will not do to overlook the fact that most of these 26 countries come in the bracket of advanced industrial countries that can afford to pass on the cost of such expensive risk insurance to the taxpayer. Now a similar thing is going to happen in India. What the public sector insurance companies pay to create the corpus will have to come from margil extra amounts added on to normal insurance premiums and so on, and the Rs 750 crore that the government will have to pay to make up the total amount will also have to be raised from the taxpayers. This is not an entirely unfair bargain, considering that foreign nuclear reactors will be crucial to India’s ambitions of expanding installed nuclear capacity from the existing 5,700 MW to over 20,000 MW by the year 2022. For a tion that must ensure development at a faster pace, there is a certain price to pay. We tend to keep forgetting that what the government pays, in one form or another, is really what the people of India pay directly or indirectly. It is far better to have all roadblocks removed in the way of the civil nuclear agreement between India and the United States rather than keep hemming and hawing over an agreement signed five years ago that had not become effective because of gging doubts about the acceptors of liabilities.