The Tribune, Chandigarh, India

Economy is looking up
But prices, farm sector demand urgent attention

The Economic Survey for 2010-11 tabled by Finance Minister Pranab Mukherjee in Parliament on Friday reflects a moderate improvement in agricultural growth which has helped prop up overall economic growth to a comfortable 8.6 per cent for the current fiscal. The 5.4 per cent farm growth projected for this year is, however, little to gloat about since it is attributable to a good monsoon. That in 2009-10 when there was a severe drought farm growth was a measly 0.4 per cent goes to show that we have not been able to shake off the dependence on the vagaries of weather. The Finance Minister’s call for a second Green Revolution is, therefore, apt but unless it is backed by a specific blueprint for action it can have little meaning. The impending budget would show whether there is a clear direction in mind to energise the agricultural sector by pumping in investment in the right areas.

Commendably, there are honest admissions in the survey of the daunting tasks ahead. With food inflation in high gear and global commodity markets continuing to be volatile, especially in regard to oil prices, Mr Mukherjee has stressed on fiscal consolidation and stronger reserves. He has also underlined the need for improving the delivery mechanisms and addressing corruption. These are, however, pious intentions voiced from time to time but the real proof of the pudding would lie in its eating. The fact is that no amount of growth in national income or per capita income can provide people succour if inflation continues to neutralise them.

There is doubtlessly something to cheer in terms of the continuing growth in the services sector, the perceptible revival in exports, the impressive rate of savings and investment and the performance of the manufacturing sector in the overall industrial growth. But it would be wrong to get complacent when certain key sectors deserve to show better revival. These indeed are challenging times for the country’s economy. Control of inflation, especially in regard to food, and more robust agricultural growth cannot but be key concerns.

Beyond the euphoria
Need for a national policy on abductions

The nation heaved a sigh of relief on Thursday evening after the Naxalites released Malkangiri District Collector R. Vineel Krishna from captivity. While the people of Orissa were shocked throughout his nine-day abduction, administration was virtually in a limbo. Schools and colleges in the district were closed and government offices wore a deserted look. The tumultuous ovation extended to the Collector after his release proves his immense popularity, especially among the tribals, for the various welfare projects he had launched. Amid the euphoria and jubilation, however, one cannot lose sight of the fact that the state government has willy-nilly projected itself as a soft state and this is bound to undermine its tough posture against the increasing Naxalite menace in the state.

True, in the current episode, the government’s first priority was to secure the safe release of both Mr Krishna and Mr Pabitra Majhi, a junior engineer. However, things went out of control on Wednesday when, to the surprise of the interlocutors, the state government and the people, the Naxalites released Mr Majhi but came out with fresh demands for Mr Krishna’s release. While Chief Minister Naveen Patnaik and his top bureaucrats are silent on the new demands, there is no credible and authentic information on what finally clinched the issue and enabled Mr Krishna to walk free. The 14 demands purportedly made by the Naxalites are in public domain, some of which including the release of top Naxalite leaders like Ganti Prasadam and Sriramulu are being implemented by the government in accordance with the law. But all this sends a wrong message to the nation: the government buckling under pressure. It won’t be a surprise if tomorrow the Naxalites repeat their act.

To check abductions of the kind witnessed in Orissa, Chhattisgarh, Bihar, Jharkhand and West Bengal, there is need for a national policy on the issue. The Prime Minister would do well to convene a Chief Ministers’ conference to examine the modalities and contours of such a policy. The Naxalites have not only unleashed a reign of terror but are also acting as a state within a state, undermining the due authority and constitutional legitimacy of popularly-elected governments. This disturbing trend needs to be checked.

Thought for the Day

He who has never learned to obey cannot be a good commander. — Aristotle

ARTICLE

Regional grievances in J&K
No need for fresh corrective exercise
by Balraj Puri

The Government of India has appointed two Task Forces, one for Jammu and the other for Ladakh, to examine their development needs and to remove their regional grievances. Each is headed by a member of the Planning Commission and includes qualified academicians. Perhaps the need for such Task Forces was felt to neutralise the reaction in these regions to the increased attention the Valley has received of late by the Government of India and the interlocutors appointed by it, delegations of members of Parliament, Human Rights Organisations, and national and international media in general.

But far more important for the people and leaders of Jammu and Ladakh is the question of regional discrimination they perceive to have suffered. But how can the issue of regional discrimination be studied or resolved unless the development of these regions is compared with the Kashmir region by a similar Task Force for it. Moreover, Kashmir feels aggrieved that no Task Force has been appointed for the region to examine its development needs.

Earlier, the state government had appointed a Finance Commission to study the question of regional discrimination. After four years of labour, it recently submitted its report which aggravated regional tensions. Its members from Jammu and Ladakh quoted figures, drawn from official sources, to make a point that these regions had been ignored in the development process. The member from Kashmir and the chairman arrived at contrary conclusions, adding to regional tensions.

Moreover, development is no substitute for political aspirations as experience in the Kashmir region has clearly shown. As for the last over 63 years, the Chief Minister has always belonged to Kashmir except for two and a half years when this post was occupied by Mr Ghulam Nabi Azad of Jammu. The other two regions perceive that Kashmir has dominated them and they have been denied their share in power. Recently a Jammu Congress leader demanded that chief ministership should rotate between the two regions. Another Congress minister demanded a separate Jammu State and Union Territory status for Ladakh as a way out of what he described as discrimination against these regions.

Ladakh has an additional grievance that it is not recognised as a region in the constitution of the state, and, unlike Jammu and Kashmir, it is controlled by the Srinagar-based administration from which it remains cut off for more than half a year. Thus, the Task Force for Jammu includes its Divisional Commissioner whereas that for Ladakh includes the Divisional Commissioner of Kashmir. The frustration among the people of Ladakh has led to the demand for Union Territory status, mainly raised by the Buddhists of Leh. Though the Muslims of Kargil are opposed to this demand, they equally complain against discrimination by Kashmiri leaders. As Ladakh lacks a common regional identity and it has been divided in two districts of Buddhist-majority Leh and Muslim-majority Kargil, the common regional and ethnic identity has been replaced by religious identities, giving rise to communal tensions.

No fresh exercise is, in fact, needed to satisfy regional aspirations. As far back as in 1952, the Delhi Agreement between Nehru and Sheikh Abdullah provided for autonomy of the state within India and autonomy for the regions within the state.

Again, when the Sheikh was leading the Plebiscite Front, the J&K State People’s Conference, convened by him and attended by all separatist groups of Kashmir, including the present Mirwaiz’s father, Farooq, the pro-Pakistan People’s Conference headed by G.N. Karra and the Jamaat-e-Islami, unanimously approved of my draft for internal constitution of the state – whatever be its final status. It provided for regional autonomy and devolution of power to districts, blocks and panchayats.

Neither the National Conference nor any separatist party should have any objection to this internal constitutional set-up for the state. Regional autonomy was also an unwritten part of the Indira-Abdullah Agreement of 1975. Sheikh Abdullah at a conference of representatives of Jammu and Ladakh reiterated his commitment to implement regional autonomy. It was also included in the National Conference manifesto called “New Kashmir”. Unless harmony is restored between the three regions and sub-regions, any move to decide the external status of the state can divide it, which will have its own implications.

The Regional Autonomy Committee, appointed by the state government and headed by this writer, submitted to the government in 1998 an elaborated proposal for constitutional, political, cultural and economic aspects of the concept, after consulting the best available experts in the country. The committee recommended delegation of legislative and administrative powers to the elected regional councils on some specific subjects and further devolution of power to the bodies at district, block and panchayat levels. But even if the elections are held for these bodies at the district, block and panchayat levels, the present Panchayati Raj Act makes them merely instruments of regimentation and centralisation rather than of decentralisation as they are supposed to be.

The ministers of the state and leaders of the coalition government declare at every available occasion that all regions and sub-regions will get equitable treatment in the development process. But what is the criteria of equitable treatment?

The Regional Autonomy Committee had suggested in 1998 an eight-point objective and equitable formula for the allocation of funds which included population, area, road connectivity in proportion to the the area, a share in state services and admissions to higher and technical institutions in proportion to population, infant mortality, female literacy in each area and its contribution to the state exchequer.

The formula or its modified form, after public discussion, can be computed to determine the share of funds at every level instead of deciding it, as at present, on political and subjective considerations. After the funds are thus allocated, the priorities for development and other things should be decided by the elected authorities at the state, regional and district levels on the subject.n

The writer is Director, Institute of Jammu and Kashmir Affairs, Jammu

MIDDLE

Striking it rich
by S. Raghunath

I was sitting glued to the TV intently watching the dapper Prannoy Roy shepherding his flock of experts through the intricacies of the Union Budget when the telephone rang. It was my accountant and tax consultant calling. By accountant, I mean he occasionally totes up my IOUs and the sundry monies I owe to petty creditors and as my tax consultant, he sometimes goes down to the city corporation offices, sits down with a daily-rated case worker in the revenue section and haggles endlessly over a disputed dog licence fee and demanding that the matter be referred to tripartite adjudication.

“You’re on the verge of coming into a colossal fortune,” he cried. “The Finance Minister is presenting a pro-people budget and he has announced a series of reliefs and concessions to the salaried middle class. He has raised the standard rate of deduction of income tax from Rs 40,000 to Rs 40,005. I’ve been doing some quick calculations and I find that you’re entitled to an immediate refund of 25 paise. Congratulations “

I stifled a bored yawn. Coming into a stupendous legacy of 25 paise made me feel rather ‘deja vu’ but we plutocrats have to wear the mask. It was going to be business as usual for me. I called in my 23-year-old son. “I know that you’ve set your heart on buying that 1909-model Rolls Royce-Bentley vintage car. Now that the IT people will be sending me a refund cheque for 25 paise, you can contact your dealer friend in London and close the deal, but mind you, don’t go bidding beyond Rs 10 crore. I know you spoiled sons of multibillionaires!

I then talked to my wife. “Weren’t you telling me that you were rather keen to buy Elizabeth Taylor’s diamond-studded tiara and her entire jewellery collection? Now that the Finance Minister has presented a soft budget and I stand to gain a whopping 25 paise, I shall be delighted to buy them for you. You can cable Taylor’s agent in Geneva and find out if she’s interested to sell her jewellery collection, but keep an eye on the bottom line. I know something happens to you women when you go buying jewellery!”

I also sent a hotline fax to a Dalal Street broker: “Buy controlling 51 per cent stake in Reliance Industries, Aditya Birla Group and Larsen and Toubro, I’ll pay for my stock purchases in cash.”

The telephone rang again and it was my accountant and tax consultant. “A news flash has just come in on the ticker,” he said “and the Finance Minister has announced more reliefs and concessions and I find that you’re actually entitled to a refund of 30 paise”. Oh, in that case I think I’ll place a firm order for a business jet and put in a bid for the Sultan of Brunei’s luxury yacht.

OPED DEBATE

BJP leader L.K. Advani’s letter of regret to UPA Chairperson Sonia Gandhi on the inclusion of her family in the BJP Task Force Report on Black Money has kicked off a controversy in the party. S. Gurumurthy of the BJP and Abhishek Singhvi of the Congress join the debate.
Sonia’s distress, Advani’s regret
S. Gurumurthy

That leaks make news is well known. More sensitive leaks make more shocking news. The alleged ‘apology’ of L.K. Advani to Sonia Gandhi for the BJP Task Force on black money abroad saying that she held secret Swiss bank accounts was indeed a stunner. The leak shocked the BJP to grief, surprised the Congress to joy, and bewildered the media to splits. A plain reading of Advani's letter shows that he has not regretted for the Task Force Report mentioning Sonia’s name at all. Yet, thanks to the media spin, the whole country believes he has.

L.K. Advani

Here is the story of the ‘regret’. The Task Force of the BJP consisting of four specialists — Ajit Doval, as security expert, Prof Vaidyanathan as financial expert, Mahesh Jethmalani, as senior lawyer and myself as experienced chartered accountant — had submitted a 100-page report on the black money stashed away abroad. Citing two unbiased sources, the report had said that Sonia Gandhi family reportedly held huge funds in Swiss banks. This should have made big national news, but it did not. Why?

The Delhi media in strength had attended the release of the report by the BJP and NDA leaders on February 1, but it hardly reported either news or the report. That the Task Force had mentioned Sonia Gandhi’s name was presumed to be the reason for the self-censorship by the Delhi media. But, ironically, what the release of the report could not achieve, the ‘apology’ letter’s leak seems to be achieving. The clever leak of Advani’s letter, intended to abort any discussion on Sonia Gandhi family’s alleged Swiss bank accounts, has inevitably drawn her into it. Because, as the Delhi media discusses what the ‘apology’ is for, it is forced to refer to the Swiss accounts of Sonia Gandhi family mentioned in the report.

The report cited two independent, credible sources for the alleged secret Swiss accounts and other secret funds of the Sonia Gandhi family. The first was an exposure in the most popular news magazine of Switzerland, Schweizer Illustrierte (November 11, 1991). It had alleged that some 14 leaders of third world countries had stashed away their bribes in Swiss banks; the late Prime Minister Rajiv Gandhi with $2.2 billion in secret accounts was one of them. The next was a research book, based on the declassified KGB documents, written by Dr Yuvegina Albats, a Russian journalist. The KGB documents cited by Dr Albats said that, in 1985, when Rajiv Gandhi was the Prime Minister, he had expressed gratefulness to the KGB for financial favours shown to the Gandhi family.

The report had also pointed out that A.G. Noorani first wrote about these exposes in The Statesman in 1988. Later, Dr Subramanian Swamy put out the photo copies of the Swiss magazine and the extracts of Dr Albats book in the Janata Party website in and from 2001. Subsequently, Rajinder Puri wrote about Dr Albats’ expose in 2005. I wrote about it in 2009 and again in January this year in the New Indian Express. Finally, Ram Jethmalani wrote on it in India Today.

The Task Force pointed out that the Gandhi family did not contest nor dare sue any of the writers or publishers in or outside India. It had also contrasted their silence with how Morarji Desai, when he was 87, filed a $50-million damages suit in the US when Seymour Hersh wrote in his book that Desai was a CIA agent, disproved the charge and saved his and the nation’s honour. It asked why the Gandhi family did not emulate Desai to establish the honour of Rajiv Gandhi and the nation. It had also pointed out that to make matters worse, when an advertisement containing the alleged Swiss accounts in Sonia familiy name was issued in the New York Times by some NRIs at the time of Sonia Gandhi’s visit to the US in 2008, the Indian National Overseas Congress sued for $100 million in damages to defend the honour of Sonia Gandhi but did not contest the allegation about Swiss money as also withdrew the suit!

After the report was released on February 15, 2011, Sonia Gandhi wrote a secret, not open, letter to Advani expressing her disappointment at a person of his stature releasing the report endorsing what she called as “scurrilous allegations” against her family, which she had treated with “contempt”. The exposes in Schweizer Illustrierte and by Dr Albats are scurrilous. On February 16, 2011, expressing happiness at her denial of the allegations, Advani said that had she denied it earlier the Task Force would have factored it in its report. He concluded, “Even so, I deeply regret the distress caused to you”, which made the Congress to gloat over. Explicitly, it is no regret for the report mentioning her family's alleged Swiss accounts. A dignified regret for the personal distress has been turned into a political apology.

The Task Force has asserted that it is the author of the report. The BJP or the NDA could accept or reject its report. But they considered the report, accepted and released it. Its members have reiterated that they stand by every word of their report including about the alleged secret funds of the Sonia Gandhi family based on the sources cited. It is an independent body of domain specialists. It has castigated all political parties and all political leaders as lacking in credibility, thus not sparing the BJP, which had sought its views. The leak has only helped to confirm the Task Force’s independence. And more, it has also helped to lift the self-censorship of the Delhi media and open the alleged Sonia Gandhi family Swiss accounts for public debate.

The writer, a noted Chartered Accountant, is a member of the BJP Task Force on Black Money

Need to balance emotion with hard facts
Abhishek Singhvi

Black money is a national scourge though there has been so much of it with us for so long that many think of it as an inevitable Indian institutional reality! Sustained, balanced, comprehensive and well thought-out action, consistently taken over a period of time and involving a holistic and multi-pronged approach can alone start eroding the base of this mammoth disease. Knee-jerk reactions, emotive breast-beating, a temporary, expedient or political approach or media harangues will yield nothing but sensationalism and continue the status quo indefinitely.

Sonia Gandhi

I wish L.K. Advani or any member of the BJP task force had shown any initiative of any kind on this vital subject between 1998 and 2004, since they feel so excited and agitated about it now. I wish Gurumurthy had berated the political masters of that period for masterful inactivity for over six years — not even a single letter to any country on this subject.

The UPA’s initiatives have been comprehensive and diverse and owe their genesis to the international consensus on this subject at the G20 meet in 2009. This international consensus was a significant milestone since effective action on black money abroad can happen only by international agreements, be they new Double Taxation Avoidance Agreements (DTAAs), information exchange agreements or special treaties. Coercion or harangue is futile.

That UPA means business is evident in that in the past 18 months alone it has completed negotiations on 10 new tax information agreements (of which nine have been initialed) with well known tax havens. Active negotiations are on, several nearing completion, with 65 other nations to widen the information exchange platform. Additionally, an amendment to the tax treaty has been signed with Switzerland, allowing access to hitherto confidential bank information.

It is such solid legal frameworks which alone will have an impact on this scourge and stand the test of time and of court challenge, not the rhetorical flourishes of the political opposition nor the emotive idealism of the media. It makes me laugh when I hear these two sectors seeking guaranteed information sharing with, for, example, Switzerland. They should know that that country has not shared information with any other country, that even after updating their DTAAs, no clause allows exchange of past banking information (i.e. applies only to the future) and that information available to India under such DTAAs simply cannot be disclosed since all such agreements have a confidentiality clause. Internationally known standards would render India a pariah for breaching this clause and no country has done so. India would then be classified as a non cooperative jurisdiction.

Most vitally — and this is irresponsibly ignored by the Opposition — such unilateralism will inevitably make it impossible for India to get similar information from other countries in the future. That will amount to securing a short term, partial sensationalism while ensuring long term failure.

Our detractors have frequently tried to confuse and confound by recourse to misleading statements. The US got nothing by way of information exchange from Switzerland by exerting pressure as misleadingly stated by the Opposition and media. In the course of prosecution by the US of an employee of the UBS bank, the bank reached a purely private settlement whereby that bank alone agreed to share information available with that bank with US. That prosecution was possible since the US was able to catch some employees of the Bank selling fraudulent tax schemes in the US. There is no other agreement between the US and Switzerland, or for that matter with any other country, allowing general disclosure.

Since the major reason for illicit outflow of funds is mispricing, accounting for about 78 per cent of all illicit outflows, its strict policing has resulted in doubling the detection of mispricing in the last 18 months (to Rs 33,784 crore) as opposed to Rs 14,655 crore detected over the previous six financial years. In the case of the LGT bank information released by Germany, total assessed income by the Indian authorities in 18 cases of illegal account holders has been adjudicated as Rs 39 crore and demands for tax and interest have been raised totalling Rs 24.26 crore.

One could go on regarding the technical realities, the minutiae and several other initiatives taken in respect of black money over the last couple of years. But the real point is that large segments of society are disinterested in the boring details which alone can create a system which will bring back black money from abroad. They want quick fixes, curt one-liners, magical phrases and a show of aggression, howsoever misplaced and counter productive it might be. They also ignore the diverse measures needed to stem the rising generation of black money within the country, many of which are being diligently created and implemented by the government.

The new proposed Direct Taxes Code Bill, taxable assets have been defined to include deposits in banks located outside India, reporting requirements require obligatory returns regarding interests in entities outside India, the money laundering legislation stands amended to increase the list of scheduled offended and so on.

No doubt, much more needs to be done but that requires constructive cooperation from all quarters of civil and political society and not mere carping criticism, cavil, quarrel and nitpicking.

The writer is MP and National Spokesperson, Congress