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‘Changed our mind, go
home’ Sanskrit or German? |
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Action
at Defence Ministry at last
Getting
Jawaharlal Nehru's autograph
Wheels
within wheels of fuel subsidies
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Sanskrit or German? Sanskrit
has not lost its political significance despite being called a dead language by its detractors. Human Resource Development Minister Smriti Irani made a controversial decision last week of replacing German with Sanskrit as the third language in some 500 central government-run Kendriya
Vidyalayas. However, she later dismissed charges that the decision was an attempt to
"saffronise" education. She even turned down demands that Sanskrit be made a compulsory subject. The debate has once again pushed us back to 1954 when the Centre had to set up a Sanskrit Commission to study the viability of including Sanskrit in the school curriculum. Many years later the Supreme Court rejected a petition that the teaching of Sanskrit was "against secularism" and allowed the educational institutions to promote the language. Recently, a Reddit India user translated dialogues of a popular Bollywood film
"Sholay" into Sanskrit, shared by hundreds of bloggers. The new-age response to the weary and repetitive language controversy certainly offered a hilarious shift. By putting Gabbar Singh's popular expletives into a classical language, the translator made even Gabbar sound polite and cultured! Unfortunately, the entire issue about Sanskrit is not to focus on its inherent linguistic perfection or cultural richness. Languages have been used to stress secular credentials, or the absence of it, of certain political parties and to promote national integration in a vague manner. In all these attempts the core issue of learning and teaching of modern and classical languages has been ignored. Responding to high aspirations of the young, several private schools have started the teaching of foreign languages like French, Korean, Chinese etc by diluting the guidelines for the three-language formula. The Central Board of Secondary Education is set to issue a warning to all its affiliated institutions about teaching a foreign language as one of the three compulsory languages. The
CBSE, and for that matter the HRD Ministry, should understand the need to include languages that meet aspirations of students, and not make a political statement.
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Write to be understood, speak to be heard, read to grow. — Lawrence Clark Powell
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The National Congress and freedom of speech
DEWAN Bahadur Karunakara Menon, editor of the Indian Patriot and a well-known public man of Madras, has mentioned two facts which are important in any attempt to improve the work and usefulness of the Indian National Congress. He first refers to the necessity of obtaining freedom of speech and thought by the repeal of the repressive Legislative Acts restraining the freedom of the press and public speeches. Secondly he says that a body of whole-time paid workers should be engaged, more or less on the lines of the Servants of India Society, to further the Congress propaganda. He points out how in the present state of the law it is impossible for anybody to go to the districts to educate the people and secure their co-operation for the Congress. The policemen and the hired informers follow every speaker and worker from place to place, and it is unnecessary to explain what follows from this taint of suspicion.
The seeds of Indian loyalty
WE have pointed out the absurdity of considering that the remarkable outburst of Indian loyalty in connection with the war shows the traditional virtues of the uneducated masses and has no connection with the influence of the educated class. An effective reply to such perverse opinions has been given by the Hon'ble Mr. Sivasani Aiyar, Indian member of the Madras Executive Council, in his Convocation address delivered to the graduates of the Madras University. He warned his hearers that "the critic who heaps contempt on the flower of the intelligence of the people, who denies the right of the educated India to reflect and represent the views of his countrymen and who seeks to undermine his influence with them, is no true friend of British Rule."
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Action at Defence Ministry at last
FOR over a quarter of a century the Indian Army has desperately needed artillery guns. But no matter how hard it tried it couldn't get them. One reason for this, of course, was the aftermath of the Bofors scandal, which became the standard excuse of all concerned not to take any decision at all. There was an element of disingenuousness in this posturing. For, despite the commissions worth Rs 64 crore distributed to the still unnamed beneficiaries, the Swedish gun served this country superbly during the Kargil war. Ironically, it was at the peak of this fight that the Army discovered to its dismay that it was running out of ammunition because of the obsession of the Ministry of Defence (MoD) to blacklist all suppliers it suspected or disliked. Ultimately, we had to buy the ammunition from South Africa at thrice the normal price. Even this made no difference to the civilian bureaucracy in the MoD and its political bosses. Indecision remained the ruling doctrine of both. Sadly, A. K. Antony, a very fine man with an enviable reputation for personal probity, who has been the longest-serving Defence Minister so far, became the biggest hurdle to decision-making. By doing nothing he was sure of retaining his image as "St. Antony". Against this bleak backdrop it is greatly to be welcomed that within a few days after his appointment as Defence Minister Manohar Parrikar has ended the paralysis over the procurement of artillery guns by clearing the decks for acquiring 814 long-range mounted artillery guns to fill a serious gap in its equipment and, therefore, in its overall capability. The cost will be Rs 15,570 crore. The deal was approved after a serious consideration at a Defence Acquisition Council meeting that Mr Parrikar presided over for the first time. He also said that the DAC should meet oftener than it has done so far even if its agenda is rather short. My first thought on hearing this was that Prime Minister Narendra Modi should have handed over the Defence Ministry to the former Goa Chief Minister while forming his Cabinet on May 26. Mr Parrikar has laid down that that the acquisition of artillery guns — like all future procurements — will take place within the framework of the Prime Minister’s “Make-in-India” concept. While the Army will buy 100 guns off the shelf of the foreign vendor, the remaining 714 will be manufactured here. Global tenders will be floated soon, and the Indian manufacturer will have to "tie up" with the selected foreign vendor for building the gun. Several Indian companies such as the Tatas, Larsen & Toubro and Kalyani, as well as the public sector Ordnance Factory Board have already produced prototypes of 155mm, 52 calibre guns. They are all likely to take part in the bid. So far, so good. But the real point is that the defenders of the country's freedom and frontiers will be greatly handicapped in discharging their duty until the makers of policy on national security attend to the fundamental task of reforming the higher management of the defence system. Civilian control over the military is, of course, the basic principle in every democracy. Indeed, even in China the doctrine of the “Party controlling the Gun” has prevailed since the time of Mao Zedong. The present Chinese President, Xi Jinping, has reinforced it. But in a democracy like India the civilian supremacy does not, and must not, mean the supremacy of civil servants. It is long overdue that the Indian armed forces — absolutely apolitical, unlike the armies of some of our neighbours — should be liberated from the stranglehold of the generalist babus of the MoD. In recent years when a service chief informally and politely told the then Prime Minister that he and his two opposite numbers regretted that they were not asked to be present at a meeting of the Cabinet Committee on Security (CCS), the reply he got was: “Well, you were represented by the Defence secretary”! This pattern has to end. One thing that the Modi government does not need to do is to appoint a commission or committee to suggest what to do. There is a heap of sensible reports on the subject that are gathering dust. The report of the Kargil Committee — headed by this country's strategic guru K. Subrhamanyam — had, among other things, made a strong case of having a Chief of Defence Staff. The Atal Behari Vajpayee government took it seriously. A Group of Ministers, chaired by L. K. Advani, endorsed the suggestion. At the last minute, while accepting all the GoM's recommendations, Atalji held over the one on the CDS. He made no secret of the fact that he had consulted former President R. Venkataraman and former Prime Minister P. V. Narasimha Rao, both of whom had been defence ministers in Congress governments. Seven years later, the Manmohan Singh government appointed the Naresh Chandra Task Force on revamping the entire external and internal security setup. Realising that there still was much resistance to having a CDS, it suggested a step in the right direction: the appointment of a permanent Chairman of the Chiefs of Staff Committee with a fixed tenure of two years. This was a vast improvement over the existing arrangement under which the most senior of the three chiefs acts as chairman of the CSC also until his retirement. He neither has enough time for inter-Services matters because he has to run his own service too, nor a long enough tenure. In one case it lasted precisely 30 days. The permanent chief, according to the Task Force, would not interfere with the operational matters but handle all inter-Service issues, including determination of priority in the matter of acquisition of weapons and equipment. Most importantly, the permanent chairman would be able to supervise the Strategic Command more effectively than has been happening since 1998. Over to Mr.
Parrikar.
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Getting Jawaharlal Nehru's autograph I had arrived home on winter vacation in December, 1951, a few days prior to Prime Minister Nehru's address to an election rally at Sangrur where my father was posted as the Deputy Commissioner. There was just one air strip in Punjab those days and Mr Nehru’s motor cavalcade was late by an hour and the crowd of several thousand peasants was becoming restive. But the moment the Prime Minister in a brown-coloured woollen “Achkan” and a white Churidar mounted the podium, there was instant hushed silence which only a charismatic and inspiring personality can infuse among his audience. Though I was privileged to sit on one of the few chairs upon the rostrum, I was simply mesmerised to be in the shadow of the great man that I paid scant attention to his speech. He finished his exhortation with a flourish, by asking his audience to get up and join him in a full-throated chorus of “Bharat Mata Ki Jai Ho” three times over! All this while I had sat holding a book and a pen but no sooner did Mr Nehru turn to leave than I stepped forward and, as tutored by my father, opened the book and requested him to autograph it, at the marked page. The catechism “Chacha Nehru” had not gained currency at the time but his love of children was so evident that not only did he break into a gentle smile but also gladly autographed it and patted me on my cheek. I was to learn later in the day that recounted on that page was Mr Nehru’s arrest at Jaitaun (a village in the interior of Nabha princely state) on May 23, 1923, for inciting disorder by the agitating Akalis and his lodgement in Nabha jail. And when produced in court the following day, a kindly Sikh Magistrate ordered the police to remove the handcuffs as the accused was not a criminal. Mr Nehru was obviously pleased by the fair sense of jurisprudence shown by the Magistrate and even more so by his humanity as a few days later the Magistrate visited the jail to enquire whether he was reasonably comfortable! That endorsement of probity by Mr Nehru was intrinsically valued like a family heirloom because the Magistrate was my father's father! As befitting the spirit of the times, the hard binding of the first edition of “An Autobiography” had off-white ‘khadi’ cloth pasted as its outer wrap with his autograph imprinted on the upper half of the front cover which, in a manner of speaking, also symbolised the elegance of Mr Nehru, the man.
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Wheels within wheels of fuel subsidies
Policy changes in fuel subsidies need to be examined at length because the cash-transfer scheme for LPG is scheduled to be relaunched all over the country by January 1, next year
Late on the eve of counting of votes for assembly elections in Maharashtra and Haryana, when the country was focussed on election results, major economic decisions were announced. These announcements, which have far-reaching implications, escaped public scrutiny as election results took centre stage. While diesel prices have been completely deregulated and left to market forces, subsidy on domestic LPG has again been brought under the cash-transfer scheme. These policy changes, with far-reaching implications, need to be examined at length, particularly in view of fact that the cash-transfer scheme for LPG scheduled to be re-launched all over the country by January 1, 2015 had been implemented in 291 districts, before it was withdrawn with effect from March 10, 2014 on account of a string of complaints. Far-reaching effects The major justification for curtailment of subsidies is its alleged mounting burden. However, official data indicates something else. In 2013-14, inclusive of taxes etc the government had got a revenue of Rs 2.64 lakh crore from the petroleum sector. And the government's outgo to the petroleum sector was just Rs 1.39 lakh crore, indicating net earnings of about Rs 1.25 lakh crore. A part of governments outgo of Rs 1.39
lakh crore, whopping Rs 70,000 crore was notional. The rest of the so-called losses were not compensated as these were only notional. Subsidy calculations are not based on actual profit and loss accounts of petroleum sector. Rather than being based on actual costs incurred, these calculations are based on “potential” costs if petroleum products were to be imported. While India is a net importer of crude oil, it is self-sufficient in petroleum products. So, common sense would have it that we take the import costs of crude oil, and add processing costs and come up with refinery gate price. But this obvious method is not followed. So much so that costs include even customs duties that would have to be paid if petroleum products were imported when no actual imports took place, and no custom duties were paid by companies.
Rationale behind subsidies But, why subsidise goods and services at all? Externalities, i.e., divergence between private costs and benefits on the one hand and social costs and benefits on the other, provide the rationale for subsidies and taxation. Whenever there is a divergence between personal and social costs or benefits, consumption and production decisions based on private costs and benefits will not lead to optimum consumption and production. For example, a smoker or drinker will take into account only the money he pays for smoke or drink and at best his own health consequences. But the actual cost of these is not limited to this. Hence, tax is levied on these products to reflect additional social cost. So, the purpose of subsidising certain goods and services is to influence their consumption. For example, subsidised education for women seeks to ensure that more women get more education than what their families would provide for. Similarly, the rationale for subsidy on LPG is to modify the fuel usage pattern to protect environment, forests and human health. LPG is preferred over alternative fuels like dung cakes or wood on account of health and environmental reasons. Hence, the subsidy for it.
Volatility of international markets The major reason for controlling diesel prices is to protect economy from the volatility of international markets as diesel being intermediary good has high forward linkages. The experience of 2013-14 phase of shift to the cash-transfer scheme for LPG has not been good. Hence, the scheme had to be discontinued soon after its major expansion in January 2014. A visit to the local gas agency, in districts covered, will reveal that till date thousands of customers are awaiting receipt of cash subsidy after having paid the full market price. While some were lucky to get money in their accounts without having bought gas or got it twice, others are yet to get it. So much so that research on the Kot Kasim (Rajasthan) experience of the operation of cash transfers for kerosene showed that due to delay in reimbursement of subsidy, for many months there was nil off-take of kerosene from PDS shops in the whole area. Alongside this, illegal felling of trees in neighbouring forests had also increased.
Remedial steps The remedial steps taken, if any, to ensure that the “modified Direct Benefit Transfer for LPG” (no pun intended; this is the official name of the re-launched scheme) overcomes these shortcomings, are not in the public domain. According to the official press release, the only change in DBTL is that now the Aadhaar number will not be necessary to link LPG accounts with bank accounts. In the circumstances, if the real subsidy component and not just money value of cash transfer is retained and number of subsidised cylinders is not reduced, then the fiscal burden on the government for genuine customers will not go down. As regards multiple connections and misuse, the de-duplication exercise has already progressed well without cash transfers. Cash transfers cannot check multiple connections in the family as the only additional requirement will be to have multiple bank accounts, which, without Aadhaar, would not be much of a problem. But cash transfers will definitely increase the work burden on banks and consumers. Rather than paying a few companies couple of times a year, as per official estimates, there would have to be daily transfers into 3 million accounts. The addition of another long layer — going from dealer to petroleum company, to its bank and from there to consumers' banks and consumer's account — to the system and thus increased complexity enhances the possibility of a break-down somewhere or the other in the long chain, which could be inadvertent or wilful. This, besides inconveniencing consumers, will also increase the workload of banks. Consequently, banks will raise their service charges. Anyway, already banks have announced plans to charge for hitherto free services, e.g., charges for cash deposits and withdrawals from bank branches. Moreover, the problem of short weight cylinders or preferential delivery of cylinders or diversion to non-domestic usage or poor service is not going to go away with shift to cash transfers.
Reducing subsidy The only way that the burden of subsidy on the government can come down is if the actual effective subsidy is reduced, that is, the amount of cash subsidy lags behind increase in market prices. According to the press reports, this is what the Petroleum Minister indicates will happen. But if the government thinks that burden of subsidy needs to be reduced, it can do so even under the present subsidy regime by either changing the issue-price or by reducing the number of subsidised cylinders. If this be the intention, it should be done upfront rather than take the cash-subsidy route. But, as the official data show, there is no need to reduce the subsidy, as the government's net earnings from the sector are positive rather than negative. Moreover, diesel consumption can be reduced by provision of efficient, reliable and comfortable public transport, thus reducing subsidy burden as well as environmental load. Diesel vehicles can be so taxed as to make the shift from petrol to diesel vehicles uneconomical. So the government neither needs to leave diesel to the market forces and thus induce volatility in prices nor shift to cash subsidy for LPG. These two decisions will only fuel inflation. Moreover, cash subsidy for LPG is just the beginning and many more services, including education and health will come under this ambit but untied cash transfers can be no substitutes for subsidy in kind and tied transfers make the system unnecessarily complex. This, in due course, may lead to making of the Aadhaar number mandatory which is another controversial move. Suffice to say that as of now it has no legal backing and parliamentary committee under Yaswant Sinha of BJP itself has “categorically” rejected the bill in its present form. All these steps will end up making life difficult even for the middle classes, leave alone the poor.
Dynamics of cash transfer Cash transfers for LPG scheme put on hold on March 10, re-launched on November 15, 2014.
The writer is former Professor, Department of Economics, Maharshi Dayanand University, Rohtak
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If this notional outgo is taken into account, government's net earnings from this sector would amount to about Rs 2 lakh crore for 2013-14. However, if tax and royalty earnings of the governments are excluded, then govt did subsidise the petroleum sector but it was much less than the acclaimed losses of oil companies. Over a decade, between 2002 and 2013, on an average only 54 per cent of declared losses of oil companies were offset from the government budget.