Monday, February 10, 2003, Chandigarh, India





National Capital Region--Delhi

E D I T O R I A L   P A G E


EDITORIALS

Indo-Pak diplomatic war
T
HOSE who believed that Pakistan’s Kashmir policy was being redesigned under international pressure (read America) should revise their views after the unearthing of the diplomatic channel of fund supplies to Kashmiri separatists. That Pakistan’s Acting High Commissioner Jalil Abbas Jilani should himself be involved in this anti-peace activity shows the extent of our belligerent neighbour’s desperation in giving filip to terrorist operations in Jammu and Kashmir and elsewhere in India.

Promises galore
IF election manifestoes were a true reflection of the political parties’ intents and purposes, India would have changed beyond recognition by now. But in reality these are only a good copy writer’s attempt at wooing the voter in the same manner as an advertiser does. Like New Year resolutions, these five-year resolutions are meant to be broken from day one. That is why no one takes them too seriously, while quite a few place them in the “fiction” category.



EARLIER ARTICLES

THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
OPINION

Towards an Indian common market
VAT implementation in the northern region
Subash K. Bijlani
I
NDIA has often been described as a country with a large market. In reality, the lack of a uniform tax rate and inter-state barriers have broken up this market and fragmented our trade and commerce. What could have been substantial gains arising out of the liberalisation process are being frittered away. It has also abetted diversion of trade from one state to another, fuelled unhealthy competition and encouraged tax evasion.

“What sangeet, what natak?”
Gautam Kaul
T
HE Sangeet Natak Akademi is celebrating the 50th anniversary of its founding. The celebrations involve a series of functions representative of the two wings of the Akademi. During the past 50 years the Akademi has done sufficiently good work to merit a weak applause. At the time of such celebrations one expects a public debate on the functioning of these organisations and what the future holds for them.

Women make better baby talk than men
THE blank stare on the baby’s face when dad is speaking may be for real, for a research has revealed that women really are better at baby talk than men and when talking in the coochy-coo baby-speak that parents often use with their infants, mothers’ utterances are less ambiguous than fathers’.


SPIRITUAL NUGGETS



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Indo-Pak diplomatic war

THOSE who believed that Pakistan’s Kashmir policy was being redesigned under international pressure (read America) should revise their views after the unearthing of the diplomatic channel of fund supplies to Kashmiri separatists. That Pakistan’s Acting High Commissioner Jalil Abbas Jilani should himself be involved in this anti-peace activity shows the extent of our belligerent neighbour’s desperation in giving filip to terrorist operations in Jammu and Kashmir and elsewhere in India. The case registered against Mr Jilani and some of his colleagues on charges of providing money for the promotion of terrorism to the separatist Hurriyat Conference has led to Pakistani action on similar and expected lines with tensions between the two neighbours reaching a new dangerous level. But, it seems, this is in accordance with a strategy formulated in Islamabad. The idea is to strengthen the position of the ruling General, President Pervez Musharraf, and his Prime Minister, Mr Zafarullah Khan Jamali. They are under tremendous pressure from the USA to contain the anti-American forces on the resurgent in Pakistan, or face the consequences, of course after the Iraq chapter is over. Renewed anti-Indianism will obviously create a situation forcing the Pakistani masses to rally behind the ruling General and his government. This will put them in a better position to negotiate with the USA. The speeches made on “Kashmir Solidarity Day” (February 6) in Pakistan indicate that efforts are afoot to take anti-Indianism to a new pitch. But this is a dangerous game and may spell disaster for Pakistan.

So far as the relations between the Hurriyat and Pakistan are concerned, it is a well-known fact that this Kashmir-based federation of small-time “political” outfits has been furthering the interests of its mentor and sustainer throughout the history of its existence. Its clandestine sources of funds are not so clandestine. Pakistan’s notorious intelligence outfit has always been flush with funds which find their way into the valley. The Hurriyat is believed to have been the major beneficiary. For how long can India tolerate this highly objectionable activity, that too being promoted so blatantly by the senior Pakistan High Commission staff? The latest development shows that the Hurriyat’s relationship with Islamabad remains as strong as it ever was. This is quite contrary to the impression given to the world by General Musharraf. Reports in the Pakistan media say that an influential section of strategic experts has been advocating in favour of the ongoing militancy to force India to agree to holding talks for defusing tensions between the two neighbours. This line of thinking suits the establishment in Islamabad for its own survival too. But India is mature enough to understand the game plan. How can it agree to go to the negotiating table when the other side is not interested in creating a conducive atmosphere for the purpose? The world should now know who is preventing the return of peace to South Asia. This is the right time to nail the Pakistani lie — that “a significant change has taken place” in cross-border terrorism after the promise made by General Musharraf in the wake of the US-led drive against the international scourge. Talks and terrorism cannot go together.
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Promises galore

IF election manifestoes were a true reflection of the political parties’ intents and purposes, India would have changed beyond recognition by now. But in reality these are only a good copy writer’s attempt at wooing the voter in the same manner as an advertiser does. Like New Year resolutions, these five-year resolutions are meant to be broken from day one. That is why no one takes them too seriously, while quite a few place them in the “fiction” category. What holds true at the national level is valid at the state level also. There are promises galore which are aimed at pleasing not any particular section of society but almost all. Himachal Pradesh is a case in point where the Congress promises the moon - with a few stars thrown in — to the voters. The party has earlier been in power in the state long enough to know what the peoples’ aspersions are and which of these the BJP government has not been able to fulfil in the past five years. So, it dutifully offers to do all that has been left undone. It knows that the government servants comprise a huge segment and hold the key to the elections. That is why there is a concerted attempt to woo them. Teachers have been assured of many cookies. Similarly, poor women, and destitute and old persons too have been promised a much better deal. Interestingly, nobody seems to be bothered about the nitty-gritty of the projects, such as where the money is going to come from.

The schemes it has promised to complete if brought to power are ambitious indeed. For instance, it undertakes to provide houses for all in five years and potable drinking water to all villages within three years. Well, more strength to its arms and more money to its coffers! The BJP is expected to not only match these generosities and generalities but even be one up on them. Why, even the HVC of Mr Sukh Ram seems to be thinking along the same lines. While his manifesto is silent on the issue of corruption that is being raised by the BJP and the Congress in a big way, he sets store by development. He has promised to make the state self-reliant, debt free and secular. He too has undertaken to provide more job opportunities. Asked why he did not push this agenda when his party was a partner in power, he reasons that the BJP did not agree to a common minimum programme. He is expecting a fractured mandate following which his party will have a major role to play. While trying to make the manifesto all-inclusive, both the Congress and the HVC have literally included hundreds of schemes. That may impress some voters, but may also confuse many others.
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Towards an Indian common market
VAT implementation in the northern region
Subash K. Bijlani

INDIA has often been described as a country with a large market. In reality, the lack of a uniform tax rate and inter-state barriers have broken up this market and fragmented our trade and commerce. What could have been substantial gains arising out of the liberalisation process are being frittered away. It has also abetted diversion of trade from one state to another, fuelled unhealthy competition and encouraged tax evasion.

The absence of a uniform tax rate has also prevented investments based on the large size of the Indian market. State-specific units have been set up, which may not be competitive because of their sub-optimal size. The distortions are harming the competitiveness of the Indian economy at a juncture when we need to catch up on so many missed windows of opportunities.

Indirect tax reforms were clearly an integral part of the liberalisation process started in 1991. In the years since then India has been attempting a tax structure which is simple, moderate, rational and easy to administer and comply with. The Raja Chelliah Committee spoke of uniform tax rates way back in 1992. An attempt to unify sales tax rates in the states with effect from January, 2000, was made by the Standing Committee of State Finance Ministers when minimum floor rates were announced. This, however, did not specify a ceiling and added to the complexity. Multiple rates across the states continue to proliferate.

The negative effect of the present “origin-based CST” can be understood by the following example: 1. Importer of raw material in state A pays CST in state B.

2. Converts into a new product in state A and resells that end product in another state (C) by paying CST in the home state (A).

3. With the addition of transport, loading, unloading and other incidental charges, the cost of end product rises sharply. The cascading effect is quite visible. The complexities in the sales tax structure at the state level can be addressed after the implementation of the VAT (value-added tax) system. A dual VAT would, among other things, remove the cascading impact of taxes.

The experience of the countries which have adopted a VAT system has been that it results in a simpler system, brings transparency and encourages voluntary compliance besides garnering revenue to the exchequer.

The ground reality is that the issue of VAT’s implementation beginning on April 1, 2003, is still in the air. States are concerned about the revenue losses in the wake of this transition. Some states have already adopted measures for new taxes such as entry tax to recoup any anticipated fall in revenues. There is no place, however, for such taxes under the VAT set-up. These measures will end up hurting the very basis of VAT, a tax regime meant for simplifying taxes.

The switchover from the present tax system to VAT would ensure that the following objectives are achieved:

  • increase the competitiveness of Indian industry by removing the multiplying effect of the various taxes and levies.
  • help removal of barriers to inter-state trade and commerce and facilitate creation of a unified national market.
  • ensure simplicity and transparency in the system.
  • ensuring revenue neutrality in the long run so that the states are comfortable with the shift to new system.
  • The mechanism should be self-regulated.

At the central level, the initiative has been to lower the tariff walls of both excise and customs, rid the system of the complexities, reduce the number of rates, correct anomalies and bring down the interface with the government.

The introduction of a single rate of excise, i.e. Cenvat of 16 per cent, was a major step and brought in some rationalisation in the tax structure. Attempts have also been made in states to bring down the number of sales tax rates. Still, under the current dispensations in various states, “special” rates like 2%, 3%, 3.5%, 4%, 8%, 10%, 12% and up to 72% prevail.

After the implementation of Cenvat for Central excise, we are on the threshold of the introduction of the VAT system at the state level. Under the VAT regime, formal assessment is not framed. The returns filed are accepted as such subject to certain conditions. The system is quite transparent.

Implementation of VAT with effect from April 1, 2003, calls for thorough preparation at the state level. The primary focus should be to design a tax structure that is simple, has low rates and rests on a broad base. The first task is to design legislation and notify the Act in the coming Assembly sessions. Secondly, the states must issue the rules at the earliest. The finalisation of the VAT Act and rules well in advance is crucial to give industry time, say two to three months, to adjust to the new regime.

Central sales tax (CST) has proved be a bane for VAT’s implementation in a federal arrangement like India. CST is clearly a massive revenue generator for states. Yet it results in a cascading effect and is VAT-incompatible. To allay states’ apprehensions, Finance Minister Jaswant Singh has come out with a plan of phasing out CST instead of its outright abolition. How CST can be handled at the ground level in a VAT regime, more so in the absence of a clearing house mechanism among states, is a challenging task. It simply adds another layer of complication to the entire implementation process.

In case a clearing-house mechanism cannot be introduced, the solution will be to abolish CST from April 1. In its place a Central value added tax for inter-state sales, inter-state VAT or I-VAT, can be introduced.

While the Centre and states are busy grappling with the crucial issues of implementing VAT, the CII, Northern Region, has reviewed the process from a different perspective. The driving force behind this project is the underlying prerequisite that there must be uniformity among the VAT Acts of various states for a successful transition to VAT. A single VAT Act must be adopted throughout India. But alas! Sales tax being a state subject, drafting of VAT Acts is within the precincts and discretion of the respective state governments.

A comparison of the draft VAT Acts of the key north Indian states — Delhi, Punjab, Haryana, Rajasthan and UP — among each other has been made. Parallels have been drawn with the draft VAT Acts from other regions of India. For a “national” perspective, one representative state was chosen from each region of India, namely Gujarat (western region), Karnataka (southern region) and West Bengal (eastern region). All eight draft Acts were benchmarked on 26 crucial VAT provisions.

Results of this analysis only go to confirm some worst fears. The draft Acts come in all flavours, shapes and sizes. Not surprisingly, the variations stem from the respective state concerns and, to an extent, the state-specific legal jargon. However, greater the variance among the Acts of the states, larger will the chaos and bottlenecks.

A significant highlight is that draft VAT Acts of three northern states (Punjab, Delhi and Haryana) are in some aspects better than those of representative states from the west, south and east. The other two northern region states, Rajasthan and UP, need not go far to emulate! Rajasthan, a vocal champion of the VAT cause, needs to draft a simpler and more taxpayer-friendly Act.

The major challenge is to bring out harmony among the incongruous Acts, particularly where the inter-state trade is concerned. Sadly, we may have to contend with a fragmented marketplace, instead of providing cohesion, through the basic VAT philosophy, to move towards the common Indian market.

The Central government’s initiative of circulating the Model Value Added Sales Tax Bill, 2003, for the state governments is a positive step, but has not made an impact. The CII submitted an important set of recommendations to the empowered committee of the government on October 19 to iron out the discrepancies.

It is expected that a single/uniform rate across the country for all commodities in the present socio-economic environment may not be feasible. To begin with, the VAT rates could be a two-slab structure. Besides the exceptional rates of nil, 1% and 20% for specified items, there should be a 4% rate on items of mass consumption, i.e. merit goods as well as industrial inputs, and all other items should be at the Revenue Neutral Rate (RNR) which could be 10% or 12.5%. There is need for a cap of 12.5% on the RNR as any rate higher than this will provide incentive for tax evasion. The list of industrial inputs attracting 4% should be comprehensive and cover all items used by the industry.

The product classification and description of individual products should also be aligned with Central taxes and the International Convention of Harmonised System of Nomenclature (HSN). This would reduce litigation. The uniform classification across all the states and the Central taxes, like excise and Customs duty, will create the right environment for the growth of trade and industry.

Besides “pre-implementation” aspects, states have to prepare for the ground realities of implementation by undertaking the following activities in a time-bound manner:

  • Training and orientation of officials. There should be accountability and reward for good performance.
  • Computerisation as part of the strategy to minimise the interface with the taxpayer.
  • Concurrently with the simplification of procedures, it is also important to design an efficient penalty and appeal system.

A lot of ground has yet to be covered to ensure smooth transition to a VAT regime in India. The northern region states of Delhi and Punjab have been quite proactive and made progress in the run-up to the current phase. Other states have to wake up to the gravity of the effort required to catch up and also to get ready for the implementation process.

The author is the President of Magnus Consultants and Chairman, CII, Northern Region.
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“What sangeet, what natak?”
Gautam Kaul

THE Sangeet Natak Akademi is celebrating the 50th anniversary of its founding. The celebrations involve a series of functions representative of the two wings of the Akademi.

During the past 50 years the Akademi has done sufficiently good work to merit a weak applause. At the time of such celebrations one expects a public debate on the functioning of these organisations and what the future holds for them.

In the past, the Sangeet Natak Akademi went through the phases of internal bickering and even lack of proper administration.

Fed up with the working of the various academies, the Government of India had constituted the P.N. Haksar Committee to examine the functioning of the three academies and give their recommendations. The Haksar Committee had submitted its report more than 10 years ago but the public was kept out of the final outcome.

After remaining under wraps for nearly four years, the Government of India had agreed on some of the recommendations made by the Haksar Committee. Even today it is not known publicly what the accepted recommendations were, and what has been the outcome of implementing even the few recommendations to ensure that the academies were managed better.

The autonomous akademis of “sangeet”, “natak” and “lalit kala” receive funds for their functioning. This, however, has been the bone of contention of succeeding chairmen of the akademis on how they have used the money to support the promotion of fine arts.

One of the failings of these akademis is that they have not only lacked public support on their working, but have also failed to get the corporate world interested in sharing some of the limelight which the chairmen of the akademis have hogged for themselves.

The result has been that the Sangeet Natak Akademi has also failed to be a pioneer in generating an art revolution in the country.

Another of its major failing remains in the development of research orientation in the discovery and preservation of both folk and classical music, and other aspects of fine arts in the country.

There has been insufficient coordination between the academies at the Centre and the state akademis.

For a vast country like India, the “fellowship” to the academy is very restrictive. With the result that a large number of deserving masters of their fine arts have remained unrecognised.

When we are celebrating the 50th anniversary of these institutions, it becomes necessary to not only get a public debate on their functions but also to have introspection on whether in the 21st century these academies have any relevance left, or not.

At least for the past six years I have been monitoring the work of one similar foreign institution, and that is the Art Council of the State of Victoria in Australia. This Art Council has similar functions as given to the Sangeet Natak Akademi, but performance-wise there is a vast difference. The Victoria State Art Council has been pursuing an aggressive programme of promoting the opening of art galleries, holding of art programmes, particularly directed for the generation of interest in fine arts at the school and college levels; the finding of theatre groups, providing international scholarship, and providing information of its work to a worldwide subscription service.

Our academies are not able to maintain properly their only museums at the headquarters. A visit to the offices shows that the workers assigned various responsibilities are no better in their approach in the promotion of fine arts, as may be found in the department of excise and entertainment tax.

Artists with rare exceptions do not make for good administration. Therefore, it is important that while the chairman of any such akademi may be a person of artistic eminence, the secretary administrator of these academies must be selected from among the well-known artists-cum-administrators. The job of the secretary in the akademi is not enjoying any social prestige and is, even after 50 years, a low profile position. This is one area of improvement in future.

Another failing of the Sangeet Natak Akademi is its total neglect of the traditions of Western classical music. The P.N. Haksar Committee had given a recommendation that centres in India promoting the learning and performances in Western classical music must be given support on a par with other forms of Indian classical music. This was to impress the world that the Indian mainstream cultures provided equal space to the finest traditions in the cultures of the West and that the Government of India accepted this secular and international approach in its culture policy.

The Sangeet Natak Akademi has at present no scheme to provide any substantial financial aid to any school in the country which teaches western classical music. By ignoring this aspect it has immediately cut itself off from a whole segment of western classical traditions being nurtured in the north-eastern states of Nagaland, Mizoram and Meghalaya, and, to some extent, in Goa.

The Sangeet Natak Akademi also does not have any authenticated information of how the tradition of Western classical music is being nurtured in the country. It has not endorsed any research in the standardisation of music instruments used in the Indian as well as Western musical traditions, nor is there a scheme for the introduction and promotion of export of Indian musical instruments.

If it considers such work outside its tradition, then it only shows the limitations of its functioning, and failure to enlarge its activities to make it more dynamic in the new perspective of the 21st century.

It is now 40 years since a representative of Church Music was accepted in the assemblies of music experts in the akademi. Currently, nobody in authority is interested in such subjects. Alternatively, we are seeing more interests generated among nations to offer to the Indian people some of their best musical works and even suggest bilateral culture exchanges.

That the Sangeet Natak Akademi finds no space for offering patronage to the Western classic music traditions is also evident in the programmes announced for celebrating the golden jubilee of its founding. To this extent, the loss is of that of the akademi.

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Women make better baby talk than men

THE blank stare on the baby’s face when dad is speaking may be for real, for a research has revealed that women really are better at baby talk than men and when talking in the coochy-coo baby-speak that parents often use with their infants, mothers’ utterances are less ambiguous than fathers’.

We know that babies pick up on the “affect” or emotional content of speech rather than the actual words, says Gerald McRoberts, a psychologist at Lehigh University in Bethlehem, Pennsylvania. But it is still unclear precisely how adults use various acoustic properties in their voice, such as rhythm, pitch and stress, to communicate different meanings to infants.

So McRoberts, and Malcolm Slaney of IBM’s Almaden Research Center in San Jose, California, designed a computer program to evaluate the properties of the speech parents use as they talk to their children, says a report in Health Scout.

They then asked six sets of parents to play with their infants and make approving or disapproving comments designed either to encourage the child, or to warn them to stay away from dangerous objects such as sharp instruments or electrical appliances.

When the program analysed the acoustic properties of nearly 700 excerpts of speech, it correctly distinguished between approving or disapproving comments 80 per cent of the time. But to the researchers’ surprise, the program correctly identified 12 per cent more of the comments made by the mothers, suggesting that women use less ambiguous sounds than men to convey to babies what they mean. ANI

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Child: a little animal capable of becoming a God.

Every birth is a victory;

Every new-born child a prophecy.

To be a prophet one must remain a child.

Children take their play seriously;

Men take theirs tragically.

The nearer man is to God,

the more he feels himself a child.

O man, learn to play if thou wouldst learn to be God.

— Paul Richard, "The Gospel of the Cradle"
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