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Quashing 2G allocations
Slicing subsidies |
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Lopsided view of women Law alone cannot stop killing of lovers A vast number of social organisations as well as certain government agencies have demanded a special law to deal with ‘honour killings’, a suggestion that was recently rejected by the Law Commission of India.
Law on food security
Of the original rock star
Pinning hopes on the budget
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Quashing 2G allocations
THE Supreme Court’s decision to cancel all the 122 telecom licences issued by jailed former Communications Minister A. Raja on January 10, 2008, on grounds that they were determined in a “totally arbitrary and unconstitutional” manner is a blow to the Manmohan Singh government and will predictably have wide ramifications. The licences were given by Raja on a first-come-first-serve basis at 2001 prices and fetched the government a paltry Rs 9,000 crore while subsequently, the 3G licences which were fewer got the government Rs 69,000 crore. There is a clear averment in the Supreme Court verdict that the first-come-first-serve principle which Mr Raja followed in 2008 was flawed and that it was the auctions route that should have been adopted. That the earlier NDA government had followed the same principle cannot be treated as valid defence because from then on the demand for spectrum had grown manifold. With the Supreme Court having lobbed the ball back to the trial court on Janata Party president Subramanian Swamy’s plea to name Finance Minister Chidamabaram as a co-accused, all eyes are on what would be the outcome in the trial court. The ultimate political consequences would be largely determined by whether Chidambaram is impleaded or spared a trial. Regardless of that, however, it would be an uphill task for the UPA to regain the credibility that it has lost progressively over the 2G scam. It is indeed a misplaced fear voiced by some that the experience of foreign firms that had entered into partnerships with the erring Indian firms in good faith would deter foreign investors from coming to India in general but more so in the telecom sector. On the contrary, the clean-up of the messy telecom sector will attract more investors who believe in the rule of law and fair business practices. There is a silver lining for the government too. Thursday’s cancellation order gives the government four months to reallocate the 2G spectrum licences. If it resorts to auction, as the Telecom Regulatory Authority of India has recommended, the depleted treasury many have a financial windfall.
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Slicing subsidies
THE Centre has made public the draft National Water Policy 2012 which, if approved in its present form, would have serious implications for states like Punjab and Haryana. The draft policy redefines the role of the state. From being a “service provider” it is proposed to be a regulator and facilitator of services. This means a greater role for the private sector in the management of water resources under public-private partnerships. To make the supply of water lucrative for private firms and discourage its waste there is a proposal to raise the taxes on its users. This could be politically untenable. Parties in states in particular following populist policies will oppose any hike in drinking and irrigation water tariffs. The draft policy, which had been put up on the web site of the Union Water Resources Ministry for public comments up to February 29, also disapproves of subsidising electricity since it leads to wastage of both water and power. Both the Congress and the Akali Dal-BJP combine in Punjab are committed to supplying free electricity to farmers and the poor without realising the disastrous consequences of wasting precious resources. Since water is a state subject there is a plan to shift it to the Concurrent List so that the Centre can pass a “national framework water law” to ensure optimum use and better management of inter-state water resources. While there is need to work for the efficient use of scarce water resources and check their reckless abuse, the government cannot abdicate its responsibility of providing clean drinking water in sparsely populated, water-scarce, inaccessible areas where people’s capacity to pay is often limited. The state also cannot wash its hands off the duty to stop pollution of rivers, canals and groundwater and encourage conservation measures like rainwater harvest through community participation. It is easy to levy and hike taxes but governments often shy away from spreading mass awareness about rejuvenating common water resources. |
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Lopsided view of women
A
vast number of social organisations as well as certain government agencies have demanded a special law to deal with ‘honour killings’, a suggestion that was recently rejected by the Law Commission of India. Even as the debate rages, the latest outrage in Ludhiana — a youth killing his sister and her lover on seeing them together — brings a realisation that the problem cannot be dealt with by legislation alone. This was a crime of passion, arising from a convoluted sense of honour. When people fly into a rage, no law, or even the fear of death, would stop them. The youth in this case did not attempt to escape arrest, or show any remorse. To tackle the menace, a close scrutiny of the motivations is required. This particular form of murder is common in both Punjab and Haryana, but in the latter state, there is an additional element of incitement from community groupings — khaps, more specifically. The debate over enacting a law would have to apply more to cases where a community itself conspires to commit the crime. In Punjab, honour killings have rarely been under direct pressure from community. A case such as the one in Ludhiana is not of premeditated crime. Even courts have been known to treat such cases as ‘culpable homicide not amounting to murder’, as the crime is committed in a moment of rage. Whatever be the motivation, the outcome is shameful, and is rooted in the evolutionary quirk that makes men look upon women as ‘commodity’. That explains why it is nearly always the girl’s family that kills. (In another context, it could be a jilted lover). While enacting certain laws may help contain the khaps, this basic cause will have to be addressed by society itself. It has to evolve. Herein comes the role of religious leaders. A strong condemnation of honour killings by heads of various religions and sects could be a beginning. |
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I’m not really interested in persuading people, I don’t want to and I try to make this point obvious. What I’d like to do is to help people persuade themselves. — Noam Chomsky
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Law on food security
THE Food Security Bill, which was approved by the Cabinet on December 18, 2011, will be placed before Parliament in due course. The pros and cons of the Bill have been discussed widely in public debates and diverse views have emerged. In a country like India where recent reports about malnourishment and stunted growth among children are not only alarming but also shameful and require urgent public attention, reaching food to the poor is the duty of the government. In fact, the Public Distribution System (PDS) has done so for 60 years but obviously it has not done it efficiently and gaps remain. Many people want wider coverage and have argued that the Food Security Bill should be universal in its approach and that there should be no differentiation between the very poor — people below poverty line (identified as the ‘priority group’) — and the not-so-poor (above poverty line or the ‘general group’). Only 46 per cent of the rural population and 28 per cent of the urban population would fall under the ‘priority group’. The Bill provides for highly subsidised foodgrains for the ‘priority group’ and each BPL person would get 7 kg of foodgrains per month — rice at Rs 3 per kg, wheat at Rs 2 per kg and coarse grains at Rs 1 per kg. But different conditions apply for the ‘general group’ — they would get 3 kg per person of cereals at half the minimum support price that is given to farmers. The Bill is supposed to cover 75 per cent of the rural population and 50 per cent of the urban population. All in all, it is slated to allocate a much smaller amount of foodgrains than in the prevailing PDS. Every poor family will have to purchase additional amounts in the open market. It won’t change the nutritional intake of children perhaps because only foodgrains are going to be distributed. Of course, for a country as big as India and with around 456 million poor (World Bank), and 240 million hungry and malnourished people, at least 75 per cent of the population will get subsidised food but it will cost a huge amount of money about which recently Sharad Pawar expressed concern. The Food Security Bill, if it becomes an Act, will cost the government around Rs 100,000 crore a year and this too when the economy is on a downswing and the growth rate is sliding from 9 per cent to 7 per cent. It will mean a much bigger than expected fiscal deficit which will cause many problems and enlarge manifold the government’s borrowing programme which may be inflationary and may crowd out private investment. But when there is no shortage of money for events like the Commonwealth Games and huge tax sops are given for the industrial sector every year, why shouldn’t the government provide the resources for feeding the poor? Also if the level of corruption can be brought down, what is sought for the poor can easily be done. The opponents argue that the Food Security Bill does not address the real problem of poverty alleviation, especially in the countryside. Though provision has been made for improving agricultural productivity and creating additional storage space, it is being done too late. The real problems in agriculture are small-sized farms and low quality of inputs, including inadequate irrigation facilities. These problems have made marginal farmers dependent on subsidised food because their own productivity is low. To raise farm incomes, there is need for greater public investment in irrigation and storage. The lack of sufficient employment opportunities in the non-farm sector is also responsible for poverty in the villages. Critics of the new Food Security Bill also say that if the government is serious about alleviating poverty and feeding the poor, it shouldn’t let tonnes of foodgrains lie rotting in the open. So much wastage is unthinkable in a country where hunger and starvation deaths are reported from many parts. Opponents also point out that the Bill has been passed by the Cabinet with a political dividend in mind. It is aimed at convincing the poor that the government is serious about ameliorating their lot as they have faced high food inflation in the past two years. It could have much political leverage in the future but the fact remains that when there are hungry people in the country, the government cannot ignore them and it has to do something urgent about correcting the situation. The Food Security Bill thus is a move in the right direction except that it has to have a much better delivery system. Various checks and balances have to be in place to monitor trucks carrying foodgrains to remote villages because most of the diversion of foodgrains to the market takes place before it reaches the ration shops. Also there has to be regular monitoring of the effectiveness of some of the important food-based interventions like the Integrated Child Development Services, the Mid-Day Meal Scheme and maternal care schemes that have been included in the Bill. Other indicators which directly or indirectly affect food security are access to safe drinking water and toilets which have also been included. Large-scale procurements by the government, however, may mean that the private sector procurement will get squeezed and this may lead to price rise. What may also happen is that there will be a hike in the minimum support prices of wheat and rice every year which will push up inflation. The Bill involves a top-down approach with little leeway for states to manage their own food security needs. It is, therefore, imperative that the government revamps the food security system on all fronts and involves the states. Additional items like pulses and oilseeds/edible oils should also be regularly supplied if the malnutrition question is to be addressed seriously. To reduce malnutrition, the ministries concerned have asked for a huge hike in expenditure, but how can proper implementation of the programmes be ensured? Revamping agriculture is obviously important; otherwise if agriculture remains dependent on the monsoon and the same pattern of cultivation continues, there may be a shortfall in the procurement requirement of 61 million tonnes of foodgrains a year. It will make India dependent on imports in times of droughts and vulnerable to world price fluctuations. We cannot take the risk of feeding almost 1.3 billion people through imports by saying, “We have enough foreign exchange reserves.” Food self-sufficiency through increasing agricultural productivity is important, and in future if there is faster agricultural growth through more R&D, better storage and improved rural roads, India could be an important exporter of foodgrains
also.
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Of the original rock star
The recently released film, “Rockstar”, is brimming with imprints of the original rock star, Jim Morrison. Whether or not Janardhan Jakhar portrayed by Ranbir Kapoor acquires the stature of the iconic Morrison is a question that leaves room for speculation. However, the movie sure has jarringly flashed Jim Morrison in my face and on my mind yet again. I first came to be acquainted with the rock star of the 1960s when Oliver Stone’s film, “The Doors”, came out in 1991. A friend in high school had recommended it highly. I did see the film; however, at the time I lacked both the emotion and the poetic acumen to relate to Morrison’s persona and his poetry, and was upset with my friend for recommending a movie about a maniac! For someone who came of age in the 1990s, my limited perception of the 1960s “Rock and Roll” implied only the Beatles and Elvis Presley, leaving no place for the remarkably left of the centre, Jim Morrison. In later years, however, my stance on Morrison began to change. As my poetic sense evolved, I began to see Morrison’s heady outbursts as soul stirring and evocative of the restlessness of an entire generation. I also came to rate his spontaneous, “spoken word passages” in the middle of a wild performance as some of the finest poetry ever written; his thoughts being suggestive of both the revolutionary German philosopher, Fredrick Neitzche, and the rebel French poet, Arthur Rimbaud. My interest in Jim Morrison found a new high when I came to live in the ethereal coastal city where Morrison grew up. While his charisma looms large in entire southern California even after four decades of his death, the streets of the dainty island town in particular, where his parents came to live after he died, are replete with unmistakable mementos of the son of the soil. Both in his poetry and in his music, Morrison has come to form a distinguished cult inspiring artists all over the world. Even as a fashion icon, his trademark leather pants have come to be associated forever with the archetypal rock star. By any yardstick, Jim Morrison shines through as the supreme rock musician soaked in scandal and shrouded in mystery both in his life and in his death. On re-thinking Jim Morrison, his quirks and his songs have come to speak to a part of me in a quiet, very personal way. While he has been famously called a rioter and a mutineer, I have also come to see Morrison as a lover of mythology, a spokesman for the marginalised, and a sensitive, offbeat commentator on history, people and places. And as I am in the midst of talks with the Department Provost about teaching a class on the Psychedelic Poetry of Jim Morrison, I can’t help thinking that it is never too late to thank the high school friend for starting me off on the squiggly journey of uncovering the original rock
star!
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Pinning hopes on the budget
THE Union Finance Minister, Mr. Pranab Mukherjee, has begun pre-budget discussions with experts, farmers, industry captains and other representatives. However, his projected estimates made for the current fiscal have gone awry. The growth rate is expected to be around 6.5-7.0 per cent against the projected 9 per cent. Fiscal deficit, which is legally mandated at 3 per cent, may be around 6 per cent against the budgeted 4.6 per cent. Likewise, revenue deficit, which ought to be zero as according to the Fiscal Responsibility and Budget Management Act 2003, may substantially cross the budget estimate of 1.8 per cent due to the rising subsidy payments and growing wage bill, thus helping fuel inflation. Though in the recent past inflationary tendency appears to be at ease, yet it is more due to the fall in vegetable prices (which is a seasonal phenomenon) and the high statistical base of the last year. Otherwise, due to structural factors like demand outstripping supply, it was in double digit up to November 2011.
Lesson from China With regard to inflation we must learn from China, which during the last winter, anticipating a demand-supply gap for poultry products, announced various incentives for producers to boost supply. Unfortunately, in India we have no such mechanism to anticipate such gaps and thereby design our policies accordingly. The Budget for 2012-13 may consider designing such policies. In order to increase the supply of food articles and other goods, public investment for research and development in agriculture has to be stepped up. While nearly 60 per cent of India’s population still depends on agriculture, their share in national income has fallen to nearly 15 per cent. Not only that, economic development of the country has bypassed them. With no social security, they have rather become vulnerable to poverty and unemployment. For the removal of poverty even ‘poverty alleviation bonds’ can be issued to appeal to the philanthropist spirit of the richer sections of society. Further, in spite of the fact that the RBI raised interest rates 13 times since March 2010, monetary policy could not do much to contain prices because of late our growth has become consumption-led. To promote investment-led growth, we have to rely more on fiscal policy (read budgetary policy), which has moved in the opposite direction, pushing government consumption expenditure. In fact the fiscal task of mobilising resources from people in order to contain demand was handled by monetary policy with the result that both became ineffective. The Indian growth story is largely interwoven by domestic savings and increased domestic demand. Contribution of foreign funds is just 2 per cent of total investments in the country. Therefore, the better-off sections of society can be rather encouraged to spare some more resources for investment in social and economic infrastructure to augment the supply of goods and services so as to contain inflation. In this connection the 2012-13 budget may consider the DTC’s (Direct Taxes Code) suggestion to raise the exemption limit on savings from the present Rs 1 lakh to Rs 3 lakh, albeit with some modifications.
Infrastructure bonds As in the budgets for 2010-11 and 2011-12, special infrastructure bonds carrying low or negligible interest rate can be issued. To defer the burden and keep revenue deficit under check, their lock-up period can also be increased. The rate of interest on tax-exempted saving schemes can also be lowered. As tax-saving instruments are purchased mostly by the upper income classes, who have no choice except to invest in tax-saving instruments, lowering interest rates may help contain the revenue deficit. Besides, this will be a win-win situation for both the government and the taxpayers. While the latter will lessen their tax burden, the government will also get necessary funds to finance infrastructure. No doubt this may raise the fiscal deficit/borrowings, yet we should concentrate more on revenue deficit, which should be brought to zero. There is no need to worry about fiscal deficit, when proceeds from disinvestment are considered as part of the government income, thereby pushing unproductive public expenditure. Then to tackle the problem of black money, a Voluntary Disclosure Scheme (indicating the source of income) may be introduced for a limited time with penal progressive tax rates. However, after the expiry of the period a law should be passed to confiscate black money whenever seized. Mr. Mukherjee should also consider the fact that the budget for fiscal 2011-12 was inequitable for senior citizens as the exemption limit raised in their case from Rs.2.40 lakh to Rs. 2.50 lakh was proportionally less than the increase in the general exemption limit from Rs. 1.60 lakh to Rs. 1.80 lakh, and it was absolutely insufficient to neutralise inflation. Although the lowering of age for senior citizens from 65 years to 60 years and introducing the super senior citizen class (above 80 years) were welcome steps, it seemed discriminatory for those who were in their seventies or close to seventy. As one advances in age the expenditure on medicines and sustenance increases. Therefore, to be fair with all senior citizens, there is a need to introduce another category of senior citizens belonging to 70-80 years. In all there can be three groups of senior citizens, young senior citizens (60-70), old senior citizens (70-80), and super senior citizens (80 and above). An electronic processing of income tax returns can very easily handle this classification. Further, as far as possible, exemption limits and other personal concessions should be approximately linked to inflation.
Address states’ concerns Last but not the least where the interest of states is also involved they must be taken into confidence. Take the introduction of the GST (Goods and Service Tax). Even if it is delayed by another year or so, it must address the states’ concerns. Similar should be the case with land acquisition reforms. The recent developments in the case of FDI (foreign direct investment) in retail trade stands testimony to the fact that for any policy changes having far-reaching consequences in a federal set-up, the Central government must evolve a consensus so that it does not have to cut a sorry figure at a later stage. For example, the introduction of a uniform VAT throughout the country, though was spread over five years 2003 to 2008, became feasible only after the states’ concerns were addressed. Then according to the recommendations of the 13th Finance Commission, the additional excise duty in lieu of sales tax on textiles, sugar and tobacco has been abolished. This has adversely affected states’ finances as they were getting 1 per cent more in their share from the Central divisible pool of total tax revenue. The new DTC suggestion to impose a 10 per cent tax rate on the income slab of up to Rs. 10 lakh, 20 per cent on Rs. 10 lakh to Rs. 25 lakh and 30 per cent on above Rs. 25 lakh compared with the present slabs of Rs. 1.80 to 5 lakh, Rs. 5 lakh to Rs. 8 lakh and above Rs. 8 lakh should be kept in abeyance as this move will adversely affect states’ finances. It goes to the credit of Dr. Manmohan Singh, that as Union Finance Minister in the early ’90s he always weighed in his mind the probable implications of any change in income tax laws as nearly 75-85 per cent of income tax proceeds were transferred to the states.
Revive estate duty Further, in view of the ever increasing number of billionaires in the country who have accumulated huge properties there is an urgent need to reintroduce the estate duty, which was abolished in 1985 by Mr. V.P Singh, the then Union Finance Minister, and, according to the constitutional arrangement, hand over the entire proceeds to the states. Then as suggested by the Empowered Committee of the State Finance Ministers, the Centre should abolish the cap on the upper limit of professional tax. Since professional tax is levied by the local bodies/municipalities, the Centre can incentivise them to impose such a tax by giving matching grants. This will strengthen their financial position and thereby promote decentralised governance in the country. As admitted by the 13th Finance Commission, “there has also been an increase in the size of non-shareable portion of Central revenue receipts.” Then as assured by the Prime Minister at the recently held 56th meeting of the National Development Council (NDC), “the fiscal burden that is being faced by the state governments due to the range of national flagship programmes” needs to be addressed in the coming budget. The states should be free to select for implementation, within their annual entitlement, such schemes as are more suited to their needs. For example, the Mahatama Gandhi National Rural Employment Guarantee Scheme (MGNREG), which accounts for nearly Rs. 50,000 crore in the current fiscal, is a complete failure in Punjab because of labour scarcity. Instead, if the state is allowed to spend its share for promoting agriculture/rural productivity, its contribution to national kitty would be much more. In fact, most of the second-generation reforms relate to the states. For successful federal financial relations, the Centre must take the states into its confidence. It would be better if the Union Finance Minister makes a beginning in this regard and starts holding pre-budget discussions with the states’ finance ministers. The writer is a former Professor & UGC Emeritus Fellow, Department of Economics, Punjabi University, Patiala
What FM should do l Anticipate food demand-supply gaps and offer incentives for higher production of farm commodities in short supply. Invest more in agriculture l
‘Poverty alleviation bonds’ can be issued to appeal to the philanthropist spirit of the richer sections of society l
The budget may consider the DTC’s (Direct Taxes Code) suggestion to raise the exemption limit on savings from Rs 1 lakh to Rs 3 lakh l
To tackle the problem of black money, a Voluntary Disclosure Scheme may be introduced l
There is need to introduce another category of senior citizens aged 70 to 80 years l
In view of the increasing number of billionaires in the country there is need to reintroduce the estate duty, which was abolished in 1985
The Indian growth story is driven by high domestic savings and demand. The growing number of billionaires can be tapped for greater investment in social and economic infrastructure
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