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Trade with Pakistan
Mob frenzy in Gujarat |
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Grain drain
Hopelessly mired in the past
Facing an inquiry
As rightly pointed out by Punjab Chief Minister Parkash Singh Badal, there is an urgent need to rewrite Centre-state financial relations. But in his budget for 2012-13 the Union Finance Minister has failed to protect states' interests
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Trade with Pakistan
The integrated check post on the Wagah border will ease land-route trade with Pakistan by removing infrastructural bottlenecks. The dedicated passenger and cargo terminals are in place and, hopefully, immigration and Customs officials will give up practices they are notorious for. On Monday some 50 Pakistani trucks drove in the new check post, carrying dry dates, gypsum and rock salt, and the drivers returned with happy memories of the experience. Despite troubles at home and opposition from hardliners Pakistan Prime Minister Yousuf Raja Gilani has shown unusual courage by opening up trade with India, drawing a small negative list of 1,209 items. However, much to their dismay, Punjabi traders have discovered that they can trade only in 137 items through the Wagah border. The border states in general and Punjab in particular had pinned high hopes on the opening up of land-route trade with Pakistan. The once thriving cities and towns in states along the border with Pakistan have suffered post-Partition as industry has generally shunned the border areas, trade opportunities have dried up and agriculture is stagnant. It is, therefore, quite natural for these states to appreciate the Pakistani gesture of broadening the gamut of trade. Given their cultural affinity, the land-locked eastern and western Punjabs have much in common. Apart from improving connectivity for greater opportunities for people-to-people contact, traders can supply goods people need. If farmers here throw potatoes on roads due to surplus production, Pakistanis can get them from here cheaper. If onion prices shoot up here, Pakistani traders can bring in their surplus produce, giving better returns to their growers. In this context limiting trade to a small list of 137 items makes no sense. Some vested interests seem to have played a mischief. In fact, the need is to open up more land routes as volumes of trade are bound to pick up. The powers-that-be must remove these and other irritants and give regional growth a chance. |
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Mob frenzy in Gujarat
No tears need be shed for the 23 people convicted for the massacre of two dozen men, women and children from the minority community in Ode village of Gujarat during the post-Godhra riots when mob frenzy had thrown people into a chilling orgy of violence. While those convicted had set ablaze a shelter for Muslims huddled for safety, of the 23 who were acquitted, 14 were set free for lack of evidence of throwing an 80-year-old man into the fire the very next day. This is the third of nine sensitive 2002 riot cases which were ordered by the Supreme Court to be investigated by a Special Investigation Team. While this is the first case in which the accused have been convicted of not only murder but conspiracy too, earlier a court had awarded the death sentence to 11 and life term to 20 in the Godhra train burning incident in which 58 people, mostly kar sewaks from the majority community, had been killed on February 27, 2002 while another special court had given life imprisonment to 31 people while 42 were acquitted in a case of burning alive 33 from the minority community in Sardarpura village of Mehsana district. While these unfortunate incidents have left an indelible black mark on Gujarat, it is odd of the BJP to take credit for the relatively speedier convictions. The Gujarat government led by Narendra Modi, which was in the saddle at that point too, had failed to protect the lives of innocent people for which it must feel apologetic. That the perpetrators of the violence against Sikhs in the wake of then Prime Minister Indira Gandhi’s assassination in 1984 have still not been punished is shameful. But to expect kudos for a government because some perpetrators of the 2002 violence have been brought to book is preposterous. As case after case is taken up of that unfortunate period of recent history, it is sad that the Modi government has not thought it fit to tender a public regret over its failure to prevent such largescale massacre. Mr Modi keeps talking of the need to move on, but wouldn’t a public apology go a long way in healing old wounds? |
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Grain drain
It was in 2010 that the Supreme Court, following media exposure of food grain rotting in open storage, ordered the Central government to hand it out free to the poor than let it go waste. Despite the outcry that followed, the Central government has been unable to improve the situation in Punjab and Haryana, two states where most of the grain is stored — and damaged. While last year 20-22 lakh tonne of wheat in Punjab was stored unscientifically, this year it is likely to be more than 30 lakh tonne. In Haryana it could be 50 lakh tonne. Even out of the storage that is considered ‘regular’, around half is actually on plinths in the open. Investment for creating storage has largely to come from the Centre, which procures most of the grain produced in the two states. It has taken steps such as increasing the budget for storage and giving loans and subsidies for private investment in the sector, but the results are slow in showing. While shortage of space is one reason for the crisis, another is poor management of the logistics of food grain movement. Rail rakes are often not available in the numbers required; accurate estimates of requirement in different parts of the country are not made in advance. In fact, if the country could devise a way of predicting area-wise demand, some of the grain could be stored in consumption states rather than in producer states. Totally covered storage for all food grain is likely to remain a dream for at least a few more years. Food managers would have to innovate till then. One of the deterrents for private storage investment in Punjab is low rents offered, compared to the high land cost. To overcome that, farmers could be encouraged to hold their produce for a few months by offering increased payment for delayed sale. The Indian Council of Agricultural Research has predicted the demand for food grain could outstrip supply by around 30 per cent by 2020. Letting our food grain rot is definitely not an option. |
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Treat a work of art like a prince. Let it speak to you first. — Arthur Schopenhauer |
Hopelessly mired in the past
India is hopelessly mired in the past at every level. Fundamentalists and moral censors, whether Hindutva, Islamic, Christian or Sikh, seem tirelessly to seek the future in the past, one recent Deoband fatwa for example endorsing the validity of Muslim divorce by instant triple talaq even by a drunken husband and another declaring beauty parlours un-Islamic. Now some want the Supreme Court to declare the Ram Setu, a submerged geological formation in the Palk Strait, a national heritage monument forever to preclude dredging a navigation canal through it. Others would want the Ganga to remain a free flowing river up to Haridwar. Sentiment is cited, not reason. The government too has much to answer for endlessly delaying the execution of death penalties and disposal of mercy petitions. The latest example is the wholly contrived controversy over the pending execution of Balwant Singh Rajoana, the back-up suicide bomber in the Khalistani assassination of Punjab Chief Minister Beant Singh in 1995. The mercy petition here has been moved by elements close to the SGPC and Sikh religious hierarchy, though Rajoana has himself insisted on being hanged. The Akali patronage of residual Khalistani sentiment is playing with fire. At another level, governance and development are being stalled as many politicians, bureaucrats, trade unionists and environmentalists have turned Luddite and would wish to sanctify colonial administrative procedures and the status quo as holy writ. As a parliamentary reporter over many years just after Independence, I was amazed by the veneration accorded to procedure. Performance simply did not matter. All the early “scams” revealed by the Public Accounts Committee were labelled “procedural irregularities”. Process mattered irrespective of outcomes. Good outcomes were suspect if they defied some hallowed process. Thus, industrial production in excess of licensed capacity would be adversely noticed in annual administrative reports. The malaise persists. Every status quo spawns vested interests. Perambulatory files filled with sundry notings, precedents and superfluous signatures leisurely progress up and down administrative hierarchies to delay decision-making. Things may have improved somewhat only to get tangled in higher levels of the Parkinsonian process. How much of the Moily Report on administrative reform, only one among many general and specific reform efforts, has been taken on board? Police reforms crawl along. The Sachar Report’s key recommendation in favour of moving from reservations to an equal opportunity regime remains pending. Turf wars can be devastatingly destructive of action. Three agencies under strong administrators bucked the trend: the Atomic Energy Commission under Homi Bhabha, ISRO under Vikram Sarabahi, and the NDDB under Verghese Kurien. All have flourished. Sadly, the pattern did not spread with most others becoming prisoners of “the system”. The same “system” has trapped the armed forces in antiquated and inefficient structures, procurement and indigenisation procedures, information muddles and civil-military and inter-service rivalries. The latest contretemps over the so-called January alert on allegedly suspicious troop movements - officially dismissed as rubbish or as part of a conspiracy to discredit General V.K.Singh — and the petitions against the appointment of the recently-announced successor to the present Army Chief are also products of internal fissures and systemic failure. Rather than pretend that all is well and sweep uncomfortable questions under the carpet, this is the time to clean the Augean stables and make long-needed structural reforms in higher defence management, procurement and indigenisation. The key, however, lies in jointness, integration and appointment of a chief of defence staff and formulation of a sensible national information and communication policy. A group of eminent lateral-entry technocrats into government and corporate leaders have also (once again) appealed to the powers-that-be to liberate them from the stranglehold of bureaucratic red tape if India is to accomplish anything. This does not imply carte blanche to pursue sectoral or personal interests but to serve the greater common good and speed progress, seize opportunity and not merely restore but also accelerate investment and growth. The sad passing of P.S. Appu, a great civil servant of integrity and dedication who did all he could to push land reforms, comes with news that a high-powered land reforms committee set up under the Prime Minister, with the Minister for Rural Development, Jairam Ramesh, as Vice-Chair, has not found time to meet since 2008! Eastern India, which should be the nation’s bread basket, will not make the grade unless there are agrarian reforms in a region where the feudal hold is still strong. Procedures do matter but not if they inherently ignore outcomes. The country must be result-oriented if it is to make progress while being mindful of closing the door on corrupt practices. Corruption lies in intent, not outcome, provided decisions are taken bona fide. However, judgements are too often made ex post facto with the wisdom of hindsight. Bold policy makers and managers who take timely decisions are hounded long after the event. Hence decisions are kept pending or are reopened as there is a premium on playing safe or doing nothing, however costly that be. This is why India is falling behind others despite its enormous advantages. This is also why fixers flourish and bribes grease the movement of files. Further, everything is seen through the prism of short-term politics - the next election, nursing vote banks, stalling a rival, garnering money for the next poll. Narrow, short-term politics has trumped economic and strategic decision-making. The UPA government can, however, revive its fast-flagging prospects by pressing ahead with bold reforms that open up the system to investment, opportunity and employment. No other coalition is currently available to challenge UPA-II and no party is ready for early elections. The government must, therefore, take the initiative and force the Opposition to veto reform and explain itself to the people. A further problem is the endemic leakage with complete immunity and impunity of privileged papers and information even before they reach the intended agency or authority. Witness an April 6 newspaper expose based on a “yet to be tabled” CAG report. Worse, a leaked “preliminary report” of the CAG estimating a notional loss to the exchequer of Rs 10.67 lakh crore on account of discretionary allotments of coal blocks. The CAG repudiated the report as a trial estimate that it had itself corrected/abandoned but the damage was done. This “pre-empting” of definitive findings by preliminary estimates or motivated leaks and plants to set the agenda has become a pernicious habit that undermines good governance, bold decision-making and national integrity. Meanwhile, Orissa and also the rest of India face the dilemma whether or not incarcerated terrorists/Maoists should be traded for innocent people taken hostage by them. Orissa decided to trade 27 imprisoned Maoists for two hostages taken by them, a foreigner and a tribal MLA. This conceded, a factionalised Maoist leadership has asked for more. Negotiations are in progress. It is time for the country to take the hard decision not to yield to terrorists who take hostages. Terrorism cannot be fought by
capitulation. |
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Facing an inquiry
You look like a Nazi and you behaved like Nazis”, remarked the judge after my cross examination. I was facing a judicial inquiry. This was after the 1975 Emergency. A family planning party was attacked. The mob became unruly, and the police opened fire. Two persons were killed. The villagers got hold of a constable and later burnt him alive. I was the District Superintendent of Police, Sonipat. During the Emergency the family planning campaign had gained momentum. Once even a bus from G.T. Road was brought to the police station, where the doctor did the needful. In India, the cluster around the top consists of “yes” men, silent consenters and passing dissenters. The political and bureaucratic top brass was whole-heartedly supporting and implementing the family planning campaign. The higher a monkey climbs, the more you see his behind. During the Emergency life was orderly. Law and order was under control. The main priority of the administration was family planning. Police protection became essential as public resistance and anger grew. In India, it is not the rule of law, but the law of the ruler. Loyalties are to a person and not to any ideology. The post-emergency scenario was dismal. All practising politicians are subject to destabilisation. I remember the day when counting was taking place after the poll in 1977. Four ministers were sitting with me in a Rest House. The control room was informing me about the counting. I got a call from Bansi Lal, inquiring about the Congress candidate. I told him that she was likely to lose. A senior minister said cynically, “Is ko bata do, is ke bhe batti band ho jay gee” (Tell him he is also likely to lose) and made some very uncharitable remarks. Mrs Gandhi lost. To me, the future looked bleak. I thought I would lose my job. I joined LL.B in the evening classes. In the final year of LL.B I was cleared of the judicial inquiry. Many years later, I was sent to Israel for an Intelligence gathering course. I went to Jerusalem, where we visited “Yad Vashim” - a memorial for the victims of the Holocaust killed by Nazis. I saw the photographs of many Nazi officers. I remembered the judges’ remark, who had told me that I look like a Nazi. I found some of them to be brutally handsome and evil looking. Every problem has a limited span. Just as a cured infection leaves anti-bodies behind, a hurt, once healed, may leave us with a net gain - greater self-awareness, increased maturity and hard-earned wisdom of a survivor. Good judgement comes from experience. Experience comes from bad judgement. The day I took over as a Member of the Permanent Lok Adalat, I thought life had come full circle. In the current political scenario, the media and the judiciary are the islands of
hope. |
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As rightly pointed out by Punjab Chief Minister Parkash Singh Badal, there is an urgent need to rewrite Centre-state financial relations. But in his budget for 2012-13 the Union Finance Minister has failed to protect states' interests
Winding up the debate on the Governor's address, Chief Minister Parkash Singh Badal, advocated the strengthening of states financially (The Tribune, March 28). He has demanded that the Centre should at least return 50 per cent of the revenue collected from them in the form of taxes. In fact, this demand has the backing of many other states. Even the 13th Finance Commission has stated that all the states "without exception" have sought an increase in their share of central taxes and "the majority have sought an increase from the present 30.5 per cent share in net tax revenues of the Centre to 50 per cent." Seen in this light the Union budget for 2012-13 appears to be containing many implications hitting the states' finances adversely. The Finance Minister had stated in his budget speech "that the gross tax receipts are estimated at Rs 10,77,612 crore. After devolution to states, the net tax to the Centre in 2012-2013 is estimated at Rs. 7,71,071 crore", as if the balance will be transferred to the states. Administrative costs It actually implies that while revealing its share the Union Finance Minister has already deducted the administrative and other costs which are incurred for the collection of taxes. In fact, the history of the usage of the concepts 'gross' or 'net' goes back to the Tenth Finance Commission which suggested for the first time to transfer 29 per cent of the gross Central tax receipts to the states. However, when the Constitution was amended in 2000 in order to incorporate this recommendation, the Centre cleverly replaced the word 'gross tax revenue' by 'net tax revenue', thus reducing the share of states from the divisible pool permanently. Punjab was the only state whose Finance Minister, Capt. Kanwaljit Singh, raised this issue. The Central Government at that time promised to compensate the states in some other way but it never did. The above mentioned receipts of the Centre are besides the non-tax revenue and non-debt capital receipts, which are estimated to be Rs. 1,64,614 crore and Rs. 41,650 crore respectively during 2012-2013 and these receipts are the exclusive privilege of the Central Government. Besides collecting gross tax revenue, the Centre also levies surcharge and education cess @ 2.0 per cent and secondary and higher education cess @ 1.0 per cent on TDS exclusively for its use. Even a rough estimate will reveal that a gross tax collection of Rs. 10.78 lakh crore will yield nearly Rs. 32,000 crore from the education cess alone out of which states are denied their legitimate share. Had the cess and the surcharge merged with the basic taxes, these could form the part of a divisible pool of tax revenue. Even the 13th Finance Commission has suggested that "the Central Government should review the levy of cess and surcharge with a view to reducing their share in its gross tax revenue". Then where is Rs. 50,000 crore which the 13th Finance Commission kept apart to be transferred to states in the event of adopting the goods and services tax (GST)? Service tax negatives Another clever move announced by the Union Finance Minister in his budget speech relates to the levy of service tax on all items except 35 services enlisted on the negative list or exempted services. The negative list was prepared by the Empowered Committee of State Finance Ministers at its meeting held on March 2, 2012, to be adopted when the country eventually moves to the GST. Therefore, the statement of the Union Finance Minister expressing "the desirability of moving towards taxation of services based on a negative list" does not carry conviction. In fact, taking advantage of the clause that whatever tax is not mentioned in the Constitution belongs to the Union government, it started levying service tax for the first time in 1994. To begin with, service tax was levied on only three services viz. telephone bill, general insurance and stock broking charges @ 5 per cent. Last year the number of services carrying service tax was nearly 120 and the tax collections Rs. 82,000 crore. As during the next fiscal year 2012-2013 the list will be extended to cover all services except those mentioned in the negative list and with the enhancement of rate from 10 per cent to 12 per cent the Centre may enrich its coffers by more than Rs 1 lakh crore. In his pursuit to mop up as much as possible from the service tax, Pranab Mukherjee appears to have forgotten even the Constitutional provisions. Levying service tax on railway passenger fares and freights is one such example. Our Constitution guarantees that 100 per cent tax proceeds from the tax on railway fares and freights should go to the states. It is another issue that this tax was abolished in 1957 and States continued to get the compensation in lieu of this tax till the 80th Constitutional Amendment in 2000. Tax the rich Then, what has hindered the Union Finance Minister to tax the wealthier class that has accumulated huge properties? In view of the ever-increasing number of billionaires in the country there is an urgent need to reintroduce the estate duty, which was abolished in 1985 by V.P. Singh, the then Union Finance Minister. And as per our Constitutional arrangements 100 per cent proceeds from estate duty are to be transferred to states. Also the plea of the Empowered Committee of State Finance Ministers to abolish the cap on the upper limit of professional tax levied by the local bodies appears to have not gone well with the Union Finance Minister. At their meeting held on March 2, 2012, the states' Finance Ministers had also asked the Centre to increase the levy of Central Sales Tax (CST) to earlier 4.0 per cent from the present reduced rate of 2.0 per cent. Or else the Centre should compensate the loss of States on this account to the tune of Rs.19,060 crore. The Union Finance Minister had remained silent on these issues, whereas he restored the service tax and the Union excise duty rates to the earlier levels. Central schemes Finally, the greatest assault on the States' financial autonomy is the enhancement of about 20-25 per cent on various flagship programmes and Centrally sponsored schemes such as the Mahatama Gandhi National Rural Employment Guarantee Scheme (MGNREGS), the Indira Awas Yojana (IAY), etc. where the states have to contribute a 25 per cent share. In some schemes like the Sarav Shiksha Abhiyan (SSA) and the Integrated Child Development Scheme (ICDS), the share of states is even 35 per cent and 50 per cent, respectively. During the Eleventh Five Year Plan there was a total provision of Rs.6,60,506.40 crore for the Centrally sponsored schemes of which nine flagship programmes alone constituted Rs.5,24,465.99 crore i.e. 79.4 per cent. The various flagship programmes may be for the overall uplift of the masses, yet as admitted by the Prime Minister at the 56th meeting of the National Development Council held on October 22, 2011, "these schemes are frequently not flexible enough to accommodate the specific issues facing each state". The Prime Minister also recognised "the fiscal burden that is being faced by the state governments due to the range of the national flagship programmes and insufficient consultation with the state governments on the issue of fiscal sustainability of these initiatives." The Chaturvedi Committee on Restructuring of Centrally Sponsored Schemes, in its report submitted in September 2011, has also admitted to the lack of flexibility in the schemes, the adverse implications of counterpart funding requirements of the schemes on state finances and the questionable utility of operating large number of schemes with thinly spread resources at the field level. At present there are 147 schemes which, according to the Chaturvedi Committee, can be reduced to 59. 'Flexi Funds' Further, 44 per cent of the total schemes have an annual outlay of less than Rs. 100 crore, which should be transferred to states which can operate these schemes based on their requirements. The committee has further stressed that in order "to enable state governments to meet their special needs, flexibility in the Central schemes should be provided in its design". At least 20 per cent of the budget allocation in all Central schemes to be called 'Flexi Funds' should be earmarked in each scheme for this purpose and states should be allowed to spend such funds on the sub-schemes or prescribed components of the Central schemes. The Budget 2012-13 appears to have done some lip service in this regard. The Union Finance Minister has announced in his budget speech that some new missions will be set up after merging some agricultural activities. These National Missions are : Food Security Mission, National Mission on Sustainable Agriculture, including Micro Irrigation, National Mission on Oilseeds and Oil Palm, National Mission on Agriculture Extension and Technology, National Horticulture Mission and National Mission for Protein Supplement. But this move will in no way reduce the number of schemes. Nor will it ensure flexibility and freedom for the states to operate Central schemes according to their requirements. In this very budget session the two Bills (Railway Protection Force Amendment Bill, 2011 and BSF Amendment Bill, 2011) listed for consideration have been opposed by states. The recent developments in the case of FDI in retail trade and the NCTC stand testimony to the fact that states' interests need to be protected and with mutual consultation states' concerns must be addressed. The writer is a former Professor and UGC Emeritus Fellow, Department of Economics Punjabi University, Patiala
Restoring the balance n States are justified demanding an increase in their share from the divisible pool of Central taxes. n
Education cess and surcharge should form an integral part of the divisible pool. n
Following the recommendations of the 13th Finance Commission Rs 50,000 crore has been kept apart for transferring to states in the event of adopting GST. As GST has been delayed, states have a legitimate claim over this amount. n
Many taxes like estate duty, which were abolished earlier, need to be introduced as the states have a constitutional right over the entire tax proceeds. n
Recommendations of the Empowered Committee of the State Finance Ministers should be given due weightage and pre-budget consultations must be held with it. n
The number of centrally sponsored schemes need to be reduced and some flexibility be allowed to states to meet their special needs. n
Some independent body should be constituted to review the working of centre-state financial relations. |
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