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Back to future Retooling industry |
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Importance of public spending
Watching children grow up
Sir Chhotu Ram: Messiah of peasants
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Back to future What
the AIADMK's Jayalalithaa and the CPI's A.B. Bardhan announced at their press conference on Sunday was essentially an electoral tie-up in the coming Lok Sabha elections. The CPI contested two seats in Tamil Nadu in the 2009 polls and has asked the AIADMK leadership for the same seats of North Chennai and Tenkasi again. The CPM too has an electoral understanding with the AIADMK. The AIADMK has sent two Left nominees to the Rajya Sabha. Jayalalithaa is hoping to get all the 40 Lok Sabha seats in Tamil Nadu with the cooperation of the Left parties, which have pockets of influence in at least eight seats, so that she can throw her weight around in the formation of the next government at the Centre. After a poor electoral performance in their strongholds of Kerala and West Bengal, the marginalised Left leaders are trying to unite various regional outfits to stay relevant in national politics and counter the rise of the BJP under Narendra Modi. On October 30 last year they had organised a convention against communalism in New Delhi. Though Jayalalithaa herself stayed away, she sent a representative of her party to the meeting. Now again the non- Congress, non-BJP political parties have called a meeting in Delhi on February 5. This has revived the talk about the possibility of a third front before the parliamentary elections. The other like-minded parties open to the idea include the Samajwadi Party of Mulayam Singh, the BJD of Naveen Patnaik and the Janata Dal (United) of Nitish Kumar. Though in politics anything is possible, there is a lot of justifiable pessimism about the third front coming to power. First, it is based on opportunism rather than being guided by a programme, ideology or conviction. Leaders of these regional parties are driven more by their personal ambition than a genuine meeting of minds. Each, barring perhaps the Leftists, is calculating to realise his or her own dream of becoming the next Prime Minister. In such circumstances no one can predict who would go with whom, post-elections.
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Retooling industry Industry
in Punjab, which is largely small scale, has been failing for a while. Now, as indicated in a just-concluded series on the state of industry carried in The Tribune, several units have shut down and more are on the brink. The reasons are similar across various industries, whether steel, yarn, cycle or sports. They all complain of high taxes, power disruptions, slow clearances, and shortage of raw material and
labour. While the issue of power the government has promised will be addressed very soon, there are certain other aspects that the government can address such as quick clearances and a fair reassessment of taxes vis-à-vis other states. There are, however, many issues that the state government can do little about such as high land prices in Punjab, global slowdown, labour not coming in from other states, or competition from China. The government and industry have to together take stock of the larger economic and business situation in relation to Punjab. The present profile of units came up in the sixties. Since then a lot has changed. Bringing in steel scrap from distant ports or ingots from far-away states and then sending finished products all the way back cannot be sustainable without subsidies. Transporting coal to produce power here is also similarly unviable. Manufacturing (raw material and power) and land costs thus rule out many kinds of industry. Punjab has to look at what will give it an edge over other states. Agro industry is one, with the advantage of raw material. The state can also look at turning into an education hub, which will help its own human resource as well as attract business. In turn it can spawn the IT industry, which requires very little land and power. Trading with Pakistan will have a geographical advantage; for that the Central government must make serious efforts. Rather than battle over tax relief of a few percentage points, both industry and the government should look where the state's strengths lie, and strive to be sustainable rather than be supported by props.
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Clever people will recognise and tolerate nothing but cleverness. —Henri Frederic Amiel
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A FEW words of explanation are necessary to make the announcement about the “Kashmir Arbitration” intelligible. There has been a long standing dispute between the Government of His Highness the Maharaja of Kashmir on the one side and the Kashmir Minerals company on the other. The latter company claims several lakhs of rupees from the Durbar for losses said to have been incurred in its schemes of exploitation. The Durbar resists the claims and even repudiates it. But unfortunately the Government of India seem to consider that the claim is not altogether unjustifiable. The Maharaja Sahib was, however, willing to leave the question to the arbitration of Sir Lawrence Jenkins, the Chief Justice of the Calcutta High Court. It appears that the Government of India have instead selected Sir Arthur Reid, the ex-Chief Justice of the Punjab Chief Court, for that delicate office. The enquiry will perhaps last a month. Prof Ramsay Muir on the study of history
The address which Professor Ramsay Muir delivered the other day before the Punjab Historical Society is of great value to Indians. Of course, arguments in defence suggest themselves when an attempt is made to criticise an existing system, but Professor Ramsay Muir's charge of intellectual sterility is not one which can be easily defended. “If the chief object of a historical course in a University cannot be the production of qualified historical investigators, one object should certainly be,” said Professor Ramsay Muir, “to stimulate intellectual curiosity, to train the student in methods of inquiry and to inspire him with a deeper knowledge than the lecture and text-book could give him.”
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Importance of public spending One
thing that the UPA government is trying its best to control is the fiscal deficit (the difference between government expenditure and revenues excluding the borrowings). The IMF has also warned that if the fiscal deficit is not controlled, there would be problems of high inflation and this would lead to a falling growth rate. The government seems all set to adopt austerity measures for containing the fiscal deficit but this may have an adverse impact on job creation. The US, on the other hand, has managed the aftermath of the financial crisis relatively better. The global financial crisis began in the US in December 2007 and ended a year and a half later. The US went in for monetary easing ever since to resuscitate demand and encourage economic recovery. Under its monetary easing policy, the Federal Reserve or the central bank buys bonds from the government worth $85 billion a month which means that a huge amount of liquidity is injected by it into the financial system. In this manner the US has managed to keep interest rates at the near zero level. It has also been successful in lowering the home mortgage rates. This has helped the recovery of the housing market. The US economy has seen a recovery in recent times and growth has been at 2.2 per cent which prompted the Federal Reserve to announce in June 2013 the tapering of its monetary easing policy in 2014. This created havoc in the emerging markets of Brazil, India, China, Russia, Turkey, Argentina, Indonesia and South Africa. The Indian rupee fell rather sharply. The recent turmoil in the stock markets is also due to the fear of less global liquidity. Clearly the US is coming out of its economic crisis and is in better shape than the EU in terms of the pace of economic recovery. The EU has had a massive bailout by the European Central Bank but the sovereign debt of some of its members is still large and growing. The US has an unemployment rate of around 7 per cent but there is a little problem of falling demand and the US recovery is poised to be stronger in 2014 which will help the rest of the world with a rise in US demand for goods and services. Europe, on the other hand, has had one star performer in Germany, whose exports and growth rate are rising and it has controlled inflation also. Joblessness is much less in Germany because it has managed to keep wages down and discouraged trade unions' collective bargaining. Austerity measures, on the other hand, increased poverty in the EU as pensions and health spending have been cut. Greece cut its health spending by 40 per cent. India, which has experienced a 4.6 per cent growth rate in 2013-14, requires higher public spending on infrastructure. More public services and goods are needed to bring relief to the lower income groups, especially health services, otherwise they are likely to slip into poverty. There is need for an increase in public spending in agriculture as productivity is low and farmers are burdened with both small land-holdings and low quality inputs. If irrigation too is inadequate, they are doomed to remain subsistence farmers. Increasing irrigation facilities for small farms through big and small irrigation works is imperative and state governments' spending will depend on the money they receive from the Centre. Similarly more storage and marketing facilities are needed. The Central government cannot afford to scale down its agricultural investment in infrastructure. Similarly, roads have to be built to increase connectivity between towns and villages and towns with cities. It has been proved that lack of good roads and ports is a big deterrent to increasing investment. The Finance Minister has announced that the fiscal deficit will be at 4.65 per cent of the GDP for the current fiscal when he presents the Vote on Account in the Lok Sabha on February 17. The Finance Ministry has slashed about 12 to 15 per cent of the funds promised for social welfare schemes and plan allocations from the Budget presented last February. Last year, the efforts to meet the fiscal deficit target led to a Rs 100,000-crore cut in the Plan expenditure. This year the fiscal deficit has already hit 94 per cent of the government's target. The tax revenues have also not picked up greatly due to the slowdown in economic growth. Hence a big cut in expenditure is likely. Already to meet its fiscal deficit, the government is likely to use cash reserves of 20 PSUs by seeking special dividends from them. If a lesson can be learnt from the EU, it is that austerity does not always work as it compresses demand and lowers industrial growth which leads to unemployment. Instead non-essential expenditures like foreign travel by ministers and bureaucrats as well as MPs should be curbed. The government can also increase the duty on gold, silver and platinum and also ban the holding of meetings and conferences in five-star hotels. Curbing consumption expenditure is more justifiable than curbing investment expenditure which would go a long way in enhancing the productive capacity of agriculture and industry. Yet the rating agencies and the IMF will go on insisting that cutting government expenditure is important for containing the fiscal deficit. Otherwise, there could be a downgrade of India's investment rating to below investment grade by agencies like Moody's which will create problems for corporate borrowers abroad. But economists, including the Prime Minister, agree that the need of the hour is to increase investment which is the key to the revival of manufacturing industry to create jobs. This can only happen if infrastructure is upgraded and an enabling environment is present.
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Watching children grow up A
father is his daughter's first love, and his son's first hero. A mother is a lifelong role model for both. I am one of the many unlucky Army fathers who have missed seeing their children grow up. It was the wife who played both our roles. Now grandchildren are growing up. The three grand children from the son's side are all born in the West. Their upbringing is orderly and disciplined. They have to be ready and dressed up for breakfast and cannot leave anything in the plate. They have fixed hours for playing and TV viewing, where they cannot stray beyond the kids' channels. While in car they would sit in their assigned seats, all belted up. We spent the last summer with the son in Toronto. After their early dinner the kids would come to our bed, tuck themselves in and hear stories from their Daadi. I am spared as they have not taken to my rural tales. One of them politely tells me they are good stories but are too short. I take the hint. One call from their mom, they would make it the last story, kiss us good night and would be off to bed by 8:30 pm. The parents would then be free to watch TV or talk and discuss. "This is the only way", the daughter-in-law holds, "We can get time for ourselves." Her point is valid. Every man has a child living within him. I felt my son's children were living too controlled a life compared to what I myself experienced at their age. I picked on one to teach some 'bad' habits. One day we sat across a long, low table in the drawing room. I would push a dice with a reverse spin. It would spin back before he could make a grab. His booming laugh warmed my heart. When he tried doing it, the dice would stop in the middle of the table. He would climb up the thick glass top to retrieve it. Once when he was doing so his mother walked in and asked, "Kush who allowed you to climb the table?" The boy looked at me and I signalled an eyebrow approval. Kush looked down at his reflection and replied, "My shadow tells me I can climb." His mother walked out without a comment, suppressing an understanding smile. I felt happy I was making success in my efforts. One day I told Kush I would give him a piggyback ride in the nearby park. He excitedly came running as I sat down to help him perch up. Just as he was about to do so, he suddenly stopped and asked, "But Daada, where is the seat belt?"
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Sir Chhotu Ram: Messiah of peasants Exploitation of farmers This was exactly what disturbed Sir Chhotu Ram, in the late thirties and early forties of the twentieth century. Looking back, it was a sort of dictum in the imperial regimes that the more the farmer was economically squeezed, the more he produced. In Japan, for example, during the King Meji regime, farmers were made to pay the revenue in money rather than the traditional system of paying certain share of the produce as revenue to the state. It was done so simply to financially squeeze the farmer so that in order to meet the enhanced revenue obligations, he had to produce more and more to earn that money. Though differently, yet the same basic approach to squeeze the farmer was adopted in India by the British regime charging land revenue on the basis of per unit (acre) of land uniformly, irrespective of the size of holdings and income levels of farmers. It continues to be the same in the country even today. Whereas in other sectors of the economy there were (and are) exemptions on certain levels of income, there was no such exemption in the case of farm lands and there was no consideration as to the size of the land holdings and level of earning from the land! Even the poorest of the farmer with land of even less than one acre and under acute financial stress had to pay the land revenue at the same rate.
The other very serious problem of the peasants was the usurious interest rates charged by moneylenders and making arbitrary entries of dues from borrowers. In spite of farmers repaying loans year after year on every harvest, loan amounts kept on increasing. Ultimately, in many cases lands of farmers were attached in favour of the moneylenders. In fact, the Indian system of charging usurious interest rates dates back to the 1500 BC era. In Manu’s system only the Vaisha caste could take to money-lending business and rates were charged according to the risk involved. In the Chanakya system interest rates varied between 24 and 240 per cent, depending upon who borrows, for what purpose and the extent of risks involved. Coercive means to extract money from the borrower, even up to the killing of the son or wife of the borrower were not considered a big crime. Inhuman treatment In its considerably diluted form the system was quite coercive in the British regime also. Sir Chhotu Ram quoted several live examples of inhuman treatment meted out to peasant-borrowers. In one case he narrated the example of a farmer who, seeing his very bumper crop, thought of retiring the loan of the moneylender and celebrating the marriage of his grown-up daughter. Suddenly, he saw a locust swarm approaching and in matter of minutes his whole crop was eaten up. The moneylender came with a court decree within a few days. The farmer and his wife pleaded for mercy, promising to repay the loan during the next harvest. But the moneylender acted clumsy and suggested the farmer to sell his daughter that would get him good money. The farmer could not stand this humiliation and in a fit of rage, thrashed the moneylender, who died later. The court awarded imprisonment for life and the farmer died in shock. Ultimately, in spite of the heart-rending pleadings by the farmer’s wife, the total 300 bigas of farmer’s land was attached and given to the moneylender’s family, putting the farmer’s wife and six children on the road. Thus, the hapless peasants were in a dire state of poverty. The British regime had pushed the peasants into the quagmire of poverty and irretrievable indebtedness. The indebted small farmers lost their lands to moneylenders and they were turned into being serfs to the moneylenders. Sir Chhotu Ram, having deep sympathies with the downtrodden, could not bear this dismal situation. Although there were some Acts that were intended to protect the farmers from exploitation such as the Deccan Agriculturists Relief Act of 1879, and a little improvement on that, the Punjab Land Alienation Act of 1900, yet these Acts suffered from many lacunae and loopholes that allowed the moneylenders and commission agents to usurp the lands of farmers and hold them in a perpetual debt trap. New laws to help farmers Sir Chhotu Ram right from his childhood passed through this atrocious situation of poverty and exploitation of the peasants. Coming to power through the Unionist Party, just in six years from 1937 to 1943, he got legislated more than one dozen Acts and amended the existing ones to protect the farmers from exploitation by moneylenders as well as market functionaries and traders. Special mention can be made of the establishment of cooperative banks and cooperative societies to serve as alternatives to moneylenders and private banks in order to eradicate farmers’ indebtedness. Further he took some effective measures to provide water for parched lands and reduced the land revenue to nominal rates. His take was that governments should curtail their unproductive expenditure and reduce taxes on the people, especially on the hapless peasants, who were in acute financial distress. This approach has full relevance even today both for the Centre and state governments. Some of the other important Acts and amendments that go to his credit are: These Legislative and some other potent executive measures adopted by the then Fasli Hussain government at his behest benefited the farmers, specially the small peasant proprietors, a great deal. Further, in order to awaken the farming community from the slumber of fatalism and inaction he wrote 16 articles in Urdu under the title of “Bechara Zimindar” in the Jat Gazatte published from Rohtak and campaigned very hard to organise the farming community against the injustices being meted out to them. I have given my voice to those articles in a C.D and these articles have also been translated into English by the Haryana Academy of History and Culture. Today even, Sir Chhotu Ram lives in the hearts of the farming community for his efforts to alleviate the poverty of peasants and ameliorate the economic distress from which the farming community was suffering under the oppressive regime and unsympathetic usurious money lenders as well as exploiters in the agricultural markets. Shaikh Saadi’s Persian couplet “Saadia, marde niku-naam na meerad harghaz, Murda aun ast ki naamash b-nikuee na barand” (O Saadi, the person of good deeds never dies; the dead is the one whose name is not associated with any good deed) holds true for Sir Chhotu Ram in letter and spirit. Although he was born on November 24, 1881, at Garhi Sampla village in the district of Rohtak, he used to celebrate his birthday on Basant Panchmi. Today on the day of Basant Panchmi, a grateful salute to the great son of the soil and messiah of the poor peasants, Sir Chhotu Ram!
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In recent times the results of austerity measures adopted by different governments have not been very successful especially in the EU. A lesson could be learnt from the on-going Euro zone crisis which is leading to deflation and a rise in unemployment. Deflation is the opposite of inflation -- it means falling prices and higher real interest rates which lead to reduced investment and more unemployment. France has gone in for austerity measures. France's unemployment rate is high at 11 per cent and youth unemployment at a higher 25.6 per cent. Similarly, Greece and Spain, which went for austerity measures, are also faced with unemployment at 27.8 per cent and 26.7 per cent respectively with youth unemployment at nearly 60 per cent in Greece and 57.4 per cent in Spain. A situation where the young people coming out of schools and colleges cannot find jobs is hard to handle for any government. 
Two granddaughters live in Mumbai. They are having a carefree childhood. They play, sleep and eat whatever, whenever they like. While visiting us, the older girl sleeps in our bed. She sleeps late and keeps insisting on stories from her Nani. After each story the Nani says, "OK, go to sleep now" and Atirah insists on 'one more'. Finally, unable to get any more from her, the girl turns to me. I did not grow up reading fairy tales. When I tell her some funny village stories, she laughs hysterically. Our daughter has her philosophy of bringing up children: "What good is childhood without total freedom?" She makes a strong case. 
