Building with BRICS
Source: By Salman Haidar: The Statesman
Goa has just played host to an impressive group of Heads from different parts of the world, weighty figures who lead countries that have recently emerged into prominence and collectively bid fair to re-shape processes of international cooperation. BRICS, whose Summit meeting brought these high dignitaries to India, is a relatively new grouping of emerging countries, that is to say of countries that have come out of relative obscurity in global councils and are now vigorously thrusting ahead. Members of BRICS have already become crucial participants in the global economy and collectively the group has formidable potential for the future. It commands a good part of the world’s manufacturing and trading capacity and has shown dynamism at a time when the global economy as a whole has slowed down. Though some of the members have recently been through bad times they are turning the corner and, as the Goa meeting showed, BRICS as a group retains its vitality and is poised for an enlarged international role.
One of the principal challenges for BRICS is to work collectively to re-order international structures of cooperation that date back to the beginning of the post-war era. The Bretton Woods agreements of the immediate post-war have long been recognized as in need of reform to meet present day requirements, for they give undue weight to the original signatories in institutions like the IMF and the World Bank. The developing countries have long laboured to redress the balance, and though they have made some advances, the original structures have not been significantly changed. Now that BRICS has come into being it can be hoped that there will be new momentum in the process of restructuring the institutions, for economic success has bestowed new capacity on the emerging countries to re-shape them and to adopt more equitable procedures.
It is significant that along with BRICS Goa hosted a meeting of Heads of the BIMSTEC countries. This was an Indian initiative of considerable symbolic value, billed as an outreach, and with the great merit of proclaiming BRICS’s intention of expanding its circle of cooperation. BRICS is thus not an inward looking group trying only to maximize the benefits of its members but as a body seeking to establish closer ties with other like-minded groups.
Economic decisions as identified in its earlier meetings were reaffirmed in Goa, for these have given BRICS distinctiveness and practical significance. In this context, the New Development Bank came in for mention and there was general satisfaction at what it had been able to achieve in its short period of existence. The agreement on Contingent Reserve Arrangements is another important decision of BRICS and it was reaffirmed in Goa where its operationalization was announced. Goa thus marked an important stage in the emergence of BRICS in the global economy.
Economics may be the core area but the political dimension of BRICS was very much in evidence at Goa. As in so many other multilateral meetings, much of the action took place around the margins of the main conclave. A very useful meeting of this nature was the one between Prime Minister Modi and Russian President Putin, as a result of which some of the shadows that have recently tended to creep into this very important relationship were dispelled. The announcement of major arms deals between the two countries soon after the top-level meeting in Goa showed that, notwithstanding doubts expressed in some quarters, their relations were in good shape and set to develop further.
The Goa Summit took place at a time when Indo-Pak ties were in great disrepair as a result of the cross-border attack at Uri. India has worked hard to ensure that Pakistani actions in support of terror should be highlighted in all international forums, and it was to be expected that there would be intensified focus on this issue at Goa. In the lead-up to the Summit the anticipated SAARC meeting had to be cancelled as some of the members did not agree to take part after the terror attack at Uri. At the Summit and in the bilateral meetings that accompanied it India was assiduous in driving home to the participants the need for international solidarity in standing firm against terrorism in every form. The conference document was clear and strong on this point and can be seen as another important step in isolating countries that provide sly encouragement to terrorist groups.
However, though there was nominal solidarity, and indeed nobody could oppose the decision to denounce terrorism in all its forms, there were differences within the group on what was implied by their collective stand. India sought a clear condemnation of the tactics adopted by Pakistan and the point was forcefully made in the outreach Summit that added BIMSTEC to the BRICS group. Despite the prevailing sentiment on this point, no formal position pinpointing Pak actions could be adopted, nor did it prove possible to put Pak-backed terror groups in the same category as some other such groups in the Middle East that were specifically mentioned in the communiqué. This was because China stood in the way and held out against steps that could unambiguously name or identify Pakistan. Thus Pakistan was able once again to take advantage of its close association with China to mask its complicity in terror.
Though it could have wished for more India went along with the final conclusions of the meeting. As host country it had responsibility for ensuring that conference differences should not get out of control and that the solidarity of the group should not suffer owing to disagreements on specific issues. And though the final communiqué was less forthright than it might have been, there was compensation in that Goa provided a platform and permitted wide dissemination of the message India wished to convey.
Thus BRICS was able to handle the obvious differences between India and China on matters involving Pakistan. These differences have been on view for many years and could not be expected to disappear through the agency of BRICS. However, India-China relations remain friendly and their overall cooperation continues to grow, as shown by the decision of the Chinese President to make a personal visit to Goa. This is one of the important results of the Summit and should not be obscured by differences on some issues.
As a collective body, BRICS is still evolving and its international voice is progressively strengthening. It can be expected to play a bigger part in international affairs as the instruments it has developed, the Bank and the CRA prominent among them, extend their reach. Goa showed that BRICS is well launched on its chosen path of bringing greater dynamism and equity into global affairs.
Then and now
Source: By K. P. Nayar: The Telegraph
" It does not have to be that way." Those eight words of a chorus line made memorable by John Edwards, the vice presidential running mate during John Kerry's unsuccessful American presidential bid in 2004, are applicable to the just concluded Brazil, Russia, India, China, South Africa summit in Goa.
It was not that way, as Edwards would convincingly put it in a very different setting, that New Delhi conducted its neighbourhood diplomacy or, for that matter, dealt with Moscow 20 or 25 years ago when the diplomatic challenges that this country faced were no different from what Narendra Modi faces today. India was a far less confident country then, in the early to mid- 1990s, than it is today. To the eternal shame of most Indians who lived through that period and would like to forget those tough years, the country's gold reserves had been pawned, not just on paper, but the gold was physically transported to Switzerland, ordered by none other than then finance minister, Yashwant Sinha, who has now turned into a holier- than- thou critic of the current prime minister.
The United States of America was piling pressure on India on every front. Human rights abuses were alleged in Jammu and Kashmir and the Northeast; child labour fuelled considerable Indian exports especially items like carpets and handicrafts; there were trade reprisals against New Delhi under Section 301 of the US Trade Act of 1974 initiated by the much- reviled Carla Hills, the then American trade representative; there was India's nuclear ambiguity and its unwillingness to sign the nuclear non- proliferation treaty... the list was long and overwhelming.
At last, with the collapse of the Soviet Union, Washington had found a chance to punish New Delhi. In Washington's view, New Delhi had betrayed the global community of democracies or the socalled free world with its friendship with the “evil" Soviet empire. That friendship was seen in the West — in spite of India's non- alignment — as an alliance. In any case, the Americans had described nonalignment as “immoral". Successive prime ministers had stood up to indignantly righteous Americans from John Foster Dulles to Richard Nixon the way few thirdworld leaders had done. The turning point came when the US formally questioned the validity of the instrument of accession by Jammu and Kashmir to the Indian Union signed by Maharaja Hari Singh on October 26, 1947. I recall with unease the shock with which the rejection of the instrument of accession by the first US assistant secretary of state for South Asia, Robin Raphel, was received in New Delhi at every level. “We view Kashmir as a disputed territory. We do not recognize that instrument of accession as meaning that Kashmir is forevermore an integral part of India. And there are many issues at play in that time frame, as we all here know," were the exact words that Raphel used in a conversation with the Indian press corps in Washington on October 29, 1993.
It is not unreasonable to conclude that if an American official were to say something similar today, at least some Indian television channels will not report such a US statement because it would be deemed anti- national. Blessed is the cat that drinks milk with its eyes closed in the belief that no one can then see what the animal is up to on the sly. In the days that followed, the then Chinese ambassador in New Delhi sought a meeting with a senior official in the ministry of external affairs dealing with China.
When the appointment was granted, the ambassador had an incredible message to convey from Beijing. China, he told the Indian official, was a party to the Kashmir dispute. Legally, such a position was inadmissible. But in Realpolitik it was a statement of fact because China was in de facto possession of territory of pre- Partition Kashmir, which Pakistan had gifted to Beijing under a bilateral agreement in 1963. The ambassador then told the Indian official that Beijing realized that Washington was conspiring to prise Kashmir out of India. To the best of my recollection, he said that it was with the aim of creating an independent Kashmir. The envoy did not say it in so many words but the unstated message was that an independent Kashmir would have been for Washington what it would now like Ukraine to be vis- à- Vis Russia.
An independent Kashmir is geographically an invaluable listening post into China and strategically a launching pad for missiles and even nuclear warheads that can be aimed at the heart of the People's Republic. No one will say it publicly any more in these days when Modi is on back- slapping terms with “Barack". But within India's intelligence community and among the country's cerebral diplomats, there is still deep suspicion that one of the options in the Central Intelligence Agency files in the spy outfit's Langley headquarters is strategic use of Kashmir in the event of its independence from India and Pakistan.
After all, that is how all superpowers retain and expand their hold over the world. The ambassador made it plain, and without the slightest shadow of doubt, that China stood shoulder to shoulder with India against American pressures at a time when this country was weak and vulnerable. Although China's claim that it was a party to the Kashmir dispute was legally inadmissible from an Indian point of view, I recall the immense relief among those in the government — their number was, of course, very few — who were briefed about this episode at that time. How differently things were done in those days! As John Edwards would say, " it does not have to be" the way things are done nowadays. As a nation, Indians must reflect why and how things have changed, and certainly not for the better in the way New Delhi and Beijing engage each other. Nearly a year passed after the Chinese envoy's call on South Block and another shock occurrence made those at the top of the Indian government sit up. India, which had midwifed Nepal's transition from the panchayat era to constitutional monarchy, understandably got the jitters when, belying expectations of a continued and cosy relationship with the Nepali Congress, the Communist Party of Nepal ( Unified Marxist- Leninist) came to power in Kathmandu.
On November 30, 1994, Man Mohan Adhikari was sworn in as prime minister of a CPN (UML) government. India worried that Adhikari would take Nepal out of India's sphere of influence and make the world's only Hindu kingdom a partner of China. Of particular worry among India's intelligence agencies was Adhikari's record during the 1971 war for the liberation of Bangladesh. Adhikari, according to their accounts had described the war as an act of aggression by India against Pakistan.
P. V. Narasimha Rao, who was prime minister both during the episode involving Robin Raphel and at the time when Adhikari was elected to head Nepal's government, had no hesitation in calling Harkishan Singh Surjeet to his 7 Race Course Road residence for topsecret talks on Nepal. Rao shared his worst fears about Nepal with Surjeet, who, in turn, readily sent an emissary from his Communist Party of India (Marxist) to meet Adhikari in Kathmandu. When the emissary returned from Kathmandu, Surjeet went back to Rao along with the emissary and conveyed Adhikari's assurance that nothing would change between Nepal and India as long as he was in charge.
Indeed, very little changed during almost one year that the CPN (UML) remained in power. Meanwhile, China got wind of the CPI (M) mission to Adhikari. Beijing's ambassador went to South Block and assured the ministry of external affairs point person dealing with the subject, an outstanding Sinologist trusted by all for his expertise, that China had no intention of rocking India's Nepal agenda. China did not, of course, do it out of altruism. Stability in Tibet is very much linked to ensuring that the Indian applecart in Nepal is not wilfully upset from the outside. But 2016 is not 1994, and India's long- standing Tibet policy is undergoing a rethink within the ruling party, if not in the government.
It does not have to be that way, said John Edwards, and he was lamenting the state of affairs in his country. It is tempting to speculate what would have happened if Modi had called Sitaram Yechury to his residence and taken the CPI (M) leader into confidence about his concerns on China well before the BRICS summit — in fact, well before this government's relations with China slipped into an uncertain phase.
How to tax tobacco under GST regime
Source: By Vijay Chibber: The Financial Express
The passage of the GST Bill by Parliament represents the start of a new phase of economic reforms in the country which will have far-reaching impact. With the politics of getting the legislative hurdles out of the way, the challenges of implementation of GST are now before us. As the Centre and states converge on the details, they have shown a seriousness of purpose and intent which is most welcome. The ambitious timelines for roll-out of this major tax reform by the prime minister now appear to be achievable as the details get worked upon in a harmonious manner. Given the above, the primary objective of a genuine pan-India common market is becoming increasingly viable. The secondary benefits of better “capture” of all transactions, i.e., goods and services, will also happen, resulting in a substantial part of the ‘informal’ economy shifting to the ‘formal’, thereby positively impacting India’s GDP profile.
GST has been attempted in several geographies, albeit with mixed results. Similar benefits will undoubtedly accrue in India over the next 2-3 years as the GST framework gets fully established. The outcomes can, however, be significantly ‘amplified’, if the categories hitherto exempted from the tax-net or taxed in a distorted manner, are revisited simultaneously. This will also help provide a cushion for any shortfall in revenues in the initial years.
An obvious example of such a sector is tobacco, the use of which is universally accepted as being harmful, and in the Indian context, a major health concern with particular reference to the habit of chewing tobacco. Almost 560 million kilos of tobacco is consumed in India annually, of which 68% in quantity and 48% in value terms is currently untaxed. Cigarettes which account for just 11% of tobacco consumption account for 87% of tobacco tax revenues. Bidi, on the other hand, is exempted from VAT in nine states and taxed at a low value in 13 others. The situation is even more skewed in respect of chewing tobacco (khaini, gutkha, etc) where almost 90% evades the tax net altogether, notwithstanding the fact that it is relatively the more serious health hazard in comparison with bidi and cigarettes, in that order. Even within these three segments, attractive tax arbitrage exists, particularly so in respect of cigarettes due to high and differential rates of VAT.
The additional revenue potential if the entire value of tobacco is brought under the tax net is estimated at over R30, 000 crore. Cigarette-centric tobacco taxation has become a double jeopardy by undermining both healths as well as revenue objectives. While tobacco consumption increased by 38% from 406 million kg (1981-82) to 562 million kg in 2014-15, the consumption of cigarettes declined from 21% to 11% during the corresponding period. The loss of revenue is primarily due to fragmented manufacturing in the unorganised sector and rampant tax evasion. The cigarette-centric tax policies continue to expose the consumers, particularly at the lower socio-economic strata to substandard and unhygienic tobacco products.
At the current tax ratio, the effective incidence of tax per kilo of tobacco used in cigarettes is over 50 times more than the tax on other tobacco products. This huge tax gap disincentivises the consumer from consumption of legal, duty-paid and relatively less harmful cigarettes and encourages her to shift to more harmful and tax-inefficient tobacco products like khaini, bidi, gutkha, etc. This skewed tax structure has in fact led to an increase in the share of other tobacco products, from 79% in 1981-82 to 89% in 2014-15. The incidence of tax on cigarettes with reference to per-capita GDP is also much higher in India relative to other major markets like the US, China, Australia, etc. Thus, it is no surprise that India is today the fourth-largest market for illicit cigarettes, with FICCI estimating the annual loss of revenue at over R9, 000 crore.
GST will be a real game changer if it can factor in the need to remove the distortion and infirmities of the current tobacco taxation policy. An equitable taxation structuring on tobacco will not only ensure sustainable revenue buoyancy but also, more important, address the bigger concern of rampant use of chewing tobacco which is a major health concern in the country. The way forward is levy of GST on all unmanufactured tobacco at the standard rates with input tax credit at every stage of value addition. The Centre can levy excise duty on all tobacco products as currently being done. This will discourage under-valuation and keep it litigation-free. Similar to tobacco, there are several other verticals where there is an urgent need for tax rationalisation and reforms.
For too long have we allowed populist policies to determine our tax paradigm? The full benefit of GST will accrue only when the tax structures are determined on a scientific and principled understanding based on empirical evidence and by adopting global experience and best practices. A good beginning can be made with the taxation strategy as outlined above on all tobacco products with the primary objective being better public health on which bipartisan support of all political parties is possible.
U-turn by Philippines
Source: By Bhopinder Singh: The Statesman
When Rodrigo Duterte took over as the President of Philippines on June 30 this year, attention was focused on China’s belligerence in the South China Sea and the ensuing judicial case between Philippines and China before the Permanent Court of Arbitration at The Hague. On 12 July, the court ruled strongly in favour of the Philippines. It observed that China had “no historical rights” over the disputed Scarborough Shoal. The wary neighbourhood sighed a collective relief at the verdict calling the Chinese bluff of the brazen “nine-dash-line” approach that even threatened the sovereignty of other countries like Malaysia, Vietnam, Taiwan, and Indonesia. It seemed the famed “Pivot” approach -- as propounded by Hillary Clinton in the seminal America’s Pacific Century, with undertones of recognizing the emergence of a hegemonic China and therefore the need to contain the same -- was finally playing out and taking shape with the strategic alignments in the region.
Except for the fact that Rodrigo Duterte was a maverick no one had anticipated.
His background betrays traits of his extreme unpredictability. A self-confessed socialist in a very pious Catholic majority country, he had even cursed Pope Francis during the Pontiff’s visit last year. He is selectively outspoken, populist and crass in language. For a country that is statistically the most pro-American country in the world (89 per cent having confidence in Barack Obama in 2014) he has brazenly reneged the special US-Philippines equation that afforded a political-diplomatic-military shield as the most strategic “Non-NATO” ally of the US. What is baffling is the preferred trajectory towards the traditional foe, China, in an unexpected drift that threatens to tilt the balance of power in the restive South China Sea.
The unexpected U-turn by the Philippines was crafted by President Rodrigo Duterte immediately after the International court’s verdict, when he avoided his trademark triumphalist bluster and offered a conciliatory approach. “War is not an option. So, what is the other side peaceful talk” to calm the angry shock-waves in Beijing. However, this understated sobriety was unusual for man who had earlier promised to jet-ski in the disputed waters and plant the Filipino flag on the Spratly Islands.
On the contrary, his bluster was wholeheartedly reserved towards the Western powers. For a man who has claimed to have shot a fellow student in his youth, made despicable comments about a gang-rape victim (saying that he “should have been the first” to rape), bragged about his licentious and adulterous life, and has willy-nilly encouraged vigilante justice in his anti-drug drive (said to have claimed 1,400 alleged criminals, drug users and street children), his recent sobriquets of “The Punisher” by Time magazine or “Duterte Harry” in ode to his language has made international capitals sit up and take notice of the latest strongman who is scripting an uncharted course for the Philippines. And it is a course that has strategic import for the rest of the world.
His angst is inexplicably targeted at the US, where he is packaging himself in Cold War theatrics and positing the accompanying “imperialism” of the US interest, military forces and stakes in his country. From his infamous description of Barack Obama as, “a son of a whore”, to his cavalier comparison of his anti-drug drive to Hitler likening the same “Hitler massacred three million Jews. Now, there are three million drug addicts. I’d be happy to slaughter them”.
A shocked world watches the new realities in Manila. Beyond the crassness of his words is the implied strategic drift towards China. To please the Chinese before his impending visit to Beijing, he has asked the US to withdraw its troops fighting the Islamist militants in the Philippines, has accused the CIA of trying to kill him, has declared that the ongoing US-Philippines military exercises on the Island of Luzon would be the last, and further threatened to withdraw from the United Nations, and instead, form an alternative multilateral equivalent with China and its vassal African nations.
Clearly, he is playing one international power against the other and thus far his approach is holding well on the domestic streets as he is seen as an assertive nationalist who does not shy away from calling a spade, a spade. While the international bodies and human right groups are aghast at his anti-drug methods and the accompanying killings, he remains unmoved, “Do the lives of 10 of these criminals really matter? If I am the one facing all this grief, would 100 lives of these idiots mean anything to me?”
Despite the international shockwaves, his domestic popularity chart remains robust as ever. With the open pandering to the sub-conscious and latent “anti-imperialist” sentiments, the strongman bravado and tactics resonates with the populace. Even his shift from the Western group to the Chinese fold is attributed to practical pragmatism. The contours of his new-fangled “independent foreign policy” envisage an active reach-out to both China and Russia. As Washington refused to sell arms to Manila, he is supposed to have reacted furiously and said, “Instead of helping us, the first to hit was the State Department. So you can go to hell, Mr. Obama, you can go to hell”.
The Chinese are gleefully lapping up the providential turn of the tide and a red carpet awaits President Duterte at Beijing. An unprecedented quid pro quo is said to be in the offing. The Philippines will play down the territorial claims on the disputed waters in exchange for mega-bucks from the Chinese in the decrepit and desperate Filipino infrastructure, soft-term loans and military aid as well as assistance for his anti-drug drive. The traditional suspicion between the Chinese and the Filipinos is giving way to a new realm that threatens the traditional equation between the US and the Philippines.
Clearly, it is a U-turn and a gamble of unprecedented international ramifications with the Philippines falling for China’s “cheque-book” diplomacy. Earlier, Maldives had gone the same way. Further, the reassuring and gratifying silence of the Chinese towards strongarm tactics on domestic issues such as human rights, endears Duterte towards China. However, the military in the Philippines has historical and strong ties with the US in terms of training, equipment and outlook. Therefore, a sudden political U-turn with the enemies of yesterday, suddenly becoming the best of friends of today, will not go down very smoothly. The cultural integration of the US-Filipino connects and the accompanying sovereign-compromise vis-à-vis the Chinese will put on test the gamble of President Duterte. For now, the strategic balance in the South China Sea and the Asian waters at large will be monitored very carefully and the process of re-calibration is guaranteed as the situation unfolds.
For quality judiciary
Source: By R D Sharma: Deccan Herald
It is indeed good that the Narendra Modi government is contemplating to revive the proposal of constituting an All-India Judicial Service (AIJS) for the recruitment of district and subordinate judges in lower judiciary. In fact, the setting up of such a service on the lines of the Indian Administrative Service (IAS) and Indian Police Service (IPS) has been hanging fire for a long time.
While most of the government departments have all-India service recruits selected after they have passed the all-India competitive examination conducted by the Union Public Service Commission (UPSC) every year, the judiciary is the only set-up that does not have a national level selection process of its own to attract the best possible talent.
The idea of having an AIJS is not new. The chief justices' conference in 1961, 1963 and 1965 had favoured its creation. The Law Commission, too, has thrice - in its 1st, 8th and 116th reports - called for such a body.
The Supreme Court, first time in its 1991 judgment and second in the all-India judges case (1992), had endorsed the proposal. In its 15th report, the Parliamentary Standing Committee on Law and Justice recommended for its establishment as well and directed the Union Law Ministry to take immediate steps in this direction. The first National Judicial Pay Commission and the National Advisory Council to the Centre have also supported the idea.
Over and above, Article 312 of the Constitution explicitly provides for the creation of a national level judicial service. But despite all this, mere opposition by some state governments and high courts to the reform gave a lame excuse to successive governments at the Centre to sleep over the matter.
In the absence of such a mechanism, it is becoming increasingly difficult to maintain the required judge strength at all levels of courts. For example, against the overall sanctioned strength of 21,612 judges in the country's courts, only 16,698 are working. There are about 4,432 vacancies in subordinate courts, though the sanctioned strength has gone up to 20,502. It is needless to say that the country's 24 high courts with a sanctioned strength of 1,079 judges are simply managing with 601, and thus account for 478 vacant positions.
Similarly, the Supreme Court has only 27 judges instead of 31 including the chief justice, following the retirement of four judges. And whether resultant vacancies in the higher/subordinate judiciary will be filled soon to maintain the full strength is anybody's guess. Consequently, the overburdened available judges are unable to clear the huge backlog of cases, leave alone handle new ones.
If established without delay, the scheme will have its own distinct merits. Primarily, the recruitment of judges right from the entry level will be handled by an independent and impartial agency like the UPSC through an open competition, thereby ensuring fair selection of incumbents. It would naturally help attract bright and capable young law graduates to the judiciary, who otherwise after law graduation prefer immediate remunerative employment in the government or the private sector.
For the subordinate judicial officers, it would ensure equitable service conditions besides providing them a wider field to probe their mettle. As of now, the subordinate judges are recruited from a pool of lawyers who, despite being not so competent, eventually become judges in higher courts, as established lawyers are rarely willing to give up their lucrative practice to join the bench.
In this scheme, the measure of uniformity in standards for selection will improve the quality of personnel in different high courts, as about one-third of judges come there on promotion from subordinate courts. Similarly, judges of the Supreme Court are drawn from the respective high courts. In this process, only persons of proven competence will preside over the benches of superior courts, thereby minimising the scope of partiality, arbitrariness and aberrations in judicial selection. Simultaneously, the quality of dispensation of justice will also improve right from the top to the bottom, as it essentially depends upon the quality of judges appointed to man the law courts.
Apart from serving the noble cause of national integration in a limited sense, the reform should help considerably in toning up the judicial administration by throwing open the appointments to talented persons from across the country. In addition, the objective of introducing an outside element in high court ben-ches can be achieved better and more smoothly because a member of an all-India judicial service will have no mental block about interstate transfers. It will enrich their experience and make them better judges. At present, judges of subordinate judiciary remain only in one state where they are appointed to work.
The creation of an AIJS is a low-cost proposition and should not pose any financial problem to the government in introducing this long overdue laudable reform. The amount collected as court fees, at least, ought to be spent for this purpose instead of being utilised as a source of general revenue for the states. According to an agency report, figures from the Ministry of Law and Justice show that the income generated from court fees is more than the expenditure incurred on the administration of justice by the government.
The AIJS is expected to bring in much-needed uniformity in the selection and service conditions of judges who have been getting the raw deal in subordinate judiciary which, though an important wing of our judicial system, is undeniably in an alarmingly bad state. Whether it is a question of establishing more courts, filling of vacancies or providing basic amenities to judges, the track record of most state governments has been far from satisfactory. Considering all this, the long-felt need for such a service has increased several folds and its formation should not brook any further delay.
If you see him, say hello
Source: By Ruchir Joshi: Deccan Herald
I have not yet read anything by Elena Ferrante. I've been told by many people how powerful the novels are, and I've been saving them up for when my desk is clear of other bits of prose fiction.
I have, however, read the interview Ferrante gave to The Paris Review and found it, for the want of another word, quite gripping. In her interviews Ferrante touches on the fact that she has chosen to stay anonymous, to avoid the public rituals, the runnings of the gauntlet, of the writerly world, the book launches, the festivals, the author photographs and, by implication, all cultish things that grow on writers' lives like the leel — the surface moss — that layers ponds, obscuring a writer's vision or muddying the clean connection between lived and observed reality and its imaginative but true expression.
Reading the interviews, I envied many things about Ms Ferrante, her obviously deep mind, the clarity of her articulation, her unpretentious self- deprecation, but also the brilliance of the move of choosing anonymity. Not for her the scurrying away of critics when they spot you after having given you a bad review, not for her the whispering into ears by literary awards judges who tell you they were pushing for your book except so and so played a very dirty game, not for her the fawning of idiots who understand nothing of your work yet feel they need to obsequiate like banshees.
No, she (or he) could just attend all the book events and parties, listening to the unadulterated criticism of her books and also the unfiltered, honest praise, s/ he could even discuss her own work with people, ' neutrally', or use the gambit of ' oh, I haven't read that yet, what's it like?' Recently, in a piece published by The New York Review of Books, an ' investigative' journalist ' exposed' Ferrante's real identity by digging into the payments made by her publishers.
For us desis, the name that was thrown up sounded remarkably Indian at first. Upon examination, it became clear that Signora Anita Raja had no Sub- Continental muse- corpuscles coursing through her veins, the name Raja is probably pronounced ' raya' and comes from Anita's father, who was a judge in Naples. This, of course, was irrelevant to the debate that has ensued after the article came out. Broadly, there are two camps, the journos and the writerly types, on either side of the divide.
For many Journalistas, the investigation fell completely within the rules of fair play: Ferrante and her publishers had deliberately built up the business of her pseudonym, letting everyone know that it wasn't the writer's real name and that the writer preferred and fiercely protected her anonymity. What might have begun life as a decision stemming from modesty and a genuine aversion to being in the public eye had now been turned into a brand amplifier and was therefore a fair target for a public uncovering.
For the Authorites, the article was a gratuitous, unwarranted intrusion into a writer's personal life, a kind of burglary that ransacked an artist's private domain and irreparably damaged the place from which she had chosen to work. ‘Obviously, if her life had been at risk or something, the reporter would not have revealed her real name,' the Journalistas argued.
' She wasn't a public official or a criminal, her assumed persona and her anonymity put nobody's life at risk, there was no public good to be achieved from the revelations, so why make them at all?' argued the Authorites. ' While this is a debate about the right to privacy and anonymity, it is also a debate about the worth and meaning of art , says Vohra, pointing out that '... in these times of celebrity self- promotion and the currency of thinking of the individual self as a brand, anonymity has a radical charge .' Before concluding, Vohra points out that ' when utterances and identity are tightly fused and what you say is constantly filtered through your identity alone, it denies the possibility of moving forward politically and culturally.' Someone who understood this several decades ago was a young American singer and poet who also took on a name different from the one he was given at birth. When Robert Zimmerman became Bob Dylan, he was in essence saying, ' look at the man performing before you, listen to my songs, listen to the words, and don't worry about who my mommy and daddy were, or where I come from.' As he made his transition from Minnesota to Manhattan, Dylan put on many different masks, assumed many different personas, told all kinds of fictional stories about his life upto then.
He did this for many reasons apparently, to pull the chicks, to impress record producers, to get away from any overtly Jewish identity, to get away from any taint of Hibbing and Duluth and small- town middle America, and yes, to force people to look at him and hear his songs without the ' framing' of his background or what one might call his ' American caste'. While depreciative of his past, the young Zimmer- Dylan was quite cocky about his present and only slightly hesitant about his future: ' I'm a poet, and I know it, hope I don't blow it .' Across the years, far from blowing it, Dylan went on to redefine poetry, writing, and the modern American music of blues, folk and rock (while leaving the jazz family more or less alone). For the purists and sticks in the mud to object to this man being given a Nobel for Literature is patently absurd — far more than many a keyboard- cowboy, Bob Dylan is a character who scribbles away on pads, on the backs of envelopes, huddling in blankets on people's sofas or bumping along on a tour bus, reading voraciously, dismantling and rejigging modern prose, poetry, philosophy, all of it. Such is his range, there are so many succeeding Dylans that in Anglo- Saxon literature the only one you can compare him to is Shakespeare, or the crew that constituted the many different Shakespeares we have. In Todd Haynes's wonderful anti- biopic I'm Not There several different people, including Cate Blanchett, play Dylan, and, as the trailer says, the film is as inspired by the false stories as it is by the true ones.
Again, as the trailer quotes, BD says ' I can only be me, whoever that is.' T he thing is, far more than most other American folk and rock musicians (to take just one category) at the base of Dylan's music are his lyrics, the act of his writing. And in that writing, as Dylan says of Dante, so many of them words rang true/ And glowed like burnin' coal/ Pourin' off of every page/ Like it was written in my soul . The thing is, many of us across the world feel that Dylan transcended the Nobel Prize many years ago and it is the Swedish Academy that is honouring itself by giving him the award this year. In her Paris Review interview, Ferrante says that ' Writing requires maximum ambition, maximum audacity, and programmatic disobedience.' If there is anyone alive today who totally personifies that axiom, it is Dylan.
Even as we wait to hear Mr Bob's reaction to the prize, we can make other conjectures on the nature of art and anonymity and multiple identities. As Paromita Vohra asks towards the end of her piece: ' Imagine for a minute if Chetan Bhagat wrote anonymously. Would his books be either as successful or as reviled?' Or, imagine, as is far from unlikely that in the near future the literature Nobel might go to a certain Italian woman. What will Ms Raja- Ferrante do when she hears the news? How will she handle the award ceremony and the customary laureate's speech? Will it be a recorded speech or will we get to listen and watch as ' the ghost of electricity howls in the bones of her face '? Or, if she can't please everyone will she decide she ‘might as well not please anybody at all’?
Change the mindset
Source: By Salil Desai: Deccan Herald
A fortnight ago, nine members of a housing cooperative society were arrested in the Mumbai suburb of Vasai for trying to dissuade a person from selling his flat to a Muslim family, by refusing to provide an NOC.
This kind of ganging up, to keep people from the minority community out, has been going on for a long time in various cities. The most infamous instance in recent times was when a right-wing organisation successfully picketed and openly harassed a Muslim family to vacate a bungalow in a predominantly Hindu locality in Bhavnagar, Gujarat in 2014. But while nothing better can be expected from such organisations, what explains the tendency of educated, urbanised, middle-class people to carry their prejudices to this level?
In the Vasai incident, it is intriguing that two Muslim households were already staying in the society for several years. So, what prompted 11 members to object to another Muslim family from taking up residence there, if not sheer prejudice and majoritarian chauvinism? They were surely aware that, legally speaking, they were in the wrong. The laws governing cooperative housing societies clearly state that the society has no power to prevent a member from selling his flat to whosoever he wishes to, and certainly not on such arbitrary grounds. Moreover, they had also flouted IPC Section 295 (A) in hurting religious sentiments by refusing the NOC on the basis of the buyer's religion.
Therefore, such open impunity stemmed from the belief that the buyer or seller would be cowed down by the stand taken by the society members, especially because the buyer belonged to the minority community. Secondly, the members also probably believed that the authorities would simply not take any strong action to enforce the law because they were predominantly from the majority community.
However, unexpectedly for them, the police did act promptly by arresting nine of the 11 members who had objected when a complaint was filed by the buyer. As a result, the 11 members had not only to immediately withdraw their objection and provide the NOC, but also had to apologise for hurting the buyer's religious feelings. Sadly, the fact is, this kind of discrimination and prejudice is deeply ingrained and widespread in society and mostly below the radar. Minority tenants and house-buyers are routinely kept out in direct and indirect ways. There is a sort of undeclared consensus practised with an unashamed sense of legitimacy, as if it needs to be done to safeguard the sanctity of our living and cultural spaces on one hand and the physical security of our localities on the other.
Take, for instance, the news item which immediately followed the Mumbai incident. In Bharuch and Mandvi in Gujarat, Muslims were reportedly banned from participating in 'garba' and 'dandiya' events, ostensibly to avoid law and order problems and prevent eve-teasing. If this viewpoint was restricted only to fringe elements, it would be outrageous enough, but it is appalling that even the most mild-mannered of us seem to believe that such measures are perfectly reasonable and necessary.
How are we ever going to outgrow such strong prejudice as a people if education seems to have made no difference whatsoever? What exactly is behind this mindset? What is it that makes us Hindus so insecure despite being an 80% majority in our country, that we have this uncontrolled hostility towards minorities, especially Muslims? Why do we feel so threatened, that we don't want to have them as our neighbours, breathe the same air as they do and keep them out of sight and our existence? Why do we, subliminally at least, see them as undesirables?
There was a time when we wouldn't admit it, but now many people seem to express it openly, as if it were some badge of honour. Indeed, the Shiv Sena objecting to renowned actor Nawazuddin Siddiqui acting in the Ramlila in his home town in Uttar Pradesh only because he is a Muslim, too, is a manifestation of the same disturbing narrow-mindedness and prejudice.
There are many reasons for this, expertly nurtured and propagated by right-wing organisations - right from purported oppression of Hindus during the Mughal rule to partition to secularism and so-called minority appeasement by the Congress to religious fanaticism to Kashmiri militancy and Pakistani terrorism. In addition, there is a cultivated anger against Muslim personal privileges like polygamy and beef-eating to general disgust about their apparent backwardness, dressing and lack of hygiene.
In other words, we simply look down upon them as human beings - unfit to share our immediate surroundings. And, that is precisely where the danger lies. We, as a society, are precariously close to crossing the threshold of believing that our largest minority community is unworthy of normal humanitarian consideration. No wonder, even the BJP leader and Minority Affairs Minister Mukhtar Abbas Naqvi echoed similar sentiments when he said that sometimes Muslims feel like second-class citizens.
Hasn't the time come for ordinary citizens to consciously arrest the levels of casual prejudice we harbour against minorities and reverse the trend if we seek to be a progressive, modern nation? We can't aspire to be a great people if we behave like reactionary dwarfs, who create majority enclaves for themselves and prefer minorities to stay in their own ghettos. What bigger gesture of trust can there be than a Muslim family wanting to stay amidst a predominantly majority community housing society? What can foster friendship and amity better than minorities wanting to join in dandiya? Is that to be welcomed or rebuffed? Perhaps, the key lies in perceiving these not as attempts by minorities to invade or infiltrate our living and cultural spaces, but as efforts to integrate and assimilate. Can we tweak our mindset?
Source: By Arunabha Bagchi: The Statesman
Vladimir Putin is the most hated person for the establishment politicians in the West today. The real turning point was the annexation of Crimea by Russia in 2014. Trouble was already brewing for a while as NATO tried to push into the periphery of Russia using the ploy of “association agreement” of the former Soviet republics with the European Union (EU). Russians always argued that this undermined the tacit agreement between the United States and the Soviet Union as a precondition for the reunification of Germany. The West went ahead anyway following the Wolfowitz doctrine that is still used as the guideline of US foreign policy since the dissolution of the Soviet Union:
“Preclude the emergence of bipolarity, another global rivalry like the Cold War, or multi-polarity, a world of many great powers, as existed before the two world wars. To do so, the key was to prevent a hostile power from dominating a ‘critical region,’ defined as having the resources, industrial capabilities and population that, if controlled by a hostile power, would pose a global challenge.”
The effort of the West to ‘capture’ Georgia did not work, and even led to a small war in the Caucuses. When Ukraine’s pro-Russian president, Viktor Yanukovych, reneged on an earlier commitment to sign the “association agreement” with the EU under intense pressure from Moscow, the pro-EU lawmakers from the western part of Ukraine deposed the president and he fled to Russia. During that turmoil in Kiev Vladimir Putin annexed, on 18 March 2014, Crimea, a tiny peninsula on the Black Sea that was technically part of Ukraine. The West immediately condemned Putin for violating the post-Cold War arrangement and imposed economic sanctions on Russia.
There were numerous conflicts over Crimea throughout history, first between Russia and the Ottoman Empire and later between Russia and the western powers. After the October Revolution, French and English efforts to take control of Crimea were thwarted by the Red Army. Although inhabitants of Crimea were predominantly Russian, Nikita Khrushchev, in a gesture of goodwill, gave Crimea away to the Ukrainian SSR from the Russian SSR in 1954. This uneventful incident of that time became a serious potential problem when another Russian leader, Boris Yeltsin, in an even more bizarre gesture of goodwill, decided to break up his own country and the independent Republics of Russia, Belarus and Ukraine were formed after the collapse of the Soviet regime in 1991. Russians must have panicked at the prospect of depending on the whims of Ukraine for the use of their huge naval base at Sevastopol in Crimea, the only warm water port in their possession that was leased from Ukraine until 2045. The possibility of Ukraine tying up with the West in the future posed a permanent danger to Moscow on the continuing use of the naval base in Crimea.
The annexation of Crimea was immediately followed by civil war in Ukraine between the pro-western government in Kiev and the Russian-speaking rebels in eastern Ukraine. The worst incident was the downing of the Malaysian Airlines flight MH 17 over rebel territory by a Russian Buk missile on 17 July 2014, resulting in a huge embarrassment for Moscow. The passengers were largely Dutch tourists, and included some top Dutch scientists planning to attend a conference in Indonesia. This led to the imposition of more stringent sanctions by the West. With a stalemate on the battlefront, an uneasy, and often violated, truce was agreed to under the Minsk protocol signed on 5 September 2014. It was a proxy war between the West and Russia that is still continuing at low key despite the signing of truce between the warring factions of Ukraine.
The theatre of operation on Russian confrontation with the West shifted to Syria the following year. To contain Iraq and appease the traditional Sunni allies like Saudi Arabia and Turkey, the West fomented trouble in Syria by transforming street protests there against their president in 2011 into a sectarian conflict. The purpose was to get rid of the Syrian President Bashar al-Assad who was supported by Iran and Hezbollah, both bulwarks of the Shias. Around the same time, the Sunni militants of Iraq formed the Islamic State of Iraq as soon as the Americans withdrew their troops in 2011. They were initially tolerated by the West as a counterweight to the Shia supremacists running amok during the rule of Nouri al-Maliki. The Islamic State of Iraq used this opportunity to take over a large part of the northern and eastern parts of the Syrian territory, with Raqqa as its ‘capital’, and was from then on better known as ISIS. Soon many other rival rebel groups sprang up, including the Syrian Kurds and the al-Qaida affiliated Al-Nusra front. There are also tens of so-called moderate fronts supported by the West, all of which are absolutely useless on the battlefield.
Russia has consistently supported the Syrian President in all international forums and, because of the prevarication of the West, slipped into the chaos in Syria with direct military involvement from 30 September 2015. At that moment the Syrian government was fast losing ground and only tenuously holding on to a small territory around the capital Damascus. The scale of Russian involvement with ground forces advising the Syrian Army, massive aerial bombing from their naval base in the Syrian port city of Tartus and their audacity of firing cruise missiles from their warships in the Caspian Sea and the Mediterranean to hit targets in Syria stunned the western experts. It changed the tide of war in favour of the Syrian government. Russians are bombing all rebel targets, except the Syrian Kurds. This includes the Al-Qaida affiliate, the Al-Nusra front, which is infuriating the West, as it is the only rebel faction capable of countering ISIS in the ensuing power struggle if the government of Syria eventually falls. The current savage bombing of the Syrian city of Aleppo by the Russians and the expected military onslaught there by the Syrians made a mockery of the latest of many ceasefire plans agreed upon by the US and Russian foreign ministers. The latest ceasefire is now virtually dead, amidst accusations by the West of Russia committing war crimes in Syria. This is the lowest point of the relationship of Russia and the West since the end of the Cold War.
Russia has dramatically come back from the cold. Putin has a clear strategic edge over the West at this moment. Russia has become a key player in the Middle East. This is borne out by the fact that her long-term adversaries Israel and Turkey are mending their fences with Russia. The relationship with Iran has improved so much that Russian planes used an Iranian Air Force base to bomb rebel strongholds in Syria. This is so different from Russia right after the disintegration of the Soviet Union when a drunken leader, Boris Yeltsin, and his coterie of oligarchs in cahoots with western ‘big business’ ruled over a demoralised and pauperised population. After Putin came to power in 2002, the economy made an impressive turnaround. With the collapse of global commodity prices, the Russian economy is now undergoing a severe crisis of prolonged recession, with no end in sight. This made the aggressive posture of Russia from Crimea to Syria all the more puzzling to western strategic thinkers. The establishment media in the West is furious with Vladimir Putin for upsetting western designs.
According to the Russian expert, Professor Stephen Cohen, Putin’s unexpected behaviour reflects the power struggle going on in the Kremlin among the adherents of the “Washington Consensus” and the “nationalists”, with the latter faction ‘accusing’ Putin of acquiescing to the western plan to encircle Moscow. Putin came to power as a moderator between these two factions, and is now being forced to side with the “nationalists” under military, economic and financial pressure from the West. Putin is hugely popular in his country. Russians seem prepared to accept economic hardship in return for retrieving some of their past glory. Even more surprisingly, he succeeded in splitting western public opinion by drawing admiration among the nationalist politicians in Europe and those supporting Donald Trump in America. Whether Putin can sustain his Odyssey given Russia’s current military and economic weakness is anybody’s guess at present.
Source: By S. L. Rao: The Telegraph
China in 2016 is estimated to grow at 6.6 per cent, the United States of America at 1.6 and India at 7.6. The only similarity that most see between the US and India is that India is the world's largest democracy and the US is the second. Going further, they are perhaps the two most diverse nations in the world, in the number of races, religions, and languages. The US got that way by immigration and then by birth. China is an autocracy with a more homogeneous population. We like to think of our youthful population as a potential for economic dividends in future years but are investing little for its development. The corporate sector in all three countries is overleveraged with debt, as is the household sector in the US, but not so far in India and China. Inequalities in income and wealth in all three populations are high and rising.
India is more dissimilar to the others. The International Monetary Fund estimated the 2016 gross domestic product of the US to be 18,558,129 in international dollars, that of India to be 8,642,758 and that of China to be 20,853,331. India's GDP is much smaller, and even smaller in per capita GDP than the US, with its much smaller population, and China, which has a relatively static population. In the last two years, India's growth has outstripped that of most other countries, including the US, and is higher than China's recent declining growth rate.
The composition of the GDP is also different. Industrial production in 2014 was 24.2 per cent of GDP in India, and 43.9 in China. Industrial production grew at 6.3 per cent in China, the US 1.1 and India at minus 2.4. We are far from being an industrial economy and getting there very slowly. This structural difference between India and the other two is likely to limit general prosperity till more Indians move from occupation in agriculture to industry and services. Services as a percentage of GDP were 43.8 in China and 56.9 in India, but more people in India are in services that need few skills and are therefore poorly paid.
Agriculture in the US contributed 1.12 per cent, China 9.1 and India 25.8, with most people dependent on it, leading to poor per capita incomes. Indian agriculture is also inefficient, with yields of most crops lower than that of most Asian countries. The shares in GDP are not reflective of relative outputs. The US is highly indebted overseas at 114 per cent of GDP, while China has 16.2 and India 6 per cent. The US also has enormous public debt at 104.17 per cent of GDP, while China has 31.7 and India 49.6 per cent. It seems that prosperity requires high borrowing by governments and their enterprises. However, if we look at total external debt, counting public and private debt, the US as percentage of GDP has 114 per cent, China 16.2 and India 6 per cent. The US is highly leveraged and India and China are far less so. The status of the American dollar as a reserve currency helps the US. It is thus that the resources of other countries are valued in dollars, in which most trade is conducted. This will soon be the case with China, which has a huge foreign exchange reserve, booming international trade and has taken the first steps to attain an international currency.
The domestic savings rate in China was 48 per cent of GDP, India 31.1 per cent, and the US 16.9 per cent. The corporate sector is a big and growing borrower, and the US savings rate might fall further. In China, corporate debt was 125 per cent of GDP; in India, the corporate debt was 52.7; while in the US, it was 190.4. Both government and corporate debt have fuelled American growth. India and China are following the same route. Savings are high because of high household savings rates, but will fall in the US with the use of credit cards and housing loans. This may not be the best route to take, since it places the economy at the mercy of a volatile financial system. But societies like India and China that model themselves after Western lifestyles will go the way of the US. Thus growth seems to be fuelled by government, corporate and household borrowings and spendings.
As these rises, savings decline and the economy depends on debt — domestic and external. This puts a huge pressure on the lending agencies to vet borrowers and get the debts serviced. In countries like China and India, where banks are largely government- owned and borrowers are either government enterprises or private ones with enormous influence over the government, many of these loans are weakly backed by assets or prospects. The lenders end up with huge non- performing assets and the banks become fragile. In the US, which is the home of private enterprise, there is a similar result for other reasons. Managers of lending agencies are paid bonuses on the growth of their portfolios of loans and tend to lend with significant hope in some cases of being repaid.
The problem is magnified by the very high levels of household borrowings. These are stimulated by very low interest rates, which make borrowing preferred. What is needed is much greater discipline among lenders, whose managers should be rewarded for stable portfolios over a period of years and not just over one year. Loans must be backed by adequate security and not just by personal guarantees. If enforced, this might reduce the level of economic activity. Public enterprises (in India and China) must also be subjected to the same rigorous tests about their present and future prospects. An independent investigation agency must watch to ensure that loans are given to all on honest appraisals and not bribery or nepotism.
The US has similar problems, although borrowings are mostly private unlike in India and China, where they are mostly by public enterprises. However, India has developed a private enterprise system that exercises undue influence on State- owned banks through illegal favours and commissions. India has another set of problems that prevent rapid industrialization. These are the residues of the system of rigid licensing and controls and public interference in corporate decisions by government officials. This has become part of our industrial culture in relation to government. We have a heavy- handed bureaucracy at all levels, and complex rules and procedures. Adeptness at these rules marks the successful ( and many times also prosperous) bureaucrats. These rules and procedures have to go or be simplified if industry is to grow. “Ease of doing business" means this, but the dismantling of these regulations demands expert knowledge that only the bureaucracy possesses.
There is dilatoriness in this effort, especially now at state government, municipal and taluk levels. Industrialization in India faces the new obstacle of rapid changes in technology. These have to do with scale, automation, and robotics. Reproducing cars through 3- D printing may be possible soon. Such a technology calls on new education and skills. It will lead to smaller scales of production and considerable decentralization. India has yet to become industrialized with much large- scale production.
We must plan our financial sector to ensure that we keep high savings rates. We must plan as a society for the next stage of industrialization with smaller- scale production capacities and wider dispersal of manufacturing. We will need far more flexibility in land acquisition and in licences and rules for starting and running factories. It will need much deeper equity and debt markets. Our investments in improving the people through education and skills development must go up substantially. They must be of good quality. We must spend enough so that all benefit and we do not create a small privileged class and a large class of poorly educated and unskilled people. If the rate of present capital investment in demographic improvement is a guide, we will continue to be as we have been for decades, a middling industrial society with a few bright spots.
Take the call now
Source: By Rajendra Pratap Gupta: Deccan Herald
On Independence Day, we heard Prime Minister Narendra Modi saying that his government's motto is to 'reform, perform and transform'. On Sept 1, Carnegie Endowment for International Peace wrote: "India's economy has grown rapidly in recent years, but the country's bureaucratic quality is widely perceived to be either stagnant or in decline." It is time, perhaps, to take a relook at overhauling the bureaucracy. We need speed, efficiency and effectiveness in our entire chain of command. This is the pre-requisite in realising the vision of any statesman. We have had a mixed bag of experiences with the bureaucracy in implementing some of the key announcements of this government including those of the Budget. I would like to make the following suggestions: The reasons our bureaucracy fails are:
1. Unlike the politicians who have to go to the electorate every five years seeking votes as their 'appraisal' for their performance, bureaucrats come with a 'seniority-based promotion' and a defined retirement age, and hence, they may not be much bothered over their performance reviews. In some cases, their Annual Confidential Reports (ACRs) are 'managed';
2. Most of the bureaucrats' approach is to 'control' and 'govern' and not 'work as a team' for 'development';
3. Also, a majority of these bureaucrats work for themselves, and then, there are egos, differences, grudges and dislikes for other bureaucrats. So, there is hardly a 'team approach' in what they do and this drags the performance of the government;
4. Bureaucrats are more 'procedure-driven' than 'outcome-driven'. Union Minister Nitin Gadkari said on May 9, 2016 that it took him a nine-month wait for an approval for an automated parking. This is when Gadkari is known for getting things done from the bureaucracy unlike many of his colleagues. If this is his fate, one can imagine other ministers and common people. So, the time has come that the government goes for reform of this system. If not, our biggest in failure in the coming years and decades may be because of the largely inefficient and unaccountable bureaucracy.
Appraisal system: As of now, we have an appraisal system that looks at ACRs, which only counts for an individual's performance. If the performance and payment of the bureaucrat was based not just on his individual performance but also the performance of his department/ministry and the overall performance of the government, then the bureaucrats would work as a team. So, the first change is: move from ACR to CPR (Comprehensive Performance Review), which includes:
1. Individual Performance Review (IPR): (50% weightage) based on the yearly goals/deliverables assigned;
2. Department's Performance Review (DPR): (25% weightage). Overall departmental review is based on the goals set for the year for the department/ministry;
3. Government Performance Review (GPR): (25% weightage). This is the overall performance rating of the government based on:
a) Facts/data-based self assessment by the ministry/ department (10% weightage);
b) Annual online survey taken by the citizens, for all the departments/ ministries at the Central level (15% weightage).
Increments, variable pay/incentives and promotions of officials should be based on CPR. Implementation can be done in a phased manner starting with the secretaries, followed by joint secretaries and then on to the director level. Major change in bureaucracy from this is moving to a 'performance-based contractual service'. The biggest bane of bureaucracy is their job security. When politicians have to go every five years for their performance review and renewing their term before the electorate, why should the top officials not undergo a review and renewal based on their performance?
All officers of the rank of joint secretary and above must be put on a five-year contract based on their performance review, with a performance-based financial incentive. The salary structure should have a fixed pay and a variable component. If they fail to live up to the performance standards (IPR) of above 80% for three years (out of the five-year term), they must be relieved. Let us not forget that the 'best are first to be hired and last to be fired.'
Nirmal Kumar Mukarji, the last serving Indian Civil Service (ICS) officer who retired as cabinet secretary in 1980, had called for an end to the all-India tenured services while speaking as chief guest at the Indian Administrative Service's 50th anniversary celebrations in 1997. Some thought about post of the private secretary (PS) to the minister at the Centre: the PS to the minister is considered an important bureaucrat but he is a junior IAS officer (below the rank of joint secretary), and hence they play safe dealing with their seniors, as one day they might have to work under these officers. The loser in this case always is the minister. So, we need to consider that the post of PS to the minister should be of the rank of special secretary, which is of a senior officer.
The prime minister recently said, perhaps rightly, that: "We cannot march through the 21st century with the administrative systems of the 19th century." Ironically, we still have the post of the 'collector' in post-British India, and this it shows that the bureaucracy is still in the 19th century! When the prime minister made a proposal of converting the Planning Commission to Niti Aayog, many like me may have thought that it is better "to build a new house than to repair the old one". May be the same approach is needed for the 'institution' called bureaucracy. The transition is critical and we have no time to lose, and there should be a time-bound plan to implement it.
An unconventional enemy
Source: By Prasenjit Chowdhury: The Statesman
The much tom-tommed ‘surgical’ strike and the vicarious pleasure that surrounds it feeds a domestic audience. The self-congratulatory messages might be premature because we never know when the Deep State will strike again. Therefore, it is time to count how many chickens India has, before they come home to roost. Pakistan has proved time and again that it can tinker with India almost at will, at any time of its choosing, and with impunity. It is also apparent that Pakistan, already known as the bad boy in town, is not overly concerned with its image problem or unnecessarily hindered by any moral righteousness or any pretension to it. Until Pakistan is made to pay a heavy and incalculably high price, it would continue to bleed India, perhaps despite it.
The worst fallout of the Uri attack is the vulnerability of the Indian Army. Coupled with the ongoing unrest in Kashmir and the retarded political response to it, India must be wary of being spoken of in diplomatic policy circles and multinational fora like the UN in the same breath as Pakistan again, re-hyphenating itself with the country that it loves to loathe. India - unlike Pakistan - must desist from playing great power games in the absence of a matching military-industrial-economic capability.
While there is a visible upsurge of jingoist slogans (‘jaw for a tooth’) following the nationwide outrage in the aftermath of the Uri attack, there have been greater acts of provocation (Kandahar hijacking, Parliament attack, 26/11, Pathankot) by Pakistan against India. The imprint of Pakistan was traced to both the March 1993 Mumbai serial blasts and the July 2006 suburban train bombings, attacks that had killed more people. But the drumming up of base passions and retaliatory rhetoric might come to salve the hurt to our confused sense of nationalism up to a point and no further. This rambunctious call to war, just to mollify the anger of a domestic audience, would serve us no good.
It must not be forgotten that the mere symbolism of mounting a surgical strike barely a few kilometres into the LoC would not take us far, apart from giving Pakistan the impression that India is ready to take the war to their side, It is prudent to consider if India can show a similar girth if the launch pads are shifted deeper into the PoK or across the international border. Therefore, however much we gnash our teeth in hopeless anger at being shortchanged by Pakistan for the umpteenth time; let us first calculate what India cannot do. India cannot play America or mount a witch-hunt in Pakistani territory for its known bête noires – Hafiz Saeed, Masood Azhar, et al. It cannot even do a China to Kashmir and follow the instance of overrunning Tibet with the Han Chinese. It cannot continue to play the hardline state as it is neither Israel nor Russia, or for the even simpler reason that Narendra Modi is no Ariel Sharon or Vladimir Putin. It cannot be seen as an aggressor state. It does not have enough diplomatic clout to absorb the huge international ramifications that might follow. Besides, Pakistan is no Syria, Iraq or Afghanistan. Pakistan has developed tactical nuclear weapons of low yield as a deterrent against an invasion by the Indian Army - a “one-dimensional” nuclear programme to stop Indian “aggression” before it happens - claimed by one of Pakistan’s foreign secretaries last year. According to a finding, Pakistan is on way to securing the world's third-largest stockpile after the US and Russia and twice that of India within a decade.
This brings us to a nuclear/pre-nuclear, much in the vein of a lapsarian/pre-lapsarian, discourse. Had it been militarily inclined, it would have wrested PoK in 1971 itself, had it not been for the dispatch of the USS Enterprise to the Bay of Bengal during the 1971 Bangladesh War, driving the symbolic politics of keeping the nuclear option open in India. That weaker and poorer country may seek to use nuclear weapons to shape the perceptions and alter the decision calculus of diplomacy and war of advanced military powers is a valid argument. If Washington could have been the object of such a leveraging calculation as part of India’s complex mix of motives in acquiring nuclear weapons in 1971, Pakistan’s growing nuclearisation for managing the situation in Kashmir region since 1991 is the outcome of the same instinct. That partly explains why India is hobbled by Pakistan’s nuclear blackmail. With the nuclearisation of Pakistan, it has subsisted on a sub-conventional conflict with India, particularly in Kashmir, without the fear of a conventional military retaliation from New Delhi. The option of subterfuge in line with ISI, through sustained support of separatism (for instance, recognising Afghan claims on the Durand Line Treaty or supporting the independence-seeking people of Balochistan) and terrorism was never pursued seriously by the Indian political and strategic leadership despite the occasional clamour from the security establishment. Beyond propaganda, what, then, is the way out? Instead of pandering to a vituperative war of words through online trolls and social media, what India can do instead is set its own house in order. It can ramp up its defence establishment, shore up its modernisation programme, seal its porous borders and pay more attention to be vigilant and by all means, should try to chart out a political solution for Kashmir and formulate an institutionalised counter-terrorism strategy. It must try to keep a hawk’s eye on every act of infiltration and build better interdiction capacity to pre-empt and neutralise terror attacks, to which end resolution of our existing unresolved border disputes cannot be put on hold endlessly. The incidents of Pathankot and Uri point to a serious deficit in the army establishment: how can the army in charge of protecting its own people be so cheaply ambushed? The symbolic value of an attack on our Parliament as much on our soldiers is the disdain with which the enemies treat India. On part of our defence establishment, the factor of oversight and foul play borders on criminal laxity. We cannot claim martyrdom for tomfoolery every time. Prime Minister Narendra Modi recently ruled out the full-blown military option as a response to the Uri attack and instead called “upon people of Pakistan to come forward, fight a war on who defeats unemployment, poverty, illiteracy first”. While that itself is a laudable call, it bears recall that India is home to over 340 million destitute people and is the second poorest country in South Asia after strife-torn Afghanistan - Pakistan and Nepal have much lower destitution - according to a poverty estimation study by Oxford University in 2014. In a wide range of basic social indicators, including life expectancy, child survival, enhanced immunisation rates, reduced fertility rates, and even some schooling indicators, India lags behind Bangladesh. We have been warned against the pitfalls of an absurdly uneven and jobless economic growth and against gushing over a few ‘islands of California in a sea of sub-Saharan Africa’.
So far, the singular failure of Indian diplomacy has been its inability to isolate Pakistan - the biggest challenge being weaning the US and China away - and to devise a credible Pakistan and Kashmir policy that lends currency to such notions that had India been diplomatically far-sighted, it could have put paid to the ‘disputed’ tag for Kashmir years ago, or had it played the Balochistan card on a scale with Pakistan playing the Kashmir card, it could have saved itself many bruises. India has not sufficiently upped the ante about the China Pakistan Economic Corridor which is integrally linked to Jammu and Kashmir. Part of the reason for this might be that India had never a taste for the overkill. Short of passion, intent and aggrandisement, it is no match for Israel’s ruthlessness, Pakistan’s venality, North Korea’s recklessness, or the imperial ambitions of China. Burdened with its own heft, India seems to falter on its own contradictions, or compulsions, should you insist. But India must learn to deal with a psychotic neighbour with monomaniacal hatred for it - both militarily and diplomatically.
For a clean judiciary
Source: By Kaleeswaram Raj: Deccan Herald
Across the world, judicial corruption is a matter of serious concern. The ubiquity of the menace ranges from the US to China. The Indian judiciary is no exception. In terms of corruption, judiciary remains the least exposed and the least questioned branch. The underhandedness in judiciary, by its very nature, need not be always connected with money, though that could be a dominant player. Corruption, indubitably, is the most pernicious form of judicial misconduct.
In India, allegations and accusations often came from the doyens of the bar and the bench. Senior counsel and former law minister Shanti Bhushan went to the extent of telling the Supreme Court that eight former Chief Justices of the country were 'definitely corrupt'. He reportedly put the allegation on record. Justice Markandey Katju stated publicly that 50% of the judges of the higher judiciary were corrupt which again the media reported. For Justice Sam Piroj Bharucha, the percentage of tainted judges was 20. It is not known as to how the numbers or percentages were arrived at. But the allegations cannot be totally ignored. We have the Veeraswami case (1991) and the Ramaswami episode of a failed motion for impeachment on account of proved misconduct (1993).
It is unnecessary and perhaps unfair to prolong this piece by adding the names. One can clearly say that no part of the country and no period in her history were free from the consternation for a clean judiciary. The allegations though serious, were often not substantiated. The situation is however embarrassing and the impacts are reflected in the Transparency international's Global Corruption Barometer, 2013. It shows that 45% of the respondents to the survey treat Indian judiciary to be 'corrupt' or 'extremely corrupt'. The attributions or accusations do not amount to findings. But the Indian tragedy is that a finding on a charge of judicial corruption is practically impossible, for want of adequate law or mechanism which we badly need.
The Judges (Inquiry) Act, 1968 is inherently inadequate to tackle the problem and is virtually defunct. Even for a First Information Report (FIR) against a judge, the concurrence of the Chief Justice is a must, according to the judgment in Veeraswami case which however held that judges do come within the ambit of the relevant penal statute - the Prevention of Corruption Act. The rhetoric in Veeraswami judgment ended in a kind of impunity for the errant judges, who became insulated against a straight FIR, again in the guise of judicial independence. The registration of FIR against the delinquents in the higher judiciary cannot be expected to happen due to the rider in Veeraswami verdict.
The Kenyan story: Like inefficiency, corruption in judiciary directly results in erosion of institutional credibility. Litigation or any assertion or defence of legal rights cannot be matters of chicanery or trickery. Therefore, the reforms in terms of efficiency, probity, fairness and openness are to occur simultaneously in the institution, as part of a comprehensive praxis. Former Chief Justice Willy Mutunga's strategies in Kenya set a recent illustrative case. Prior to the reforms, according to the global corruption barometer published by Transparency International, 43% of Kenyans were reported to have paid bribes for "services from the judiciary".
But "the Judiciary Transformation Framework" by Mutunga made a radical change in the traditional and formal mindset. "Judiciary Ombudspersons" and the "court users committees" with statutory backing of the Judicial Services Act, 2011 were novel methods of democratisation. Other devices for "oversight" and "supervision" also were designed. A separate Director was appointed to evaluate the implementation of the strategy. A performance management committee was established in 2013. And all went on well. Reforms altered the public's perception of Kenyan judiciary drastically. Relying on Jay Loschky, the study drafted by Maya Gainer says: "In 2013, a Gallup poll found 61% of Kenyans had confidence in the judiciary compared with a low of 27% in 2009".
We need to draw lessons from such polite endeavours elsewhere. Judicial independence does not and cannot mean total lack of accountability. A fair and transparent appointment procedure is the condition precedent for a clean judiciary.
The Judicial Standards and Accountability Bill designed by the erstwhile government were passed by the Lok Sabha in 2012. It however lapsed by the dissolution of the 15th Lok Sabha in 2014. There are quite a few deficits and even dangers in the Schemata of the Bill, according to the critiques and therefore its verbatim revival will not pass the muster. We need to have legislation for a permanent oversight committee with a democratically and scientifically designed composition that does not afflict judicial independence. Independence of the members of such committee could be ensured even when eminent 'outsiders' are inducted by due process.
Judicial standards and misconduct need not be precisely defined and those could be better left to be decided by the body concerned, by contextual analysis on a case to case basis. We also need to evolve some effective measures against the delinquency on the bench other than the unworkable device of impeachment. Also we need to curb the unsubstantiated and malicious allegations against the judges, for those will also threat the system in a debilitating way. Article 312 of the Constitution speaks about an all India judicial service to be legislatively designed. But due to political apathy, no serious efforts were made to materialise the aspirations of the constitutional lexicon.
Reinvigorating free trade
Source: By Harsh Vora: The Mint
One of the principal concerns highlighted in the recent report on the Global Competitiveness Index 2016-17 (GCI) released by the World Economic Forum (WEF) is the growing reluctance of countries to be open and trade with one another. This inward-looking trend began with the financial crises of 2008, which led many economies to adopt some form of protectionism to insulate domestic industries and safeguard jobs.
In April this year, the World Trade Organisation (WTO) forecast global trade growing at 2.8% in 2016 and 3.6% in 2017. But it recently revised those numbers to 1.7% and 1.8%, respectively. WTO’s director-general attributed the reduced forecast to “growing anti-globalisation sentiment” in the world. This sentiment is evident in the anti-trade narrative offered by America’s presidential nominees on either side, the policy uncertainty looming over Britain’s businesses owing to Brexit, heated immigration debates in both Europe and America, China’s growth slowdown and consequent volatility in its demand for imports, or the social unrest resulting from state sponsored, cross-border terrorism.
Over the past four decades, trade has resulted in significant improvement in the economic welfare of trading nations. Starting in 1980s, trade reforms instituted by China’s Deng Xiaoping have emancipated millions of Chinese from poverty. India’s liberalisation in the 1990s has enabled its economy to escape the dreaded Hindu rate of growth, and Vietnam benefited immensely as many as seven million people were pulled out of poverty—when the US slashed tariffs on imported goods in 2001. US too have gained immensely after the establishment of North American Free Trade Agreement (NAFTA) and World Trade Organisation (WTO) in the 90s and after China’s accession to WTO in 2001. Cheap imports from China as well as Mexico resulted in significant windfall for American consumers. It also granted them considerably more choices. According to economists Robert Lawrence and Lawrence Edwards of the Peterson Institution for International Economics, trade with emerging economies, especially China after 2001, contributed to an increase in America’s per capita income by as much as $500.
Perhaps the most significant benefit of trade is reflected in its effect on innovation. Domestic industries under an open trade regime are forced to develop systems that lower their costs, raise the quality of their products, and make heightened efforts to attract consumers’ attention. In a 2015 research paper, Nicholas Bloom of Stanford University, Mirco Draka of University of Warwick, and John Van Reenen of London School of Economics demonstrated that “increased Chinese trade has induced faster technical change from both innovation and the adoption of new technologies, contributing to productivity growth” in America. Firms threatened with foreign competition created more patents, increased technology adoption, improved management quality and invested heavily in research and development.
This interconnectedness between trade and innovation has also been underscored in the GCI report. The report regards innovation as a crucial factor in enhancing the competitiveness of a nation. Having evaluated 138 countries, the GCI report shows that “economies that are more open to foreign competition are more innovative, suggesting the importance of openness for innovation.” Innovation in turn leads firms to pass on their reduced costs to consumers. It is therefore not surprising that free trade typically favours the poor, who spend more on average on traded goods. Wealthy consumers, on the other hand, tend to spend more on services which are relatively less traded.
hat said, there is also some truth to the claim that free trade has resulted in rising inequality. This, however, has happened primarily owing to the transfer of trade benefits from less efficient firms to more efficient ones. Trade tends to reallocate resources to the most productive uses. In that process, unproductive sectors of the economy often face unemployment, which in many cases may be transitory. Some displaced workers eventually get absorbed in new industries. More often than not, however, the job losses are permanent as old skills become obsolete or costly. The effective solution to labour displacement is not to keep inefficient sectors forever insulated, but to provide necessary safety net to unemployed workers through redistributing some of the gains from trade to them in the form of unemployment insurance, pensions, or initiatives such as skill development programmes. Any safety net that involves money transfer must be designed such that it does not disincentivise displaced workers from upgrading their skills or searching for work.
Prime Minister Narendra Modi’s Skill India Mission is a step in the right direction. It aspires to build 5000 Industrial Training Institutes (ITIs) in addition to the existing 13,000 such institutions. These institutes are expected to train as many as 15 million people in new skills this year. Such programmes, coupled with gradual dismantling of trade barriers, will help India become significantly more competitive than the current level. Arguably, that is easier said than done. Intraregional trade in South Asia, for example, is less than 5% of total trade. According to a World Bank estimate, it is 20% easier for India to trade with Brazil than with Pakistan or Bangladesh. This is because of inadequate trade agreements, congested border crossings, and a general lack of transportation infrastructure. Reforming these structural, non-tariff barriers to bilateral or multilateral trade is therefore crucial for any successful leveraging of trade benefits.
For policymakers, there is also the problem of balancing public opinion and good economics. In making policies related to foreign commerce, politicians often respond to the prevailing mass perceptions about the benefits of trade. These public perceptions, whether favourable or unfavourable to trade, are shaped by various factors. A study conducted by University of Pennsylvania’s Edward Mansfield and Diana Mutz found that the anti-globalisation perceptions are fuelled in part by domestic ethnocentrism, out-group hostility, or isolationist foreign policy tendencies among the public.
These hostile perceptions may be largely created either through mass media coverage of economic downturns, or interpersonal conversations with acquaintances who have suffered those downturns, or simply personal experiences. This could not be truer for India. Several political as well as spiritual leaders with mass followers are actively engaged in instilling fear of multinational corporations, foreign products and services, and foreign finance. To an extent, their fear may be justified. Some multinational companies may indeed have engaged in unethical marketing in the past. But painting all foreign companies with the same brush is also unfair, not least because such xenophobic propaganda may ultimately end up harming consumers, who are the biggest beneficiaries of foreign competition.
Source: By Salman Haider: The Statesman
The surgical strikes on terrorist targets across the LOC have intensified the Indo-Pak confrontation and given it a new dimension. Prior to Uri there were a series of incidents of a recurring pattern: covert Pak-backed attacks on targets in J&K, aimed at causing maximum damage on the ground and not permitting the political issue to fade away. The Uri event broke the pattern but there was no let-up on the ground: cross-border attacks did not come to a halt despite the evident risk of a wider conflagration, and there were continued small-scale cross-border assaults in J&K, the resumption of which seemed intended to demonstrate that Pakistan was not to be deterred by what had happened in Uri.
In a curious twist, Pakistani spokespersons have denied that Indian strikes across the LOC ever took place, notwithstanding the strong Indian assertions to the contrary. Thus the knee-jerk Pakistani reaction that could have been expected has not materialised, though there is uncertainty in the border region and troops are on alert. The Centre has asked border authorities in a 10 km frontier zone to be especially watchful, and in Punjab the residents of that zone have been asked to move out. Though there have been local protests, such measures seem intended to show that the country is on its guard and prepared for any eventuality. However, notwithstanding the heightened atmosphere and the stepped up preparations on the ground, there are signs that warlike demonstrations may be easing off.
The rhetoric has not been reduced, though many fresh accounts of how the Indian strike was conducted keep the issue in the public eye, but with the passage of time apprehensions of further military action in the LOC area seem to have been reduced. The Prime Minister himself has called a halt to the vainglorious rhetoric indulged in by so many in high positions. Terrorist incidents have not ceased Rs on the contrary, there have been some more in J&K in the last few days Rs but no further security measures have been implemented in that State to add to the large number already in place. Normal life has not been much affected; tourists continue to come as the season winds down, civilian air traffic has not been interrupted, nor vehicular traffic.
Only a few days ago the Home Minister paid a visit to Ladakh, having already visited Jammu and the Valley, apparently to give a boost to preparations for security alertness, and while he met all the responsible functionaries and officials, his presence in Ladakh, a region that tends to complain of neglect, seemed to have been regarded locally as an occasion to air specific regional demands more than for improving security preparedness. Though the situation on the ground shows some signs of restoration, tough official statements have done something to keep up the pressure and activity in diplomatic forums has had its effect. India decided to keep away from the scheduled meeting of SAARC in Pakistan to express its unwillingness to maintain a semblance of normal relations with that country in the present circumstances.
Under the rules of SAARC, India's decision not to attend meant that the meeting itself would have to be cancelled, for all Heads must participate if a Summit is to take place. It was gratifying for New Delhi that three more members decided to keep away, thereby in effect administering a multiple veto for the meeting in Pakistan. Simultaneously, in addition to the strengthened effort in diplomatic forums, India has also taken steps to review the various existing bilateral Indo-Pak agreements and arrangements, apparently in order to further control the tempo of the relationship.
As it is, not much is happening on the bilateral front and the established economic and people-to-people exchanges have been in the doldrums for quite some time. Now, in the present downturn, there would be little early possibility of restoring an easier pattern of exchanges. Among the bilateral instruments that have apparently been under review one of the most significant is the Indus Waters Treaty of 1960.
This was negotiated between the two countries over several years in a laboured and difficult process that could not have succeeded without the active involvement of the World Bank, whose good offices as a mediator were needed to bring the parties to agreement and to reconcile their greatly opposed demands. It was feared at the time that failure to agree could drive the two countries to perpetual hostility over water-sharing differences and could even lead to armed confrontation, for both were dependent on the waters of the Indus and its tributaries for their critical food production needs and could not accept the risk of shortages in this crucial matter. With the World Bank's entry the international community was drawn in and became deeply engaged, and the final Treaty is thus more than a bilateral instrument between the two parties.
At times of crisis, however, the Indus Waters Treaty tends to come in for criticism, from one side or the other, and ancient halfburied grievances re-surface, as in the present juncture. The demand has been raised in some quarters for re-evaluation of the Treaty which is criticised by some Indian observers as an agreement that favours Pakistan. Closer examination by acknowledged experts, however, has reaffirmed the essential balance of the document and its relevance to the interests of both parties, so that there is no good reason for its re-examination, or even abrogation as has sometimes been suggested.
However, what has been revealed by the current debate, and not for the first time, is that India has not availed itself of all its rights under the Treaty and can legitimately draw more of the Indus waters for its exclusive use than it does at present. To do this may not be an altogether simple matter, for a variety of technical reasons, but fuller implementation of the Treaty could bring benefits to India that have so far remained unutilised. While Indo-Pak differences continue to rage and the risk of physical confrontation remains real, some cooling down of earlier passions seems to have taken place.
The tensions and ambiguities have not been put to rest and multiple voices from either side continue to be heard advocating a variety of courses of action but on the whole opinion in the current discourse seems to be turning away from military action. Surprisingly enough, the two NSAs have been in conversation with each other. They may not have had much to convey, but that they have been in contact is important. Restoring basic channels of communication is needed as a first step towards addressing the issues that have brought the two countries to the brink.
Revisit contentious issues
Source: By Mohan R Lavi: Deccan Herald
As we make progress towards implementing the GST, two questions need to be answered. The first one is: "Should GST be implemented from April 1, 2017?" There can be no two thoughts that India requires a proper value-added tax considering the multiple taxes that products and services suffer at different stages of their lifecycle from commencement to completion.
Everybody who is somebody connected with the implementation of the GST appear to be on a mission to ensure that it is implemented from the above date. The GST Council has been set up and has had its first disagreement, a massive training exercise is being done and draft rules and forms have been issued for public comments. If the Council approves the rates of tax and the state legislations this month, we might be on course for an April 2017 implementation.
The second question that feeds off from the first is: "Should GST in its present form and shape be implemented from the above date?" The answer would be an unambiguous no. Any law that is hastily drafted (which the model GST law most certainly is) and relies on continuing the contentious issues such as disallowing input tax credit, tends to get into needless litigation later on, despite any number of clarificatory circulars. The government should press the pause button for some time now, take a complete relook at contentious issues and then implement the law.
It would certainly be an achievement if this deadline is met but the government should not make the mistake of factory-producing forms and rules just to meet it. It is possible that the government is thinking of bringing in GST next year since 2018 is a year closer to the Lok Sabha elections and it would not want to upset anyone who is negatively impacted by the GST. Implementing the GST in 2017 gives the government a cushion of one year to iron out problems that could plague certain specific industries.
Invoice matrimony: Seamless granting of input tax credit is the foundation of any GST law that believes in the concept of the value added tax. The foundation of the GST law is extremely weak because no effort has been made to rewrite the rules for availing input tax credit. By copy-pasting bits and pieces of the present input tax credit under Central excise and service tax, the government has imported all the inefficiencies of the present tax system. They have also managed to add to the inefficiencies by framing Section 29 of the model GST law which is titled, 'matching, reversal and reclaim of input tax credit.'
The details of every inward supply furnished by a taxable person for a tax period will be matched with the corresponding details of outward supply furnished by the counter-party in his valid return for the same or a previous tax period and for duplication of claims of input tax credit. If these match, life moves but if they don't, both the parties are intimated about it. An intimation received in April 2017 will have to be rectified in the return that is filed in May 2017 failing which it gets automatically added to the tax liability of May 2017. Every supplier and buyer would now need to get into the matrimonial service of matching their invoices with each other.
Without worrying about the rest of the world (where the concept of matching of invoices hasn't worked), we should consider whether matching of invoices would work in India. Differences in invoices can arise because of innumerable factors - different accounting systems, using codes for invoicing, differences in designating various types of goods and services and basic accounting errors.
A tax payer who is prompt and correct in the payment of his taxes will now have to ensure that the rest of the population from whom he receives invoices are like him - else he will have to pay for their errors, mistakes and laziness. The GST is based on the fact that there is no threat of the input tax credit in the entire supply chain being broken. The ill-advised concept of matching of invoices will ensure that there will be disruptions in input tax credit for administrative errors of the counterparty.
The entire GST tax chain relies on technology as most responsibilities under GST are to be made in electronic mode. Small-time players who are getting into GST may not be well-versed in the technology. This is bound to result in erroneous invoices being uploaded due to which the counterparty would be penalised. To avoid such issues, the GST Council should fix a threshold (for instance a turnover of Rs 2 crore) for the matching of invoices concept to apply.
In the mission to bring in GST from April 2017, draft forms have been issued. Filling up any tax form in India normally requires some knowledge of the respective tax laws and loads of patience. Apart from these two qualities, filling up the GST forms for ITC Mismatch Report (GST ITC 1A,1B & 1C) would also require a good degree of imagination because one who files the tax has to familiarise himself with the concepts of matched and unmatched invoices for the current and previous periods. The e-commerce companies and their vendors would probably need to create separate teams called as "Mismatch Teams" as the volume of invoices they deal with will be extremely large.
It is clear that comprehending and implementing this new concept of matching of invoices will take a lot of time. The government should see how this scheme of matching of invoices works for a period of one year from the date when GST is implemented without penalising the taxpayer in the form of disallowing his input tax credit. Else, taxpayers would use their innovativeness and ensure that there are as many versions of invoices as are necessary to get an input tax credit.