Indian politicians -their precept and practice

 It is said "there is a world of difference between precept and practice"- more so with our politicians and the gap widens when they speak about it more.!!

It is generally thought that Political lies are always for exploiting the ignorance of the public. Mostly they are manipulative for winning the elections. But there are times like Obama lies about Health care inorder to push through some legislation to benefit the larger society(link).

However coming to India, Politicians throw promises at the people mainly to win elections and then they renege on the promises made.

In the recent few weeks there are lot of accusations by the Opposition parties against the Central Govt that Question Hour in the ensuing Parliament has been abolished muzzling the freedom of MPs to ask Govt questions about peoples' problems to elicit answers from the Govt. But there are two stark statistics contradicting the so-called champions of freedom of expression in the Opposition. In the last few years Question hour in the parliament has been wasted for 60% of the time by the unruly Oppositions marring the proceedings of the house. Another interesting point is that in the Opposition ruled West Bengal Question Hour has been suspended by the Govt in view of the prevailing pandemic.!!

So this is clearly double standards adopted by the Opposition and it is raised against the Central Govt only to embarrass it and score some brownie points in the media.

Many of the Opposition ruled State Govts prune the budget of the local bodies saying that the State level finances are severely constrained. But if the Central Govt does it, all of them raise their voices against the Centre saying that the Central-State relationship is severely undermined and the trust of cooperative federalism has been betrayed by the Centre. They have no such qualms when they repress the local bodies by not releasing the funds to them. These are the doublespeak adopted by the opposition parties as a matter of right and pride.Our society does not relish this behaviour of politicians which they do not understand.

Centre and States are like two important organs of the body which is India. Both must work in tandem and in coordinated rhythm. Brain cannot let the Heart down and Heart cannot afford to stop blood supply to Brain. They cannot be at loggerheads with each other. This is the fundamental concept which Politicians must keep in their minds while performing and discharging their Constitutional duties.

Compensation to States and Borrower of the Last resort!

 India's FM is an unenviable position. Given the penchant for two steps forward and one step backward in all economic decisions, FM is in the eye of the storm unendingly ever since the pandemic struck India. In fact, even before that, India's GDP was sliding YOY from 2016-17 onwards. It hit a high of 8.26% in 16-17 and hit the lowest so far in Fiscal 19-20 at 4.2%.

GST collections have also ebbed along with the GDP since even Nominal GDP has grown only by 7.2% in Fy 19-20.It was growing at 11.76% in Fiscal 16-17. So, this skidding of the nominal growth rate coupled with a reduction in GST rates in 2018 led to a shortfall in GST collections even though the tax base widened. The good thing about the One Nation, One tax has been the acceptance of this Taxation in lieu of VAT at the individual state level and Excise duty at the Central level. The consensus behind GST has been bought by Arun Jaitley with the commitment for providing Central funds at the growth rate of 14% YOY to the individual States, by levying Compensatory cess on luxury and sin goods. However, the Central Govt is caught on the wrong foot this year due to the pandemic. The tax collections are abysmally low and this has forced the Central Govt. to consider reneging on its promise of providing compensatory funds to the states.

In the recent 41st GST Council meeting, FM has been compelled to use the insurance phrase of Act of God i.e force majeure(or Hand of China?!), to describe the extraordinary situation due to the Covid pandemic. Due to this compulsion, the Central Govt has presented two options to the States to consider and give their replies in a week's time. Under Option 1 States may borrow Rs.97K cr at a special interest rate and the principal and the interest will be later on paid out of Compensatory cess on Cars, Soft drinks, tobacco, pan masala, and coal. Under Option 2 States can borrow up to Rs.2.35lac cr and States will have to pay interest at the market rates.Only the principal will be paid out of Compensatory Cess later and the interest will have to be provided in the States' Budgets. In this GOI has made a fine distinction between GST implementation loss and Covid induced tax revenue loss which is also hair-splitting and needlessly academic, if not contentious.

Now the overall emerging scenario is one of confrontation between the Centre and the States. All economists are now supporting the States saying that since it is the commitment of the Central Govt. it has to find the resources for funding this GST collection shortfall. Of course, they are of the view that the Central Govt can source this fund at a much cheaper cost than what the States could bargain for.This is an important point. However Finance Secretary has gone on record saying that if the Centre resorts to this borrowings, overall bond yields may go northwards, which will raise the cost of borrowings for both the Public sector and Private Sector. As a consequence, the sovereign rating of the country may be adversely impacted which will be detrimental to the interests of all sectors of the economy. But the moot point is this can happen even if States borrow for this purpose.

In the meantime some of the opposition ruled states are considering approaching SC for a direction to the Central Govt, saying that the Centre is trying to hide behind AG's legal opinions, shirking its responsibility in honoring the revenue commitment in letter and spirit. But such an outcome may not augur well for federal relationships and for the future of cooperative federalism which is touted as the big success point behind GST introduction.

However, in all this surcharged situation over who should shoulder the borrowing burden, the missing point is how well or badly States are containing their deficits in the last few years despite being given higher level of funds without much of efforts from their side. Any additional funds given without caveats are being frittered away by them in giving freebies, free EB and in unplanned revenue expenditure. So who is going to discipline them and rein in their penchant for spending without answering for outcomes? Even in May 20, when Centre gave permission for Additional borrowings through the WMA window, many states incl. Tamilnadu objected to the thinnest of the sticks like DBT transfer of EB subsidy to BPL families, that came with the carrot. States only want the carrot as their right without any strings being attached.

That said, Central Govt. must seize this opportunity to bring to light the importance of fiscal discipline at the State level by finally agreeing to resort to the borrowings on their behalf.

If you consider the Center and the State as the right and the left hands of the same person, sometimes when your right hand is full of weight to be lifted, the left hand also should chip in to bear the weight in order to balance it. Left cannot accuse the right of transferring some of the weight to it!!

Lockdowns ,Unlocks and White elephants!

 

We have had four lockdowns and unlocks across the country.To start with it was Complete lockdown, which struck like a bolt from the blue starting from March 24th till May 31st 2020. Many prominent opposition leaders severely criticized the Govt for this lockdown accusing Modi of dictatorship tendency throwing the hungry, poverty-stricken, migrants on the streets and pavements uncared for. The second lockdown little relaxed was in June as experimentation and once the pandemic started spreading wildly, Govt. was again back to stricter lockdowns. But by the end of june, Central Govt realized that the question of livelihood was becoming important and advised staggered unlocks.

But many states ruled by opposition leaders taking a holier than Centre attitude continued with strict lockdowns introducing epasses even for intrastate movements, imposing restrictions like total lockdowns during weekends making life difficult for the common man. There was a tough competition between states as to who leads in making life miserable for the man on the street.

Now the whole world is praising Modi for his foresight in clamping down a total lockdown inorder to control the spread of the pandemic. Opposition leaders have grudgingly acknowledging this, have now started saying that because of lockdown Indian economy is in ruins.

India had to face many unwanted human tragedies in between due to industrial accidents in Vizag, Neyveli,etc.fire accidents, air accident in Kochi, and also serious border clashes with China apart from terrorist incursions in J&K from Pak.

In the meantime, Central Govt unveiled Atmanirbhar initiatives, Agri reforms, and announced Rs.21 lac crore package of measures to revive the economy.

In the melee that followed, India is still left with some white elephants like Air India which are a drain on the exchequer.Air India should have been corporatized, separating the ownership and the management at least five years back. Had Central Govt taken this bold step at that time we would have found real value of the Air India as a Corporate entity. We understand that when Jitendra Bhargava wrote a book "Descent of Air India", it kicked off a political storm with Praful Patel filing a defamation case in  the court to get a ban on the book. But the author self-released it  in 2016 and is available on Amazon kindle as an e-book.Praful Patel withdrew his defamation suit in 2017.

Now with Air India only its Intangible asset of Bilateral Landing Rights is the most valuable of all assets.This has been brought out by Kumar V.Pratap former Joint Secy,GOI, in his recent article in FE wherein he has said that Planning Commission in 2011,refused permission to publish his earlier article on Privatisation of Air India(see the link) .Now the quotes for the sale of Air India have been invited through a global tendering process. The last date for submission of bids have also been so far postponed 4 times and now the last date stands at 31st Oct.When Travel & tourism and more particularly the aviation sector around the world has been severely crippled by the pandemic , finding a suitable bidder would be highly improbable. But Govt is left with Hobson's choice now.It has to bide its time for a suitor when the airline continues to lose its value and burn tax payers' money.

BPCL sale tendering process also is in the limbo due to the prevailing uncertainty induced by the pandemic. Other PSU divestments are also moving at snail's pace due to lockdowns.

To sum up, the Govt is unable to unlock the value for its assets!!

EIA 2020 draft is good and what should we be careful about?

What do we know about EIA draft 2020? But even before we read it, we want to register our opposition to the draft. Does this attitude not reek of cynicism.

Former UPA minister Mr.jairam Ramesh shot out a letter to Minister for Environment in Central govt,Mr.Prakash Javadekar saying that draft EIA allows post facto approvals going against the principle of assessment before projects are put up.

There are some fundamental flaws in the assumptions behind the accusations against the draft.

1)Under the current EIA everything is hunky dory and the revised draft now is going to spell doom to the environment. For that, they are side by side quoting that LG Polymers gas leak disaster saying that this project has not obtained EIA clearances for the project still. These people, conveniently forgetting that this project has been put up as per current guidelines and not under the draft now presented, quote LG Polymer as an example of a violation of Environment Act. If the project had come up under the current guidelines it shows that the present system is far from perfect and not the draft EIA which is yet to be implemented.

2)The current regime encourages a lot of bureaucratic hurdles and "environment tax" on industry due to discretionary powers wielded by the govt agencies, NGOs and other vested interests. The influential private citizens hold the industry to ransom raising any number of objections and many a time it becomes a political battle using the corporate turf. The victims are corporate and the employed and finally the country.

3)Are we going by unbiased third party audits for EIA compliance before approving any mega projects. Whenever people's opinions are called for, most of the time the opposition parties jump in to settle their petty disputes and for scoring some political brownie points.Even after the matter is heard and resolved by NGT, and PCBs , local people are fed concocted news by urban naxals in the garb of NGOs through carefully planted stories in the gullible media inorder to arouse their passions and to rake up riots against the projects.In all this, the central point of Environment Impact assessment is the casualty. There are impartial National and International agencies who can give unbiased assessment reports and the country should make engaging them for assessment necessary, if not madatory.

4) Are we not unwittingly not believing any Govt agency even if the truth is told- immediately jumping to conclusion that the Corporates have bribed these Govt. agencies to talk in favour of them. We have become totally cynical of this system and we want to throw the baby with the bathwater.

5)Any development can happen only in the existing land.People must understand where they live today as their house and apartments all stand on land which was once thriving agricultural fields. Britishers pushed the development agenda by forcibly taking up the land and today our own Govt acquires these lands by paying up the agreed market price.Why are we then raising our hands against our own development. Is there any gain without pain?

6) People must understand, if they raise objections to any of these acquisitions, then where new roads, railroads etc can be laid?If our grandparents had raised such objections , whether today's existing Indian railways or National highways would have come up? or whether we could have enjoyed criss crossing the country happily riding on these infra facilities?

7) All those who raise these objections are still at liberty to approach the Courts seeking justice. Nothing or nobody is stopping them from reaching to the Courts.Instead if they want to do road roko or rail roko or cause obstruction to others in general, then their actions are anti social and anti national only. Such people are hell bent on scuttling India's development and prosperity and are playing into the hands of India's enemies.

My appeal to the common man is not to fall for the words of those who want to subvert India's growth using sophisticated wordplay and methods, as part of their selfish partisan and hidden agenda at the behest of our enemy nations.