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22 November, 2017

The Quad fails to take off

BRP Bhaskar
Gulf Today

During his recent hectic tour of Asia President Donald Trump made an attempt to push the decade-old idea of inveigling India into a new grouping which will also include Japan and Australia.

Since 2002 the US, Japan and Australia have been involved in security dialogue. In 2007 Japanese Prime Minister Shinzo Abe mooted turning it into a quadrilateral exercise by drawing India into it.

Although all concerned kept affirming that the Quad, as it was dubbed, was not directed against any nation, it had the making of a gang-up against China, which is on its way to emerging as the second most powerful nation on earth. Lately it has also become increasingly assertive. For historical reasons, this is a matter of greater concern to Japan more than to the other three members of the grouping.

Australia soon started pussyfooting on the Quad out of regard for Chinese susceptibilities. Apparently Prime Minister Malcolm Turnbull is ready to pick up the thread his predecessor left. But there are no signs of quick progress.

In 2007, the preliminary talks at the level of officials were followed by a ministerial level meeting. This time the exercise did not go beyond the official level at all.

The Manila proceedings were in fact marked by extreme coolness at every stage. India did not favour raising the talks even to the level of Foreign Secretaries. There was no joint statement after the meeting of officials. Instead, spokesmen of the four countries briefed the media separately, each emphasising its own priorities. This showed that they were not on the same page.

The Indian statement was delightfully vague. It said the officials had held consultations. The discussions focussed on cooperation based on their converging vision and values regarding peace, stability and prosperity of the interconnected region. They agreed that a free, open, prosperous and inclusive Indo-Pacific region was in the regional and global interest. 

Trump referred to the Asia-Pacific region as the Indo-Pacific in speech after speech to emphasise the importance the US under him attaches to this country’s role in regional politics and strategic calculations. The documents of the official level meeting also used that term. But India continued to approach the issue cautiously.

In his foreign jaunts Modi has often given the impression that he is willing to go along with the US even if it meant settling down to the role of Washington’s second in command in the region. At Manila he appeared determined to correct that impression.

If India was not keen to become a part of the Quad why did it play along? One explanation is that India does not want to be trapped in a geostrategy bind with the US, Japan and Australia. At the same time, it wants to leave open a certain ambiguity in its approach to the problems of the region.

All four countries have their problems with China but they are not identical. While the US and Australia used the term Quad, India and Japan sought to avoid it.

Since all the four countries have forged strategic relationship and have been participating in naval exercises in the past few years, there is little to be gained by the new grouping. But the US, it appears, is keen to push it as a substitute for the Asia pivot which has been abandoned for all practical purposes.

Indian commentators have noted that the US game is to involve India in its military calculations in the Pacific. While India has issues of its own with China, they are not of the same kind as Washington’s.

In September, on the sidelines of the United Nations General Assembly, Secretary of State Rex Tillerson had held a trilateral with India’s External Affairs Minister Sushma Swaraj and Japanese Foreign Minister Taro Kono in a bid to push the Quad.

Tillerson returned to the theme in a major policy statement last month. He also pursued it when he visited India. A US official told accompanying newsmen that Washington was looking at a working level quadrilateral meeting in the near term. All this suggests that, undeterred by the current setback, the US will continue to make efforts to carry the Quad forward. -- Gulf Today, Sharjah, November 22, 2017

14 November, 2017

Politicking over tax regime

BRP Bhaskar
Gulf Today

When a new tax regime introduced after three decades of debate calls for review and revision within four months, it is evident that the authorities did not act with due diligence. That is what happened with the Goods and Services Tax.

A major overhaul of tax on goods was proposed first by former Prime Minister VP Singh in 1986 while serving as Finance Minister in Rajiv Gandhi’s government. Liberalisation and globalisation were not under consideration at that time. 

Globalisation put service tax also on the agenda. In 2000, Atal Behari Vajpayee, the first Prime Minister belonging to the Bharatiya Janata Party, proposed a goods and services tax regime and set up a committee to design an appropriate GST model for the country.

The committee was headed by Asim Dasgupta, a US-trained economist who was Finance Minister in West Bengal’s Communist Party of India (Marxist)-led government. Before he quit in 2011, following his - and his party’s - defeat in the State Assembly elections, the committee is said to have completed 80 per cent of the work.

Introduction of GST was one of the programmes taken up by the Manmohan Singh government during 2004-2011 as part of the reforms package, and it attempted to enact legislation for the purpose. It could not make much progress because of the stiff opposition from various political parties, including the BJP.

One of the vagaries of India’s democratic system is the propensity of political parties to shift their position on programmes, depending upon whether they are on the treasury benches or on the opposite side. After the change of government at the Centre in 2014, the BJP started pushing the GST project.

The Congress did not turn against it but it raised issues about the structure proposed by the GST committee, leading to further delays. It wanted an 18 per cent cap on GST but this was not acceptable to the government.

Unlike Manmohan Singh, who often shelved reforms, especially when critics pointed out they might hurt the poor, Modi was willing to ram them down. He pushed through the required enactments, including a Constitutional amendment, and ushered in the GST regime on July 1.

While most countries have uniform GST, taking into account the size of the country and the complex ground situation, a three-tier system, comprising a Central GST, a State GST and an Integrated GST, income from which was shared by the Centre and the State, was brought in.

Soon there was an avalanche of complaints from all over, especially about the tax on services, which was new to the country. The high rates of tax which added to the cost of living also came under attack.

Complaints poured in not only from consumers but also from business houses who found the system of filing returns too cumbersome. Evidently the official machinery had not paid adequate attention to the details.

Last week the GST Council, comprising Finance Ministers of several states, reviewed the tax structure and decided to revise the tax rates drastically. It also agreed to simplify the filing procedures.

Under the original scheme, as many as 228 goods and services attracted the highest rate of 28 per cent. The Council brought down the rate on most of them to 18 per cent, leaving only 50, mostly luxury items, beverages and tobacco products, in the highest slab. The rate on many items which attracted 18 per cent was lowered to 12 per cent. 

The biggest relief for consumers was slashing of the tax on bills of restaurants other than those in five-star hotels from 28 per cent to just five per cent. The tax on five-star restaurant bills was also reduced, but to 18 per cent only. 

For the governments at the Centre and in the states, the GST is a major source of revenue. They stand to lose an estimated Rs 200 billion a year as a result of the rate revision.

Congress Vice-President Rahul Gandhi said it was his party’s campaign that led to the rate cuts. Former Finance Minister P Chidambaram claimed the upcoming Assembly elections in Gujarat, Modi’s home state, had forced the Centre to give in.

Assam Finance Minister Himanta Biswa Sarma, who heads the GST Council, dismissed Chidamabaram’s claim as childish. He said the 28 per cent slab would be phased out. 

In the prevailing political climate, it is idle to hope that politicians will stop making GST a partisan issue. --Gulf Today, Sharjah, November 14, 2017.

07 November, 2017

Poll reforms are an urgent need

BRP Bhaskar
Gulf Today

The Election Commission, which has endorsed Prime Minister Narendra Modi’s idea of simultaneous elections to the Lok Sabha and the State Assemblies, has said it will be logically equipped to conduct such an exercise by September next year.

In the first national elections under the Constitution, held in 1951-52, polling was spread over several days but voters in all the states chose their representatives to the Lok Sabha and the Assembly at the same time. 

However, stand-alone Assembly elections became necessary in Travancore-Cochin and Patiala and East Punjab States Union (Pepsu) in 1954 as the governments of the two states lost majority in the old houses and alternative governments could not be formed. 

Before the second national elections in 1957 Travancore-Cochin and Pepsu became parts of Kerala and Punjab respectively following reorganisation of states in 1956. Once again, elections to the Lok Sabha and the assemblies were held simultaneously all over the country. Kerala created a sensation by voting the Communist Party of India to power.

In 1959 the Centre dismissed the Communist government and dissolved the Kerala Assembly. After a spell of President’s rule, fresh elections were held in the state in 1960. Since the new Assembly’s tenure would run until 1965, Kerala only voted for the Lok Sabha in the third national elections in 1962. 

In 1965 Kerala threw up an Assembly which was too fractured to permit the formation of a government. It was, therefore, dissolved and the state placed under President’s rule. It voted for a new Assembly again at the time of the fourth national elections in 1967. 

No party commanded a majority in several of the Assemblies elected that year. Most of the coalition governments that emerged collapsed soon, leading to dissolution of Assemblies and holding of fresh elections. As a result Assembly elections in many states got delinked from the Lok Sabha elections.

Prime Minister Indira Gandhi who had to rely on the support of some small parties after the Congress party split in the late 1960s, dissolved the Lok Sabha and ordered elections in 1971. Later, too, on a few occasions loss of majority by the government of the day led to premature dissolution of the Lok Sabha and holding of fresh elections.

As is clear from this narration, decoupling of Lok Sabha and Assembly elections was a consequence of the practice of parliamentary democracy. The system calls for a government which commands majority support in the legislature. Return to simultaneous elections will mean grant of a fixed tenure to the Lok Sabha and the State Assemblies. This may negate the constitutional principle of a council of ministers responsible to the legislature.

The only argument Modi has advanced in support of simultaneous polls is that it will reduce expenditure on elections. Cutting costs is certainly a good objective but the issue of elections is one in which democratic considerations must have precedence over financial factors. 

The slogan “One nation, One election” raised by Modi’s supporters suggests that they view simultaneous elections as a means of promoting further centralisation of the polity in the guise of fostering national unity.

There is reason to suspect that Modi’s simultaneous elections project is a surreptitious attempt to switch from the parliamentary system to the presidential system which does not require the Executive to be responsible to the Legislature. The Constitution, as it now stands, does not permit such a switch.

The Election Commission’s claim of readiness to hold simultaneous elections is based simply on the availability of enough electronic voting machines. That cannot be a major consideration in a vital matter with a direct bearing on the future of the democratic system.

The parliamentary system has served the country fairly well in the past 66 years. It has provided for smooth changes of government both at the Centre and in the States. It has permitted parties of the Right, Left and the centre to come to power, alone or in alliance with others.

The gravest weakness of the system is the role of money and muscle power in elections. While in the opposition Modi’s Bharatiya Janata Party was a strong advocate of poll reforms. Now that it is the biggest beneficiary of corporate donations, it remains silent on the issue.

Poll reforms remain an urgent necessity. Modi should address that issue instead of attempting to tinker with the parliamentary system. -- Gulf Today, Sharjah, November 7, 2017