High on promise

BRP Bhaskar

Gulf Today

Finance Minister Arun Jaitley unveiled in this year’s Central budget an ambitious programme which, he claimed, is the world’s biggest health care project. Critics have found it high on promise and low on deliverables.

The programme, labelled the National Health Protection Scheme (NHPS), will cover 100 million poor families —or about 500 million people — with an allocation of Rs 500,000 per family, he said.

Essentially it is a medical insurance scheme of which the premium will be paid by the government. The Centre and the states are to share the cost on 60:40 basis.

According to the UN Development Programe, India has cut poverty by half since 1990 but nearly 300 million people in the country still live in extreme poverty. There is, therefore, a felt need for schemes to help the vulnerable sections of the society. 

Ruling party members dutifully welcomed Jaitley’s announcement in the Lok Sabha with thumping of desks. Many of them were probably unaware that they had cheered him at two previous budget sessions for making similar announcements. 

In the 2016 speech, he said the government would launch a new health protection scheme which would give medical cover of up to Rs 100,000 per family to one-third of the population. Although an allocation of Rs 15 billion was made for the programme, the actual spend was less than Rs 5 billion and the extent of cover per formally was only Rs 30,000.

Last year, Jaitley fixed the outlay for the programme at Rs 7.5 billion. This year it has been raised to Rs 20 billion. The experience of the last two years leaves no room to believe the new scheme will fare any better.

One of the measures proposed in the budget to raise resources for new projects is the levy of a 4% health and education cess in place of the present 3% education cess. This is estimated to yield additional revenue of Rs 110 billion. Yet the budgetary allocation for NHPS is only Rs 20 billion. This raises the question how serious the government is about this grand scheme.

According to Alok Kumar, an adviser to Niti Ayog, the Centre’s policy think tank, the NHPS will cost Rs 100 to 120 billion annually.

Mita Choudhary, an assistant professor of the National Institute of Public Finance and Policy, says the resource requirements will be much higher. In a paper, she points out that even if one assumes a conservative 2% premium on the insured sum, the scheme will cost about Rs 1,000 billion a year. Under the proposed cost sharing formula, the Centre will need to find Rs 600 billion for the scheme.

At present, the combined allocation for the Ministry of Health and Family Welfare and the Ministry of Ayush, which deals with systems other than modern medicine, is only Rs 550 billion.

Other health programmes in the budget have also been drawn up with no sense of realism. An example is the proposal to create 150,000 health and wellness centres. This is also a scheme which was first announced last year. 

The budgetary allocation for this scheme is Rs 12 billion. This works out to Rs 80,000 a year, or less than Rs 7,000 a month, for a centre. What kind of service can the centre provide with such a paltry amount?

Both the minister and Niti Ayog spokesmen dismiss questions about the low allocation of funds, and blandly assert that there is no money constraint.

Apparently all the schemes rolled out in the three budgets have come out of a proposal placed before the Prime Minister in 2016 by a committee of officials, including the Secretaries of the Ministries of Health and Ayush. It envisaged universal health cover, free of cost to 100 million deprived families and on payment basis to the rest of the population.

The committee estimated that the scheme, to be implemented through empanelled private and public health service providers, would cost about Rs 100 billion and suggested that the Centre and the states should bear the expenditure in the 60:40 ratio. 

Critics are of the view that the scheme has been introduced without making adequate financial provisions in the hope that it will yield electoral dividends when Modi goes to the people next year for a fresh mandate.

Studies have shown that the various insurance-based schemes run by the Centre and the state governments have not helped to reduce the out-of-pocket expenses incurred during hospitalisation. Against this background, some critics argue that NHPS will actually be more beneficial to private hospitals than to the poor.

Budget cuts hit war on hunger

BRP Bhaskar
Gulf Today

The Global Hunger Index report, released last week, came as a shock to India as it indicated a steep fall in its rank during the past three years.

The GHI rank had improved continuously under the Manmohan Singh government. From 67 in 2011 it moved up to 66 in 2012, to 63 in 2013 and to 55 in 2014, the year Narendra Modi came to power. Then it fell –to 80 in 2015, to 97 in 2016 and to 100 this year.

GHI is a multidimensional statistical tool developed by the International Food Policy Research Institute, based in Washington, and has been in use since 2006 to measure the extent of progress in the fight against hunger.

The IFPRI figures led to a storm of criticism in the social media against the Modi administration. The government’s supporters questioned the claim that there had been a steep fall in India’s rank.

Pratik Sinha of Alt News, which specialises in fact-checking of media reports, found substance in their arguments. Until a few years ago, IFPRI had prepared the global chart after dropping from the list countries whose GHI was less than five. When these countries are also included, India’s rank during the last six years was as follows: 2012 – 106 out of 120; 2013 – 105 out of 120; 2014 – 99 out of 120; 2015 – 93 out of 117; 2016 – 97 out of 118; and 2017 – 100 out of 119.

While these figures dispel the impression of a huge setback in the fight against hunger, they confirm that there has been a reversal in the trend since Modi came to power, promising the people achche din (good days).

What’s more, India’s GHI rank is worse than that of North Korea (93) and Iraq (78). Its GHI score of 31.4 puts it at the top of the countries with a “serious” hunger situation.

India’s poor record has made South Asia, where all countries with the exception of Pakistan (106) rank higher than it, the worst performing region.

Ironically, India, which is the world’s second largest producer of food, also has the world’s second highest undernourished population. “A high GDP growth rate alone is no guarantee of food and nutrition security for India’s vast majority,” Nivedita Varshneya, a co-author of the GHI report said.

The Oxford Poverty and Human Development Initiative’s 2017 report also showed India in a poor light. It said 1.45 billion people in the 103 countries it surveyed are multidimensionally poor, and of them 689 million (48 per cent) are children. India accounted for 31 per cent of these children.

The reason why India, which was making slow gains in the fight against hunger, started losing two years ago is easy to explain. For a long time, spending on health has hovered around one per cent of the GDP. In its 2014 election manifesto, the BJP promised to raise spending to three per cent. But allocation for health shrank under the Modi regime.

In 2015, in his first full budget, Finance Minister Arun Jaitley reduced the Health Ministry’s allocation by about Rs 59 billion. Spending on public health was cut by eight per cent and the outlay on the National Health Mission slashed by 20 per cent.

The following year the Economic Survey called for increased investment on child nutrition programmes in order to capitalise on the demographic advantage offered by the young population. Yet in the 2016 budget Jaitley cut the provision for child health intervention from Rs 154.8 billion to Rs 140 billion. The allocation for the mid-day meal scheme for school children was also reduced.

Jaitley has defended the lower allocations on health and education, saying the states lack the capacity to spend and the funds provided in the past were not fully utilised.

Some states have found money from their own revenues to make up for the shortfall in Central allocations. This is not an option open to the poor states.

In March, the government placed before Parliament a national health policy, which Health Minister JP Nadda described as a milestone. It sets 2025 as target date for increasing state expenditure on health to 2.5 per cent of the GDP and reducing the number of households facing “catastrophic health expenditure” which now stands at 25 per cent.

Raising nutrition level does not figure among the priority areas identified in the policy document. This betrays lack of appreciation of the role of a healthy citizenry in achieving the nation’s development goals. --Gulf Today, Sharjah, October 17, 2017.

Kashmir’s shadow over SAARC

BRP Bhaskar
Gulf Today

With India-Pakistan relations deteriorating in the wake of violence in Kashmir, now in its eighth week, the fate of the 19th summit of the South Asian Association for Regional Cooperation, scheduled for November 9 and 10, hangs in the balance.

SAARC, which comprises India, Pakistan, Bangladesh, Afghanistan, Nepal, Sri Lanka, Bhutan, together account for 21 per cent of the world’s population but only nine per cent of the global economy.

SAARC members differ vastly in size and economic strength. India with an estimated population of 1,330 million and gross domestic product of $2,073.5 billion is much larger than the other seven countries put together. Pakistan, the second largest country, has an estimated population of 194 million and GDP of $270.0 billion. The Maldives with only 371,000 people is at the bottom of the population table. Bhutan with a GDP of $2 billion has the smallest economy, but it attaches more importance to gross domestic happiness than to gross domestic product.

India-Pakistan differences have held SAARC back from time to time in some areas. A common market is one of SAARC’s objectives but Pakistani fear of Indian economic domination has stalled progress in that direction. In 1995, a ministerial meeting decided on the creation of a South Asian Free Trade Area (SAFTA) as a first step towards the goal of a common market. It was only in 2006 that an agreement in this regard went into effect. A decade later, intra-SAARC trade is still only a little more than the region’s GDP.

A South Asian motor vehicles agreement was negotiated by SAARC officials ahead of the last summit at Kathmandu in 2014 but Pakistan was not ready to sign it. Believing that it backed out as it now attaches economic integration with China more importance than South Asian economic cooperation, India decided to go ahead without it.

The relations between the two countries took a dive early this month when Laskar-e-Taiba chief called for demonstrations when Rajnath Singh visited Islamabad for a meeting of SARC Home Ministers. Rajnath Singh was flown from the airport to the meeting venue in a helicopter and he flew back immediately after the meeting without joining a lunch from which, curiously, even the host, Pakistan’s Home Minister stayed away.

Arun Jaitley stayed away from the SAARC Finance Ministers’ meeting in Islamabad last week, depriving it of much of its importance. Nevertheless, SAARC Secretary General Arjum Bahadur Thapa of Nepal called upon the group to move from SAFTA to South Asian Economic Union.

With India and Pakistan at loggerheads, speculation is rife over whether Prime Minister Narendra Modi will attend the November summit. Reports in a section of the Pakistani media have indicated that he might stay away although so far no one of consequence in India has suggested such a step is contemplated.

Modi made a personal investment in improving relations with India’s immediate neighbours when he invited the leaders of SAARC countries to his swearing-in as Prime Minister in 2014 and all, including Prime Minister Nawaz Sharif, promptly turned up. Several setbacks followed but he demonstrated his readiness to walk the talk with an unscheduled stop at Lahore on his way home from Afghanistan to greet Sharif on his birthday.

The current wave of unrest in Kashmir began when protests erupted over the killing of Hizbul Mujahideen commander Burhan Wani by the security forces. At least 67 persons were killed, over 6,000 injured and more than 100 blinded by pellets as youths defied the curfew. Pakistan launched a campaign against the human rights violations and India responded by raising the issue of rights violations in Pakistan-occupied Kashmir and Baluchistan for the first time.

Even as Modi and Chief Minister Mehmooba Mufti, whose Bharatiya Janata Party and People’s Democratic Party which are partners of the coalition that rules the state, began efforts to restore peace in the troubled valley, Nawaz Sharif deputed 22 diplomats to internationalise the issue. Under the Shimla Pact signed after the 1971 war which resulted in Bangladesh’s formation, the two countries are committed to resolve issues, including Kashmir, bilaterally without outside intervention.

Some course correction may take place sooner or later since Sharif, as the host, and Modi, as the leader of the largest member country and one who began his prime ministerhip with a commitment to friendship in the neighbourhood, have much at stake in the success of the SAARC summit. -- Gulf Today, Sharjah, August 30, 2016.

Ways of looking at the economy

BRP Bhaskar
Gulf Today

India’s star shines bright amid global economic challenges, International Monetary Fund Managing Director Christine Lagarde said in New Delhi earlier this month. It now has the fastest growing economy and the largest and youngest workforce and is in the process of reforming the system, she noted.

The reform process began in 1991. A quarter century later, it still faces many obstacles. The first Congress-led United Progressive Alliance government could not go ahead with some proposals due to strong opposition from the Left parties which sustained it in office. When UPA II came up with a constitutional amendment to provide for a uniform pattern of tax on goods and services across the country the Bharatiya Janata Party, which was in the opposition, did not cooperate. Now, as the ruling party, the BJP is eager to take the measure forward but the Congress stands in the way.

The BJP and the Congress agree on steps to make it easy to acquire land for industries but the people who stand to lose their farmlands and homesteads are up in arms against them. Changes of the kind the International Monetary Fund is pressing for may not, therefore, come easily. However, India is well set to retain its status as the fastest growing economy as no credible challenger is in sight.

According to World Bank data, China’s growth rate stood at 9.5 per cent in 2011 and India’s at 6.6 per cent. Since then China’s growth has fallen continuously and India’s has risen except in one year. In the process, they levelled at 7.3 per cent last year. The projection for India in the current financial year is 7.5 per cent against China’s 7.1 per cent.

On the strength of the growth rate, Finance Minister Arun Jaitley claimed that the economy had recovered from the effects of the global slowdown. But former Prime Minister Manmohan Singh, who, as Finance Minister, had initiated the economic reform process in 1991, termed the recovery very fragile. Touched to the quick, Jaitley said, “In a global slowdown situation, to have the fastest growth rate in the world certainly does not make the Indian economy fragile.”

Chief Economic Adviser Arvind Subramanian sought credit for the government for the fast growth rate. He said the manufacturing and service sectors, which were under the government’s control, had done well while the farm and export sectors, which were not under its control, had not done so well.

The steep fall in oil prices in the international market helped India, which imports 70 per cent of its crude requirements, to contain inflation and the current account deficit. But it also hurt to some extent by reducing foreign demand for its products.

Alyssa Ayres, Senior Fellow at the Council on Foreign Relations, in a testimony before a Congressional committee urged the US to “elevate support for India’s growth to the highest bilateral priority” and to “work more comprehensively to integrate India in the global economic institutions”.

She mentioned in particular the Asia Pacific Economic Cooperation (APEC) forum, which has not acted upon India’s application for membership for two decades, the Organisation for Economic Cooperation and Development (OECD), where India has the status of “key partner”, and the International Energy Agency (IEA).

China, which is watching the US moves, is of the view that unrealistic praise and forecasts for India are painting a false picture. “There is no possibility of India surpassing China,” the Communist Party’s English tabloid, Global Times, said in an article last week.

Growth rate is not a reliable measure of the robustness of the economy. A developed economy cannot be expected to chalk up a high growth rate. The US growth rate in the last four years, for instance, ranged between 2.9 per cent and 4.1 per cent. Assessment of the economy entirely on the basis of the growth rate will, therefore, be misleading.

“It is inescapably clear that India won’t easily outgrow China as predicted by the West,” the Global Times article said. “From a macro perspective, China’s GDP in 2015 was nearly $10.42 trillion, which is around five times as much as India’s $2.18 trillion.”

IMF data of GDP shows that vast gaps separate India from China, and China from the US. In per capita terms, China’s GDP is 25 per cent of the US’s and India’s 11 per cent. Until India is able to carry with it the vast excluded sections of its population, the high growth rate will be of little avail. - Gulf Today, Sharjah, March 22, 2016.

Change of master, not of system

BRP Bhaskar
Gulf Today

The Congress which headed the government at the Centre longer than any other party had come under attack frequently on two grounds: misuse of the institution of Governors and misuse of the Central Bureau of Investigation. One and a half years after Narendra Modi led the Bharatiya Janata Party to power there is no sign of change in the situation. If anything, it is getting worse.

Arunachal Pradesh is facing an unprecedented situation with Governor Jyoti Prasad Rajkhowa colluding with a group of Congress rebels and the opposition BJP to oust Congress Chief Minister Nabam Tuki.

The bizarre development began with Rajkhowa, a retired bureaucrat, advancing the date of the State Assembly session on his own. Speaker Nabam Rebia suspended 14 rebel Congress members and locked the Assembly premises to prevent the session called by the Governor without the Cabinet’s recommendation.

The Congress rebels and the BJP members met at a community hall, with Deputy Speaker T Norbum Thongdok, who is one of the rebels, in the chair. The Deputy Speaker rescinded the suspension orders issued by the Speaker. Thereafter the rebel assembly adopted a resolution removing the Speaker.

The rebel assembly later voted to remove Chief Minister Tuki and installed dissident Congressman Kalikho Pul as his successor.

On a petition filed by Speaker Rebia, the Gauhati High Court ordered that all decisions of the rebel assembly be held in abeyance. The court will take up the petition for hearing on February 1, 2016.

The Congress party alleged that Union Minister of State for Home Affairs Kiren Rijiju, who belongs to Arunachal Pradesh, was behind the Governor’s unconstitutional acts. Denying the charge, Rijiju told a reporter that subversion of the Constitution was not in his blood.

Curiously, while admitting the Constitution was being subverted, Rijiju did not condemn it. He blamed the Congress for the situation.

The gubernatorial shenanigans did not attract much political and media attention as Arunachal Pradesh is a remote border state with a predominantly tribal population. A mischievous move by the CBI around the same time received more attention as the scene was Delhi.

While the UPA was in power, annoyed by the revelation that the CBI had made changes in an affidavit in a corruption case at the instance of a minister, a Supreme Court judge had dubbed the agency a caged parrot.

Responding to the criticism, CBI spokeswoman Dharini Mishra said, The CBI conducts all investigations in a free, fair and impartial manner as per the law. However, Vijay Shanker, who had headed the CBI from 2005 to 2008, admitted that the agency did come under political pressure.

The hollowness of the spokeswoman’s claim was exposed when the agency requested the Supreme Court to grant its Director the status of Government Secretary so as to free him from the government’s administrative and financial control.

The agency clarified that it was not seeking enhancement of its legal powers. Even if the Director was granted the powers of a Secretary, superintendence would vest in the Centre and the minister in charge would remain the final authority, it said.

The Supreme Court made a cursory attempt to secure a measure of professional autonomy for the agency. It sought the government’s views on a law to give the CBI functional autonomy and insulate its investigations against outside interference. The government rejected the idea of such a law.

Six months later, the BJP-led National Democratic Alliance replaced the Congress-led UPA in office. The CBI now had a new master but the system remained unchanged.

Soon a change in the CBI’s tune was in evidence. In 2012, it had filed a charge-sheet implicating Amit Shah, who was Home Minister under Modi in Gujarat, along with some senior police officials in two cases of alleged fake encounters. On a petition by Shah, the trial court quashed the charge-sheet last year.

By then Shah had become the BJP’s president. The CBI, which had earlier claimed it had evidence against him, chose not to file an appeal.

Recently the CBI searched the office of Delhi Chief Minister Arvind Kejriwal ostensibly in connection with a corruption case against his Secretary, Rajinder Kumar, an IAS officer.

Kejriwal, whose Aam Admi Party had trounced the BJP in the Delhi Assembly elections, said the agency was looking for information on movement of files relating to alleged corruption in the Delhi and District Cricket Association when BJP leader and Union Finance Minister Arun Jaitley was its president.

If Kejriwal’s allegation is correct, the caged parrot may be turning into a hunting falcon. --Gulf Today, Sharjah, December 22, 2015

End of black money chase

BRP Bhaskar
Gulf Today

Why did Indians holding secret accounts in foreign banks contemptuously reject the corporate-friendly Narendra Modi administration’s generous offer to them?

During the Lok Sabha election campaign, Modi had declared he would bring back the money stashed abroad within 100 days of taking office. He would then have enough money to pay out Rs1.5 million to each citizen, he said.

When the deadline passed without any action, critics taunted him. The government then framed a law prescribing stiff penalties for holding undisclosed income and assets abroad, and offered a three-month window, from July 1 to September 30, to disclose black money accounts without attracting its harsh provisions.

In his Independence Day address, on August 15, Modi said the government had already received disclosures to the tune of Rs65 billion. However, when the time set for voluntary disclosure ended, only hoardings worth Rs37.70 billion had come to light.

That reduced the notional share of each citizen from 1.5 million to a measly Rs37. More taunts followed.

India has been living with the problem of black money, generated at home and abroad, since long. Businessmen are known to create black money abroad by under-invoicing exports and over-invoicing imports. Politicians and officials also park ill-gotten money abroad. Ahead of elections, money hoarded abroad flows into the country.

Modi’s was the fourth voluntary disclosure scheme in 40 years. About 260,000 persons disclosed concealed income of Rs15.90 billion in the first one in 1975. The second one in 1985 brought out Rs29.40 billion held by about 150,000 persons. The third in 1997 was the most successful one: about 470,000 persons disclosed concealed income of Rs330 billion.

The latest scheme, limited to foreign account holders, evoked the poorest response. There were only 638 disclosures. In absolute terms, the income disclosed is the second largest but it has to be viewed against the growth in the size of black money accounts since 1991 in the wake of economic liberalisation.

Modi, who is a prolific communicator, has not spoken or tweeted on the collapse of the scheme. The formal official response came from a bureaucrat who said, “We will now start taking action against those who have not declared their concealed income.”

If caught, a black money holder faces the prospect of a 120 per cent tax penalty and a 10-year jail term. The way the illicit account holders have ignored the scheme suggests they are supremely confident of their ability to evade the law.

There are no large industrial houses or tycoons among the 638 who made disclosures. Most of them are medium-sized industries or businessmen. It is possible that some made partial disclosures to avoid further scrutiny. Having made disclosures, they are immune from prosecution.

The government has no information about the assets held abroad by Indians. In a 2013 report, the Washington-based Global Financial Integrity put illegal outflow from India in the previous 10 years at about $440 billion. It ranked India third in illegal overseas money transfers, after China and Russia.

In 2006, Switzerland’s Banking Association revealed that Indians topped the list of secret account holders in that country with deposits totalling $1,456 billion. This was higher than the combined deposits of nationals of Russia ($470 billion), the UK ($390 billion), Ukraine ($100 billion) and China ($96 billion).

As Switzerland initiated steps to live down its reputation as a parking station for illicit wealth, Indian clients started moving their money elsewhere. By 2011, Indian deposits slid to the 61st place and stood at less than $2 billion. The 2014 figure is $1.98 billion.

The government’s hope of black money recovery now rests mainly on the multilateral automatic exchange of information system due to come into force in 2017. But those with undisclosed funds have enough time to move the money to countries which are out of it.

There is reason to doubt if the government is serious about unearthing black money. How can politicians who need black money to finance election campaigns crack down on black money?

Modi’s Bharatiya Janata Party is now the biggest beneficiary of corporate funding. Published accounts show that it received more than Rs12 billion from big companies last year. The Congress party’s share of corporate donations was only about $480 million. It is reasonable to assume that black money holders are actuated by the same considerations as the corporate since their interests coincide.

Finance Minister Arun Jaitley virtually proclaimed the end of the chase of foreign account holders when he wrote on Facebook on Sunday that the bulk of the black money is within India. He also bailed them out with the observation that the high tax regime of the past was to blame. --Gulf Today, Sharjah, October 6, 2015

Two-faced banking reform

BRP Bhaskar
Gulf Today

A seven-point programme to revamp the banking sector, unveiled by the Government last week, has enthused domestic and foreign interests seeking accelerated economic reform but it overlooks the chronic problem of corporate default afflicting the public sector institutions.

Finance Minister Arun Jaitley outlined the programme shortly after the end of the monsoon session of Parliament. The government’s plan to push through some important reform-related legislation had fallen through due to continuous disruption of the two houses by the opposition.

Global rating agencies Standard and Poor’s and Fitch Ratings had recently pointed out that banking reform was necessary to achieve Prime Minister Narendra Modi’s growth targets. Large corporates were holding back new investments pending action by the government, they said.

India’s major banks are government owned. They were brought under the state in stages. The British-owned Imperial Bank, which handled government accounts during the colonial period, was nationalised in the eighth year of Independence. Banks floated by the former princely states were later made its subsidiaries.

With the takeover of 14 private banks in 1969 and six in 1980, as much as 80 per cent of the industry came directly under the central government.

At the government’s instance the public sector banks expanded rapidly into the countryside. They also tuned their lending policies to meet the needs of priority sectors identified by the government. There was political interference in their working even as they played their part in promoting government programmes aimed at inclusive growth.

When the country took the first steps towards economic reform in 1991, it recognised the need for a competitive banking system. The main issues were the small capital base and low profitability of the banks.

The government infused additional capital of about Rs 200 billion and allowed the banks to raise more from the market subject to the condition that the government’s holding should not go below 51 per cent.

New laws were enacted to improve the health of the finance sector and banks were asked to adopt global standards. At that time more than 23 per cent of all bank advances were classified as non-performing assets (NPAs). As a result of the measures that followed NPAs came down to 16 per cent by 1998.

In the wake of the East Asian financial crisis, the government initiated more measures to strengthen the banks. It also brought in a new law to regulate credit information companies.

By 2008, NPAs were down to 2.4 per cent. However, they soon started rising again and stood at 4.5 per cent last year. Also, as much as 12.9 per cent of public sector banks’ advances was classified as “stressed advances,” a term which includes NPAs and restructured standard advances. The corresponding figure for private banks was only 4.4 per cent.

The public sector banks certainly need to bring down NPAs. This is a task which can be accomplished without deviating from the policy of increased financial inclusion.

There is enough material in the public dominion to establish that the rise in NPAs is not a result of policies meant to help the disadvantaged sections of the society.

Public sector banks have been coming under stress from two sources. One is the ever expanding demands of infrastructure development, particularly in sectors like power, steel and transport. The other is wilful default by unscrupulous businessmen.

While announcing the reform programme, Jaitley noted that there was improvement in the highways, steel, power distribution and sugar sectors. He studiously avoided the issue of corporate default.

Last year the All India Bank Employees Association made public a list of 406 defaulting borrowers of 24 public sector banks. It said the top 30 bad loan accounts stood at Rs 703 billion..

Heading the defaulters’ list was an airline company floated by a liquor baron which owed the banks Rs 26.73 billion. Two jewellery firms in the list had a combined loan liability of Rs 31.57 billion.

The AIBEA said the public sector banks had written off Rs 2,040 billion in 13 years, restructured loans to the tune of Rs 3,250 billion, and run up fresh bad loans of Rs 4,950 billion. Demanding that the government release the names of the major defaulters and lay down stringent loan recovery norms, its general secretary, CH Venkatachalam said, “If there is a political nexus, let it come out. The people should not be punished for corporate default.”

The government has decided to bring in personnel from the private sector to head some public sector banks. The theory promoted by some circles that the private sector banks are good commercial models stands on questionable grounds. One or two of the successful private banks are known to have been involved in illegal transfer of funds to foreign locations. - Gulf Today, Sharjah, August 18, 2015.

US rebuke evokes divided response

BRP Bhaskar
Gulf Today

Public statements by President Barack Obama chiding India for the recent attacks on religious minorities has chilled the officially promoted euphoria over the personal chemistry between him and Prime Minister Narendra Modi and elicited diverse responses from the Bharatiya Janata Party government and its Hindutva ideologues.

Obama was the chief guest at this year’s Republic Day celebrations in New Delhi. He and Modi appeared before the media after one-to-one talks to announce elevation of the strategic relationship between the two countries to a new level.

Modi repeatedly referred to Obama by his first name to impress listeners about his personal rapport with him. That did not hold Obama back from telling a home truth. Addressing a rally before leaving New Delhi, he said, “India will succeed so long as it is not splintered on religious lines. Nowhere is it more important to uphold religious freedom than in India.”

Obama’s remark, coming in the wake of a series of attacks on religious minorities and a spate of conversions in the guise of homecoming by those who had forsaken Hinduism, was interpreted by observers as a parting shot. Modi, his government and the ruling party were not happy but chose not to respond publicly.

Last week, Obama brought up the subject again while addressing the National Prayer Breakfast, an annual event in Washington attended by political, social and business leaders. He referred to his visit to India, a place “full of magnificent diversity…where, in past years, religious faiths of all types have, on occasion, been targeted by other peoples of faith, simply due to their heritage and their beliefs” and said the acts of intolerance would have shocked Mahatma Gandhi. The government and the Hindutva outfits responded this time.

The first response came from unnamed officials who suggested that Obama’s statements were the result of political compulsions. They suggested that he had criticised India to placate the Christian lobby in the US and to prevent perceptions of closeness between India and the US racing ahead of ground reality. They also insinuated that the remarks were aimed at pressuring India into making concessions on the issues that defied solution during the Delhi talks.

For the first time officials admitted that the Indo-US nuclear, defence and clean energy discussions were marked by hard bargains. The most startling disclosure was that the US had pressured India to commit troops for service in Afghanistan, arguing they could be effective as they knew the region well.

One part of the officials’ theory was clearly wide of the mark. Far from pleasing the Christian lobby, Obama had invited its wrath by following up a reference to Daesh in his Prayer Breakfast speech with reminders of the terrible deeds committed during the Crusades and the Inquisition. Drawing attention to the treatment of the Blacks, he added, “Slavery and Jim Crow all too often was justified in the name of Christ.”

As is his wont, Modi maintained silence on Hindu communalism. However, two senior ministers responded to Obama’s criticism.

Finance Minister Arun Jaitley, who dismissed the attacks on minorities as mere aberrations, said, “The best example of India’s tolerance was the Dalai Lama sitting next to Obama.” The Buddhist leader, who has been living in India since he fled Tibet in 1959, was among the guests at the Prayer Breakfast.

“Religious tolerance is inbuilt in our culture,” said Home Minister Rajnath Singh. “No one is insecure in the country, no matter to which religion he or she belongs.”

In an apparent attempt to meet the US criticism, he asked the Delhi police to take stern action against those responsible for vandalising churches in the capital. A high official telephoned the Archbishop of Mumbai and apologised for the refusal of visas to two Vatican representatives who were to have attended a meeting of the Catholic Bishops Conference of India.

While the ministers spoke in measured tones, Surendra Jain of the Vishwa Hindu Parishad, called Obama a “stooge of the Church” and said he had not been a good guest. He asked the government to weed out politicians batting for the Church.

By reiterating the Rashtriya Swayamsevak Sangh’s stand that India is a Hindu nation in a speech on Sunday, its chief, Mohan Bhagwat, made it clear that the Hindutva forces are in no mood to relent. In fact, he sought to widen the social divide by raising a new slogan, “One language, one God, one religion”, which is a total negation of India’s cultural diversity. -- Gulf Today, Sharjah, February 11, 2015

Rolling out of reforms

BRP Bhaskar
Gulf Today

Pressure is mounting on the Narendra Modi government from domestic and foreign business interests to roll out economic reforms promised by the Bharatiya Janata Party in its election manifesto.

The Paris-based Organisation for Economic Cooperation and Development (OECD) said last week the Indian economy had shown signs of a turnaround and imbalances had lessened. It forecast that the economy, which registered a growth rate of only 5.3 per cent during the July-September quarter, could go up to 6.6 per cent in 2013-16 and to 6.8 per cent in 2016-17.

These rates are by no means too modest in the context of current global conditions. However, the Indian government is eager to push the rate up to the eight per cent level achieved before the global meltdown of 2008. Finance Minister Arun Jaitley told Parliament a few days ago that the government was committed to go ahead with reform measures “to take India back to the original potential of eight per cent economic growth”.

The Western economies have a stake in accelerated growth of the Indian economy since it will boost their own recovery plans. On its part, the Indian government is looking forward to infusion of fresh foreign capital to expand economic activity and generate jobs. The rub lies in some local laws which both domestic and foreign investors consider a stumbling block.

The World Bank’s Ease of Doing Business report ranked India at 142nd among the 189 countries surveyed. This meant a decline from last year when it was at the 140th place. The Prime Minister has reportedly set for himself a highly ambitious goal of putting the country among the top 50.

An action plan drawn up by the Confederation of Indian Industry, with the help of the consulting firm KPMG, contains a set of proposals to make India the “best place for doing business”. It envisages, among other things, rationalisation of the tax regime, easing of land acquisition process and streamlining of procedures for investment approval and provision of utilities.

Some proposals, like the one regarding e-filing of applications, will certainly help cut red tape, reduce corruption and improve efficiency. Some are couched in euphemistic terms. An example is the proposal for creation of an appropriate labour development ecosystem. It talks of 44 Central laws, many of which are old and outdated and impose a heavy compliance burden, and says there is urgent need to realign them to new economic needs. This is a scarcely disguised plea to scrap laws that protect the workers against exploitation.

The OECD’s prescription for curing the economy’s ills also includes many of the CII-KPMG proposals but it presents them in a wider context giving the impression that it is sensitive to the needs of the workers and other weaker sections of the society. It asks the government to boost manufacturing jobs by simplifying labour laws, improving access to education and improving the business climate. It also proposes increasing female economic participation and improving access to quality healthcare.

The proposals of CII and OECD are not new. The Congress-led United Progressive Alliance government had seriously considered similar proposals but could not go ahead with them because of strong opposition not only from the Left parties but also some of its own partners.

Soon Modi will have before him yet another set of proposals drawn up by a World Bank team, which is now in India. It comprises experts on trade and competitiveness practices and was sent by Bank president Jim Yong Kim at Modi’s request to suggest measures to improve the business environment.

The team was reportedly holding discussions with public and private sector stakeholders in New Delhi and Mumbai on the reform initiatives and discussing various reform options and feasibility of their implementation. Its recommendations are bound to be on the same lines as those of the CII and OECD.

Parliament is now in session, and the government may try to push some reform proposals through it. However, major reforms must wait till the budget session which begins in February.

With a clear majority in the Lok Sabha, the lower house of Parliament, the BJP has more elbow room than the Congress had. However, it is in a minority in the Rajya Sabha, the upper house, and needs the support of other parties to push any changes in law. Some of the reform proposals may require changes in the Constitution, for which a two-thirds majority in both houses is necessary. -- Gulf Today, Sharjah, December 9, 2014.

Unending black money chase

BRP Bhaskar
Gulf Today

Prime ministers come and go, chief justices come and go, but the Indian black money chase goes on for ever.

The Supreme Court has been seized of the black money problem for several years. The pace of the proceedings is so slow that a final outcome cannot be expected for many more years.

The Bharatiya Janata Party raised the black money issue in its parliamentary election campaign, and Narendra Modi vowed to bring the money hoarded abroad back within 100 days if he became the prime minister.

As the deadline he had set passed with no new development, the government came under attack for dragging its feet the way the previous Congress-led United Progressive Alliance government had done.

Responding to the criticism, Finance Minister Arun Jaitley said the Congress party would be embarrassed when the names of the account holders came out. Later the government revealed three names, whose foreign accounts were under investigation.

The Modi government, like its predecessor, claimed that the double tax avoidance agreements signed with other countries prohibited it from disclosing names of holders of foreign accounts except in connection with legal proceedings. As investigations progressed, more names would be released, it said.

This, coupled with leaked reports that a former Congress minister was under investigation, led to speculation that the government planned to disclose information selectively to derive political benefit.

Hopes rose momentarily when the Supreme Court directed the government to give all the names to it in a sealed cover within 24 hours. On receiving the list, the court turned it over to the special investigation team (SIT) headed by two retired judges chosen by it earlier this year.

SIT chairman MB Shah, who opened the cover, found it was the same list the government had given to it directly earlier. It contained the names of 627 Indians who had accounts in the HSBC Bank in Geneva. The list, extracted from the bank’s records by an employee in 2006, was turned over to India by the French government in 2011.

The SIT chairman said investigation of those figuring in the list would be completed by March 31, 2015, as directed by the apex court.

When information about secret foreign bank accounts is received, the Indian government’s standard practice is to collect tax on the concealed income and close the case. There is no prosecution.

The HSBC list, which contains no big names, is already several years old and the account holders may have taken out all the money by now. According to Income Tax officials, the average amount in the accounts was about Rs500 million, and the government can at best hope to get about Rs30 billion by way tax and penalties.

A fair estimate of the extent of wealth hoarded abroad can only be made when details of accounts in other banks in Switzerland as well other tax havens become available.

Early this year the Swiss National Bank said Indian entities held over two billion Swiss francs (Rs140 billion) in 283 banks in that country. All of it may not be unaccounted money.

Switzerland has said it is ready to provide details of individual accounts if the information is required in connection with any investigation but there can be no ‘fishing expedition’. Obviously due diligence is needed to get information on the black money accounts.

Three years ago, the Washington-based research group Global Financial Security estimated that Indians held $644 billion in tax havens.

Professor Arun Kumar of Jawaharlal Nehru University, who once estimated Indian black money, circulating at home and parked abroad, at $2 trillion, rubbishes the government’s claim that the double taxation avoidance agreements hinders pursuit of money held abroad. He commends the example of United States courts which forced the Swiss to reveal the names of about 4,500 American account holders.

In a broadcast on Sunday, Modi said no one knows how much black money is stashed abroad. Sensing that people doubt the government’s ability to bring the money back, he asked them to trust him.

Incidentally, two of the three persons whom the government named publicly as holders of illegal foreign accounts said they had done no wrong. One of them had made substantial donations to both the Congress and the BJP — more to the BJP than the Congress. There lies the crux of the matter.

It is widely believed that black money in secret foreign accounts flow into the country at election time. -- Gulf Today, Sharjah, November 4, 2014.

Uncertainty in politics

BRP Bhaskar
Gulf Today

India’s major national parties are in the throes of crisis. Their internal problems may have their impact on developments at the national and state levels in the months ahead.

The Congress, which heads the ruling United Progressive Alliance government, has lost its second most important Cabinet minister, Pranab Mukherjee, having picked him as its candidate in the presidential election to be held this month.

An astute politician, Mukherjee was perhaps the one most qualified to be the prime minister. Congress President Sonia Gandhi having chosen Manmohan Singh, a non-politician, for the post, it fell to him to handle sensitive negotiations. Apart from being finance minister, he was chairman of most of the Cabinet committees.

The prime minister’s decision to keep the finance portfolio with himself and to distribute the chairmanship of Cabinet committees among several senior ministers testifies to the paucity of talent in the party’s higher echelons.

Mukherjee has the support of several parties outside the UPA, including the Janata Dal (United) and the Shiv Sena, which are constituents of the rival National Democratic Alliance. The Congress party’s largest partner, the Trinamool Congress, has set its face against his candidature, but he is set to win, thanks to the wide measure of support from outside the UPA.

So far there is nothing to indicate that the switch of loyalties by some partners of UPA and NDA in the presidential election signals the beginning of a realignment of forces at the national level.

Most Congressmen regard Sonia Gandhi’s son, Rahul Gandhi, who is general secretary of the party, as a future prime minister. His attempts to rejuvenate the party in Uttar Pradesh, the original home of the Nehru Gandhi dynasty, have not been a success. However, no one in the party sees it as a reason to delay his induction as a minister and eventual elevation as prime minister.

While Sonia Gandhi can easily bring about changes at the national level, she finds the going tough at the state level. In Andhra Pradesh, the largest state where the Congress still has primacy, the revolt by family members and followers of former Chief Minister YS Rajasekhara Reddy has administered the party a rude shock.

The party’s top leaders in Maharashtra are under the shadow of scams. In Kerala, the caste and religious forces on which the party has relied for sustenance have become an acute source of embarrassment.        

The Bharatiya Janata Party, which heads the NDA, too, is facing serious troubles. Since its long-time prime minister-in-waiting Lal Kishen Advani is too old to be in the reckoning, a frantic search is on for a new candidate.

The Hindu rightwing Rashtreeya Swayamsevak Sangh, the power behind the party, wants Gujarat Chief Minister Narendra Modi to be projected as the presidential candidate. Nitin Gadkari, whom the RSS pitch forked into the party chairmanship some time ago, has started preparing the ground to bring Modi to the national stage. Young parliamentarians like Sushama Swaraj and Arun Jaitley, who lead the party in the Lok Sabha and Rajya Sabha respectively, resent the move.

The RSS can smother all opposition to Modi from within the BJP but it will have a hard time selling his candidature to the NDA constituents as he bears the odium of having presided over the 2002 pogromme against Muslims in Gujarat. The Janata Dal (U) has made it known its opposition to Modi in no uncertain terms.

Like the Congress, the BJP, too, faces internal problems in its strongholds. In Karnataka, BS Yeddyurappa, who was forced out of chief ministership in the wake of grave corruption charges, is seeking the ouster of his successor, DV Sadananda Gowda. Former Rajasthan Chief Minister Vajayaraje Scindia, who is hoping to stage a comeback riding the anti-incumbency wave against the Congress government, is encountering opposition from a dissident faction.

The Left parties, which once played a role far in excess of their natural strength in times of political uncertainty, are no longer significant actors on the national stage. The largest of them, the Communist Party of India-Marxist, is in deep trouble in its traditional strongholds. The Trinamool Congress, which put an end to its unbroken stewardship of the West Bengal government for 33 years, is making it difficult for the party to rebuild its shattered base. In Kerala, several CPI-M leaders are in custody in connection with murder cases being investigated by the state police and the Central Bureau of Investigation.-- Gulf Today, Sharjah, July 3, 2012.