Selected Articles from Various News Paper: Civil Services Mentor Magazine - March 2017

Selected Articles from Various Newspapers & Journals

Drowned by State Failure

The boat disaster in the Ganga on Makar Sankranti day that killed at least 24 people is another reminder that safety in public transport remains a low priority for governments. As with road accidents, mishaps in the inland waterways and lakes take a terrible toll of lives regularly, with no effective administrative response. In the Ganga Diara tragedy near Patna, a large number of people had apparently crammed themselves into a small vessel for a free ride after witnessing a kite festival. The relief offered to the kin of the dead and injured both by the Centre and the Bihar government should not, however, obscure the fact that the loss of life was entirely the result of official failures. This was obviously the result of serious neglect of safety norms for which accountability must be fixed. It is essential that a judicial commission be constituted to inquire into the incident, to determine whether the laws on transport using inland waterways are being implemented and to issue directions for the future. The country boat involved appears not to have used its engine at the time of the accident, but the absence of safety training for operators is painfully evident.

The Centre, which talks of a paradigm shift in freight and passenger transport using inland waterways, should respond to the shameful national record on boat safety by firmly implementing existing laws and introducing new measures along with the States. Just last year it expanded the National Waterways programme and notified several stretches of rivers and canals for a new deal for inland water transport. Under the amendments to the colonial-era Inland Vessels Act made in 2007 - which is to be further modernised - it is incumbent on the States to apply some provisions of the Motor Vehicles Act to accidents, compensation and insurance against third-party risks for powered boats. Just as in the case of motor vehicles, registration of inland vessels other than small personal non-powered craft must be made mandatory. This will help enforce construction standards, subsidy for transport boats, passenger insurance and accident compensation. In the latest tragedy, the problem also appears to have been inadequate supply, which forced people to pack themselves into the available boats. If this is true, the Bihar government must own full responsibility and prevent a recurrence. The heart-rending spectacle of children and their kin perishing on what should have been a day of celebration must stir the conscience of governments whose duty it is to provide safe and adequate public transport, and one at which they fail badly.

Vagaries of the job market

The mismatch between the number of people who annually reach working age and the availability of jobs has been a matter of constant concern globally during the better part of the period since the global financial crisis of the last decade. The International Labour Organisation's latest forecast that a few more millions are set to join the pool of the jobless during this year and the next, is in line with its own previous estimates. In any case, with the growth in global gross domestic product registering a six-year low in 2016, expectations of generation of new jobs were always going to be low. But a no-less-serious concern in the 'World Employment and Social Outlook 2017' pertains to the stubborn challenge of reducing the extent of vulnerability that currently affects about 42 per cent of the total working population. This concern refers to lack of access to contributory social protection schemes among the self-employed and allied categories, unlike their counterparts in the wage-earning and salaried classes. The former segment accounts for nearly 50 per cent of workers in the emerging economies and 80 per cent in developing countries. The hardships faced by these 1.4 billion working people will become more apparent when seen in the backdrop of either the absence of strong welfare legislation or its effective enforcement in a majority of these countries. It is no surprise that besides Sub-Saharan Africa, South Asia has been the most affected by such volatile conditions.

To be sure, the overall share of these vulnerable workers dropped from 46 per cent of total employment in 2015 to 42 per cent in 2016. But the latest report projects only a mere 0.2 percentage point rate of reduction through 2017-18. In comparison, it says the proportion of the population in jobs characterised by vulnerability declined by an average annual rate of 0.5 percentage points in the previous decade. As a result of the relatively slow reversal rates in more recent years, these numbers are projected to increase globally by 11 million a year. The other implication of an increase in the number of people facing vulnerable working conditions is the real danger this poses of a slowdown in reducing the incidence of working poverty. It is this celebrated rise in income levels in the lowest rungs of the population that lent the current phase of globalisation the social and political legitimacy, a phase that has otherwise posed the risks of economic dislocation and unprecedented mass migration. The challenge for policymakers worldwide is to ensure that incomes do not fall below the levels of basic subsistence as the world marches towards the poverty reduction targets under the 2030 Sustainable Development Goals.

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The pragmatist's pivot to India

The death of Akbar Hashemi Rafsanjani on January 8 was a landmark for the Islamic Republic of Iran. Rafsanjani was a pivotal figure in the country's path since the 1979 revolution: a founding father, a military leader in the war with Iraq, and twice President. More parochially, his presidency also saw a historic shift in ties with India, laying the groundwork for the cooperation that has unfolded, haltingly, over the past 20 years.
It was Rafsanjani who warned that Mahmoud Ahmadinejad's victory in 2009 would bring "Islamic fascism", blamed the Bashar al-Assad regime for the use of chemical weapons in 2013, and supported Hassan Rouhani's successful bid for the presidency that same year. He was pushed to the margins of politics, had two of his children jailed, and was blocked from returning to the presidency himself. And so the mourners thronging the streets of the capital last Tuesday - never a comfortable sight for the regime - included the rare sight of supporters of the Green Movement, crushed by force in 2009, and vocal critics of Russia, alongside which Iran is fighting in Syria.

Rafsanjani's flexibility also played a role in the evolution of Iran's ties with India. In the early 1990s, the situation was delicate. In September 1993, P.V. Narasimha Rao became the first Indian Prime Minister to visit Iran since the revolution. This, President Rafsanjani noted, was "a turning point". In March 1994, Iran bailed out India in the UN Commission on Human Rights, blocking a consensus on Kashmir. Five months later, in August, this bonhomie was interrupted.

Mr. Rouhani, then secretary of Iran's powerful Supreme National Security Council and deputy speaker of parliament, paid a visit to India. Iran's now-President spoke his mind: on the "persecution" of minorities, on the Babri Masjid, and on the importance of India-Pakistan talks, including "true" representatives of Kashmiris, such as the Hurriyat Conference, to resolve the conflict in the Valley. This "unfortunate departure from diplomatic norms", as one Indian newspaper put it at the time, cast a pall over relations. Worse still, in October, Rafsanjani cancelled his own visit, concerned at being associated too closely with India while the then Organization of the Islamic Conference (OIC) was preparing once more to censure India on Kashmir. The snub was taken badly in India.

In substantive terms, Rafsanjani signed a three-way India-Iran-Turkmenistan transit agreement, allowing India to avoid Russian or Ukrainian ports. He also urged a Tehran-Delhi-Beijing axis - his proposal, sandwiched between India's 1993 and 1996 border agreements with China, was perhaps less quixotic than it looks today. Indian officials, in turn, batted away American criticism of Iran, going so far as to mock then U.S. Treasury Secretary Robert Rubin for complaining that his trip to Delhi had coincided with Rafsanjani's. India's warm welcome to both was itself a foreshadowing of what, a decade later, would come to be called multi-alignment.
Economic diplomacy has only grown in importance, as a rising India has looked to Central Asia and Iran has emerged from the sanctions straightjacket. This explains last May's historic agreement over the Chabahar port, even if Iran is considerably more relaxed than India about Gwadar, China's regional infrastructure plans, and the Chinese navy's presence in the Indian Ocean. Last year, India's oil imports from Iran trebled from the previous year, pushing it into fourth place in the ranking of Indian suppliers, and there is pressure on the Reserve Bank of India to allow Iranian banks to open branches in India, which would boost the relatively modest amount of bilateral trade.

Afghanistan is a more complicated story, with Tehran now openly flirting with parts of the Taliban even as Delhi and Kabul draw closer together. Recall that Taliban leader Mullah Akhtar Mansour's death in a U.S. drone strike in May 2016 came as he was returning to Balochistan from Iran, possibly after a long stay. Although Taliban delegations have been coming to Iran for years, they attended December's International Islamic Unity Conference in Tehran with no semblance of secrecy.

As for the Tehran-Washington balancing act, this has eased in recent years as the Obama administration in the U.S. has taken a softer approach. With Boeing and Airbus queuing up to sell to Iran, it's easier for India to do so. But Donald Trump will assume the presidency in three days, surrounded by congenital Iran hawks such as National Security Advisor Michael Flynn, Defence Secretary James Mattis, and CIA Director Mike Pompeo. Within the past few days, President-elect Trump has repeated, to a British newspaper, his view that Barack Obama's nuclear deal with Iran is "one of the worst deals ever made". He will not rip it up on Inauguration Day. Neither Europe nor Mr. Trump's apparent hero, Russian President Vladimir Putin, would agree to a reimposition of sanctions. But with Mr. Rouhani seeking re-election this year, and hardliners breathing down his neck, it's not difficult to imagine a spiral of U.S. and Iranian steps that leads to its unravelling. Will the self-styled arch-dealmaker demand that American support to India on Pakistan require a quid pro quo from India on Iran?

A wake-up call

A flurry of videos has emerged in the social media in recent days showing jawans of both the paramilitary forces and the Army complaining against a host of issues from diet to colonial-era practices. While these are disciplinary breaches, they are a good reason to initiate a detailed study into the internal health of our security establishment. The present lot of videos began early last week when BSF constable Tej Bahadur Yadav posted a series of them complaining about burnt parathas and watery lentil curry served along the Line of Control. It was almost as if he was opening the floodgates. From the Army, Lance Naik Yagya Pratap Singh of 42 Infantry Brigade expressed his grievances against the sahayak system. He alleged that professional soldiers were being forced to wash clothes, polish boots and walk dogs for senior officers, and that he was being victimised with court martial proceedings for complaining against the practice. Nursing Assistant Naik Ram Bhagat of the Army complained in another video about their rations, that they were only getting about 40 per cent of the menu items allotted. He also complained about the buddy system in the Army, in which soldiers are deputed to be with officers and end up doing their personal chores. Yet another video of an Army jawan showed him singing about the difficulties they face and discrimination by officers. He spoke about leave being denied for 10 months, poor food and other issues.

The videos quickly grabbed national attention. From the Prime Minister's Office to the Army chief, the senior leadership has been quick to respond. Both the PMO and Home Minister Rajnath Singh sought an immediate report from the paramilitary forces, while Chief of the Army Staff General Bipin Rawat ordered the provision of grievance and redress boxes. However, many of the responses, especially from the middle- and senior-rung leadership of the Army and the paramilitary forces, spelt almost outright denial. Without doubt the videos are serious disciplinary breaches, and they must be viewed keeping in mind the possibilities of such rampant access and use of social media ending up assisting the enemy. The resort to social media to air grievances could compromise national security, especially when the forces are in sensitive locations. But that should not take the attention away from the larger malaise reflected in them, and it is in tackling them that the senior leadership, both in the executive and the security establishment, must spend time now. The videos are a wake-up call.

In the nick of time

The Goods and Services Tax Council has made some breakthroughs on outstanding negotiables that were holding up the introduction of the indirect tax regime. A compromise has been reached between the Centre and the States on the formula for administrative control over taxpayers under the GST, which will subsume myriad existing State and Central levies on commercial activity. By giving up on its formula to split such control by assuming the authority to levy GST on all services entities and manufacturing firms with Rs. 1.5 crore or more annual turnover, the Centre has shown a willingness to meet the States more than halfway. The new control-sharing system appears simpler to administer. Now, 90 per cent of all GST assessees with a turnover of up to Rs. 1.5 crore will come under the watch of the States and 10 per cent under that of the Centre, with both getting to assess half of the firms with a turnover over Rs. 1.5 crore. More important, it gives States, many of which had claimed at recent GST Council meetings revenue losses following the demonetisation of currency notes, the leeway to claim that they have struck a better deal with the Centre on a reform that is now inevitable.

With the Centre finally laying to rest its hopes of an April 1, 2017 rollout and eyeing a 'more realistic' July 1 date, it has some room to tinker with a few indirect taxes in the Budget to provide a short-term pre-GST stimulus to the economy that is facing a flurry of growth downgrade projections. Since the trickiest issues between the Centre and the States are now resolved and only legislative drafts remain to be approved when the Council meets next on February 18, it is an opportune time to address some of the concerns raised by another key stakeholder - industry. Firms have indicated they would need about six months to gear up for the new tax regime once the laws, rules and all the minutiae of implementation, including the rates for different products and services, are known. More clarity and finesse are also needed on the harsh penal provisions, including the power to arrest, proposed in the draft GST law (that lists out 21 offences) and the creation of an anti-profiteering authority that can act against firms that fail to pass on benefits of tax rate cuts to consumers. While it is important to protect the consumer, a clear rule-based framework is necessary to ensure that one of the biggest gains envisaged from GST - an exponential change in ease of doing business - isn't scuttled by fears of a return to inspector raj. For a government committed to ending tax terrorism, taking a step back to meticulously review the possible gaps between intent and implementation may be worthwhile - even if it means delaying the launch by a few fortnights.

The real meaning of independence for RBI

The demonetisation decision has led several observers to express concern about the autonomy and institutional integrity of the Reserve Bank of India (RBI). Many of those against demonetisation on a matter of principle (or practice) are blaming the RBI for 'caving in' to the government's diktat and surrendering its independence. But in holding that view, they are betraying a great deal of misunderstanding about precisely what autonomy for the RBI entails. The RBI is not a self-governing Republic.

A cursory reading of the RBI Act (Section 7 on Management) lays out things quite unambiguously. Part (1) of Section 7 states: "The Central Government may from time to time give such directions to the Bank as it may, after consultation with the Governor of the Bank, consider necessary in the public interest." Parts (2) and (3) spell out the roles for the Central Board and Governor. There is a clear 'seniority' principle with (1) taking precedence over (2) which takes precedence over (3).

Unsurprisingly, the decision to demonetise high-denomination currency was taken by the government in public interest after consultation with the RBI. Whether the government or the RBI issued the first memo on the matter is just squabbling over the irrelevant. The RBI Board did its duty by ratifying/recommending the action and it was then left to the Governor and his officers to implement the decision. Any other sequence of events would be disturbing. Surely, the RBI could not take a policy decision as major as demonetisation unilaterally. Nor indeed could it turn it down unilaterally.

The central goal of central bank independence was to ensure low and stable inflation via the autonomous conduct of monetary policy. It is important to note that is not the central bank's discretion to decide what the targeted rate of inflation ought to be (or indeed what the optimum rate of growth should be); that remains the job of the elected government. But once that target is laid down, the central bank must ensure that it meets those targets with complete operational autonomy.

In India, until the monetary policy framework and an inflation target were spelt out last year, it was the RBI which decided what a reasonable rate of inflation should be. To be accurate, it was the RBI Governor - just one person - who had complete control over monetary policy goals and decisions. That was vesting too much independence in an unelected official. The proper way to conduct monetary policy is via explicit goals laid out by the elected government which are then executed by a group of experts - a Monetary Policy Committee - rather than one individual, without any interference from the government.

Still, on the setting of interest rates, even before the creation of an explicit monetary policy framework, the RBI has had its autonomous way under successive governors and with different political dispensations in office. This has led to tensions between the Finance Ministry and the RBI but rarely, if ever, any encroachment on the RBI's space.

Consider also RBI's roles beyond the conduct of monetary policy. The RBI is the government's debt manager, a function that has been proposed to be hived out to an independent debt management agency but resisted by the central bank. The separation of debt management from the RBI is not an assault on the RBI's independence by the government. Instead, it is to remove the conflict of interest that exists in the RBI's functions of setting interest rates, and management of the government's debt. The latter could influence the former when it ought not to. The RBI's independence to carry out its primary mandate, the efficient conduct of monetary policy, will only be enhanced by hiving off the debt management function.

The third major role played by the RBI is in the regulation of the banking system. Like any regulatory agency, RBI must be allowed to operate at an arm's length from the government while doing its work. Again, there is no evidence to suggest that the government has interfered in any way. Remember that the government plays a separate role in the banking sector as the owner of public sector banks which control nearly 70 per cent of all lending. The RBI is the regulator, not owner, of banks. Unsurprisingly, both the RBI and the government play critical and visible roles in banking but that does not mean that they are stepping on one another's turf.
There has not been any assault on the RBI's autonomy - in the setting of interest rates or in the regulation of banks or in other operational spheres. The government, when it exercises its right as sovereign, whether to set an inflation target or to demonetise high-value currency, is acting well within the norms of the law and the spirit of democracy. Any attempt by unelected officials to obstruct would only be abuse of their autonomy.

Focussing on the marginal farmer

The sluice gate on the Bhakra main line canal in Khanauri-Kalan village in Sangrur district, Punjab, has become infamous. According to reports, it is a suicide point for farmers and their families. Typically, 30-45 corpses are found in the canal on average every month. Farmers' suicide in Punjab is a major worry: over 2,632 farmers are reported to have committed suicide between 1995 and 2015,in the land famed for its Green Revolution, according to State government records. Mansa district alone accounts for 1,334 suicides. Adding farm labourers raises the total to 4,687 reported suicides. The reasons for this vary: cotton crop has been whittled by whiteflies, basmati's market price has declined, the local moneylender has hiked up rates to 20 per cent. The farmer ekes his way to penury.

Farmer suicides are not a new trend. According to the National Crime Records Bureau (NCRB), 2,195 marginal farmers reportedly committed suicide in 2015 (of which 834 were in Maharashtra), while 3,618 "small farmers" undertook such drastic steps, with Maharashtra alone seeing 1,285. More curiously, a larger number of small farmers rather than marginal farmers reportedly committed suicide in States like Maharashtra, Telangana and Karnataka. Somehow, small farmers are also bedevilled by the agricultural crisis, and this is not the case in just the traditional drought-stricken States.

Agriculture in States like Punjab is typically a monoculture of wheat and paddy. When input costs associated with fertilizers, crop-protection chemicals and seeds rose, along with fixed costs associated with agricultural equipment such as tractors and submersible pumps, agriculture became economically unviable. Prices have risen - of arhar seeds and staple crops like paddy and sugarcane, of fertilizers and plain barley. The old days of farmers handing seeds as family heirlooms to their sons are long gone. Hiring labourers and animals is expensive. With an increase in application of crop-protection chemicals, soya bean has seen a massive jump in pesticide cost. Given a jump in input costs, cultivation costs have gone up in multiples. The total cost of cultivation for wheat rose three times from 2004-05 to 2012-13.

While traditionally the blame is cast on the usurious local moneylender, NCRB data highlight that 2,474 of the 3,000 farmers who were reported to have committed suicide in 2015 had loans from local banks, while those who had loans from moneylenders were just 9.8 per cent of the total. Maharashtra reported 1,293 such suicides for indebtedness, while Karnataka had 946. Meanwhile, farmers in Punjab are estimated to have an outstanding debt of Rs. 69,355 crore. Somehow, the traditional moneylender is seemingly more "flexible" than local banks.

Solving this crisis requires an inclusive approach. Our policies should encourage integrated pest management, an approach that focusses on combining biological, chemical, mechanical and physical means to combat pests with a long-term emphasis on eliminating or significantly reducing the need for pesticides. In Vietnam, over 2 million of the Mekong Delta's rice farmers adopted a "no spray early" rule, curbing insecticide applications within the first 40 days of rice planting. Predatory beetles that commonly prey on rice pests were sustained, encouraging the crop while cutting pesticide use by over 50 per cent.

The local fertilizer industry needs support - timely delivery of subsidies would improve working capital requirements, enabling them to manage costs through internal sources rather than external loans. Delayed payments can cause an interest outgo of Rs. 3,500 crore for fertilizer firms annually. State seed policies should focus on encouraging contract farming, along with identification of new genotypes for treating pest and disease syndromes, as well as adverse weather conditions. Precision-farming techniques like Systematic Rice Intensification can help increase seed production in this regard.

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