Black money issue

Fighting the menace of black money stashed abroad, Finance Minister Arun Jaitley has said India has gathered independent evidence about its citizens having unaccounted money in Swiss banks and Switzerland has offered full co-operation in sharing of information in this regard.

Jaitley, who met his Swiss counterpart Eveline Widmer-Schlumpf for about 40 minutes late last night, said Switzerland has agreed to act expeditiously on such cases. To curb the black money problem, Jaitley said that India would be entering into bilateral pacts with Switzerland and other countries for automatic exchange of tax information.

“Now we do have independent evidence and material available. So, now we have to come back to Switzerland with that material on the basis of which we can get (the information),” the Finance Minister said after meeting his Swiss counterpart.

According to Jaitley, Switzerland has assured that on the basis of such independent information “they will cooperate”. Jaitley said the global community is moving towards automatic exchange of information. Switzerland has agreed to share information expeditiously on black money cases where independent evidence is furnished, he said.

About the meeting with his Swiss counterpart, Jaitley said they discussed about the parameters based on which Switzerland can provide details on unaccounted money parked in Swiss bank accounts once independent evidence is furnished. In October last year, both countries had inked a joint statement of understanding with regard to cooperation on tax matters. However, Switzerland has a clear position that information based on stolen data would not be shared with another country but such requests would be looked into in case of independent evidence on the same being made available.

In continuation with that agreement, Jaitley said he had a detailed meeting with the Swiss delegation as to what could be the parameters of that independent evidence. “Of course, our tax officials are working round the clock. They are trying to finish all the assessments and they are trying to collect evidence. Several people in that list have already admitted to the fact that they had accounts.

“Now we do have independent evidence and material available. So, now we have to come back to Switzerland with that material on the basis of which we can get (the information),” the Finance Minister said

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It’s no ordinance raj

Ordinances have once again become a live political issue, with the president expressing strong views on them. The media and the Opposition have already laid into the government for promulgating ordinances on insurance, land acquisition etc. In some cases, bills are pending before Parliament or its committees and the question had arisen whether the government could still go ahead with promulgation. Going by precedent, this is clearly permissible. In fact, as early as in 1950, an ordinance was issued even though the Sugar Crisis Enquiring Authority Bill was pending in Parliament.

Constitutional experts, the Opposition and the media are against the government issuing ordinances. Generally, their opposition is based on the grounds that an ordinance is an undemocratic route to lawmaking, which is the job of the legislature. Therefore, any executive attempt at lawmaking is bad, they argue.

An ordinance is a temporary law passed by the executive to meet an emergency that necessitates immediate legislative action. Article 123 of the Constitution vests the power to issue an ordinance with the president and Article 213 with the governor of a state. The only condition laid down by the Constitution is that there should be circumstances necessitating immediate action and that Parliament should not be in session. The apex court has said that the president or the governor is free to decide whether such circumstances indeed exist.

It is true that neither the British nor the US government has the power to issue ordinances. Separation of power is zealously guarded in those countries. Therefore, they cannot countenance the use of legislative power by the executive. However, the Government of India Act, 1935, contained a provision for issuing ordinances that was later included in the Constitution with proper safeguards. The Indian Constitution confers on the executive the power to issue orders on all matters on which Parliament can make laws and to promulgate ordinances as an emergency legislative measure.

Although an ordinance is described as a legislative power of the president, in effect it is issued on the advice of the council of ministers and is hence regarded as a law made by the executive. But an ordinance has a short life as it lapses automatically six weeks after the reassembly of Parliament. Of course, Parliament has the power to disapprove an ordinance, which would mean it immediately ceases to be in force. Incidentally, an ordinance, whose lifespan is predetermined by the Constitution, need not be approved by Parliament. What Parliament approves is a regular bill that is moved to replace the ordinance.

It is customary for governments to issue ordinances when the legislature is in recess. And since the ordinance-making power has been conferred on the executive by the Constitution, it cannot be faultedfor issuing one. The only test is whether the circumstances require immediate action. In many cases, ordinances are issued when there is no emergency, particularly in the states. Recently, the president issued as many as eight ordinances soon after the prorogation of Parliament. Many relate to bills pending before the Houses. Since the Rajya Sabha was dysfunctional, some bills could not be passed during the last session. These are central to the economic liberalisation policy of the government. So, it took recourse to ordinances in order to move quickly to remove bottlenecks in infrastructure. There is undoubtedly an urgency for economic reforms, which have been badly delayed so far, severely affecting growth. Urgent legislation is required to accelerate the growth process. The continued disruptions of Parliament have, in fact, created a situation where crucial bills are held up. Under such circumstances, what are the options available to the government? It could either sit with its fingers crossed and wait for Parliament to function smoothly or take the ordinance route. Since the ordinances came into force immediately, all the crucial laws that could not be passed by Parliament have already come into effect. The disruption of Parliament is not normal or acceptable. It blocks all legislative work of the government. After disrupting the Houses and blocking the passage of bills, one cannot turn around and say that issuing ordinances is undemocratic. Considering the context, it can’t be said that promulgating the ordinances was egregious. The practice becomes unacceptable when it degenerates into an “ordinance raj”, where ordinances are seldom brought before the legislature but are re-issued again and again, violating the spirit of the Constitution. In D.C. Wadhwa and others vs State of Bihar and others, 1987, the apex court strongly deprecated this practice and termed it constitutional fraud. That judicial intervention would be inevitable in the case of an ordinance raj was established by the court as far back as in 1970 in its judgment in Rustom Cavasjee Cooper vs Union of India. So when the executive starts abusing its power to issue ordinances, the judiciary could set it right. Otherwise, the executive should be free to decide when and what ordinances should be issued. This is in conformity with the judicial pronouncements on the matter.

India tops malnutrition chart in south Asia

Severe acute malnutrition should be recognized as a medical emergency with one million children under five dying in India due to malnutrition related causes, say activists. A new study in Baran, Rajasthan and Burhanpur in Madhya Pradesh has found that preventable deaths continue to hit children in the poorest areas of the country.
According to UNICEF, every year 1 million children under five die due to malnutrition related causes in India. The statistics are alarming, and far above the emergency threshold for acute malnutrition (as per WHO classification of the severity of malnutrition).
ACF India and Fight Hunger Foundation on Tuesday announced the launch of the Generational Nutrition Program. Speaking about the program ACF India deputy country director Rajiv Tandon said that there was an urgent need to recognize severe acute malnutrition as a medical emergency. He also stressed on the need for policies to tackle malnutrition and adequate budgets for implementation.
The ACF report says that the number of children affected in India is higher than all the south Asian countries with high burden of wasting or acute malnutrition.
"Within India, scheduled tribes (28%), scheduled castes (21%) and other backward castes (20%) and rural communities (21%) have a high burden of acute malnutrition," the report said.
These reports throw light on the malnutrition situation in the two districts analyzing the infant mortality rates and child deaths due to conditions which are preventable.
In Madhya Pradesh, according to NFHS 3, 40% children were stunted down from [NFHS 2 - 49%], 60% underweight up from [NFHS 2 - 54%] and 33% wasted [NFHS 2 - 20%]. "The rise in these nutritional indicators in the state is worrisome and it is essential that strategies for addressing this are adopted on a war footing,'' the report says.
Regarding Rajasthan the report said that according to NFHS-3, 20% of children under five are wasted, an increase from 11.7% in NFHS-2, 24% are stunted as opposed to (52% in NFHS-2) and 44% are underweight (50.6% in NFHS-2). The NFHS-3 data also shows that children under five belonging to scheduled tribes in Rajasthan have the highest prevalence of severe acute malnutrition.

Making retirement meaningful

To the three crucial events in the life of every human being ` birth, marriage and death ` can be added a fourth, retirement. It is a significant event of not only salaried people in public and private sectors but of self-employed persons too. When a rickshaw-puller ceases to ply his contraption, being aged or ailing, he is said to have retired too. A huge chunk of every government's revenue is spent on paying pension and other superannuation benefits to its employees from day one of retirement. Over 10.12 lakh retirees get pension from the Central government on the last day of every month (except March), through the Central Pension Authority which authorises over 55,501 bank branches across the country to release pension and settle all related matters.  Recently, in reply to a RTI enquiry, the Union government gave out that of Central retirees, except from the railways, defence and telecom; nearly 2.33 lakh took voluntary retirement before reaching 60. Over 3.32 lakh were aged between 60 and 70, over 1.7 lakh lived up to 80, nearly 41 thousand were between 80 to 85; over 27.5 thousand between 85 and 90, only 11.4 thousand lived beyond 95 and 1675 beyond a century. Private companies pay no pension to their employees, big concerns retain outstanding employees beyond 60 with or without work and even after their deferred retirement allow certain perks to them, just as the TISCO, Jamshedpur did to its legendary CMD and partner, Russi Mody, until his death on 16 May, last year. Common employees are given a lump sum, when they snap the umbilical cord with their employer.  

Pension is a British practice, introduced in India after the so-called Sepoy Mutiny in 1857 to appease their employees so that they refrain from Swadeshi movement. Hindu and Mughal rulers paid no pension howsoever outstanding their employees might have been. The Raj legalised it by the Pension Act of 1871. The pension amount was static, except for temporary increases in 1921 after the First World War and in 1943, 1944 and 1945 during the Second, to compensate for price rise. The first pay commission was appointed in 1946.

Even now, the chief attraction of eligible youngsters to join government service, despite much lesser pay and perks than in the private sector, is pension which no government froze, or reduced, even in the worst of times since Independence. Pension keeps retired employees hale and hearty and prolongs their lives. If not afflicted by cancer, diabetes, hypertension, dementia, gout and osteoarthritis, many pensioners remain fit and live up to 80 years, or beyond, because of proper health care and modern medicines through the Central Government Health Scheme (CGHS). Central dearness allowance has soared beyond 100 per cent over Sixth Pay Commission revision with effect from 2006 and rises every six months with the hike in price indices. No State or UT government raises DA like the Centre; West Bengal with its 7 per cent recent hike, lags behind Central DA by 42 per cent. Senior retirees from the Government of India draw more than 70,000 per month.

The main problem of such pensioners is thus not lack of money but enforced leisure. They worked for seven to eight hours a day for five days a week and were off-duty for 104 Saturdays & Sundays, 28 public holidays and were entitled to 12 casual and 33 days of earned leave. That is, working for a little more than half the year, they earn from January 2006 Rs. 6660 to Rs 80,000 as basic pay per month and half-yearly DA increases. Even after retirement, the CGHS provides them medical care and medicines for a pittance; in serious and emergency cases, they can avail treatment in government hospitals and in empanelled private super-speciality hospitals and nursing homes, both invasive and non-invasive. The ten-to-five office hours hang heavy on them; depression and abrupt loss of power, prestige, pelf and perks hasten death. They vegetate if they do not do any domestic work, render voluntary service, or do some paid work outside the home. Even healthy pensioners become fidgety, irritable and nagging and a nuisance to other family members or kin. They become sentimental and pettifog with their wives particularly. Being disgusted, sons and daughters-in-law pack them off to old-age homes where they slowly fade to death.  

Work is alcohol; positive thinking is a powerful tonic. If the society or government creates some work for pensioners, paid or voluntary, it will take away their boredom and make their retired phase of life meaningful. In the government, they acquired experience and expertise in whatever they did, which few outside can equal or emulate. Society can benefit from these. How many motor mechanics of private companies can be as efficient as retired mechanics of Maruti factories? It holds true in every field of society. As population soars, more efficient people are required to cater to them in every sphere. Option for post-retirement work, free or paid, can be sought before their last day in service and after a cooling-off period, meaningful and relevant work can be offered to them near their homes or habitats. There would be many pensioners who would be willing to work for the society or government free, or on nominal wage or allowance. They will not block legitimate career prospects of serving employees; instead

they can forge a bonhomie and esprit de corps with the serving staff. Work for them can be created by local Panchayats and municipalities, by government institutions as long as they want and remain fit. Getting hefty pension while doing nothing for the society and the government makes them feel guilty. From performers on the stage of the world, they suddenly become onlookers from the ringside and worthless in the eyes of their families and neighbours; this makes them sad and looks for vicarious pleasure in watching sports, movies, plays or plain pornography. There are books and journals they had no time to access and read as cogs in the wheel of the Juggernaut of government. There are hidden talents that could blossom in superannuation. With ample time left to them, much of these could be bequeathed to society and posterity. Charles Lamb delved the pathos in the lives of the retired in the 'Superannuated Man' in Last Essays of Elia (1833):

"I am Retired Leisure. I am to be met within trim gardens. I am already come to be known by my vacant face and careless gesture, perambulating at no fixed pace, nor with any settled purpose. I walk about; not to and from. …I grow into gentility perceptibly…. I have done all that I came into this world to do. I have worked task work, and have the rest of the day to myself." Modern governments can alleviate this pathos by a relevant legislation and giving it effect through local self-government agencies and institutions.

The grain mountain India's foodgrain policy takes some steps forward

The Cabinet Committee on Economic Affairs (CCEA) has approved a revised buffer stocking policy for foodgrain which, even while requiring holding of higher strategic food reserves than stipulated earlier, nevertheless provides a window for shedding excess stock - through domestic sales and exports. The central grain pool, according to the new norms, should have 41.1 million tonnes of rice and wheat on July 1 and 30.7 million tonnes on October 1 every year. These limits were, respectively, 32 million tonnes and 21 million tonnes earlier. The stocking norms for the quarters beginning January 1 and April 1 have been altered only marginally.

The food ministry has been authorised to dispose of any surplus stock through open sale in the domestic market or export without seeking the Union Cabinet's approval. This marks a welcome departure from the earlier practice of maintaining excessive, unmanageable and fiscally burdensome food inventories created by purchasing all the grain on offer at the minimum support price. Under this system, the government had ended up buying, on average, 33 per cent of the rice and 30.4 per cent of the wheat produced in the country between 2008-09 and 2013-14. Besides bloating the food subsidy bill to unsustainable levels - the carrying cost of each tonne of foodgrain works out to nearly Rs 5,000 at current prices - this had seriously distorted the country's food market. The new policy can iron out these distortions, restore the relevance of private trade in the food sector and rein in food inflation by augmenting grain supplies in the open market.

The old buffer limits were fixed almost a decade ago when the requirement of foodgrain for the public distribution system (PDS) was lower. However, after the enactment of the National Food Security Act, 2013, which seeks to provide 5 kg of foodgrain every month to some two-thirds of the country's entire population at highly subsidised rates, this requirement has risen sharply. When this law becomes fully operational - at present it is being implemented only in 11 states - the annual foodgrain requirement for PDS and welfare schemes may swell to over 61 million tonnes. This apart, changes in the food stocking policy and an increase in the size of the needed grain reserves have become necessary also to enable India to show better compliance with the public stockholding norms for food security laid down by the Agreement on Agriculture (AoA) under the World Trade Organisation (WTO). New Delhi is also seeking an amendment in the grain stockholding and food subsidy caps stipulated in the AoA.

However, the anticipated gains from the new policy will accrue only if it is implemented earnestly and is supported by more reforms in food management. Though the government has already taken some steps - such as discouraging states from offering bonus on top of the minimum support price - to reduce needless acquisition of foodgrain for the central grain kitty, but these alone may not suffice. The current practice of open-ended food procurement, which is the root cause for excessive stock accumulation, may need to be curbed by making a distinction between procurement and market support operations. Otherwise, food sector reforms may remain incomplete.

The promise of a presidential visit

Where India and the United States cannot agree on a given issue, it is important that they seek other avenues of cooperation

As President Barack Obama sets out for India, he will find that the same favourable winds which are driving India’s economy are also moving the U.S.-India relationship. The President will be the first American chief of state to visit India twice during his incumbency. He will also be the first President to be received as Prime Minister Narendra Modi’s guest at India’s Republic Day. The invitation to Mr. Obama and his decision to visit India speak volumes about prospects for the Indian-American relationship.

We have come a long way over the past two decades. Indian and American trade and investment are buoyant, defence trade has surged, and strategic consultations, intelligence sharing and counter-terror cooperation are closer than ever in history. The U.S., including our two political parties, believe that a strong India is good for this country; India believes a successful and prosperous America is good for India. This said, to achieve the potential of the relationship, we need to deepen strategic and economic cooperation and set new goals for the relationship.

Common problems

The first issues President Obama and Prime Minister Modi need to address are strategic. The U.S. and India face common problems in dealing with the rise of China. We have many friends in the region, notably Korea, Japan, the Philippines, Vietnam, Singapore and Indonesia. These countries have similar views about China and recognise the importance of maintaining an Asian balance of power. India and the U.S. have an interest in reinforcing our respective ties to each of these powers. Our common objective should not be to confront or contain China. Rather it should be to shape the environment within which China pursues legitimate ambitions, so that China’s quest for status does not threaten its neighbourhood and the U.S.

“India and the U.S. should not confront or contain China, but shape the environment within which China pursues legitimate ambitions”

Similarly, India and the U.S. are preoccupied with Afghanistan’s future and with the deteriorating situation in Pakistan. Both questions demand close attention and frequent exchanges on strategy. The U.S. has serious issues with Russia and in the Middle East. We face a common threat from terrorism. This said, we have different points of view and must be careful not to surprise one another. Where we cannot agree on a given issue, it is important that our two countries seek other avenues of cooperation.

We have challenges ahead in coordinating our respective approaches to climate change; this subject will require hard and specialised work.

An additional word on terrorism is in order. The use of terror affects India, the U.S., Europe, Russia and China, among many other nations. It springs from deep political and cultural causes and has no single point of origin. It cannot be dealt with by military means alone; in fact the use of military force can be counterproductive.

To deal with terror, we need to use the full box of tools available to governments — political, intelligence, religious messaging, and police cooperation. Prime Minister Modi and President Obama should give U.S.-Indian cooperation in counter terror the highest priority.

Expanding defence cooperation is an especially promising area in the Indian-American relationship. While our two countries will not be “allies” as the term is classically defined, the security of our two nations is enhanced by the closest possible cooperation.

No two countries exercise their military forces more frequently than India and the U.S. We are not, however, cooperating as we should in preparing India’s industrial base to provide the systems it will need to cope with the security challenges of the future. Modern warfare is increasingly about intelligence systems communications and electronic warfare. India needs to strengthen its capabilities in these fields as it continues its defence modernisation. Other than the U.S., no nation offers as extensive a range of high-tech defence capabilities. Furthermore, to be able to work together in moments of crises, India and the U.S. should aim to have common defence platforms. To build these platforms, India must reach an agreement with the U.S. on the protection of defence information. Without it, the U.S. cannot share its defence “crown jewels.” The President and the Prime Minister would be well advised to reach agreement on this important question.

Prime Minister Modi is determined to grow India’s economy. He wishes to expand rapidly India’s manufacturing base, and he welcomes American and foreign investment as key drivers in India’s economic performance. To attract foreign and mobilised domestic investment, the Prime Minister, India’s government and its Chief Ministers must tackle key growth impediments. These include infrastructural inadequacies, as well as tax, land, labour and Intellectual Property Rights questions, and India’s financial services regime.

The landscape of U.S.-India economic cooperation is crowded with investment disputes, which undermine confidence in India as an investment destination. Our 2005 civil nuclear agreement has yet to produce the first investment.

The upcoming budget session of Parliament gives the Indian government an important opportunity to lay out an economic reform agenda. American investors will be watching closely the promises which the Indian government makes, and more importantly, its ability to put those promises into practice.

India can reasonably look to President Obama to set out his administration’s policy on high-tech immigration and other irksome issues like social security totalisation. India can also look forward to the President’s help in securing early passage of GSP, the trade enhancing regime that has long facilitated India’s exports to the U.S.

Setting bold goals

Finally, we need to look ahead and set bold goals for the relationship. These goals must serve Indian and American interests. For ‘Make in India’ to succeed, India must sell at home and have markets abroad. To assure foreign markets, India must be competitive and able to trade without impediment. India has yet to complete a bilateral investment treaty with the U.S., and it is not party to current WTO negotiations on subjects as important as IT services and government procurement. More importantly, India is not a member of the Asia-Pacific Economic Cooperation and is not in consideration for membership in Trans-Pacific trade negotiations. President Obama will shortly seek Trade Promotion Authority to permit the U.S. to advance these new super-trade regimes for the Atlantic area and the Pacific. India risks falling between two stools and being excluded from the world’s most potentially dynamic market areas. Securing India’s trade future requires tough negotiations, and a willingness by India to become a competitive world-class economy. This subject is worth discussion between President Obama and Prime Minister Modi. It is reasonable to expect the U.S. to be India’s friend and sponsor if India decides to refocus its trade policy and go global. Expanding India’s trade horizon is central to building Indian strategic strength and in consolidating the U.S.-India relationship. The most promising days of that relationship lie ahead. Prime Minister Modi and President Obama have the opportunity later this month to align our policies and give our very promising relationship a fresh impulse.

Odds of escaping poverty in India, U.S. same: World Bank

A World Bank report has challenged the conventional understanding of India’s inequality. The report, “Addressing inequality in South Asia,” has found that the probability of a poor person moving out of poverty in India in 2014 was as good as that in the U.S.

“There is good news — India is no longer the land of extremes and there are some bright spots,” said Martin Rama, one of the authors of the report and World Bank Chief Economist for South Asia.

The report has found that sons from Scheduled Caste and Scheduled Tribe households are no longer stuck in the jobs done by their fathers. Across generations, mobility of occupational profiles among Muslims has been similar to that of higher caste Hindus, whereas mobility among Scheduled Castes and Scheduled Tribes and Other Backward Classes has become higher than that of upper caste Hindus over time.

The report shows that one of the main drivers of upward mobility is the increase in number of non-farm jobs in rural India.

Urbanisation reducing inequality: World Bank report

A World Bank report has found that between 2004-05 and 2009-10, 15 per cent of India’s population, or 40 per cent of the poor, moved above the poverty line. In the same period, a sizeable portion of the poor and the vulnerable — over 9 per cent of the total population or about 11 per cent of the poor and vulnerable — moved into the middle class.

However, over 9 per cent of the total population, or about 14 per cent of the non-poor group, slipped back into poverty, revealing the greater risks faced by the vulnerable and even the middle class than in other countries, the report, “Addressing inequality in South Asia,” said.

The third finding of the report that challenges the conventional understanding of inequality in India, said Onno Ruhl, World Bank Country Director in India, is that urbanisation is reducing inequality, not increasing it.

Mr. Ruhl said the policy takeaways from the report for Prime Minister Narendra Modi included “strive for universal health and sanitation; leverage the opportunity for urbanisation; and create jobs for all and build skills not just through technical training but also with servicing the population with primary and secondary education and nutrition.”