THE HINDU – CURRENT NOTE 27 APRIL
Aadhaar-PAN linkage meant to plug tax leaks, says SC
We as citizens are like that... we don’t want to pay taxes, shame on us: Justice Sikri
•Slamming a tendency in the country to evade taxes, the Supreme Court referred to the mandatory linking of Aadhaar to the Permanent Account Number (PAN) and Income Tax returns as an instance of the government’s efforts to bring “new and new laws to stop leakages.”
•“When tax evasions are there, the government will try to bring new and new laws to stop leakages. We as citizens are like that... we don’t want to pay taxes, shame on us. This conduct and character is seen for example at the time of matrimonial alliance. Then the groom has the best income. The moment the estranged wife files a maintenance application, the same boy is a pauper,” Justice A.K. Sikri, leading a Bench comprising also of Justice Ashok Bhushan, observed orally on Wednesday.
•The court was hearing petitions filed by Ramon Magsaysay award winner Bezwada Wilson, former Kerala Minister Binoy Viswam and ex-Army officer S.G. Vombatkere, represented by senior advocates Arvind Datar, Shyam Divan, Sriram Prakkat and Vishnu Sankar, challenging the constitutionality of Section 139AA inserted in the Income Tax Act by the Finance Act, 2017.
•The provision makes Aadhaar mandatory for getting a PAN. Possession of an Aadhaar card is necessary for the continuing validity of an existing PAN and for filing returns under the income tax law.
AG cites fake PANs
•Attorney-General Mukul Rohatgi said there were “five to 10 lakh fake PAN cards generated every year.” “What are you propagating here in the name of public interest, fake PANs,” he asked the petitioners.
•To prove that Aadhaar was not foolproof, Mr. Datar responded that 132% of the population of Delhi is shown to have taken Aadhaar cards and 104% all over the country.
‘Agencies blacklisted’
•At least 34,000 agencies which dealt with collecting data for Aadhaar were blacklisted.
•But the court said these statistics did not necessarily mean that bogus Aadhaars were in circulation. Mr. Rohatgi said the biometric technology used in Aadhaar left no chance for duplication.
•Mr. Divan argued that Section 139AA was an instance of how the relationship between the state and citizen was shaping up.
•“The state is seeding Aadhaar everywhere, in your bank accounts and in income tax returns. In no time, the state will know what your persuasions and beliefs are without you even having to tell it,” he submitted.
•The Bench responded that Section 139AA was a product of the legislative mandate of Parliament. The Bench observed that Parliament cannot be held accountable for any “solemn undertakings” given by the government to the Supreme Court.
A shrinking home for endemic birds
17 Western Ghats species have smaller ranges than what experts at IUCN estimated
•Birds endemic to the biodiverse Western Ghats appear to be in greater danger than they were thought to be, because the range of places they live in may have been overestimated.
•Researchers from four American universities who analysed range maps used by the influential global authority, the International Union for Conservation of Nature (IUCN), found that for 17 of 18 bird species, the distribution was smaller than IUCN estimates.
•The ‘Red List’ classifications of the IUCN serve to guide protection policies; ‘less vulnerable’ species receive a lower conservation focus.
•The study published in the journal Biological Conservation , argues that IUCN overestimated the habitat of these bird species by up to 88%. Of the 18 species, habitats of 12 were overestimated by over 50%. Under the new model, 10 species could be bumped up on the IUCN scale, for a higher risk.
IUCN classification
•An example is the Malabar grey hornbill which IUCN classifies as ‘Least Concern’ and believes is distributed across 2.3 lakh sq.km in Kerala and Karnataka. But when researchers used a spatial modelling technique, they found its range was just 43,060 sq. km, or, nearly 81% less than the estimates. This would put the bird in the ‘Near Threatened’ category.
•Again, the Nilgiri pipit appears to have lost 88% of its habitat, making it “endangered” rather than “vulnerable.”
•The lead author of the study, Vijay Ramesh, a spatial and computational ecologist at the Cary Institute of Ecosystem Studies, who worked with scholars from Columbia, Cornell, and Duke universities, says underestimating threat and overestimating habitat reduces policy response. “Moving towards the 2030s and 2040s, if we are not aware of where exactly these birds are found today, there is very little you can do later on,” he says.
•IUCN uses expert sightings and other records, while the study used land cover, forest type (satellite imagery), temperature, precipitation and ‘citizen science’ using the eBird online birding checklist.
‘Govt. school teachers often away on duty’
It is not neglect but systemic issues that require them to take up other tasks, says study across 6 States
•For long, government school teachers have complained of being burdened with non-academic work.
•A survey held recently on teacher absenteeism in government schools in Karnataka and five other Statesfound that nearly 7% of the teachers were absent on account of a range of official duties outside the classroom. About 2.5% of the teachers were found to be absent from school without any reason.
•The survey, conducted by the Azim Premji Foundation (APF), covered 2,861 teachers in 619 government schools across Karnataka, Chhattisgarh, Rajasthan, Uttarakhand, Bihar and Madhya Pradesh; there were 371 teachers from 60 schools in Karnataka alone. Nearly 19 % of the teachers were not present in school at the time of the survey.
•It was found that the main reason teachers were away from school was not neglect of duty, but rather “systemic issues” that required them to take up other tasks.
Range of tasks
•Some teachers were not present in school on account of official academic duty (deputation to other schools, training, and cluster meetings) and administrative duty (submission of report on midday meals, children with special needs and other incentive schemes).
•Many were also away because of elections, health issues, panchayat meetings and department schemes.
•Anish Madhavan, head of field research at APF, said government school teachers were generally a committed lot “Their effectiveness is dependent on their work environment and the support they get. Clearly, teacher absenteeism is not as big an issue as it is made out to be; our study also suggests that,” he said.
•The data is based on a day’s visit to each school during August-September 2016. The study also found that more female teachers (83.8%) were present in school than males (78.4%). About 80.5% of the regular teachers were present in school, as opposed to 83.5% of headmasters.
J&K court spells steps to stop pollution, encroachment of Dal Lake
J&K HC spells out steps to preserve Dal Lake
•The Jammu & Kashmir High Court has come down heavily on authorities for failing to preserve the famous Dal Lake. The court ordered a slew of measures to contain the ever growing pollution and encroachments in and around the waterbody.
SC seeks law to regulate NGO funds
Finds new guidelines insufficient for systematising accreditation, fund utilisation and audit of NGOs
•The Supreme Court on Wednesday suggested that the government ought to frame a statutory law to regulate the flow of public money to the NGOs even as the Council for Advancement of People’s Action and Rural Technology (CAPART) recommended the registration of 159 FIRs against various NGOs for swindling government funds.
•A three-judge Bench led by Chief Justice of India J.S. Khehar suggested introducing a law after perusing guidelines handed over by the government to the court, appointing NITI Aayog as the nodal agency for NGO registration.
•But the court said the guidelines might not prove sufficient for “systematising the entire process of accreditation, fund utilisation and audit of NGOs”.
•The Centre on April 4 handed over to the Supreme Court the new guidelines framed for accreditation of nearly 30 lakh NGOs and voluntary organisation in the country.
New guidelines
•The Union Rural Development Ministry had framed the accreditation guidelines to regulate the “manner in which the VOs/NGOs, which are recipient of grants, would maintain their account, the procedure for audit of the account, including procedure to initiate action for recovering of the grants in case of misappropriation and criminal action”.
•The court, however, gave the government the liberty to start civil and criminal proceedings against 703 NGOs, which according to CAPART, have defaulted. The agency, which works under the Rural Development Ministry, said 718 NGOs had been initially blacklisted, but 15 had responded satisfactorily to notices issued on them.
•CBI records filed in 2016 in the Supreme Court had shown show that only 2,90,787 NGOs file annual financial statements of a total of 29,99,623 registered ones under the Societies Registration Act.
Ineffective laws
•In some States, the CBI said the laws do not even provide for the NGOs to be transparent about their financial dealings. In the Union Territories, of a total of 82,250 NGOs registered and functioning, only 50 file their returns.
•New Delhi has the highest number of registered NGOs among the Union Territories at 76,566. But none of these organisations submit returns, the CBI chart showed. In Kerala, which has 3,69,137 NGOs, there is no legal provision to submit returns. The same is the case for Punjab with 84,752 and Rajasthan with 1.3 lakh NGOs.
Lax filing
•Uttar Pradesh, which has the highest number of NGOs at 5.48 lakh among the States, has only 1.19 lakh filing returns. Tamil Nadu has 1.55 lakh NGOs registered; however, only 20,277 file returns. Andhra Pradesh has 2.92 lakh NGOs, but only 186 file financial statements annually.
•West Bengal has 2.34 lakh registered NGOs, of which only 17,089 active NGOs file annual returns.
•The Supreme Court had expanded the scope of a PIL petition alleging misuse of funds by Anna Hazare’s NGO Hind Swaraj Trust to include the status of all NGOs.
No port deal during PM’s Colombo trip
The declaration was made in Sri Lanka even as Ranil Wickremesinghe was on a visit to Delhi
•Responding to growing domestic pressure, Sri Lanka on Wednesday declared that a crucial agreement with India on the Trincomalee port would not be sealed during Prime Minister Narendra Modi’s upcoming visit to Colombo. The declaration came from senior Sri Lankan leaders in Colombo even as Prime Minister Ranil Wickremesinghe signed a memorandum of understanding for cooperation in economic projects in Delhi.
•“The Prime Minister is only signing a broad MoU on economic cooperation while in Delhi. Later, the respective Ministries from both countries will hold discussions and then sign agreements that are legally binding,” Rajitha Senaratne, senior Minister and Cabinet spokesman, told presspersons in Colombo.
•He explained that the port deal would not be signed during the Indian Prime Minister’s visit.
Port strike
•The Hindu reported on Wednesday that oil union workers in Colombo went on a strike against the planned MoU with India for 84 tanks in the Trincomalee upper oil tank farm. The strike, which hit oil supplies in Sri Lanka on Monday, was called off on an assurance from the leadership that the workers’ concerns would be taken into account before sealing the deal.
•Mr. Modi would attend the UN Vesak Day or Buddha Poornima celebrations in Colombo on May 12. The only other event, Sri Lankan government sources said, was in the island’s Central Province where the Indian Prime Minister would visit the famous Temple of the Sacred Tooth Relic in Kandy, and inaugurate a hospital in Dikoya, built with Indian assistance.
•The statement regarding the Economic and Technology Cooperation Agreement and the MoU for Cooperation in Economic Projects came at the end of the visit to Delhi by Prime Minister Wickremesinghe to Delhi which also stopped short of producing a solution to the opposition that Economic and Technical Cooperation Agreement (ETCA) has been facing from Sri Lanka.
Extensive talks
•In Delhi, Mr. Wickremesinghe held extensive talks with Mr Modi, External Affairs Minister Sushma Swaraj, Home Minister Rajnath Singh and Shipping and Highways Minister Nitin Gadkari.
•During the discussion with the visiting dignitary, the Indian representatives also requested continued cooperation of Sri Lanka for better treatment of Indian fishermen.
The world is still flat
The IMF’s outlook for world economic growth exudes optimism, but it’s too early to celebrate
•Cheer up, prospects for the world economy have improved. This seems to be the headline message from the International Monetary Fund’s (IMF) World Economic Outlook (April 2017). However, the caveats to the message — or “downside risks” as the IMF puts it — are so many that any celebration would be premature.
•The IMF sees world economic growth accelerating from 3.1% in 2016 to 3.5% in 2017, and 3.6% in 2018. Both advanced and emerging economies are poised to do better. Growth in advanced economies is projected to rise from 1.7% in 2016 to 2% in 2017 and 2018. Emerging markets will grow at 4.5% in 2017, and 4.8% in 2018, compared with growth of 4.1% in 2016.
•China will see growth decelerating from 6.7% in 2016 to 6.6% and 6.2% in 2017 and 2018, respectively. India’s growth, in contrast, will accelerate from 6.8% in 2016 to 7.2% and 7.7% over the next two years.
Years of secular stagnation
•These are modest rates of growth compared to the record before the financial crisis of 2007. In 1999-2008, the world economy grew at 4.2%, with emerging markets firing away at 6.2%. But the IMF’s projections do hold out the hope that the world economy may emerge from the prolonged slump it has seen consequent to the financial crisis of 2007.
•This is a bit of a surprise considering that, until very recently, many economists had come to believe that the world economy was in the grip of ‘secular stagnation’, an expression coined by the economist Alvin Hansen in the 1930s. Hansen argued that where savings substantially exceed investment, the real interest rate tends to drop to a very low level.
•Conventional monetary policy operates by reducing nominal interest rates in order to stimulate growth. Where the nominal interest rate is already close to zero, there isn’t much scope for cutting interest rates. In conditions of ‘secular stagnation’, conventional monetary policy is doomed to be ineffective.
•The burden of reviving growth in such a situation falls on fiscal policy. This means running up large government deficits and increasing public debt. But markets will finance government borrowings only up to a point, and there is also resistance among policymakers to increased government spending.
•This seemed to be an accurate description of the world economy in recent years. Economists underlined that the real interest rate had indeed been falling for several years.
•This was because savings were rising and investment was falling. Higher savings flowed from factors such as greater inequality (the rich can spend only so much), and greater life expectancy and reduced post-retirement benefits (which means people have to save more to provide for retirement). Investment had fallen because capital goods had become cheaper, the new economy did not require a great deal of capital and population growth had slowed (which meant lower demand for goods down the road). With decreased spending, inflation rates also fell in the advanced world.
Winds of recovery?
•But the situation has changed quite a bit in recent months. Inflation is trending upwards. The IMF expects the inflation rate in the U.S. to rise from 1.3% in 2016 to 2.7% in 2017. In the Euro area, it sees inflation rising from 0.2% to 1.7%. The spectre of a deflationary spiral has thus been dispelled.
•Does the incipient revival of the world economy disprove the ‘secular stagnation’ hypothesis? It’s too early to tell. We have not seen big increases in private or public investment in the advanced economies. Instead, the stock markets have soared consequent to the election of Donald Trump as U.S. President, and household debt is once again rising in the advanced world.
•We cannot be certain, therefore, that the projected acceleration in growth in the medium term is based on a solid recovery. It could well be the result of speculative excess which cannot be sustained for long. The IMF warns that high income inequality is likely to persist. This means that an important cause of ‘secular stagnation’ will remain unaddressed.
All eyes on the U.S.
•Much of the boost to market sentiment has to do with expectations that the U.S. will see a strong fiscal stimulus through the combination of tax cuts and massive infrastructure spending that Mr. Trump promised during his election campaign. His flip-flops on foreign policy in the first 100 days, however, raise doubts over his ability to follow through on his campaign pledges.
•The IMF suggests that the U.S. policy agenda could unfold in ways that could derail its forecasts. It factors in a widening of the fiscal deficit by 2 percentage points by 2019. This could have either of two outcomes. It could cause output to rise while leading to a moderate rise in interest rates. Or it could cause a sharp rise in interest rates without any significant increase in output. The world economy would benefit in the first scenario but not in the second.
•The uncertainties in the U.S. policy agenda are not confined to fiscal policy. The Trump administration has promised to roll back financial regulation put in place after the financial crisis, saying these are coming in the way of efficiency and innovation in the financial sector. Such deregulation would lead to imitation elsewhere, jeopardising the hard-won gains in ensuring financial sector stability.
Dip for emerging economies
•The IMF warns that emerging markets, including India, will find the external conditions for growth less supportive than in the post-2000 period thus far. Slower growth in the developed world means lesser demand for emerging market goods and services. Tightening monetary conditions in the advanced world spell lower capital flows (although foreign investors will still be attracted to emerging markets with sound fundamentals). Subdued commodity prices mean that terms of trade improvements will be limited.
•Emerging markets accounted for 70% of global growth in purchasing power parity terms in 2000-08, nearly double their contribution in the 1980s. Following the global economic crisis, as growth in advanced economies dipped sharply, the contribution of emerging markets rose even further to 80% in 2010-15. With external conditions now turning adverse, the IMF sees the contribution of emerging markets and developing economies (EMDEs) to global growth in 2016-21 falling. The fall is quite small but it may mark the reversal of a benign trend.
•China faces the problem of a large expansion in credit which has sustained growth in recent years. The other big emerging market, India, too is wrestling with a huge debt overhang. So are large parts of Europe. Excessive debt in many parts of the world could undermine the IMF’s upbeat forecasts.
•The threat of protectionism and anti-globalisation sentiments in the U.S. and Europe pose bigger risks than many of the factors mentioned above, although it is not yet clear how these risks will play out. It is significant that at the IMF meeting this month, finance ministers and central bankers refrained from commitments to resist protectionism out of deference to America’s preferences. They pledged instead to promote “a level playing field in international trade”, a term that is open to multiple interpretations.
•Finally, there are rising geopolitical tensions. U.S.-Russia relations have touched a new low. There is a real prospect of confrontation between the U.S. and Russia over the conflict in Syria. Tensions over North Korea have reached a flashpoint. The U.S. and China are at loggerheads over maritime rights in the South China Sea.
•To believe that these add up to brighter economic prospects requires more than ordinary optimism. Do not be surprised if the IMF comes up with a ‘downgrade’ in the months ahead — it’s happened before.
Politics and the police
The SC verdict reinstating a DGP limitsthe political executive’s discretion in transfers
•In 2006, the Supreme Court ruled in the Prakash Singh case that the chief of a State police force should have a fixed tenure of at least two years. Despite this, State governments have failed to protect Directors General of Police from arbitrary transfers. In the event of a regime change following an election, new political dispensations assume they have an unfettered right to reshuffle officers in the civil and police services. Rarely has this assumption been challenged. The Supreme Court’s ruling reinstating T.P. Senkumar, who was replaced as head of the Kerala police soon after the Left Democratic Front assumed office last year, reinforces its 2006 judgment. It limits significantly the discretion enjoyed by the political executive in effecting transfers at whim. Expanding on the import of the Prakash Singh verdict, in which the court had given directions to insulate the police from external pressure and political influence, a two-judge Bench has delineated the limits of the State government’s subjective satisfaction in removing the DGP. No longer is it valid for the government to justify a DGP’s removal on the vague ground that it has reached a prima facie conclusion that the public is unhappy with the efficiency of the force. The government’s ‘subjective satisfaction’ about the state of affairs must be based on “cogent and rational material”, the court has ruled. On going through the record, the Bench found there was no material adverse to Mr. Senkumar, except some opinions and views.
•The verdict is undoubtedly a political setback to Kerala’s LDF government, which is already battling controversies caused by the words and deeds of a few ministers. The Pinarayi Vijayan government had defended its transfer of Mr. Senkumar by citing dissatisfaction among the public about the efficiency of the police following the Puttingal fireworks tragedy in Kollam and the murder of a Dalit woman named Jisha in April 2016. However, the court noted that these issues had “suddenly resurfaced” more than a month after the incidents — that is, after the present regime assumed office. In a telling indictment, the court has observed: “This might perhaps be a coincidence, but it might also be politically motivated…” The LDF government must immediately abide by the order to reinstate Mr. Senkumar, whose original two-year tenure was to have ended on May 21, 2017, and who is due to retire in June. However, the legal import of the verdict is not confined to Kerala. State governments would do well to implement the measures outlined in Prakash Singh , the message of which was that the police must be answerable to the rule of law and not to political masters. In particular, every State should set up a State Security Commission — Kerala has one — to both guide the police and decide on top police appointments and transfers.
Navigating between friends
Any narrowing of the U.S.’s rhetoric-action deficit vis-à-vis Iran will impact India
•Changes in the United States’ attitude to Iran could be very serious for India; among the issues involved are India’s access to Iranian oil supplies and other resources, the progressively more cordial relations between New Delhi and Washington, and India’s deepening defence relationship with Israel.
Upping the ante
•The Trump administration is openly and consistently confrontational towards Iran, where President Donald Trump’s predecessor Barack Obama was firm but constructive. On April 18, the U.S. Secretary of State Rex Tillerson wrote to Congress — in the quarterly review Congress requires of the July 2015 international nuclear deal — that Iran continues to comply with the deal, but in the same letter he called Iran “a leading state sponsor of terror”. A day later, the Secretary of Defense, James Mattis, who has long been very hostile to Iran, accused it of attempting to “destabilise yet another country”, meaning Yemen. Two months earlier, on February 4, Mr. Mattis had responded to Iran’s late-January test of a ballistic missile by calling it the world’s “single biggest state sponsor of terrorism”. On April 12, the U.S. Permanent Representative to the United Nations, Nikki Haley, said in a Security Council briefing on Syria, “Iran is [Bashar al-]Assad’s chief accomplice in the regime’s horrific acts.”
•Second, Washington’s major regional allies, Israel and Saudi Arabia, have been no less hostile. Israeli Prime Minister Benjamin Netanyahu has said Iran’s “aggression must not go unanswered”. Following exchanges with Riyadh, the White House has said the U.S. and Saudi Arabia have agreed to address what the U.S. Treasury’s Office of Foreign Assets Control, in a statement imposing several sanctions on businesses and individuals for Iranian links, calls Iran’s “destabilising activities” in the region.
•Third, Mr. Trump’s own statements that he could consider committing U.S. troops abroad have been accompanied by an unprecedented $54 billion increase in the defence budget, despite the President’s frequent pre-election denunciations of what he called excessively high defence spending.
India’s Iran relationship
•All this is highly significant for India. In October 2016, Iran was India’s largest supplier of crude oil, with its exports to India exceeding the overall largest supplier Saudi Arabia’s exports of 697,000 barrels per day (bpd) by over 10%. As the U.S. federal body Energy Information Administration notes, India is also funnelling Iranian oil into its expanding strategic petroleum reserves (SPR), with a view to holding 90 days’ supply against contingencies. Crucially, Tehran has consistently offered New Delhi very favourable terms, including non-dollar oil sales and other commercial attractions.
•Oil is of course only one commodity in a long-standing Indo-Iranian trade relationship; Iran buys basmati rice and sugar from India, as well as various agrochemicals and petroleum products. Substantial expansions in the volume of business are also likely, despite earlier tensions over delayed Indian payments for oil. The Indian government has, furthermore, taken steps to reassure Indian insurers in the public and private sectors, as well as banks, over the risks they might take in handling Iranian money while the U.S. sanctions regime remains in force.
•In addition, India and Iran have reached agreement on the expansion of several industrial facilities at the port of Chabahar; the work is to be undertaken mainly by Indian entities. Another substantial deal is the one under preparation for India to have operating rights in the Farzad B gas field, which lies within Iranian waters in the Persian Gulf.
Consequences
•The prospect of a more aggressive U.S. attitude on Iran, if not stronger sanctions against Tehran, will almost certainly make the Government of India very uncomfortable, with the attitudes taken by Israel and Saudi Arabia no doubt exacerbating New Delhi’s predicament. It may help India that within the U.S. and Israel, moderating factors — both commercial and military — obtain. In 2012, the then Chairman of the U.S. Joint Chiefs of Staff, General Martin Dempsey, stated that attacking Iran would only delay Iran’s development of a nuclear weapon and not stop it. At that time too, the former head of Israel’s intelligence service Mossad, Meir Dagan (now deceased), said that a pre-emptive attack on Iran was “the stupidest idea” he had ever heard.
•Among the commercial agreements which have followed the Iran nuclear deal (the Joint Comprehensive Plan of Action between Iran, the five permanent members of the United Nations Security Council and the European Union), is a 10-year, $16.6-billion contract for the aerospace giant Boeing to supply Iran Air with 80 passenger aircraft. Quite apart from Boeing’s competition with the EU manufacturer Airbus, any attack on Iran could put about 1,00,000 U.S. jobs at risk.
•Perhaps as a result, the Trump administration, despite its bellicose rhetoric, is showing some signs of moderation in all this. For example, the sanctions announced since the recent Iranian missile test amount to no more than the implementation of measures already prepared by the Obama White House. It is, nevertheless, virtually certain that Tel Aviv and Riyadh will maintain what pressure they can on Washington by continuing to be vituperatively anti-Iranian, at least in public. Whether or not the U.S. allows the exchange of rhetoric to escalate may well depend on whose advice is decisive, even though on the evidence Iran is not a clear and present threat.
•For India, a further point is that while previous U.S. administrations exempted India from certain sanctions over India’s continuing oil deal with Iran, the Trump administration may see the matter differently. One saving grace may be that no matter what Mr. Trump’s main regional allies tell him or want him to do, they cannot predict what he will actually do.
A solution in search of a problem
The proposed new avatar of the National Commission for Backward Classes is unlikely to providea credible and effective social justice architecture
•“May I ask,” T.T. Krishnamachari queried in the Constituent Assembly on November 30, 1948, “who are the backward class of citizens?” The Assembly was faced with the task of determining who were the groups deserving special protections and privileges other than the Scheduled Castes (SCs) and Scheduled Tribes (STs). TTK was quick to add, “It does not apply to a backward caste.”
•In seven decades, the nation has failed to answer the question and it also willy-nilly blurred the distinction between caste and class. This failure is at the core of demands by several rich, powerful and dominant castes to be included as backward classes (BCs) to obtain the benefits of reservations.
The new NCBC
•On April 10, Lok Sabha passed the 123rd amendment to the Constitution which will, when it becomes law, bring into being a ‘constitutional’ National Commission for Backward Classes (NCBC). The current NCBC was created under an Act of Parliament in 1993. The new insertion into the Constitution (Article 338B) is identical to the Articles 338 and 338A that respectively created the national commission for SCs and another for STs. (The amendment also brings about changes to Articles 342 and 366.)
•What the 123rd amendment amounts to is that the Union government has in one stroke brought BCs in league with the SC/STs as victims of discrimination, exclusion and violence. It not only is illogical and lacks historical justification, but is fraught with several challenges to the way India runs its welfare system. The move turns social justice on its head.
•Interestingly, the government pushed this amendment on a war footing. All that it took was five days — from introduction to passage — which included the weekend. On a Wednesday the Bill was introduced in the Lok Sabha which passed it the following Monday! If the government had had a reason to push the Bill so hard and fast, it’s not obvious to common folk. An opportunity has been wasted to reimagine the whole social justice architecture that is appropriate for 21st century India.
•In fact, the new NCBC is a solution in search of the problem. It is bound to create more problems than it is capable of solving. One, on the task of identifying backward classes, the new entity will not even be expected to do the job. Hereafter Parliament will determine who is a BC for the ‘Central’ List. Two, since it has no responsibility to define backwardness, it cannot address the current challenge of well-off castes’ demands to be included as BCs.
Delinking Article 340
•It may be recalled that TTK was speaking during the discussion on Article 340 which deals with the need to, inter alia, identify those “socially and educationally backward classes”, understand the conditions of their backwardness, and make recommendations to remove the difficulties they face.
•The article stipulates the appointment of a commission to give effect to its provisions. This was the context for the appointment of two commissions (one headed by Kaka Kalelkar in the 1950s and the other by B.P. Mandal in the 1970s). Even the 1993 NCBC Act was based on this article.
•The 123rd amendment delinks the whole folio of backward classes from Article 340 and brings it closer to provisions related to SC/STs. The main shortcoming of the current NCBC, according to the Union government, is that it has no power “to hear the grievances” of the BCs. Curiously, the SC commission has become the gold standard for those demanding the new NCBC. If the new body is as incompetent as its role model, the nation will be spared of a lot of avoidable problems.
•The government initially proposed to set up the “National Commission for Socially and Educationally Backward Classes” which is — in nomenclature, at least — closer to Article 340. By retaining the old generic name of NCBC and delinking the body from its soul (Article 340), the government set the stage for the whole scheme of special protections under the Constitution to crumble.
•Once the 123rd amendment becomes law, Article 340 will be dead without being accorded the dignity of a repeal. It will be a pity. The article reflects the Constituent Assembly’s understanding on the matter which is relevant even today: there are classes, not castes, which suffer from social and educational backwardness, and the state has the burden of allocating adequate funds to ameliorate their conditions. It stretches one’s credulity to accept that the article stipulates quotas and representation be extended to BCs.
New untouchables?
•Though Article 338B keeps the socially and educationally backward classes as its subject matter, in practice the proposed system will treat the developmental issues related to BCs on a par with caste discrimination and untouchability suffered by SCs and even by STs. The new NCBC will hear grievances, inquire into complaints, summon officials given its powers as a civil court, issue directions and have the right to be consulted by both Union and the States on policy matters related to BCs.
•One is right to assume that BCs do face discrimination and exclusion and they deserve state support. Is there any justification to suppose, however, that their conditions are as bad as those faced by the SC/STs? The whole business of inquiries into complaints, safeguards, recording evidence, etc will result in the need to enact laws similar to the ones in existence for the protection of SC/STs. Have there been instances of BCs (Shudras) suffering violence/intimidation due to their caste? Are such instances, if they were taking place, widespread enough warranting special legislation and watchdog bodies?
•This illogic will sooner than later degenerate into perversion. Consider a possibility: in case of an atrocity against SCs, the National Commission for Scheduled Castes intervenes as a guardian of their rights. It is not rare that in most atrocities SCs are pitted against Sudras (be they upper or lower). It is irrelevant whether it is an atrocity or a group clash, once an incident flares up two ‘constitutional’ national commissions will clash, each defending its wards.
•A generation ago social justice was mistaken to be a new dawn for ‘weaker’ sections such as SC/STs, BCs and minorities to be united as one group of Indians with common interests and destiny. That project was dead on arrival, as its votaries lacked both intellectual honesty and policy imagination. Its new and more sinister variant seeks to smuggle BCs into the tent meant for SCs. An ill-defined need begets a monster which is sure to do more mischief than good.
SEBI to grant one licence to brokers, clearing members
Unified licence will allow trading in equities, commodities
•Market regulator SEBI on Wednesday decided to grant a unified licence to brokers and clearing members to operate in commodity derivative as well as equity markets.
•SEBI’s board approved a proposal for integration of stock brokers in equity and commodity derivative space.
•Following this, a broker or clearing member dealing in the securities markets will be allowed to buy, sell or deal in commodity derivatives without setting up a separate entity and vice-versa. To enable the integration, SEBI will amend norms pertaining to stock broker and securities contract regulations, the regulator said in a statement after the first board meeting under Ajay Tyagi as chairman.
•“The integration of stock brokers in equity and commodity derivative markets while having many synergies in terms of trading and settlement mechanism, risk management, redressal of investor grievances, etc would benefit investors, brokers, stock exchanges and SEBI,” the regulator said.
•Besides, it will increase economic efficiency in terms of meeting operational and compliance obligations at the member level, potentially resulting in ease of doing business.
•Also, the integration will help in widening market penetration and facilitate effective regulatory oversight by stock exchanges and SEBI.
•Finance Minister Arun Jaitley, in his budget speech for 2017-18, had announced that the “commodities and securities derivative markets will be further integrated by integrating the participants, brokers, and operational frameworks”.
Stricter P-Note norms
•Bolstering steps to curb any flow of illicit funds in markets, SEBI also decided to bar resident as well as non-resident Indians from making investments through participatory notes.
•The decision is part of efforts to strengthen the regulatory framework for offshore derivative instruments (ODIs), commonly known as participatory notes (P-Notes), which have been long seen as being possibly misused for routing of black money from abroad.
•“An express provision shall be inserted in the regulations to prevent resident Indians/NRIs or the entities which are beneficially owned by resident Indians/NRIs from subscribing to ODIs,” SEBI said.
•Asked whether there were fears that NRIs might be investing through P-Notes route, Mr. Tyagi said, “I don’t think there is any fear of that... The intention all along was not to allow them and that was not clearly reflected in the regulations, only through FAQ. And so it (is being) clarified through regulations.”
•The notional value of these instruments has declined over the years from 55.7% of overall FPI investments in June 2007 to just 6.7% in December 2016.
•There was a surprise uptick in March — presumably due to this being the last month for availing of certain tax benefits.
•There are also fears that the P-Note investments may start coming from other jurisdictions like the U.S., France and the Netherlands after tightening of rules for inflows from Mauritius, Singapore and Cyprus.
Reorient social sector subsidies: NITI Aayog
‘Beneficiaries must not be dependent’
•India’s social sector subsidies should be reoriented so that beneficiaries don’t become dependent on them, the NITI Aayog said.
•In its three-year action plan for the economy the government think-tank mooted a reduction in food subsidies as a proportion of GDP by 2019-20 through better targeting and rationalisation measures.
•“Within revenue expenditures, subsidies have tended to crowd out the socially more productive expenditures such as those on education and health,” the Aayog pointed out.
•“The social subsidies should be reoriented so that beneficiaries become economically independent instead of remaining perpetually dependent on them,” it said.
•While in absolute terms, the allocation towards food subsidy, as per the Aayog, will increase marginally to Rs. 1.57 lakh crore from Rs. 1.24 lakh crore, as a proportion to GDP, the expenditure will come down to 0.73% from 0.90% in 2015-16.
•“Given the recent subsidy rationalisation measures undertaken by the government, and the scope for better targeting through the use of the socio-economy caste survey, there is a scope to contain the food subsidy expenditure in future,” the Aayog has said in the three-year action plan document accessed by The Hindu .
•“Therefore, our allocations are based on reduction in food subsidy as a proportion to GDP from 0.90% in 2015-16 to 0.73% in 2019-20,” it said.
Fertiliser subsidies
•As the government has been able to contain the expenditure on fertiliser subsidies to Rs. 70,000 crore in the past few years, the Aayog expects it to remain at this level for the next three years.
