📰 Walking with others on a tightrope
Gandhi knew well that one cannot be a friend of Truth without living on the edge
•January 30 marks the 70th anniversary of the assassination of Mahatma Gandhi. Once again the ideas of non-violent resistance and self-transformation are brought before the public arena. But more than ever, this is an opportunity to evaluate the theoretical and practical status of M.K. Gandhi in India and in the world.
Gandhi everywhere
•It is practically impossible to live in India and not to see or hear references to Gandhi. Gandhi is by far the most recognisable Indian put on currency notes. He is also honoured all over the country with statues erected in the middle of town squares and his pictures posted on the walls of business offices and shops, even restaurants. But this does not mean necessarily that Gandhi is well read and understood by all Indians. A quick look at everyday Indian politics and the debates in the press and elsewhere shows that the spirit of Gandhi is no more fully present in his native country. Though his name is pronounced by all politicians and managers, when it comes to his teachings, young, middle class technologists, corporate lawyers and businessmen in India consider Gandhi an old-fashioned figure with his preference for an austere, simple lifestyle.
•Despite being misread and misunderstood, Gandhi’s legacy lives on over 70 years after his death. Today, for many non-Indians, the name “Gandhi” is synonymous with non-violence and civil resistance. As such, Mahatma Gandhi continues to be studied and taken seriously by all those around the world, (including Indians) who are engaged in the struggle for freedom and democratisation. Over the last seven decades, political and spiritual leaders and civil activists, from Martin Luther King Jr., Nelson Mandela, the Dalai Lama through to Aung San Suu Kyi, from young militants of Otpor in Serbia to the freedom fighters of Tahrir Square in Egypt, have increasingly incorporated the Gandhian philosophy of non-violence in their protest repertoires, realising the ways in which it challenges the ruling elite’s power and domination.
•More interestingly, there has been a new interest in Gandhi among political theorists in the West. For the past seven decades, very few theorists considered Gandhi’s seminal work, Hind Swaraj, as a major work in modern political thought next to Machiavelli’s The Prince, Hobbes’s Leviathan and Mill’s On Liberty. But a new interest in Gandhi the political philosopher is emerging among the comparative political theorists. Actually, his relevance to contemporary debates becomes even more pertinent by analysing his philosophical and political contributions in a comparative perspective. Moreover, it reveals the multidimensional aspect of Gandhian thought while providing a sharp contrast between his approach to ethics, pluralism and autonomy and many challenges of our contemporary world, including lack of empathy, legitimised violence and exclusion.
An ethics of empathy
•As such, what the comparative analysis of the Gandhian thought reveals to us is that unlike many contemporary liberal political thinkers, who put rights before duties, empathy and cross-cultural understanding are the ‘hallmarks of the Gandhian view of everyday politics. The heart of Gandhi’s ethics of empathy is to look within oneself, change oneself and then change the world. That is to say, at a more fundamental level, for Gandhi, cultures and nations are not isolated entities, because they all play a special role in the making of human history’. Therefore, ‘Gandhi rarely speaks in terms of linear world history. His goal for every culture (including his own) is the same as his goal for every individual: to experiment with Truth. This is a way to open up the world to a harmonic exchange and a transformative dialogue among cultures’.
•At a more philosophical level, in Gandhi’s view, every culture should learn from others. As a result, politics for Gandhi is a matter of non-violent organisation of society with the aim of becoming more mature and more truthful. At the same time, Gandhi is always concerned with cooperation among nations in terms of mutual understanding, empathic friendship and non-violent partnership.
•Last but not least, Gandhi is a thinker and a practitioner who is constantly experimenting with modes of comparative and cross-border cultural constellations. As he affirms, “I do not want my house to be walled in on sides and my windows to be stuffed. I want the cultures of all the lands to be blown about my house as freely as possible. But I refuse to be blown off my feet by any.” This statement of Gandhi has a particular relevance to the cultural situation in our globalised world. Gandhi’s ‘house’ can be understood as a metaphor for an autonomous and democratically self-organised system within a decentralised community of ‘houses’ where communication between equally respected and equally valid cultures can take place. In other words, this capacity to engage constructively with conflicting values is an essential component of practical wisdom and empathic pluralism of Gandhian non-violence.
•It also involves a belief in the fact that an understanding of moral views is possible among all people of all cultures because they all participate in the same quest for Truth. This why Gandhi affirms, “Temples or mosques or churches… I make no distinction between these different abodes of God. They are what faith has made them. They are an answer to man’s craving somehow to reach the Unseen.” Consequently, the Gandhian non-violent approach to plurality is a way of bridging differences and developing inter cultural awareness and understanding among individuals and nations. As a result, Gandhi suggests a view of civilisation deeply rooted in an ethics of non-violence. However, his ontological and political demands for an ethical approach to human affairs are not of an utopian nature, but more of a dialogical sensibility. Maybe that is why Gandhi’s response to the phenomenology of violence is not the exclusion of certain historical self-consciousness but a mutual recognition among subjects of history. As a matter of fact, the pluralistic and inter-cultural recognition in the Gandhian vision of democracycan determine our sense of who we are and the value accorded to the common world we live in. That is, for Gandhi, one’s sense of freedom is never a matter of simple self- introspection. Rather, understanding oneself as an autonomous self-consciousness requires the recognition of the otherness of the other. For Gandhi, recognition is the mechanism by which our democratic existence, as self-transformative beings, is generated.
Importance of dialogue
•The point here is that in Gandhi’s political philosophy, the experience of freedom derives from the diverse modes of participation in common concerns and community-engendering values spelt out in terms of a dialogue with the otherness of the other. Actually, Gandhi’s message would be that dialogue with the other would save the self from its own tyranny. In short, what all this means is that with Gandhi, human conscience finally returns to earth, to the here and now, after centuries of temptation looking for salvation in eschatological constructions.
•Gandhi knew well that one cannot be a friend of Truth without living on the edge. For him, therefore, thinking and living became one. But, thanks to his comparative and dialogical attitude, he always thought differently and lived marginally. His opening up to the world went hand in hand with his act of being free. While listening to his inner voice, he also had an acute sense of the world. Gandhi preferred to walk with others, even on a tightrope, rather than walking alone on a rigid, inflexible and impenetrable ground. This is his legacy, which is needed now more than ever.
📰 Three milestones in education
There is enough data about the learning crisis in India. What is needed is effective decentralised action
•Every year in January, when the Annual Status of Education Report (ASER) is released, there is a hue and cry about the status of children’s learning in India. The hand-wringing, debates and discussions die down after some time. But this year’s situation is different. India is in a position right now to think and act differently.
Benefits of RTE
•First, this year is historic because the children who are today in Class VIII are the first cohort to benefit from the Right to Education Act, which came into effect in April 2010. With almost all these children not only enrolling in school but completing at least eight years in the education system, we are in an excellent position to think seriously about what eight years of schooling should entail and what it should enable children to do.
•Second, there are now two new sources of data available on children’s learning. Last week, ASER 2017 and the district report cards from the National Achievement Survey (NAS) were released. The recently released ASER data is different from the usual survey: it concentrates on the 14-18 age group, which is different from the usual target population. Also, unlike the usual ASER surveys which are carried out in all rural districts of the country, this year the exercise was done only in one or two districts per State. The ASER 2017 “beyond basics” assessment framework explores how youth cope with everyday tasks that involve literacy and numeracy. This is in line with the National Council of Educational Research and Training’s (NCERT) learning outcomes approach where developing connections between mathematical thinking and daily life is stressed. In a departure from usual practice, the NAS reports lay out performance of children by different broad competencies rather than by reference to the syllabus or simply in terms of a score. For example, for Class VIII, the report card gives the proportion of students who can “read textual/non-textual materials with comprehension and identify the details, characters, main idea and sequence of ideas and events while reading” or “solve problems involving large numbers by applying appropriate operations”. Both 2017 exercises, one by the government and the other done by non-governmental organisations, indicate a significant shift in thinking about children’s learning. In their own ways, both point to the importance of considering stage-wise learning outcomes, a move which will contribute towards a much-needed rethinking of class-wise curricular expectations. (In both cases, the information available is of the current school year. Every year ASER releases data in the same school year in which the assessment is conducted. The government has done this with NAS data this year. Again, a laudable move.)
Different methodologies
•Both use different methodologies – ASER is a household survey and NAS is a school-based effort. ASER conducts its assessment one-on-one, while NAS is a pen-paper test. ASER is aimed at a representative sample of all children (whether in school and attending or out of school) whereas NAS is a representative sample of children who are enrolled in government or aided schools. Typically, ASER focusses mainly on foundational skills like reading and arithmetic, while NAS looks at a wider variety of skills. In the last 10 years, much has been made of these differences. However, the truth is that they both point to important trends related to children’s learning in India. They are also the only two sources of data that are repeatedly available (whether periodically in the case of NAS or annually in the case of ASER). Contrary to recent assertions in the media, many researchers have accessed and used ASER data for more detailed analyses than is published in the ASER report. Data being available over time enables analysts to track progress and identify persistent gaps of different kinds.
•Third, district-level data are now available. This is significant as within the government’s education system, planning focusses on the district as the unit for planning, allocation and implementation. Information on inputs or infrastructure are available annually at the district level. However, until this year, other than the annual ASER data, estimates on children’s learning were not available at the district level. One of the reasons for ASER collecting data on a representative sample of children at the district level was to contribute to decisions at that level. The timely release of the NAS district report cards is also a welcome move. Now districts in the same State will have the opportunity of making contextually relevant and appropriate plans to address the needs of their children.
More data to mine
•Given these three important milestones, India is in a good position to think of effective new ways of moving beyond universal schooling towards learning for all. Each year, as the Finance Ministry prepares the Budget, it carries out consultations with different groups. Recently, in such a discussion, our suggestion was to have a learning improvement fund that districts can apply to for implementing a results-oriented multi-year learning improvement programme. The annual nature of the planning process in education may have been useful for when inputs had to be provided. But when the focus is moving from “providing schooling” towards “ensuring learning”, a multi-year period is needed for implementation.
•Over and above whatever States do, for many years we have seen many instances where the district administration wants to implement serious district-wide learning improvement efforts. But sometimes this energy can be constrained by lack of interest, funds and guidance at the State level. Although there is a provision for innovation funds in the annual work plan guidelines, these are usually not effectively spent. In the upcoming Budget, an amount could be set aside specifically for a learning improvement fund. Financial mechanisms could be worked out to access this Central or State-level special fund so that interested districts could bid for these funds based on a well worked out plan. The mechanism could include provision of know-how and support, external verification of progress, and room for course correction.
•Today there is much more data and evidence about the contours of the learning crisis in India than ever before. The time is ripe for timely and effective decentralised action to improve the quality of children’s learning outcomes.
📰 A pivot in Asia
India can be a ‘consensus builder’ in its neighbourhood before moving ahead with its role as ‘net security provider’
•The National Defence Strategy (NDS) and the National Security Strategy (NSS) released recently by the U.S. showcase the country’s strategic priorities and the way forward. As the two documents lay considerable focus on the ‘Indo-Pacific’, they will serve as crucial policy indicators for India and the region. The previous Obama administration too laid considerable focus on Asia-Pacific under its ‘Rebalance to Asia’ strategy.
•The NDS is reflective of the changing geopolitical realities in Asia. China’s territorial and maritime overtures in the Indian Ocean, regional instability due to North Korea’s nuclear and missile tests, and the salience of Asian economies in international trade and commerce has brought the region into prominence. The U.S. administration has shifted its focus from the Asia-Pacific to Indo-Pacific as a reference point of its maritime strategy. With its withdrawal from the Trans-Pacific Partnership, the U.S. is looking for multilateral economic engagement with Asian economies. On the strategic front, apart from building missile defence systems with Japan and South Korea to checkmate North Korea, U.S. President Donald Trump has shown keenness to align with the ‘Quad’ to counter China’s rise.
•With India as America’s ‘major defence partner’, the NDS seeks to further expand defence cooperation between the two countries with particular emphasis on military purchases. However, being an emerging economic and military player in the region, New Delhi has its own national interests and regional concerns and addressing those goes beyond mere defence deals. Besides traditional security concerns like China and North Korea, the region faces non-traditional security threats such as piracy and terrorism.
•India’s neighbourhood is demonstrating changes under China’s influence. Chinese infrastructure and loan diplomacy have impacted India’s immediate neighbourhood. There has been a constant Chinese strategic presence in the Indian Ocean Region (IOR). At the multilateral level, India is checkmated by China on the issues of terrorism and membership of the Nuclear Suppliers Group.
•Over the last three years, India has worked to secure a major diplomatic engagement to secure its relations with its immediate neighbourhood as well as further its relations with ASEAN under the ‘Act East’ policy to counter China. However, there is little tangible evidence of any significant outcome of the engagement so far.
•China has invested significant capital to push ahead its ambitious Belt and Road Initiative (BRI). Its economy will be dependent on the success of the BRI and cooperation with other states, so China will not want to destabilise the region. As no single country in the Indo-Pacific region can rise to the challenge posed by China and other security concerns, there needs to be a building of unity. India can be that ‘consensus builder’ in its neighbourhood before moving ahead with its role as ‘net security provider’ in the region.
📰 Open to talk with India on CPEC: China
New Delhi has objected to the corridor which passes through Pakistan-occupied Kashmir, as violation of its sovereignty
•China on Monday offered to open talks with India to resolve differences on the China Pakistan Economic Corridor (CPEC), opening the door for removing a major irritant in New Delhi-Beijing ties.
•“We are ready to work with the Indian side through dialogue and communication for a better solution. This best serves the interests of the two countries,” Chinese Foreign Ministry spokesperson Hua Chunying said, when asked to comment on remarks on CPEC by India’s Ambassador to China, Gautam Bambawale.
•In an interview with Global Times last week, Mr. Bambawale had proposed a new phase of dialogue between India and China, which would cover all differences including CPEC.
•Asked to comment on China’s alleged newly developed military infrastructure in the Doklam area, as shown in recently published satellite pictures, Ms. Hua reiterated Beijing’s stock response that Donglang (Doklam) was China’s sovereign territory, and Beijing had a right to build infrastructure in the area.
📰 Sushma Swaraj to engage new Nepal government
•In a bid to revive ties with Nepal, External Affairs Minister Sushma Swaraj will visit Kathmandu from February 1 to 2.
•The visit comes weeks after Nepal elected a Leftist coalition, which won the first historic poll under the new Constitution of the country.
Expanding partnership
•“The visit is in keeping with the tradition of regular high-level political exchanges between India and Nepal, and reflects the expanding bilateral partnership and the importance that the two countries attach to further strengthening it across diverse sectors,” a release from the Ministry of External Affairs said on Monday.
•The visit by Ms. Swaraj will be the first big diplomatic engagement by the newly elected rulers of Kathmandu.
•Significantly, only last week Prime Minister Narendra Modi had reached out to the elected Prime Minister K.P. Sharma Oli wherein both the leaders had invited each other for a visit.
Cold ties
•Ties between Mr. Oli and Mr. Modi had been cold since the former was the Prime Minister during the months-long economic blockade between 2015-16.
•Mr. Oli fought the election through a coalition with former Prime Minister Pushpa Kamal Dahal ‘Prachanda’ though he is yet to be formally sworn in.
•“The upcoming visit will provide an opportunity to hold discussions with political leaders of Nepal on issues of mutual interest, and to advance age-old, special ties of friendship between India and Nepal,” the release said.
📰 President, PM call for early passage of triple talaq Bill
It has been hanging fire in Upper House of Parliament
•President Ram Nath Kovind and Prime Minister Narendra Modi on Monday advocated the early passage of the Muslim Women (Protection of Rights on Marriage) Bill, 2017, also known as the triple talaq Bill, during the Budget session of Parliament.
•While Mr. Modi made his remarks before the start of the session, Mr. Kovind made it a part of his address to both Houses.
•The Bill had been cleared by the Lok Sabha in December last, but is hanging fire in the Rajya Sabha where a larger Opposition group wants to send it to a Select Committee for further scrutiny, while the government wants early passage of the Bill.
Opposition charge
•Opposition members are resisting what they term the “criminalisation of divorce” as the Bill proposes a three-year jail term for Muslim men if they pronounce instant triple talaq.
•In his customary address to the media outside the Parliament House, Mr. Modi said it was the government’s effort as well as the expectation of the people that there would be no politics on an important issue like triple talaq and that Muslim women would get their right.
📰 Cow vigilantism: SC issues notice to Haryana, U.P. and Rajasthan
Tushar Gandhi, great grandson of Mahatma Gandhi, in his contempt petition, says the three States had not complied with the court order.
•The Supreme Court on Monday asked the governments of Rajasthan, Haryana and Uttar Pradesh to respond to a plea seeking contempt action against the States for not complying with the court’s order to take stern steps against cow vigilantism.
•A Bench led by Chief Justice Dipak Misra, acting on a contempt petition filed by Tushar Gandhi, the great grandson of Mahatma Gandhi, asked the States to respond by April 3.
Stern measures
•On September 6 last year, the apex court had asked all the States to take stern measures to stop violence in the name of cow protection, including appointing of senior police officers as nodal officer in every district within a week and acting promptly to check cow vigilantes from behaving like they are “law unto themselves.”
•Observing that such acts of violence “must stop,” it had directed the States to form a dedicated task force in each district. It had asked their chief secretaries to file status report giving details of actions taken by them to prevent incidents of cow vigilantism.
•“The senior police officer shall take prompt action and ensure that vigilante groups and such people are prosecuted with quite promptitude,” the top court had said.
•It had observed that the people “should not take law into their own hands” and that “they should not behave as if they were law unto themselves.”
•The court had further asked the Centre to respond to the submission that it could issue directions under Article 256 (obligation of States and Union) of the Constitution to all State governments on issues related to law and order. It had said that “some kind of planned action is required so that vigilantism does not grow” and efforts have to be made to stop such acts. It had directed the States to ensure highway patrolling after it was pointed out that such incidents mostly took place there on the pretext that vehicles were carrying beef.
📰 A path to executive power
The issue of office of profit must be understood as part of the legislature’s institutional separation
•On January 21, President Ram Nath Kovind approved the recommendation of the Election Commission (EC) to disqualify 20 Members of the Legislative Assembly (MLAs) of the Aam Aadmi Party (AAP). They were deemed to have been holding offices of profit as they were parliamentary secretaries to ministers in the Delhi government. The party protested the move saying the EC had acted in a unilateral manner as its MLAs had not been given a hearing.
•There is a lot at stake here since disqualification necessitates by-elections. However, due to the comfortable majority the AAP enjoys, the move will not bring down the Delhi government.
Office of profit debate
•There are multiple questions this issue raises. Did the EC act in a fair manner and was its decision to disqualify the MLAs legally sound? The appointment of parliamentary secretaries also raises broader concerns about the nature of executive power in a parliamentary system.
•The concept of office of profit originates from Britain where, during the conflicts between the Crown and the Parliament in the 16th century, the House of Commons disqualified members from holding executive appointments under the Monarch. The underlying principle behind this is the doctrine of separation of powers. The office of profit rule seeks to ensure that legislators act independently and are not lured by offers from the executive. India’s Constitution makers adopted this idea under Articles 102(1)(a) and 191(1)(a) which state that a lawmaker will be disqualified if he or she occupies “any office of profit” under the Central or State governments, other than those offices exempted by law. While the term “office of profit” is not defined in the Constitution, the Supreme Court, in multiple decisions, has laid out its contours.
•Chief Minister Arvind Kejriwal had appointed 21 MLAs as parliamentary secretaries soon after the AAP government assumed office in 2015. When this decision was challenged before the High Court, the Delhi government sought to retrospectively amend the Delhi Members of Legislative Assembly (Removal of Disqualification) Act, 1997 to exempt parliamentary secretaries from the definition of “office of profit”. However, the Lieutenant Governor reserved the matter for the President, who refused to give his assent to the Bill. Thus the position of the parliamentary secretaries became precarious.
•The Delhi High Court, in September 2016, set aside the appointment of parliamentary secretaries since it lacked the approval of the Lieutenant Governor. Citing this, the AAP claimed that since the appointment was anyway void, the MLAs could not be said to have been occupying an office of profit. However, the EC said that the MLAs “de facto” held the office of parliamentary secretaries. The AAP now alleges that the EC is acting in a partisan manner, as in other States, the striking down of the office of parliamentary secretaries has not resulted in the disqualification of MLAs. While the legality of the decision in the instance in Delhi will be decided in court, it is also critical to examine what the practice of appointing parliamentary secretaries reveals.
Rewarding loyalists
•The trend of appointing MLAs as parliamentary secretaries is done across the political spectrum. Many of these have been legally challenged and struck down by the judiciary. Recently, the Supreme Court struck down the Assam Parliamentary Secretaries (Appointment, Salaries, Allowances and Miscellaneous Provisions) Act, 2004, calling it unconstitutional. Hence, the issue has a chequered legal past.
•So why do State governments create such posts in the first place? Such posts are mainly to reward MLAs who do find a place in the cabinet. One of the major constraints in cabinet formation is Article 164 (1-A) of the Constitution which limits the number of Ministers in State cabinets — including the Chief Minister — to 15% of the total number of MLAs of the State; for Delhi it is 10% of the total seats. It is to get round this constitutional cap that State governments create such posts.
•Article 164 (1-A) was inserted by the 91st Constitutional Amendment in 2003 on the recommendation of the M.N. Venkatachaliah-headed National Commission to Review the Working of the Constitution. While it can be debated whether the prescribed cap is too harsh, constitutional constraints and office of profit restrictions seek to prevent the creation of multiple executive posts to reward loyal legislators.
•In India’s parliamentary system, contesting elections to the legislature is primarily seen as a path to exercise executive power. It is often ignored that holding the government to account is not only the Opposition’s role but also that of the entire legislature. Rewarding MLAs with executive posts can restrict them from performing their primary role.
•The creation of such posts can also be attributed to the larger institutional malaise facing the legislatures. Lawmakers have been enfeebled over the years through measures such as binding party whips and a purely executive-driven legislative agenda. In such an institutional milieu, lawmakers increasingly seek positions with perks to exercise influence. Unless legislatures are truly strengthened and the disproportionate power of the executive in the legislature curtailed, the demand for creating such posts will continue to persist.
📰 ‘Recovery will lift growth to 7-7.5%’
Economic Survey says effects of note ban, GST have recededSounds a note of caution on rising oil prices, stock marketsCalls for medium term focus on education and agriculture
•The economy is set to grow at 7-7.5% in the next financial year on the back of reviving exports and investment even as the negative effects of demonetisation and the teething troubles of the Goods and Services Tax recede, Chief Economic Advisor Arvind Subramanian said in the Economic Survey 2018.
•The Survey, tabled in Parliament by Finance Minister Arun Jaitley on Monday, further predicted that GDP growth in the current financial year would touch 6.75%, higher than the 6.5% estimated by the Central Statistics Office.
For more reforms
•Looking ahead, it said reform measures like the implementation of the Insolvency and Bankruptcy Code and the recapitalisation plan for public sector banks would go a long way in addressing the twin balance sheet problem afflicting both corporates and banks, which would in turn further boost economic growth.
•“As a result of these measures, the dissipating effects of earlier policy actions, and the export uplift from the global recovery, the economy began to accelerate in the second half of the year,” the Economic Survey said.
•“This should allow real GDP growth to reach 6.75% for the year as a whole, rising to 7-7.5% in 2018-19, thereby re-instating India as the world’s fastest growing major economy,” it said.
•However, the Survey did caution about some ongoing trends — such as rising oil prices and stock market prices — that would require vigilance and preventive action.
•“Against emerging macroeconomic concerns, policy vigilance will be necessary in the coming year, especially if high international oil prices persist or elevated stock prices correct sharply, provoking a ‘sudden stall’ in capital flows,” it said.
Oil-inflation link
•Mr Subramanian said that a $10 per barrel increase in oil prices results in a slowdown in GDP growth by 0.2-0.4%, and a rise in inflation of 0.3-0.4%.
•Apart from addressing these risks, the government also has several policy actions it has to take in the next financial year, the Survey pointed out.
•These include completing the reforms needed to effectively address the ailing balance sheets of corporates and banks, and finalising the privatisation of Air India.
•“The TBS actions, noteworthy for cracking the long-standing ‘exit’ problem, need complementary reforms to shrink unviable banks and allow greater private sector participation,” the Survey said.
•In the medium term, the Survey highlighted three areas that would require a policy focus including employment, education, and agriculture.
•“There has been a lot of stress on the agriculture sector and job creation has been a challenge given the global backlash and technological advancements,” Ranen Banerjee, Partner and Leader, Public Finance and Economics at PwC India said. “We therefore expect a lot of emphasis in the budget on the farm sector as well as job intensive sectors.”
📰 Taxpayer count rises post GST
Voluntary enrolment by small firms lifts number of indirect taxpayers by 50%
•The Goods and Services Tax has resulted in a 50% increase in the number of indirect taxpayers, the Economic Survey said, adding the fledgling tax regime has already revealed new data on key aspects such as inter-State trade, State-wise exports, and the extent of formalisation in the economy.
•“There has been ... a large increase in voluntary registrations, especially by small enterprises that buy from large enterprises and want to avail themselves of input tax credits,” the Survey said.
•Data showed GST had resulted in a significant increase in voluntary compliance, with about 1.7 million registrants who were below the threshold annual turnover limit of Rs. 20 lakh choosing to register for GST nevertheless.
Tax credit preference
•In addition, the Survey showed a significant proportion of tax filers eligible for the Composition Scheme have instead opted to file their returns in the regular manner so as to avail of input tax credits. “For this reason, about 1.9 million (24% of total regular filers) of the registrants sized between the GST threshold of Rs. 20 lakh and the composition limit… instead decided to file under the regular GST,” it said. So, about 54.3% of those eligible for the composition scheme chose instead to be regular filers.
•The data also put to rest States’ concerns about declining revenues under GST, the Survey said. “The distribution of the GST base among the States is closely linked to the size of their economies, allaying fears of major producing States that the shift to the new system would undermine their tax collections,” it said. “Data on international exports of States (the first in India’s history) suggests a strong correlation between export performance and States’ standard of living,” the Survey added. “India’s internal trade is about 60% of GDP, even greater than estimated in last year’s Survey and comparing very favourably with other large countries.”
•Further, GST data showed that the formal sector in India was larger than earlier thought. “Formality defined in terms of social security provision yields an estimate of formal sector payroll of about 31% of the non-agricultural work force; formality defined in terms of being part of the GST net suggests a formal sector payroll share of 53%,” the Survey said.
📰 CEA: time to change monetary stance
Cites return of inflationary pressures
•Chief Economic Adviser Arvind Subramanian on Monday acknowledged that the country’s monetary authorities may have little choice now but to adopt a policy stance that lets them tamp down on re-emerging inflationary pressures.
•Once a strong votary of sharp interest rate cuts till a few months back, now said it is natural that the Reserve Bank of India (RBI) will change its stance as inflation is picking up.
•While answering a question during the post the release of the Economic Survey 2018, on whether RBI should change its stance as inflation is rising, Mr Subramanian said, “Now clearly the cycle has turned, inflationary pressures have re-emerged. So it is not just the fact inflation is picking up but also the fact if growth happens the output gap will also start narrowing. From both those perspective the stance of the monetary policy naturally has to change.”
•“As Keynes famously said as facts change, I change my opinion. So I think there is a change in the underlying facts,” he added.
•Bond yields shot up after the comments with the yield of new 10 year government bond ended the day at 7.44% as compared to its previous close of 7.31%.
•Consumer price index based inflation - the central bank’s primary yardstick for monetary policy formulation - increased to a 17 month high in December following higher food prices. It was 5.21% in December just below the central bank’s tolerance limit of 6%.
•The monetary policy committee of RBI has kept the key policy rate or the repo rate unchanged in the last two meetings while keeping the neutral stance. The next review meeting is due next week.
•Mr Subramanian has justified his earlier call for deep rate cuts earlier.
•“In the period when we had very very high real interest rates and the economy was weak that was a phase where we could have seen much lower rates,” he said.
•He also said the markets have misinterpreted the government’s additional borrowing numbers as it does not reflect the underlying deficit.
•“Whatever the borrowing that’s been done by the centre and the especially the states, markets have misinterpreted that …it is not going to be financing new deficit but a change in financing away from the NSSF (National Small Savings Fund) towards market borrowing. And that is not a new deficit,” he added.
📰 ‘Eliminate embedded taxes to boost exports’
Survey moots thorough review of taxes from products left outside the ambit of GST, and from within
•The Economic Survey has suggested that the Goods and Services Tax (GST) Council should comprehensively review ‘embedded taxes’ and expeditiously eliminate the embedded export taxes to boost India’s manufacturing exports.
•Referring to the ₹6,000-crore package for the apparel sector announced in June 2016, the Survey observed that the largest component of that package was rebates on state levies to offset indirect taxes levied by the states (the VAT) that were ‘embedded’ in exports. The Survey found that the package in fact increased exports of ready-made garments made of man-made fibres.
•It then said a policy implication (arising from this example) was that the GST Council should conduct a comprehensive review of embedded taxes arising from products left outside the GST (petroleum and electricity) and those that arose from the GST itself (for example, Input Tax Credits that get blocked because of “tax inversion,” whereby taxes further back in the chain are greater than those up the chain).
•“This review should lead to an expeditious elimination of these embedded export taxes, which could provide an important boost to India’s manufacturing exports,” the Survey said.
Need for national policy
•Pointing out that high cost of logistics was impacting competitiveness in domestic and global market, it suggested the formulation of a National Integrated Logistics Policy to bring in greater transparency and enhance efficiency in logistics operations.
•“Improving logistics sector has huge implication on exports and it is estimated that a 10% decrease in indirect logistics cost can increase 5-8% of exports,” the Survey said.
•The document has also thrown up some interesting findings on India’s export sector. This included data on the international exports of states, the first in India’s history, showing that five states — Maharashtra, Gujarat, Karnataka, Tamil Nadu and Telangana — in that order account for 70% of India’s exports.
•Similarly, for the first time, the Survey did a firm-level analysis on exports and found that export concentration by firms was much lower in India than in the U.S., Germany, Brazil, or Mexico – meaning that India had no ‘exports superstars’ and that its export structure was “egalitarian” in nature.
•“The top 1% of firms accounted for 72, 68, 67, and 55% of exports in Brazil, Germany, Mexico, and USA respectively, but only 38% in the case of India. The top 5% accounted for 91, 86, 91, and 74% in those countries, compared with 59% in India,” the Survey said, adding that the new GST data had made it possible to construct firm-level exports.
📰 ‘Tax litigation taking toll on economy’
Income Tax Department is the biggest litigant but loses 85% of cases, says Survey
•Less is more said the Economic Survey released on Monday when it comes to appeals by the income tax department for both direct and indirect tax cases.
•Faced with a success rate that is less than 30%, the Survey said the tax department would gain from a reduction in appeals pursued at higher levels of the judiciary besides leading to a reduction of workload on high courts and the Supreme Court.
4.7% of GDP
•In March, 2017, there were approximately 1.37 lakh direct tax cases and 1.45 lakh indirect tax cases under consideration by the Income Tax Appellate Tribunal, high courts and Supreme Court.
•“Together, the claims for indirect and direct tax stuck in litigation by the quarter ending March, 2017, amounted to nearly ₹7.58 lakh crore, over 4.7% of GDP,” the Survey said.
•The tax department is the largest litigant with almost 85% of direct tax cases arising out of its appeals. But the Survey pointed out that, “the Department unambiguously loses 65% of its cases”. It said the government’s persistence with litigation despite high rates of failure was increasing the workload of the judiciary and adding to delays and pendency of cases.
•This, it said was “taking a severe toll on the economy in terms of stalled projects, mounting legal costs, contested tax revenues, and reduced investment”.
•While it is difficult to estimate the costs of pendency and delay, the Survey found that more than ₹52,000 crore worth of government infrastructure projects have been stalled by various orders of the courts.
•“The Ministries of Power, Roads and Railways have been the hardest hit,” the Survey said as project costs have risen by close to 60% during the stalled period.
•The survey also reflected on the tendency of the Supreme Court to eagerly entertain appeals directly from any court or tribunal in the form of Special Leave Petitions (SLPs).
•Initially invoked only in “exceptional circumstances”, SLPs were now an overwhelming feature of practice at the Supreme Court, the survey said.
•The rate at which the Supreme Court admits SLPs increased from about 25% in 2008 to almost 40% in 2016.
•“This rising tendency to grant special leave has fundamentally altered the nature of the Court and created a high level of pendency, nearly 85% of which are SLP cases,” the report said.
•The Survey found that dedicated subject-matter courts could have “profound benefits” as seen in the apex court’s recent experiment with constituting an exclusive bench for taxation produced impressive results.
•This may be replicated for other subject matters, and emulated by other high courts, the Survey said.
📰 Govt. has curbed inflation: Kovind
Focusses on economic democracy
•President Ram Nath Kovind, on the first day of the Budget session on Monday, addressed a joint sitting of Parliament where his speech focussed on “ensuring social justice and economic democracy.”
•In what appeared to reflect key areas for the government, Mr. Kovind mentioned about giving the highest priority to agriculture, dignity for women by building toilets, providing cooking gas connection, improving maternity benefits and expressing hope that the Bill to ban triple talaq became law.
•“The highest priority of my government is to remove various difficulties faced by farmers and to raise their standard of living. The schemes of my government are not only removing their hardships but also reducing the expenditure incurred by them on farming,” said Mr. Kovind in his maiden address to Parliament and reiterated the government’s commitment to double farm incomes.
•Talking about the economy, he said the government had been able to contain inflation and fiscal deficit in the past three-and-a-half years and highlighted foreign exchange reserves in excess of $410 billion as an achievement of the government.
•“During the first quarter of 2016-17, the economy witnessed a temporary slowdown in GDP growth. The second quarter of 2017-2018, however, has seen a reversal of this trend. In the last three-and-a-half years, the rate of inflation as well as the government’s fiscal and current account deficits have, on an average, shown a decline,” he said.
•The President said appropriate policies of the government ensured that foreign investment increased from $36 billion to $60 billion during the period.
📰 The many things that Lamin B2 can do
The novel role of the nuclear protein has been explored
•For the first time, nuclear protein lamin B2, which plays an important role in maintaining the structure and function of the nucleus, has been found to determine the morphology and function of the nucleolus, a roundish entity found inside the nucleus. The nucleolus makes ribosomal ribonucleic acid (rRNA) and ribosomes. Like in the case of the nucleus, the lamin B2 protein is found at the border of the nucleolus, which is again a new finding.
•In contrast to normal cells that contain one or two spherical and regular-shaped nucleoli, cancer cells may have as many as 10. Cancer cells are highly proliferative in nature and require more protein synthesis for survival. The demand for additional protein is met by large-sized nucleoli that are distorted in shape or by nucleoli that are found in abundance. Cancer cells can also have a large number of nucleoli that are large-sized.
•Peering deep into cells using a super-resolution microscope, a team led by Kundan Sengupta from the Indian Institute of Science Education and Research (IISER), Pune found that in addition to their location at the border of the nucleus, lamins were found right near the boundary of the nucleolus. “We were able to locate lamin B2 at the border of nucleolus as we isolated the nucleolus from the cell and used antibody staining to identify lamin B2,” he says. “Since lamins’ role in controlling the shape and function of the nucleus is known, we wanted to determine if they played a similar role in the nucleolus’ case.”
•Using a molecular approach, they reduced the levels of lamin B2 in colorectral cancer cell lines. “In about 75% of the cancer cells, the nucleoli lost their shape and came together to form a large aggregate,” says Ayantika Sengupta from IISER and the first author of a paper published inMolecular and Cellular Biology. The aggregate occupied more volume than when the nucleoli were separate entities. When the lamin B2 was restored to its normal level, the nucleoli regained their original shape. “This strongly suggests that lamin B2 controls the shape of the nucleolus,” she says.
•Besides controlling the shape, lamin B2 also controls the function of the nucleolus. When the lamin B2 level was depleted in the cancer cells, there was an increase in the levels of ribosomal RNA precursors. Lamin B2 also modulates the entry and exit of a multifunctional RNA binding protein (nucleoli). This protein too forms an aggregate in the absence of lamin B2.
📰 Economic Survey: Cautious optimism
The Economic Survey underscores the need to maintain fiscal credibility
•The Economic Survey for 2017-18 paints the picture of an economy that gives reason for both optimism and caution. It projects that GDP growth could accelerate to 7-7.5% in 2018-19, from 6.75% in the current fiscal, reinstating India as the world’s fastest-growing major economy. According to Chief Economic Adviser Arvind Subramanian, the key factors contributing to the positive prognosis are the reform measures: the July 1 implementation of the Goods and Services Tax and the steps taken to address the twin balance sheet problem in the banking sector. The latter includes the push to use the Insolvency and Bankruptcy Code for debt resolution and the initiative to recapitalise public sector banks. Adding to these domestic enablers are the fair winds of a global recovery that have already lent a lift to overseas demand for India’s goods and services. But capitalising on these favourable factors while remaining vigilant to other macroeconomic threats, including a key risk in the form of persistently high oil prices, would require exemplary economic stewardship. Among the concerns the CEA has flagged is one relating to what the Survey calls “a classic emerging market ‘sudden stall’ induced by sharp corrections to elevated stock prices.” With Indian stock indices continuing to soar to new highs on an almost daily basis, the Survey warns against “sanguineness about its sustainability”. A correction in the stock market, besides triggering capital outflows, could force policymakers to raise interest rates, choking off the nascent recovery.
•On the fiscal front, the survey contends that the Centre needs to reappraise its priorities. The onus, it argues, has to be squarely placed on establishing and maintaining policy credibility. To this end, it argues against “setting overly ambitious targets for consolidation, especially in a pre-election year” that are based on optimistic and unrealistic assumptions. Instead, it recommends a “modest consolidation” that would signal a return to the path of calibrated deficit reductions. In doing so, it appears that the Survey is signalling that the government may have to retain the elbow room to stabilise the GST, complete the recapitalisation exercise and, most crucially, support agriculture. Devoting an entire chapter to ‘Climate, Climate Change and Agriculture’, the CEA and his team have stressed on the dangers climate change poses to the outlook for farm growth. With the potential to reduce annual agricultural incomes — by as much as 20-25% for unirrigated areas — the Survey calls for a range of mitigation measures including extensive provision of efficient irrigation technologies and a wholesale review of the cereal-centric approach to policy. Citing job creation and education as key priorities, the Survey sets out a plan for rapid economic expansion by recommending that policymakers keep their sights trained on strengthening “the only two truly sustainable engines — private investment and exports.”
