📰 Centre wants fake news traced
WhatsApp, FB will be asked to remove ‘unlawful’ content under proposed rules
•The government has sought public comments on the proposed amendments to the Information Technology (IT) Act that seek to make it mandatory for platforms such as WhatsApp, Facebook and Twitter to trace “originator” of “unlawful” information, while also removing such content within 24 hours after being notified.
•It pointed out that a number of lynching incidents were reported in 2018 mostly due to fake news being circulated through Whatsapp and other social media sites.
•As per the draft ‘The Information Technology [Intermediaries Guidelines (Amendment) Rules] 2018’ released on Monday, the intermediary after being notified by the appropriate authority should remove or disable access to unlawful content within 24 hours in the “interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality, or in relation to contempt of court, defamation or incitement to an offence, on its computer resource without vitiating the evidence in any manner…”
•The intermediary is also expected to preserve such information and associated records for at least 180 days for investigation purposes as against 90 days now.
•Following fears of “surveillance and censorship” with the proposed norms, the government clarified that it does not regulate content appearing on social network platforms.
•Pointing that a number of lynching incidents were reported in 2018 mostly due to fake news being circulated through WhatsApp and other social media sites, the government said social media has brought new challenges for the law enforcement agencies, including inducement for recruitment of terrorists, circulation of obscene content, spread of disharmony and incitement to violence.
•It said the Minister for Electronics and IT Ravi Shankar Prasad, while responding to a calling attention motion on “Misuse of social media platforms and spreading of fake news” in Parliament, had conveyed the resolve of the government to strengthen the legal framework and make the social media platforms accountable under law.
•Subsequently, the IT Ministry prepared the draft rules to replace the ones notified in 2011. “Presently, consultation process is under way…it was initiated with inter-ministerial consultations and thereafter with other stakeholders, including major social media platforms and messaging services platforms like Facebook, Google, Twitter, Yahoo, WhatsApp and other associations like IAMAI, COAI and ISPAI representing intermediaries.”
•MeitY has sought comments from stakeholders by January 15, 2019.
•The proposed rules state that intermediaries should within 72 hours, provide information or assistance asked for by any government agency “or assistance concerning security of the State or cyber security; or investigation or detection or prosecution or prevention of offence(s); protective or cyber security and matters connected with or incidental thereto.”
•This draft comes close on the heels of a recent Supreme Court order that gave a green signal to the government to frame guidelines or a standard operating procedure (SOP) to deal with the publication and proliferation of sexually abusive online content like child pornography, rape and gang rape videos and objectionable material through social media intermediaries like Google, YouTube, Facebook, and WhatsApp.
•The Centre’s draft SOP include setting up of proactive monitoring tools for auto deletion of unlawful content, deployment of trusted flaggers for identifying and deletion of unlawful content, setting up of a 24/7 mechanism for requisitions of law enforcement agencies, and appointment of India-based contact officers.
📰 The case against surveillance
Regardless of which government enhanced powers of surveillance, reform is long overdue
•Last week, a Ministry of Home Affairs (MHA) notification authorising 10 Central agencies to intercept, monitor, and decrypt online communications and data caused a furore in both Parliament and the wider civil society. The notification was described as an incremental step towards a surveillance state. The government’s defence was equally swift: it protested that the notification created no new powers of surveillance. It was only issued under the 2009 Information Technology Rules, sanctioned by the previous United Progressive Alliance government. The 10 agencies had not been given a blank check; rather, specific surveillance requests, the government contended, still had to be authorised by the MHA in accordance with law.
•But whatever one makes of the government’s defence, the MHA notification lays bare the lopsided character of the surveillance framework in India, and highlights an urgent need for comprehensive reform.
The problem
•The existing surveillance framework is complex and confusing. Simply put, two statutes control the field: telephone surveillance is sanctioned under the 1885 Telegraph Act (and its rules), while electronic surveillance is authorised under the 2000 Information Technology Act (and its rules). The procedural structure in both cases is broadly similar, and flows from a 1997 Supreme Court judgment: surveillance requests have to be signed off by an official who is at least at the level of a Joint Secretary.
•This is a familiar argument, but it must be examined more closely. First, let us clear a basic misconception: it is nobody’s case that privacy is absolute. The staunchest civil rights advocates will not deny that an individual reasonably suspected of planning a terrorist attack should be placed under surveillance. The debate, therefore, is not about ‘whether surveillance at all’, but about ‘how, when, and what kind of surveillance’.
•In this context, the evidence demonstrates clearly that a heavily bureaucratised and minimally accountable regime of surveillance does nothing to enhance security, but does have significant privacy costs. For example, while examining the U.S. National Security Agency’s programme of mass surveillance, an American court found that out of more than 50 instances where terrorist attacks had been prevented, not even a single successful pre-emption was based on material collected from the NSA’s surveillance regime. Indeed, such a system often has counterproductive effects: a government that is not checked in any meaningful way will tend to go overboard with surveillance and, in the process, gather so much material that actually vital information can get lost in the noise. In the famous ‘privacy-security trade-off’, therefore, it is exceedingly important to assess the balance on the basis of constitutional principles and fundamental rights, rather than blindly accepting the government’s rhetoric of national security.
•After the Supreme Court’s 2017 judgment in K.S. Puttaswamy v. Union of India (‘the right to privacy case’), the constitutional contours within which the questions of ‘how, when, and what kind’ have to be answered have been made clear. Any impingement upon the right to privacy must be proportionate. One of the factors of the proportionality standard is that the government’s action must be the least restrictive method by which a state goal is to be realised. In other words, if the same goal — i.e., protecting national security — can be achieved by a smaller infringement upon fundamental rights, then the government is constitutionally bound to adopt the method that does, indeed, involve minimal infringement.
•Under these parameters, there is little doubt that on the three counts described above — its bureaucratic character, its vagueness, and its opacity — the existing surveillance framework is unconstitutional, and must be reconsidered. To start with, it is crucial to acknowledge that every act of surveillance, whether justified or not, involves a serious violation of individual privacy; and further, a system of government surveillance has a chilling effect upon the exercise of rights, across the board, in society. Consequently, given the seriousness of the issue, a surveillance regime cannot have the executive sitting in judgment over the executive: there must be parliamentary oversight over the agencies that conduct surveillance. They cannot simply be authorised to do so through executive notifications. And equally important, all surveillance requests must necessarily go before a judicial authority, which can apply an independent legal mind to the merits of the request, in light of the proportionality standards discussed above.
•Second, judicial review will not achieve much if the grounds of surveillance remain as broad and vaguely worded as they presently are. Therefore, every surveillance request must mandatorily specify a probable cause for suspicion, and also set out, in reasonably concrete terms, what it is that the proposed target of surveillance is suspected of doing. As a corollary, evidence obtained through unconstitutional surveillance must be statutorily stipulated to be inadmissible in court.
•And last, this too will be insufficient if surveillance requests are unopposed — it will be very difficult for a judge to deny a request that is made behind closed doors, and with only one side presenting a case. There must exist, consequently, a lawyer to present the case on behalf of the target of surveillance — even though, of course, the target herself cannot know of the proceedings.
Root and branch
•To implement the suggestions above will require a comprehensive reform of the surveillance framework in India. Such a reform is long overdue. This is also the right time: across the world, there is an increasingly urgent debate about how to protect basic rights against encroachment by an aggressive and intrusive state, which wields the rhetoric of national security like a sword. In India, we have the Supreme Court’s privacy judgment, which has taken a firm stand on the side of rights. Citizens’ initiatives such as the Indian Privacy Code have also proposed legislative models for surveillance reform. We now need the parliamentary will to take this forward.
📰 A solution in search of a problem
The argument that a centralised judicial recruitment process will help the lower judiciary does not hold up
•Last week, in its report, ‘Strategy for New India@75’, the NITI Aayog mooted the creation of an All India Judicial Service (AIJS) for making appointments to the lower judiciary through an all India judicial services examination conducted by the Union Public Service Commission (UPSC) in order to maintain “high standards” in the judiciary.
•Similar proposals were made by the Union Law Minister Ravi Shankar Prasad on three different occasions this year as a solution to the problems of vacancies in the lower judiciary and a lack of representation in the judiciary from marginalised communities. This last argument appears to have caught the attention of Dalit leaders such as Ram Vilas Paswan, a Minister in the Central government, who voiced support for the AIJS following the Supreme Court’s controversial judgment, earlier this year, that diluted the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989.
•In our opinion, the AIJS is not a solution to these problems and the government would be well advised to reconsider its stance. So, how serious is the problem of vacancies, and is centralisation the solution?
The facts speak
•The argument that the creation of the AIJS and a centralised recruitment process will help the lower judicial services is based on the assumption that the current federal structure, that vests the recruitment and appointment for the lower judiciary in the hands of State Governors, High Courts and State Public Service Commissions, is broken and inefficient. On facts, however, this assumption does not hold up.
•Going by the latest figures published by the Supreme Court in its publication Court News (December 2017 and the last available figures), many States are doing a very efficient job when it comes to recruiting lower court judges. In Maharashtra, of the 2,280 sanctioned posts, only 64 were vacant. In West Bengal, of the 1,013 sanctioned posts, only 80 were vacant. Those are perfectly acceptable numbers.
•However, there are States such as Uttar Pradesh where the situation is shocking. Of the 3,204 sanctioned posts, 1,348 are vacant, i.e. 42% vacancies. These numbers show that the problem of vacancies is not uniform across different States. The solution is to pressure poorly performing States into performing more efficiently.
•Further, the argument that the centralisation of recruitment processes through the UPSC automatically leads to a more efficient recruitment process is flawed and not a guarantee of a solution. For example, the Indian Administrative Service — its recruitments are through the UPSC — reportedly has a vacancy rate of 22%, while the Indian Army’s officer cadre, also under a centralised recruitment mechanism, is short of nearly 7,298 officers.
Impact on State politics
•Will the creation of an AIJS lead to more representation from marginalised communities and women? The second argument in support of the AIJS is that its creation, along with provisions of reservations for the marginalised communities and women, will lead to a better represented lower judiciary. Dalit and tribal politicians are supporting the AIJS on these grounds. The fact is that several States already provide for reservations in their lower judicial service.
•For example, at least 12 States, which include Madhya Pradesh, Chhattisgarh, Uttar Pradesh, Rajasthan and Kerala, provide for caste-based reservation in the direct recruitment examination for district judges from the bar. In addition, U.P., Karnataka, Rajasthan and Chhattisgarh provide women with special reservations. Karnataka also recognises two additional categories of reservation within caste-based reservation — for those from a rural background and those from Kannada medium backgrounds. Karnataka is an example of how States are best suited to assess the level of intersectional disadvantage of various communities residing in the State.
•Unlike States, the Centre almost never provides reservation for women in the all India services. On the issue of caste, an AIJS may provide for SC/ST reservation along with reservation for the Other Backward Classes (OBC) but it should be noted that a recent Supreme Court ruling has held that SC/STs can avail the benefit of reservation in State government jobs only in their home States and not when they have migrated. The same principle is usually followed even for OBC reservations. Thus, instituting an AIJS would mean that nationally dominant SC, ST and OBC groups would be at an advantage as they can compete for posts across the country, which they would otherwise be disqualified from because of the domicile requirement. Thus an AIJS will have consequences for State-level politics.
•As originally enacted, Articles 233 and 234 of the Constitution vested all powers of recruitment and appointment with the State Public Service Commission and High Courts. During the Emergency, Parliament amended Article 312 of the Constitution to allow for the Rajya Sabha to pass a resolution, by two-thirds majority, in order to kick-start the process of creating an all India judicial service for the posts of district judge. Once the resolution is passed, Parliament can amend Articles 233 and 234 through a simple law (passed by a simple majority), which law will strip States of their appointment powers. This is unlike a constitutional amendment under Article 368 that would have required ratification by State legislatures. In other words, if Parliament decides to go ahead with the creation of the AIJS, State legislatures can do nothing to stop the process.
📰 Implementing NOTA in the right spirit
Maharashtra and Haryana have shown the way
•In People’s Union For Civil Liberties v. Union Of India (September 27, 2013), the Supreme Court had ruled that a None of the Above (NOTA) option “may be provided in EVMs” so that voters are able to exercise their “right not to vote while maintaining their right of secrecy”. On October 29 that year, the Election Commission of India (ECI) said that if a situation arose where the number of NOTA votes exceeded the number of votes polled by any of the candidates, the candidate with the highest number of votes would be declared winner. This, it said, was in accordance with Rule 64 of the Conduct of Elections Rules, 1961.
•This provision made the NOTA option almost redundant. While it ensured confidentiality for a voter who did not want to choose any of the candidates and yet wished to exercise her franchise, the provision clarified that a NOTA vote would not have any impact on the election result, which is what interests candidates, political parties, and voters. Soon after this, candidates began campaigning against NOTA, telling voters that choosing the option meant wasting a vote.
What the court intended
•The ECI seemed to have completely overlooked the spirit of the judgment, illustrated in the following excerpts: “For democracy to survive, it is essential that the best available men should be chosen as people’s representatives... This can be best achieved through men of high moral and ethical values, who win the elections on a positive vote. Thus, in a vibrant democracy, the voter must be given an opportunity to choose NOTA..., which will... compel the political parties to nominate a sound candidate (emphasis added).
•“Democracy is all about choice. This choice can be better expressed by giving the voters an opportunity to verbalize themselves unreservedly and by imposing least restrictions on their ability to make such a choice. By providing NOTA button in the EVMs, it will accelerate the effective political participation in the present state of democratic system and the voters... will be empowered. We are of the... view that in bringing out this right to cast negative vote at a time when electioneering is in full swing, it will foster the purity of the electoral process and also fulfil one of its objectives, namely, wide participation of people(emphasis added).
•“When the political parties will realize that a large number of people are expressing their disapproval with the candidates... there will be a systemic change and the political parties will be forced to accept the will of the people and field candidates who are known for their integrity (emphasis added).”
Two reasoned orders
•The State Election Commission (SEC) of Maharashtra was the first to understand the spirit of the judgment. It issued a reasoned order on June 13 saying, “If it is noticed while counting, that NOTA has received highest number of valid votes, then the said election for that particular seat shall be countermanded and fresh elections shall be held for such post.” This was commendable, but it stopped short of giving NOTA the teeth that the court wanted. It meant that the same candidates could contest the new election, which meant that the result could be the same as earlier.
•It was not long before the final correction came forth. The SEC of Haryana, in an order dated November 22, stated that if “all the contesting candidates individually receive lesser votes than... NOTA,” then not only would “none of the contesting candidates be declared as elected,” but “all such contesting candidates who secured less votes than NOTA shall not be eligible to re-file the nomination/contest the re-election.”
•The two SECs are within the ambit of the Constitution and various Supreme Court judgments to issue these orders for various reasons: they have powers identical to the ECI for elections that take place in their jurisdictions; they have plenary powers to issue directions in areas related to the conduct of elections where there is no specific legislation, till such time as Parliament or the State Assembly enacts such legislation; and there is no specific legislation pertaining to NOTA.
•With two SECs showing the way, the remaining SECs and the ECI should follow suit so that political parties are compelled to nominate sound candidates, and are forced to accept the will of the people, as desired by the highest court in the land.
📰 State departments wary of bullet train losses: RTI reply
Seek clarity on loan share, benefit to State; CM-led panel hasn’t met since Feb. 2017
•The Narendra Modi government’s Mumbai-Ahmedabad bullet train project may turn out to be a loss-making proposition and burden Maharashtra’s already dwindling finances, the latest information obtained by an activist under the Right to Information (RTI) has revealed.
•As per the RTI response, a State Transport Department report has highlighted several objections raised by various departments over the economic viability of the Shinkansen train, which could result in losses in the form of wasted Floor Space Index (FSI) and delayed loan repayment in the absence of proper frameworks.
Unutilised FSI
•In its assessment, the State Urban Development Department (UDD) said some part of the FSI at the station proposed at Bandra Kurla Complex (BKC) in Mumbai could “remain unutilised because of the height restrictions, leading to revenue losses”. “Hence, a conscious decision must be taken in this regard even as the Railways have said there is no impediment to the construction viability of the financial centre. However, the clauses in this regard must be specifically incorporated so that no objections are raised by the Railways later on,” a note from the UDD reads.
•Both Planning and Finance departments have called for a thorough study of bullet train economics in other countries before a decision is taken on its feasibility in India. Additionally, the departments said the Centre must clarify the formula for sharing the loan burden if the project remains loss-making for a long period of time. Since the State is coping with serious loss in income and further burden of loans, the impact of this project on government finances needs to be considered, both departments said.
High chance of losses
•“The estimated annual return of the project is less than the expenditure, hence the chances of losses are high. [We] need clarifications regarding sharing of such losses and expenditure,” the State Finance Department said in its note.
•Activist Jeetendra Ghadge, who had filed the RTI application with the State Home Department, said it was “shocking” that the government had cleared a project which has no practical benefit for the State and would add financial stress. “The State government has clearly rushed into approving the project under pressure from the Central government, without even looking at its feasibility or the interests of its own State,” he said.
•Moreover, the documents show that the ministerial committee headed by Chief Minister Devendra Fadnavis has not met to discuss the project since being incorporated in February 2017. The committee was tasked with carrying out an in-depth study of the Japan International Cooperation Agency report and the project’s feasibility. “The Home Department, in the RTI response, has said there has been no meeting conducted by the subcommittee till now,” Mr. Ghadge said.
•The Transport Department’s report was prepared on January 3, 2017, and presented to the State Cabinet soon after. It sought r clarity on the responsibilities of the State and Centre regarding expenditure on land acquisition and rehabilitation, and competitive tender process for reducing the expenditure. The report further demanded clarity on the number of passengers going from Maharashtra to Gujarat for business/jobs to ascertain the benefit of the project.
Liability of State
•The Finance Department had also forewarned that the Central government should bear the burden of the loan to the special purpose vehicle (SPV), without the State government bearing any guarantee towards the SPV. How the loan will be availed is yet to finalised. “[This was an issue] faced by the Pune Metro, when the World Bank refused loan to the SPV, even though the Centre and State had 50:50 equity. These aspects need to be borne in mind. In essence, the loan must be taken by either the Central government or SPV without any guaranty by the State,” it said.
•The train, with a capacity of 750 passengers, will travel at speeds between 320 km/hr and 350km/hr and is expected to reduce travel time between Ahmedabad and Mumbai to three-and-a-half hours or less from the present eight. The project is expected to be completed in seven years.
📰 Bogibeel: from ‘small’ to big
The Bogibeel across Brahmaputra, opening today, was first demanded in 1977
•India’s longest rail-road bridge that took ₹5,920 crore to build was born “small” on paper – a scribbled note in Parliament after a dramatic display of anger – 22 years ago.
•The 4.94 km Bogibeel, the fourth bridge across river Brahmaputra to be inaugurated by Prime Minister Narendra Modi on Tuesday, was one of eight spans pursued in 1973 to ease the pressure on the 4,258-ft Saraighat Bridge on the western edge of Guwahati.
•Until the Saraighat was built in 1962, the Brahmaputra was the only river in India that had not been bridged along its entire length from delta to foothills either for road or railway.
•The first push for the bridge was from a citizen’s forum in eastern Assam’s Dibrugarh. In June 1977, members of the forum submitted a memorandum to Prime Minister Morarji Desai demanding the construction of the bridge at Bogibeel, about 17 km downstream of the town.
•But the bridge found no takers in New Delhi until it dramatically made its way into the Parliament less than two decades later.
Angry outburst
•Based on another memorandum seeking the construction a bridge connecting Dibrugarh and Dhemaji, five MPs of the Asom Gana Parishad (AGP) had a detailed project report prepared for Bogibeel soon after their election in 1996.
•But the Railway Board said the estimated project cost – ₹2,000 crore – was too much for a small State like Assam. The AGP parliamentarians, nevertheless, sought Prime Minister H.D. Deve Gowda’s support for the bridge they said would be crucial for communication and internal security of India’s easternmost part.
•The AGP was part of the United Front government that Mr. Deve Gowda headed. Party’s Birendra Prasad Baishya was the Minister of Steel and Mines while Muhiram Saikia was Minister of State for Human Resources Development.
•“I lost my temper when Bogibeel was missing from the Budget proposal at the Cabinet meeting prior to the Railway Budget during the Parliament session in September 1996. I told the PM and Ram Vilas Paswan (then Railway Minister)... they ignored us,” Mr. Baishya told The Hindu on Monday.
•Mr. Deve Gowda placated Mr. Baishya by asking Mr. Paswan to settle the Bogibeel issue. Moments later, Mr. Paswan had a brief meeting with AGP parliamentarians.
•“He said it was too late to incorporate Bogibeel in the Railway Budget, but advised us to hand over a note with the request for a ‘small bridge’ during the presentation for reading out loud,” Mr. Baishya.
Hitting hard
•The off-the-script announcement placed the bridge in the Parliament records. Two days later, Mr. Paswan found out that the bridge he had announced was massive, not small. The scale of the project, Mr. Baishya recalled, had hit the Railway Minister hard at a meeting with the AGP members and the Railway Board chairman.
•But Bogibeel was accommodated in the Prime Minister’s special package and Mr. Deve Gowda laid its foundation stone at Dhemaji on January 22, 1997. Work, though, started after another round of initiation ceremony by his successor Atal Bihari Vajpayee in April 2002.
•But the bridge missed several deadlines. Its project’s cost hence shot from ₹1,767 crore to ₹5,920 crore.
📰 The decades that transformed China
Forty years ago, Deng Xiaoping began ‘reform and opening up’. Now China may be at another crossroads
•The December 1978 Third Plenary Session of the Eleventh Central Committee of the Communist Party of China (CPC) might sound obscure, but its global repercussions were of seismic proportions. Deng Xiaoping’s series of economic policies, termed “reform and opening up”, went on to catapult China from an agricultural backwater into a manufacturing powerhouse that shapes the world’s economic architecture.
•As China celebrates the 40th anniversary of “reform and opening up”, it holds the world’s largest foreign reserves ($3.05 trillion in October), and boasts the second-largest economy (with a GDP of $12.2 trillion in 2017). Its share of the world’s economy has ballooned from 1.8% in 1978 to 18.2% in 2017. In doing so, it has defied decades of predictions that its uncomfortable blend of authoritarian politics and economic liberalisation was unsustainable.
A country of contradictions
•Contemporary China is rife with contradictions. Its ruling party espouses a communist, egalitarian ideology while presiding over the emergence of a hugely unequal, capitalism-driven society. The divergent interests of the urban middle class clash with those of peasants and migrant workers. It has the world’s largest number of Internet users (more than 772 million) and accounts for more than 40% of global e-commerce transactions despite being one of the world’s most censored digital environments.
•And yet, the CPC has proved adept at squaring seeming circles and proved doomsday scenarios of its imminent collapse wrong, time and again. A crucial tool in achieving this feat has been the pilot project, poetically rendered as the Deng Xiaoping maxim, “crossing the river by feeling the stones.” This approach was characterised by experimentation and local policy tinkering, in order to establish what worked best in practice, before adoption at the national level.
•The special economic zones (SEZs) promoted along China’s coast in the 1980s, for example, were not brought into existence based on a priori assumptions about their theoretical utility. The idea was for them to be laboratories that provided a controlled environment within which experiments could be conducted boldly. Eventually SEZs became the locomotive for economic growth, attracting unprecedented flows of foreign investment and transforming fishing villages like Shenzhen into global manufacturing hubs. This approach was used repeatedly over the years to test new policies, from cooperative medical care schemes to abolishing controls on the movement of workers from the countryside to the cities. Consequently, the CPC swapped the kind of abrupt, ideologically based upheavals that characterised Mao Zedong’s mass movements from the 1950s to the 1970s, for pragmatic solutions that worked.
•What ‘worked’ was defined by certain parameters, most fundamentally the preservation of the CPC’s power. To this end, Beijing deployed a range of strategies including censorship and purges, but also the co-option of key constituencies like the urban middle class. By tying the prosperity of this group to the continuance of the party at the helm of policy-making, the CPC effectively neutralised what could have been its most formidable foe.
•Critically, what was found to work best for preserving power was delivering on promises of economic growth. This self-interested focus on performance continued as over time, the middle classes began to demand improvements in their quality of life beyond opportunities for material prosperity. The party responded by stepping up environmental protection. Beijing’s air pollution is a case in point. From being a poster boy for foul air, the Chinese capital has transformed into a model to be emulated by cities like Delhi.
•Far from sclerotic, post-reform-and-opening-up China has developed a problem-solving approach that makes its leaders more responsive to socio-economic challenges than is generally believed of autocratic governments. Reforms have extended beyond the economic realm into governance and administration. An example is the introduction of term limits and mandatory retirement ages for officials. Internal report cards issued to evaluate the performance of local bureaucrats are used to promote good governance, by linking promotions and bonuses to the meeting of economic and, increasingly, environmental targets.
•This emphasis on outcome rather than ideology has its corollary in performance over process, which helps explain why a country like India continues to lag behind China on most parameters of development. The legitimacy of democracy absolves Indian governments from the necessity of performing. The CPC can afford no such luxury. Hence the counter-intuitive state of affairs where, despite political representation for the poor in India and the lack of political participation in China, Beijing trumps New Delhi on the delivery of basic public goods like roads, drains and schools.
The Xi Jinping era
•The legacy of “reform and opening up” is crucial in explaining how China got to where it is today. However, its continued relevance in the new era under President Xi Jinping’s leadership has become the million yuan question. Despite Beijing’s formal commitment to further economic liberalisation, the ongoing trade war with the U.S. marks a path divergent to the one trod over the last four decades. Moreover, the CPC has still not resolved the contradiction between state control of the economy and the embrace of free markets, what in China is called “socialism with Chinese characteristics”.
•There are other signs of a break from Deng-inspired policies — most notably, the recent scrapping of the presidential term limit that enables Mr. Xi to potentially continue in office indefinitely. Besides, while Deng preached economic openness and encouraged China to recruit overseas expertise, Mr. Xi emphasises self-reliance and warns of the threats posed by “hostile foreign forces”. The focus on peaceful economic integration is being supplanted by a trade war that some fear could degenerate into a new cold war. Nationalism has trumped the Dengist strategy of “hiding strength and biding time”. Even the pilot project approach of experimentation appears to be out of favour. An article in The Economist points out that while in 2010 some 500 policy-related pilot projects were in place at the provincial level, this number had plummeted to about 70 by 2016.
•Is “reform and opening up” past its sell-by date? If so, what will replace it? And how will Beijing meet future challenges with the U.S. as an adversary, rather than the trade and investment partner it has been so far? The answers, while critical, are unclear. What is clear is that the CPC will need to walk several tightropes going forward, a balancing act that could prove tough for acrobats even as skilled as the Chinese.
📰 Course correction? on GST decisions
Revenue and optics seem to play a greater role in GST decisions
•Under attack on how the indirect tax regime has panned out, the Goods and Services Tax Council on Saturday announced a set of feel-good moves to reassure diverse stakeholders. For consumers, the peak tax rate of 28% levied on cinema tickets above ₹100, large screen television sets or monitors, digital cameras and lithium ion batteries, among others, was bought down to 18%. For businesses still coping with compliance niggles, more time has been granted for filing this year’s annual returns; the promise of a simpler return filing system has been dangled (by July next year); and a single, fungible e-cash ledger has been proposed to replace the present system in which credits available under Central GST cannot be set off against State GST dues. Last but not the least, concerns expressed by several States about revenue trends since the GST’s introduction in July 2017 have been taken on board, and a ministerial group will be tasked with assessing the structural patterns affecting revenue collections in some States. This is an accommodative gesture from the Council, whose chief — Finance Minister Arun Jaitley — cited recent revenue trends that suggest compensation payable to the States has reduced substantively from last year. It is anyone’s guess how much of a role the recent reverses suffered by the Bharatiya Janata Party in Assembly elections played in the latest decisions to slash rates or to ease the burden on businesses.
•GST rationalisation is still a work in progress. It has long been clear that traders need a simpler filing system, faster refunds and other mechanisms to ease their cash flows. Consumers, for their part, are yet to get a clear definition of what qualifies as a good or service for the ‘sin’ category. From over 200 items that were initially kept in the 28% ‘sin’ goods rate bracket, it is now down to just 28 items, which include cement (hardly a luxury for a country with a massive infrastructure investment agenda) and auto components. That the original rates were neither thought-through nor reviewed prudently is apparent with the Council’s decision to reduce the 28% levied on disabled persons’ carriage parts and accessories to 5%. Since cement yields ₹13,000 crore in GST and auto parts another ₹20,000 crore, the Council has resisted rate cuts on these items for now. This is the problematic part — revenue and optics considerations seem to have a greater role in rate setting than the nature of the goods or services to be taxed. The Prime Minister announced impending cuts in the 28% slab, and reacted positively to the film industry’s demand for lower GST. Seeking to correct popular perception ahead of the elections is one thing. But frequent tweaks to the structure, and an impression that rates can be altered by lobbying the powers-that-be, risk ruining the promise the GST held for investors wary of India: a predictable, simple and stable tax regime.
