📰 U.P. site expected to get ‘national importance’ tag
Largest necropolis of late Harappan age
•An ancient site with chariots, swords and other objects pointing to the presence of a warrior class around 4,000 years ago in Uttar Pradesh's Baghpat district could be declared a site of national importance soon.
•The Archaeological Survey of India (ASI) has started the process of declaring the site at Sadikpur Sinauli, which is spread over 28 hectares, of national importance, issuing a notification on June 6 seeking objections, if any, from the public for a period of two months.
•An ASI official said the site, where excavation and preservation work is still ongoing after being started in 2018, was deemed to have national importance due to the finds uncovered. Among the treasures unearthed are three chariots, legged coffins, shields, swords and helmets – all which point towards a warrior class that must have existed around 2,000 BCE, according to an ASI statement.
•In an official statement about the excavation earlier this year, ASI said the site, which is 68 km north-east of Delhi, was the “largest necropolis of the late Harappan period of the early 2nd millennium BCE”.
“The United States is India’s top market for exports and U.S. companies see great opportunity in India.”
•The State Department on Wednesday reacted to India’s announcement of retaliatory tariffs on certain U.S. imports, reiterating U.S. President Donald Trump’s message of reciprocal trade and the strength of U.S.-India ties.
•“India is one of our closest strategic partners in the Indo-Pacific region. The U.S.-India partnership stands upon a shared commitment to democratic values and the rule of law. As the President has repeatedly stated, the United States wants fair and reciprocal trade,” a State Department spokesperson told The Hindu via email, adding, “The United States is India’s top market for exports and U.S. companies see great opportunity in India.”
•Last Friday the Office of the United States Trade Representative (USTR) had told The Hindu that there was no trade action to announce at the moment but that the U.S. continued to raise market access concerns with India.
•U.S Secretary of State Michael Pompeo is expected in New Delhi next week for discussions prior to the G20 meeting in Osaka, Japan, where Prime Minister Narendra Modi will meet U.S. President Donald Trump.
•Among the challenges in the Indo-U.S. relationship that Mr. Pompeo is expected to discuss, are the U.S.’s preferential trade access system, the Generalized System of Preferences (India was recently taken off the beneficiary list as of June 5) , 5G network infrastructure, and data localisation.
•Regarding 5G, the U.S. is trying to dissuade countries from letting Chinese telecom giant Huawei participate in building countries’ next generation networks citing security concerns. The U.S. is also concerned about the direction in which India’s policies with respect to data portability across borders is going and that has become one of the areas of disagreement in trade discussions.
📰 Panel will study the ‘1 nation, 1 poll’ issue
11 parties, including Congress, DMK, BSP, Trinamool Congress and AAP skip four-hour meeting
•A committee will be formed by the Narendra Modi-led government to prepare a road map for “One nation, one election”, Defence Minister Rajnath Singh announced here at the end of an over four-hour meeting with presidents of 21 political parties. Eleven political parties, including the Congress, skipped the meeting convened by the Prime Minister.
•Speaking to reporters at the end of the meeting, Mr. Singh said, “Majority of the parties supported. CPI and CPI (M) raised questions about its feasibility but didn’t oppose the move. The Prime Minister then said he will form a committee regarding this issue.”
•All the political parties were given the opportunity to put forth their views, after which Mr. Modi spoke in support of the idea. “The Prime Minister said that this is not the government’s agenda but the country’s agenda. If there are differences of opinion, they are welcome,” Mr. Singh quoted the Prime Minister as saying.
•Sources said Mr. Modi stressed that this formula needs to be accepted even if it takes 10 years to achieve synchronisation.
•Other than the Congress, the notable absentees included the Trinamool Congress, the Samajwadi Party, the Bahujan Samaj Party, the Dravida Munnetra Kazhagam, the Aam Aadmi Party and Rashtriya Janata Dal among others.
•The AIADMK sent Tamil Nadu Minister C.V. Shanmugam and Rajya Sabha MP Navaneethakrishnan both of whom were denied entry since the meeting was only open to the party chiefs. They submitted in writing the AIADMK’s position on the issue. Among the NDA allies, the Shiv Sena was missing.
•Congress president Rahul Gandhi skipped the meeting convened by Prime Minister Modi but his party made its opposition to the proposal of simultaneous polls at a press conference by party spokesperson Gaurav Gogoi. The Congress MP argued said the proposal violate basic features of the Indian Constitution like flexibility and federalism.
•But former Congress MP Milind Deora, who now heads the Mumbai Congress, said the proposal is worth a debate. In a statement he argued that “being in continuous election mode is a roadblock to good governance, distracts politicians from addressing real issues and adds populism to the character of governance”.
•The CPI (M) and CPI have strongly opposed the idea. “Why were the state elections detached from the general elections? It was because of the gross misuse of article 356 of the Constitution. As long as this article remains we can’t have simultaneous elections,” CPI (M) General Secretary Sitaram Yechury told reporters. He said that his suggestion of removing Article 356 was met with silence. Simultaneous elections, Mr Yechury said will be subvert democracy. “Any suppression of will of the people by prolonging or shortening assembly or Parliament is anti-democratic and is against federalism,” he added.
•According to sources, regional parties such as Biju Janata Dal, YSR Congress and Telangana Rashtriya Samiti have supported the idea.
•Andhra Pradesh Chief Minister Jagan Reddy, according to sources, said that though his party in-principle agrees with the idea, he is opposed to the fixed tenure of legislatures. “If say a state government falls because of a certain exigency, you can’t prolong the government for simultaneous polls alone. So if the government falls after two years, then there should be a re-election with the new government holding power only for remaining three year period,” a top YSR Congress leader said.
•Odisha Chief Minister Naveen Patnaik, who was one of the first to leave the meeting told reporters that his party supports the idea. On the other agenda of the meeting to pay tribute to father of the nation Mahatma Gandhi on his 150th birth anniversary Mr Patnaik has suggested that “ahmisa” and “non-violence” should be added to the Preamble of the Constitution.
‘Noble, not practical’
•Many other parties remained ambivalent and flagged the need for further study.
•NCP’s Sharad Pawar, according to sources said that the idea is noble but it is not practical. “He said during the meeting that simultaneous election will have a lot grave implications and needs further intensive study,” a top opposition leader said.
•Trinamool Congress leader Mamata Banerjee too had expressed a similar opinion in her letter to Parliamentary Affairs Minister Prahlad Joshi declining the invite. She said that this formula can’t be hurriedly implemented and there is a need for a white paper.
•The Telugu Desham Party, who didn’t attend the meeting since its President Chandrababu Naidu is abroad has submitted a memorandum. The TDP has argued that “One Nation One Election” is an a serious and sensitive subject that requires much deliberation. Co-operative federalism is a key feature and the parties need to weigh in legal, political and practical aspects too before accepting it.
•BSP chief Mayawati who was absent told reporters in Lucknow that holding simultaneous national and state elections "appears to be an undemocratic and unconstitutional" idea for a vast country like India. The elections she said should not be weighed from the point of view of expenditure and extravagance".
•The meeting also discussed increasing productivity of Parliament, 150th birth anniversary of Mahatama Gandhi and 75th anniversary of the Indian independence movement. Defence Minister Rajnath Singh said that the parties were unanimous about increasing Parliament’s productivity.
📰 Game of Chicken in the Gulf
Why an Iran-U.S. conflict looks like a realistic possibility
•When two powers are heading towards each other in an escalating game for leverage, the situation is often referred to as a Game of Chicken. This is a concept in game theory. The strategic calculus of the Game of Chicken is that each player thinks the other will either slow down or swerve away and therefore become the “chicken”. This will not only avoid a crash, but also give the persistent player an advantage over the other. The risk of the game, of course, is that if no player backs off, a crash is certain.
•There is no better theoretical description to understand the Iran-U.S. tensions that are unfolding now. U.S. President Donald Trump began the escalation by pulling the country out of the Iran nuclear deal in May 2018. He then reimposed crippling sanctions on Iran, termed a branch of the Iranian armed forces a terrorist group, and sent more troops to West Asia in a bid to force “behaviour change” in Tehran. The U.S. administration calls this strategy the “maximum pressure” approach. But with Iran now threatening to breach the nuclear deal and increasing anti-U.S. military rhetoric, this strategy appears to be failing. As a result, war clouds have gathered over the Gulf with U.S.-Iran ties sinking to levels seen in the final years of George W. Bush’s presidency.
Returning to talks
•Unlike some members of his administration, Mr. Trump has said he doesn’t want a war with Iran. But he was unhappy with the nuclear deal reached between Iran and world powers in 2015 under his predecessor, Barack Obama. The deal, its critics argued, paid Iran for not making a nuclear bomb, while leaving unaddressed critical issues such as its ballistic missile programme and its “disruptive” activities in the region. Mr. Trump wants Iran to return to talks on terms set by the U.S. so that they can renegotiate the nuclear issue. He may have hoped that the “maximum pressure” the U.S. has put on Iran would force it to return to the table.
•The sanctions have been effective in isolating and choking Iran’s economy. After the U.S.’s pullout, the nuclear deal was practically a dead agreement. The other signatories to the deal — the U.K., France, Germany, Russia, China and the European Union (EU) — did nothing concrete to save Iran from U.S. sanctions. Corporations that had shown interest in investing in Iran, including Chinese companies, pulled out after the sanctions. The U.S. also scared off the top-buyers of Iran’s oil, including India, resulting in a massive drop in Iran’s oil exports. But where Mr. Trump erred was in his calculation that economic misery would force Iran to give up its resistance and return to talks.
Back to hostility
•Iran has cooperated with the U.S. in the past. After the September 11, 2001 attacks, it assisted the U.S. war in Afghanistan. It arrested and deported Taliban members who crossed into its territory and also conducted search and rescue operations for downed U.S. aircrew members. Iran also played a critical role in the formation of the first post-Taliban Afghan government. But thereafter, the U.S. turned hostile to Iran, with President Bush lumping the country together with Iraq and North Korea as the “Axis of Evil”.
•With help from the European powers and Russia and China, President Obama got the Iranians to the table. After months-long painstaking diplomatic engagement, all sides agreed to the nuclear deal, which scuttled Iran’s nuclear programme in return for the lifting of international sanctions. After the deal was signed, the U.S. and Iran cooperated in Iraq in the fight against the Islamic State (IS). But once the direct war against the IS in Iraq was over, Mr. Trump pulled the U.S. out of the deal.
Iran’s options
•Broadly, Iran had a choice of tactical pathways. One was to return to talks on the U.S.’s terms and negotiate another nuclear deal for sanctions relief. But this would have been humiliating for nationalist Ayatollahs who have built their political capital on anti-Americanism since 1979.
•The second was to wait out Mr. Trump’s presidency and hope that his successor would take the U.S. back to the nuclear deal. This is still not impossible as there are Democratic presidential candidates who back the deal. But with sanctions biting, Iran can’t wait till the next U.S. presidential election. Also, there’s no certainty that Mr. Trump will not be re-elected.
•The third option was to force the EU to defy U.S. sanctions and save the deal. Iran, in fact, waited for a year after the U.S. pullout for the other members to come up with a solid mechanism to save the deal. When it did not materialise — the EU has set up a channel with Iran called Instex (Instrument in Support of Trade Exchanges), but this is used mainly for transacting essential goods, not high-value exports such as oil and gas — Iran moved to the last option, “maximum resistance” to “maximum pressure”.
•Iran’s response has been gradual. In May, it gave a 60-day deadline to other signatories to fix the deal and also vowed to keep unspent enriched uranium and heavy water, which it had been exporting ever since the deal was sealed. This week, as the deadline is set to expire in two weeks, Tehran said it will keep the low-enriched uranium and threatened to begin enriching the uranium to higher levels of purity. Under the agreement, Iran is allowed to enrich uranium to 3.67%, which it plans to raise to 20%, taking the country closer to weapons-grade level (90%). If Iran starts producing high-enriched uranium, it would be a breach of the nuclear deal.
•This may sound dangerously aggressive, but it is not totally irrational. First, it proves that Mr. Trump’s “maximum pressure” doesn’t work. Second, it holds Mr. Trump primarily responsible for the collapse of the deal and seeks to deprive the U.S. of any help from Europe in the event of a conflict. Third, if Iran is actually responsible for the tanker attacks in the Gulf, it is an indication to countries dependent on oil that flows through the Strait of Hormuz what disruption caused by war would look. If Iran is not behind the attacks, the “maximum pressure” strategy has raised the stakes so high that even a third party is capable of carrying out false flag attacks to trigger an all-out conflict. Either way, Iran is using counter-escalation for deterrence.
•But the danger in the Game of Chicken is that the risk of a crash is always there unless one power swerves away. Will Mr. Trump do so after realising that his “maximum pressure” approach has failed? Or will Iran be able to sustain its “maximum resistance” in the wake of continued U.S. targeting? If not, there will be war.
📰 PM’s panel rejects former CEA’s paper on GDP growth
‘Lacks vigour, won’t stand up to scrutiny’
•The Prime Minister’s Economic Advisory Council (PMEAC) has released a detailed note enumerating its objections to former Chief Economic Adviser Arvind Subramanian’s paper on India’s GDP growth.
•The note said that Mr. Subramanian’s paper “lacks rigour” and would not stand up to academic scrutiny.
Lower GDP
•The paper, released in Harvard University, postulated that the GDP growth between 2011-17 was significantly lower than the 7% shown by the official figures.
•“Having closely read the paper and taking into account all information available until June 19, 2019, the primary contributors of this note reject the author’s methodology, arguments and conclusions in the said paper,” the note by the PMEAC said. “A critique of official GDP estimates must specifically critique coverage or methodology, the author does neither.”
•“Given the fact that his paper lacks rigour in terms of specific data sources and description, alternative hypothesis, rationale of equation specifications, use of dummies, and robustness-check diagnostics of estimated equations, and choice of countries in the sample and a specific list, it would not stand the scrutiny of academic or policy research standards,” the note added.
•The Council, however, said this did not mean that the paper should not be taken seriously, but that “to believe it as gospel truth is equally problematic.”
•In a detailed rejoinder, it said the 17 indicators “cherry-picked” by the former CEA were sourced from the Centre for Monitoring Indian Economy (CMIE), which was not in itself a primary source of information.
•“Further, a cursory look at the indicators suggests a strong link with industry indicators (a sector that contributes an average of 22% to India’s GDP), while the representation of services (60% of GDP) and agriculture (18% of GDP) is as good as missing,” the PMEAC said.
•“It is difficult to believe that indicators in the services sector would not correlate with Indian GDP.”
•The note pointed out that while Mr. Subramanian had stated in his paper that he was not including tax collection data in his analysis because their relationship to GDP was unstable, the fact is that tax collections are hard data that are not based on surveys and should not have been ignored.
•“Unlike many indicators, tax data is not collected through surveys or by agencies through arcane techniques. These are hard numbers and should be an important indicator of growth,” the note said. “Further, there have been no major changes in tax laws until the end period in the author’s analysis (March 31, 2017). GST was introduced on July 1, 2017.”
•“The author’s logic of not using tax data appears to be a convenient argument meant to avoid inconvenient conclusions based on hard facts,” it added.
📰 At 9.8 GB per month, India has the highest data usage per smartphone
Smartphone users willing to pay 66% premium for 5G
•India has the highest average data usage per smartphone, reaching 9.8 GB per month at the end of 2018, according to a new study by Swedish telecom equipment maker Ericsson.
•The report, released on Wednesday, also forecasts that this figure is likely to double to 18 GB per month per smartphone by 2024.
•“Increased numbers of LTE subscriptions, attractive data plans being offered by service providers, and young people’s changing video viewing habits have driven monthly usage growth,” Nitin Bansal, head of Ericsson India and head of network solutions, southeast Asia, Oceania and India, said.
•In 2018, mobile data traffic per smartphone per month stood at 7 GB for North America, 3.1 GB for Latin America, 6.7 GB for Western Europe, 4.5 GB for Central and Eastern Europe, 3 GB for Middle East and Africa, 7.1 GB for northeast Asia and 3.6 GB for southeast Asia and Oceania region. “Mobile video traffic is fuelling the total data traffic as users are spending more time streaming and sharing video. This is expected to continue, as video is embedded in all types of online content… we see monthly data usage per smartphone increasing from 9.8 GB in 2018 to 18 GB by 2024 [in India], growing at 11% CAGR,” Mr. Bansal added.
•The ‘Ericsson Mobility Report’ added that total smartphone subscriptions in the region is likely to reach 1.1 billion by 2024, growing at 11% CAGR, while the total mobile broadband subscriptions in India are expected to grow from about 610 million in 2018 to 1.25 billion in 2024.
•Mr. Bansal said that LTE would remain the most dominant access technology in the region up to 2024, even as 5G subscriptions are expected to grow during this period.
•Interestingly, according to Ericsson, Indian smartphone users are willing to pay more than 66% premium for 5G services.
•“In fact, more than half of smartphone users in India expect their own provider to switch to 5G or will wait for a maximum of six months before moving to another provider that does,” Mr. Bansal said.
📰 What a $5 trillion economy would look like
The economy must be evaluated in terms of how much it contributes to the ease of our living
•At the meeting of the Governing Council of the NITI Aayog last week, Prime Minister Narendra Modi announced the target of a $5 trillion economy for India by 2024. It is necessary to think big when seeking to make a difference, for transformation does not come from modest plans. Hopefully, the Prime Minister will also use the drive to growth to place India’s official statistics on a firmer footing, so that we can be sure that economic policy-making is based on reality. However, getting the numbers right will not ideally end the task. What this task is may be illustrated by a question that was asked some years ago when a high-speed expressway connecting the polar extremities of one of our States had been proposed. A wit had asked what we would hope to find once we have reached our destination.
•A similar question can be asked of plans for growing the economy. What would we like to see in the proposed $5 trillion economy? Moreover, unlike in the case of an expressway, which can always be built by simply borrowing money and ideas from the global market, a quantum leap in the size of the economy is not so easily achieved. It will require design, funding and governance.
Without investment
•The importance of funding, and to an equal extent design, may be seen in the failure of the quite sensible aspiration, ‘Make in India’. Though technically applicable to every sector, it was clearly focussed on manufacturing. Articulated very early on in Mr. Modi’s first term (2014-19), and accorded a certain prestige in the pronouncements that followed, it played out as a damn squib. One of the reasons for this was the absence of commensurate investment outlay. To raise the share of manufacturing in the economy from its present 16% to 25%, an ambition declared by both the United Progressive Alliance and National Democratic Alliance governments, requires a scaling up of investment. This did not come about.
•Whether this was due to the corporate sector, Mr. Modi’s chosen vehicle, not having the wherewithal or due to it not being convinced of the plan is beside the point. Investment there must be and if the private sector is, for whatever reason, not coming forward to invest, then the government must. This is no more than accounting, but Mr. Modi’s government seems to be unfavourable to this diagnosis, perhaps on ideological grounds. Remember ‘minimum government’?
•A small digression should clarify matters. The first attempt to make in India was in the 1940s. Finance Minister Shanmukham Chetty’s first budget speech had identified increasing “internal production” as the economic priority. And this was achieved quite soon. Along with the quickening of the economy as a whole, the share of manufacturing had risen, the mocking epithet ‘Hindu rate of growth’ notwithstanding. This had not emerged as part of the moral victory of an oppressed people. The reason was that it had resulted from a surge in investment, led by the government. That resources could have been mobilised on such a scale in so short a time in an economy devastated by colonial rule is testimony to the availability of the three ingredients — design, resources and governance — necessary when contemplating a move to the next level, which is what aiming at a $5 trillion economy amounts to.
The wish list
•While lauding the efforts of leaders of early independent India, however, we would do well to remember their follies. Principal among them was the failure to articulate, possibly even adequately imagine, the contents of the economy that was being raced towards. If this is repeated now, a moment of triumphalism different in character but nevertheless there, it would amount to not having learned the lessons of history. Something missing from “internal production” and ‘Make in India’ is the difference these intentions would make to the lives of Indians. At least in the 1940s, the priority was to get the economy moving in the first place. This is no longer the issue. Today the economy must be evaluated in terms of how much it contributes to the ease of our living. So what would be some of the characteristics of a valuable economy?
•First, Indians should feel empowered by the economy. We know that currently they do not feel so. India is placed very low in the United Nations’ World Happiness Report. Happiness, best understood as a sense of well-being, is directly related to empowerment, or being able to undertake the functionings we value. This is, in the first instance, related to being educated and experiencing good health. We are in India facing an education sector that is broken down and the majority are battling with almost non-existent public health infrastructure. The private sector has some worthy initiatives in these areas but they await an effective public presence on a gigantic scale. So, the first attribute of the valuable economy would be access to quality health and education for all.
•The second attribute of a valuable economy would be equality of opportunity. For over three decades now income inequality has been rising in India. According to some measures, India is today more unequal than China, itself a society widely perceived as highly unequal. Now some part of inequality of opportunity is related to unequal distribution of income but a part of it is not. Gender inequality manifested as women having less opportunity in life is not going to go away with a re-distribution of income along class lines or across social groupings. India is a serious outlier in this regard, and becoming richer as a society may do little to change the status quo. Shockingly, a sex ratio, already unfavourable to women, has shown a secular worsening since 1947. Inequality in India can only be ended by equalising capabilities across individuals. Concerted public action via education is the means to this outcome. Income transfers, pushed relentlessly by policy entrepreneurs, evade the issue altogether.
Conserving nature
•Finally, an economy, whatever its size, cannot be meaningfully evaluated independently of the extent of presence in it of natural capital. Till now, by referring to the imperative for growth, to eradicate poverty, any effort to conserve nature has not just been ignored but treated with derision, by both right and left. This is no longer a credible political stance. Two-thirds of the world’s most polluted cities are in India, when we accept less than a fifth of its population. Air pollution shortens lives and lowers productivity, reducing the capacity to earn a living when alive. The poor are the most affected as they cannot afford to live in gated communities that somehow manage to commandeer scarce natural resources. Some part of environmental depletion in India is due to the pursuit of unbridled growth.
•This implies that any improvement in the life of the majority would require a re-alignment of the growth process so that it is less damaging. This would very likely require that we have slower growth but the process can be configured to channel more of it towards poorer groups. We may end up in a situation of less tangible goods in the aggregate than otherwise but one in which more people are happier than in the past. Such an economy is more valuable.
📰 The forgotten funds
The government must utilise cess proceeds and publish an annual account of how they have been spent
•The season of filing tax returns brings with it an increased emphasis on the accountability of the private sector towards the government. In this period of accounting and accountability, as citizens, it is equally important to apply the same principles to the working of the government. A key area is the social accounting of the education cess, which is a compulsory contribution made by all taxpayers, both individuals and firms.
The difference
•A cess is levied on the tax payable and not on the taxable income. In a sense, for the taxpayer, it is equivalent to a surcharge on tax. Direct taxes on income are compulsory transfers of private incomes (both individual and firm) to the government to meet collective aims such as the expansion of schooling infrastructure, an increase in health facilities, or an improvement of transportation infrastructure. A cess can be levied on both direct and indirect taxes. The revenue obtained from income tax, corporation tax, and indirect taxes can be allocated for various purposes. Unlike a tax, a cess is levied to meet a specific purpose; its proceeds cannot be spent on any kind of government expenditure. Recent examples of cess are: infrastructure cess on motor vehicles, clean environment cess, Krishi Kalyan cess (for the improvement of agriculture and welfare of farmers), and education cess. To make the point clear, the proceeds from the education cess cannot be used for cleaning the environment and vice versa.
•From the point of view of the government, the proceeds of all taxes and cesses are credited in the Consolidated Fund of India (CFI), an account of the Government of India. It constitutes all receipts, expenditures, borrowing and lending of the government. The CFI details are published annually as a part of the Union Budget documents. And the approval of Parliament is necessary to withdraw funds from the CFI. While the tax proceeds are shared with the States and Union Territories according to the guidelines by the Finance Commission, the cess proceeds need not be shared with them.
•To meet specific socioeconomic goals, a cess is preferred over a tax because it is relatively easier to introduce, modify, and abolish.
•The education cess, at 2%, which was first proposed in 2004, was aimed at improving primary education. In 2007, an additional cess of 1% was introduced to fund secondary and higher education (SHEC). And recently, in the 2019 Union Budget, a 4% health and education cess was announced which incorporates the previous 3% education cess as well as an additional 1% to provide for the health of rural families.
What data show
•Data from various years of the Union Budget show an increase in the amount of education cess collected via corporation tax and income tax. Initially, the education cess was also levied on customs, excise, and service taxes. When tax proceeds increase, the cess collected also rises. From the inception of the education cess until 2019, the total proceeds have been Rs. 4,25,795.81 crore.
•In order to utilise the cess proceeds lying in the CFI, the government has to create a dedicated fund. As long as a dedicated fund is not created, the cess proceeds remain unutilised. The dedicated fund for primary education is the ‘Prarambhik Shiksha Kosh’, or PSK, (created in October 2005, a year after the cess was introduced) while that for higher and secondary education is the ‘Madhyamik and Uchchtar Shiksha Kosh’ (set up in August 2017). It is baffling why the government set up the dedicated fund for higher and secondary education in 2017, 10 years after the introduction of SHEC; it is also shocking that this fund has remained dormant as of March 2018.
•Moreover, data from the 2017-18 annual financial audit of government finances conducted by the Comptroller and Auditor General (CAG) show that Rs. 94,036 crore of SHEC proceeds is lying unutilised in the CFI. In fact, it appears that the government finally set up the ‘Madhyamik and Uchchtar Shiksha Kosh’ after consecutive CAG reports, repeated Lok Sabha queries, and newspaper articles.
•The degree of economic injustice becomes sharper when the unspent account is seen in conjunction with the Central government’s expenditure on education; for example, in 2017-18, the public expenditure on school and higher education was estimated to be Rs. 79,435.95 crore. In other words, the cumulative unutilised SHEC funds far exceeded the expenditure on both school and higher education for the year 2017-18.
Going forward
•Taxes in democratic societies indicate the presence of a collective socioeconomic vision aimed at improving livelihoods. Just as taxpayers have a responsibility to pay taxes, the government ought to ensure that tax proceeds are appropriately utilised. Since a cess is introduced with a specific purpose, it is completely unjustified when the proceeds remain unutilised for so many years. Moreover, in the current context of self-imposed fiscal discipline and the consequent reduction of public expenditure, the opportunity cost of unutilised education cess proceeds is significantly high. Finally, it is imperative that the government immediately begins utilising cess proceeds and also publishes an annual account of the manner in which they have been utilised.
