📰 Cyclone Yaas makes landfall in Balasore, triggers heavy damage
Four killed in Odisha, one in Bengal; many areas inundated.
•The ‘Very Severe Cyclonic Storm’ Yaas that made landfall south of Balasore in Odisha on Wednesday tore into the bordering regions of West Bengal and Odisha and weakened into a cyclonic storm, leaving behind a trail of destruction in its wake on the eastern coast.
•Five persons were killed — four in Odisha and one in West Bengal.
•West Bengal Chief Minister Mamata Banerjee said one crore people had been affected and about 15 lakh people had been evacuated and housed in shelters.
•National Disaster Response Force and Army personnel joined the rescue and relief operations.
•In Odisha, 128 villages in Balasore and Bhadrak districts were inundated following seawater ingression. The cyclone caused extensive damage to power transmission lines in coastal areas. Hundreds of thatched houses were ravaged.
•Yaas battered the tree cover while passing through Balasore and Mayurbhanj districts. Thousands of big trees were uprooted.
•According to the India Meteorological Department, the storm crossed the north Odisha coast about 20 km south of Balasore between 10.30 a.m. and 11.30 a.m. with estimated wind speeds of 130-140 kmph. The cyclone hit the coast with far less intensity than what was predicted.
•By afternoon, the cyclonic storm moved away from Balasore and entered Mayurbhanj district, triggering heavy rain. The system is expected to enter Jharkhand as a cyclone.
6.5 lakh evacuated
•In Odisha, coastal districts of Balasore, Bhadrak, Kendrapara and Jagatsinghpur and northern Mayurbhanj district were affected. The State had already evacuated about 6.5 lakh people, including 1.52 lakh in Balasore, 1.20 lakh in Bhadrak and 1 lakh in Mayurbhanj district.
•Special Relief Commissioner Pradeep Kumar Jena said the extent of damage was being assessed. Collectors of Balasore and Keonjhar had confirmed two deaths, he said.
•As predicted by the IMD, tidal surge was observed above four metres in Balasore and Bhadrak.
•“Inundation was reported in the Dhamra area of Bhadrak district and Bahanaga, Remuna, Baliapal and Balasore town of Balasore district. People had cut roads at several places to discharge water. The embankments would be repaired soon,” said Mr. Jena.
CM’s directive
•Chief Minister Naveen Patnaik announced seven days of relief for all families of 128 marooned villages and directed restoration of all major roads and 80% restoration of electricity supply in affected districts in 24 hours.
•According to Mr. Jena, 295 roads out of 305 belonging to the Public Works Department and 200 out of 300 roads of the Rural Development department were restored by evening.
•The Similipal Biosphere in Mayurbhanj received 146 mm of rain. According to the IMD, heavy to very heavy rainfall has been predicted at a few places over Balasore, Bhadrak, Jajpur, Kendrapada, Jagatsinghpur, Cuttack, Mayurbhanj, Keonjhar and Dhenkanal, with isolated extremely heavy fall very likely to occur over the districts of Jajpur, Mayurbhanj, Keonjhar and Dhenkanal on Thursday.
Houses damaged
•West Bengal Chief Minister Mamata Banerjee said three lakh houses had been damaged due to the cyclonic storrm.
•Large parts of Digha, Tajpur and Haldia town in Purba Medinipur district (district bordering Odisha) along with several areas in the Sunderbans were inundated. Experts and the Chief Minister said the combined effects of the full moon tide and the cyclone led to breaching of embankments in South 24 Parganas and Purba Medinipur districts. Ms. Banerjee said there were reports of breach of embankments at 134 places in the State.
•“There has been extensive damage to agriculture due to ingress of saline water. Allied sectors such as fisheries, horticulture have suffered damage, but we will be able to estimate the complete situation in 72 hours,” she said, keeping a watch on the cyclone from the administration headquarters Nabanna for two days in a row.
•Several villages in the coastal areas of West Bengal’s South 24 Parganas district, including Namkhana, Kakdwip, Frasergunj, Dhankhali, Sandeshkhali lay submerged. At Sagar Island, seawater reached the Kapil Muni temple, a few hundred metres away from the coast. The rural areas of Purba Medinipur district in Nandigram and Contai were waterlogged.
•In Howrah, several villages were submerged in the Amta and Shyampur areas. After the cyclone, people were seen wading through deep water carrying children and cattle to safer places.
Power supply
•While the damage was less and Kolkata was largely spared by the cyclone impact on this occasion, roofs of resorts were blown off, trees were uprooted, and massive waves swept over the coastal areas. Meanwhile, the State government has advised power distribution companies to suspend supply in waterlogged areas.
•One death was reported in Purba Medinipur due to accidental drowning, when a villager, rescued by the administration, went fishing during the cyclone. Ms. Banerjee thanked the people for cooperating with “one of the biggest evacuations” carried out in a span of a few days. She also urged people residing in areas close to the river to remain alert during high tide.
•According to the State government, people were housed at 4,000 flood centres.
•The IMD had predicted heavy rainfall at isolated places over West Midnapore, Jhargram, Bankura, Purulia, East Medinipur and West Burdwan districts along with squally winds of 70-80 kmph gusting to 90 kmph over Jhargram, West Midnapore, Bankura, Purulia and West Burdwan districts.
•During the day, along with the State administration, more than 35 teams of the National Disaster Response Force helped in rescuing people stranded in waterlogged areas of Purba Medinipur and South 24 Parganas. Seventeen columns of the Army, deployed in 10 districts of the State, also lent a hand in rescue work.
It was signed by Google, Facebook, Twitter, Microsoft and in June 2020 by TikTok, as well as players in the advertising sector.
•The EU on Wednesday tasked tech giants such as Facebook, YouTube and TikTok to do more against disinformation and provide much better access to their algorithms as well as beef up fact-checking.
•The proposal is the EU's effort to strengthen its existing code of conduct against disinformation, which was launched in 2018 after revelations that platforms had facilitated and amplified false information in the ramp up to the Brexit vote and elections in the US in 2016.
•It was signed by Google, Facebook, Twitter, Microsoft and in June 2020 by TikTok, as well as players in the advertising sector.
•In the wake of the Covid pandemic, the EU executive is now asking the signatories to go even further in their commitments, which are non-binding and voluntary, at least for now.
•The pressure on the companies to deliver is great, given that the EU is also hammering out its Digital Services Act (DSA) that will give Europe power to slap penalties on Facebook and others when they fail to demonstrate strong action against disinformation.
•European Commission Vice President Vera Jourova said the stricter and more detailed code of conduct was necessary to better root out “systemic risks” on platforms.
•Jourova said that it was time for big tech companies "to stop policing themselves alone and stop allowing to make money on disinformation".
•“After the DSA will come into force, this code of practice will become semi-obligatory,” she warned.
•Among the many proposals, the EU is calling for messaging platforms such as Facebook's WhatsApp to also be included, given the vast disinformation campaigns seen in in India and elsewhere.
•The Commission is also asking platforms for regular reports with clear benchmarks to assess the measures put in place.
•In addition, the EU executive is seeking to create a designated task force composed of the code's signatories, representatives of the EU diplomatic service and media regulators from the member states.
'Code works'
•The proposals will be discussed with the signatories, who will have to submit a first version of the revised code late this year so that it can be operational by the beginning of 2022.
•Marisa Jimenez Martin, Facebook's director of EU Affairs, said that “the reality is that we think the code works”.
•“It just needs to be now strengthened and we will work with the other stakeholders to make that happen in the next months,” she told reporters.
•The code is one of the many EU workstreams to limit the reach of Big Tech.
•The DSA, along with a companion law, the Digital Markets Act, are currently under negotiation at the European Parliament and among the 27 member states in wrangling that could take at least another year.
•Those proposals, when approved, will give the EU unprecedented powers on defining how Big Tech can operate and do business in Europe.
•Brussels also plans to present by the end of the year a draft regulation on political advertising and the targeting of users based on their personal data.
📰 NGT forms panel to probe allegations of unauthorised construction in Mekedatu
NGT appoints joint committee, directs it to submit a report on or before July 5
•The National Green Tribunal (NGT), Southern Zone has appointed a joint committee to look into allegations of unauthorised construction activity taking place in Mekedatu, where the Karnataka government had proposed to construct a dam across the Cauvery River.
•Acting suo motu based on a media report, NGT has directed the panel to submit a report on or before July 5.
•“If the project is to be implemented without conducting any environmental impact assessment study and without obtaining necessary clearance, if any required, then it will be an unauthorized act affecting the environment,” the NGT said, adding that it will get the jurisdiction of intervening on the issue.
•Considering the allegations made in the news report, “we are satisfied that there arises a substantial question of environment, which requires the interference of this Tribunal,” it added.
•The NGT also directed the joint committee to assess the damage caused to the environment in case of any construction made and determine the compensation payable by the respective authorities who are responsible.
•The Principal Chief Conservator of Forest, Department of Forests, State of Karnataka will be the nodal agency for coordination and for providing necessary logistics for this purpose, it added.
•The NGT has issued a notice communicating its decision to the Union Ministry of Environment, Forests & Climate Change, Department of Water Resources, Central Water Commission, Cauvery Water Management Authority, Chief Secretaries of Tamil Nadu and Karnataka, among others.
📰 Imperious missteps: On Lakshadweep restrictions
The Centre should recall the Lakshadweep Administrator and drop his ill-conceived plans
•Lakshadweep, an archipelago of 36 islands totalling 32 square kilometres in the Arabian Sea, has had an idyllic existence as a Union Territory. But no longer, it seems, as the long arm of Delhi is rummaging around the islands these days. Praful K. Patel, a BJP politician from Gujarat, who arrived as Administrator in December, appears determined to upend the landscape and recast the lives of the islanders, around 70,000 of them, all according to his authoritarian imagination. The draft Lakshadweep Development Authority Regulation 2021 gives sweeping powers to the Administrator to take over land and forcibly relocate people, and proposes harsh punishment to those who resist. In other measures, proposed or implemented, the consumption or sale of beef, a part of the food habits of many, could be an offence punishable by seven years in prison; those who have more than two children cannot contest panchayat elections. Anyone could be held in prison without reason up to a year, under a new Goonda Act, in a place that has a very low crime rate. The traditional livelihood of fishing communities has been impeded by mindless regulations that deny them access to coastlines. Their sheds on the coastal areas have been demolished, saying they violated the Coast Guard Act. Dairy farms run by the administration have been shut.
•Development, as it is coming, is not a promise, but a serious threat to the people of Lakshadweep and the fragile ecosystem. Mr. Patel is no stranger to controversies. In March, the Mumbai Police named him as an accused in a case related to the death by suicide of seven-time Dadra and Nagar Haveli MP Mohan Delkar. Mr. Patel was named in the suicide note. He is the first politician to become the Administrator. In the last five months, he has demonstrated a unique disregard for the people’s concerns and priorities. In the absence of any administrative rationale or public good in these blatantly arbitrary measures, there are fears of other motivations. Commercial interests could be at play, and the land that inhabitants are forced to part with could be transferred to buyers from outside. There could also be ill-advised political plans to change the demography of the islands. People have risen in protest, but far from listening to them, the Administrator seems insistent on his plans. Rajya Sabha Members from Kerala, K.C. Venugopal of the Congress and Elamaram Kareem of the CPI(M) have in separate letters urged the President to recall the Administrator. The rationale for carving out Union Territories as an administrative unit is to protect the unique cultural and historical situations of their inhabitants. The Centre is inverting its responsibility to protect into a licence to interfere. It must recall the Administrator and reassure the islanders.
📰 Losing the way with a map
A cultural mapping project proposed in 2015 is now all but dead
•The official boasting about India being a cultural powerhouse rapidly disintegrates when you examine facts. An online resource for arts and culture, Sahapedia, recently ran the budget numbers for the Ministry of Culture (MoC) and the figures are appalling. While allocations for culture have been marginal at best over the last decade, they have declined in the last five years, now standing at a mere 0.07% of the Budget. For 2021-22, the budget for the MoC is just ₹2,688 crore, with another ₹4 crore accruing from indirect allocations to other ministries. If one were to make a vulgar comparison, one Rafale jet costs ₹1,670 crore. So, the annual budget of the MoC — which runs three Akademis, 70-odd museums, three national galleries, several national libraries and archives, cultural institutions of the size of the National School of Drama and Kalakshetra, zonal cultural centres, and more — equals 1.5 Rafales.
•When the pandemic struck last year, instead of helping beleaguered artists and artisans, the government slashed culture funding by a further 21%. Contrast this to countries like China, Singapore, Australia and the U.K., which increased allocations, besides announcing billion-dollar relief packages. Additionally, the government’s cultural institutions are plagued by vacancies (ranging from 30% to 70%) and lack of trained manpower. This means fund usage has invariably been random and ill-planned.
What mapping can do
•This chaos was attributed, correctly, to the absence of a comprehensive cultural map that would chart geographies, artists, resources and institutions, find the gaps, and ensure optimal fund utilisation. Thus was born, in 2015, the National Mission on Cultural Mapping. But the Mission, created with an outlay of ₹3,000 crore, was not officially approved until 2017. In 2018-19 and 2019-20, only ₹42.78 crore was allocated, of which ₹1.17 crore has been utilised. The exercise was supposed to begin by identifying artists at the block level, but this was abandoned as there was no IT infrastructure, ironic when the government has an app for everything.
•What can mapping do? At the least, it can create a database that anybody can plug into, thus becoming a resource for the media, researchers and funders. At its best, it can do so much more. It can, for instance, locate a derelict cinema and renovate it as an auditorium in a town where there are none, or create transport and tourism infrastructure around a declining crafts village. When the European Capitals of Culture programme picked Glasgow, the city was rife with crime and poverty. The programme built and renovated its cultural facilities, created a garden festival, and constructed a museum. Today, Glasgow has among the highest per capita culture budgets in Britain.
The mission document
•The possibilities are endless. But what do we find when we study this project’s mission document? After a lot of platitudinous rambling, it finally states that it will identify, collect and record cultural assets and resources. It correlates this to planning and strategising. It mentions a portal and a database listing organisations, spaces, facilities, festivals and events. It also states that this database can be used to preserve culture and provide or ameliorate livelihoods.
•But beyond this, it descends into la-la land. From a childish SWOT analysis to expecting arts to curb anti-social elements to roping artists into the Swachh Bharat and Namami Gange schemes, the plan loses its way inside a jungle of homilies and acronyms. There’s a Hamari Sanskriti Hamari Pahchan Abhiyan for “cultural awareness”, which suggests an ideological slant. There is a project with an indecipherable title — ‘Design for Desire and Dream’. There is hollow jargon such as “Create holistic thinking in artists to make them job creators rather than job seekers”. From pontification, it hops on to talent hunts, to digital literacy, to training online teachers. Why should a mapping exercise organise competitions or train teachers? Its job is merely to record and collate.
•This might still be meaningless twaddle, but it becomes harmful when it proceeds to talk of using art to “preserve family values”; of quizzes and contests to “revive tribal traditions”; of a “grading process” for artists in which apparatchiks decide which artist is “good” or “not so good”. And, as always, this government displays its obsession with surveillance and control, proposing yet another Unique Identification Code for every artist/ institution, ostensibly to facilitate schemes.
•Where does hand-holding stop and meddling begin? That’s the question the MoC must answer. A cultural map could be a vital tool in the bedlam that reigns the space, and the idea cannot be abandoned because many bureaucrats and ministers don’t understand its meaning or scope. Even this blueprint can help unravel the MoC’s budgetary challenges, provided its irrelevancies, absurdities and overreach are removed, and the focus kept on a deeper survey and understanding of the diversity of the cultural base, without caste, communal and regional hierarchies. To be a cultural leader, official India must look at its own face in a clearer mirror.
📰 The long shadow of political turmoil in Nepal
With uncertainty set to continue, India needs to remain actively engaged with all the political actors
•Politics in Nepal entered another phase of uncertainty last week. The country’s President, Bidya Devi Bhandari, dissolved the House of Representatives (lower house) late night on Friday, at the suggestion of Prime Minister K.P. Sharma Oli (picture), in a partisan move that disregarded the Constitution. Fresh elections were announced for between November 12 and 18. Announcing elections was just to ensure that Mr. Oli continues in office and controlling the state machinery, even as Nepal battles a second and deadlier COVID-19 wave.
Oli’s opportunistic politics
•Mr. Oli came to power after the 2017 elections, the first undertaken in the federal republic of Nepal, established under the 2015 Constitution. He led his party, the CPN(UML), to an impressive tally of 121 seats and together with the Maoist Centre’s 53 seats, enjoyed a near absolute majority in the 275-strong House. In May 2018, the two allies merged to cement their alliance and created the Nepal Communist Party (NCP).
•Relations with India saw positive movement. New Delhi was willing to overcome its reservations about Mr. Oli’s anti-Indian nationalist tirades. Prime Minister Narendra Modi visited Nepal in May 2018, shortly after Mr. Oli’s visit.
•However, Mr. Oli’s autocratic tendencies soon began to surface. The power sharing arrangement worked out with former Maoist leader Pushpa Kamal Dahal ‘Prachanda’ started fraying. The original idea that both would take turns at being Prime Minister and run the NCP as co-chairs became irksome for Mr. Oli. While he weaned away the Maoist cabinet members, senior disgruntled UML leaders led by former Prime Ministers, Madhav Kumar Nepal and Jhala Nath Khanal, gravitated towards Prachanda. Differences emerged in the open and a growing demand surfaced for honouring the ‘one person one post’ policy. Prachanda was willing to let Mr. Oli continue the full term as Prime Minister, provided he gave up his role as co-chair of the party. Mr. Oli decided otherwise.
•Mr. Oli needed a distraction and by end 2019, found one in the Kalapani boundary issue. India issued new maps following the division of the State of Jammu and Kashmir into Union Territories, Jammu and Kashmir and Ladakh. While 98% of the India-Nepal boundary was demarcated, two areas, Susta and Kalapani, had remained pending.
•Though the new Indian map did not affect the India-Nepal boundary in any material way, it was an opportunity for Mr. Oli to don his nationalist mantle. He expanded the Kalapani area dispute from one covering approximately 60 square kilometres on Nepal’s northwest tip with Uttarakhand and China by raising the demand for restoring an additional 335 sq. km. The boundaries were fixed in 1816 by the British, and India inherited the areas over which the British had exercised territorial control in 1947.
Domestic politics takes over
•Caught up in the first COVID-19 wave, India kept deferring bilateral talks, perhaps not realising the domestic political pressures on Mr. Oli. In May 2020 when Defence Minister Rajnath Singh inaugurated the 75 km road through Kalapani that linked to the Kailash-Mansarovar pilgrimage route, Mr. Oli upped the ante by whipping up nationalist sentiment, getting a new map of Nepal endorsed by the House and adopting a constitutional amendment to sanctify Nepal’s new territory. While this did not alter the situation on the ground, it cramped the prospects of any dialogue with India. It was a short reprieve and Mr. Oli’s political troubles soon returned to haunt him.
•President Bhandari has been Mr. Oli’s close comrade since she entered active politics after the untimely demise of her husband Madan Bhandari, a charismatic UML leader, in a car accident in 1993. Mr. Oli was her political mentor and backed her elevation as President. She reciprocated by ignoring constitutional propriety and approving dubious ordinances including amending the Constitutional Council Act that enabled Mr. Oli to pack constitutional positions with his loyalists.
•Amid rumours that Prachanda and Mr. Nepal were planning to move a no-confidence-motion against him after he had studiously ignored the meetings and decisions of party’s Secretariat and the Standing Committee, Mr. Oli got President Bhandari to approve dissolution of the House on December 20, paving the way for elections in April-May. The President’s decision was uniformly criticised as unconstitutional as the NCP enjoyed a near-absolute majority.
•India decided to steer clear of the mess, calling it an ‘internal matter’ while the Chinese Ambassador continued to actively push for a rapprochement between the NCP factions. A five-judge constitutional Bench of the Supreme Court unanimously called for a restoration of the House on February 23 strengthening the Prachanda-Nepal faction but on March 7, delivered a bombshell by overturning the UML-Maoist merger of May 2018, against which an appeal had been pending for two years.
•Mr. Oli took over the reins of the old CPN(UML), reviving prior structures but now excluding Mr. Nepal and his supporters. Some were served suspension notices. The Nepal faction was reduced to a minority; under the law, a split in the party requires a 40% of both the parliamentary party and the central committee. Prachanda, heading the Maoist Centre with 49 members since four had joined hands with Mr. Oli, needed new allies to wage his battles.
•Though Mr. Oli had lost majority in the House as Maoist Centre was no longer supporting him, he challenged the Opposition to file a no-confidence-motion, certain that the Maoists, Nepali Congress (NC) and the Janata Samajbadi Party (JSP) would fail to reach an agreement on a new Prime Minister. He was proven right but overtaken by hubris, he took another gamble. He called for a trust vote on May 10 that he lost as 28 UML dissident members were absent and half the JSP voted against him while the other half abstained.
Presidential improprieties
•The Opposition again failed to present an alternative. In a questionable decision, Mr. Oli was sworn in by President Bhandari on May 14 as Prime Minister under Article 76(3) that permits the leader of the largest party to be sworn in and given 30 days to demonstrate majority. Within a week, Mr. Oli announced that he would not seek another vote of confidence. Without resigning, however, he advised the President to explore other options. Within a day, as rumours gained ground that NC leader Sher Bahadur Deuba had managed to gather support from 149 members, including 49 Maoists, 26 UML dissidents and 12 from the JSP, Mr. Oli rushed to the President and gave her a list of 153 supporters that included all 121 UML and 32 JSP members, including UML dissidents and JSP members who voted against him on May 10. Without bothering to verify, President Bhandari dissolved the House and announced fresh elections, justifying that the rival claims exceeded the strength of the House.
•Since 2008 when a new Constituent Assembly was elected to prepare a constitution for a federal republic, Nepal has seen three NC Prime Ministers (G.P. Koirala, Sushil Koirala and Deuba), two Maoist Prime Ministers (Prachanda twice and Baburam Bhattarai), three UML Prime Ministers (Nepal, Khanal and Oli sworn in thrice) and a Chief Justice as caretaker Prime Minister in 2013. None has damaged the Constitution and the political fabric of Nepal as much as Mr. Oli, together with an obliging Ms. Bhandari. Opposition leaders have challenged the House dissolution in the Supreme Court but its outcome is uncertain. Meanwhile a raging COVID-19 puts a question mark on the election. In case an election is held, Mr. Oli will campaign on a nationalist anti-Indian platform.
•It is clear that political uncertainty will continue. India has traditionally supported constitutionalism and multi-party democracy in Nepal. At this juncture, it needs to remain actively engaged with all the political actors, and equally importantly, avoid being perceived as partisan.
📰 The end of the road for India’s GST?
The fundamental problem is the erosion of ‘trust’ and ‘trustworthiness’ between the States and the Centre
•The 43rd meeting of the Goods and Services Tax (GST) Council is to be held on May 28. Representatives of 31 States and Union Territories are expected to attend. They belong to 16 different political parties. Of the 31 representatives, 17 members are from the ruling BJP or its alliance partners. Ideally, this nugget about political affiliations should not matter in a Council set up to decide indirect taxes. But in today’s India, ‘the economic is political’, to paraphrase the American saying.
•States are dependent on GST collections for nearly half of their tax revenues. The GST Council was mandated to meet at least once every quarter, but it had not met for two quarters, ostensibly due to the pandemic. Several of the 14 members of the non-BJP group implored the Finance Minister to convene the GST meeting to help them manage their finances but none of the 17 members of the ruling group deemed it necessary. Even the need for a meeting to determine tax revenues for States is evidently a political decision.
Spirit of cooperative federalism
•The representative from West Bengal will attend the meeting against the backdrop of the Centre using investigative agencies to selectively target and incarcerate some of the State’s ministers, soon after their election victory. The Kerala representative will attend the meeting in the knowledge that his predecessor complained bitterly about the Centre reneging on its promise to pay guaranteed GST compensation to the States. The Chhattisgarh representative will attend this meeting aware of how the Centre imposed sudden and stringent policy conditions to grant approval to States for extra borrowing in the middle of the pandemic last year. The Maharashtra minister will attend the meeting with a feeling of betrayal over how the States have been forced to pay a much higher price for COVID-19 vaccines than the Centre. The Punjab Finance Minister will be cognisant of how the Centre legislated new farm laws unilaterally that affected Punjab’s farmers deeply. The Rajasthan representative will be aware of how a sudden
lockdown imposed by the Centre with no consultations with the States threw millions of Rajasthani migrant workers in disarray. The Tamil Nadu representative will be wary of the Centre’s duplicity in levying cesses that garner significant revenues for the Centre without sharing them with the States. The Delhi representative will be suspicious of the Centre’s motives after it stealthily passed legislation to strip the elected Delhi government of its governance powers. The list is endless. These are not acts in the spirit of ‘cooperative federalism’.
•The catchy phrase ‘cooperative federalism’ was introduced into India’s political lexicon to justify the transition to GST in 2017. Sadly, like other catchy phrases such as ‘Minimum government, maximum governance’ and ‘Make in India’, this too has turned out to be hollow. Cooperative federalism has a larger meaning beyond just fiscal federalism. It also entails cooperative political, administrative and governance federalism between the States and the Centre.
The Trust Game
•The GST Council is not an inanimate economic body. It is a compact of trust between the States and the Centre, set in the larger context of India’s polity. Behavioural economists, such as the Nobel Laureate, Daniel Kahneman, have articulated the critical role of the twin attributes of ‘trust’ and ‘trustworthiness’ among heterogeneous participants in an economy. Using a tool called ‘The Trust Game’, they have demonstrated that the motive of ‘altruism’ leads to the most optimal economic outcome for everyone in the group while a motive of ‘spite’ leads to the worst outcome for all. The tragedy of the GST Council is that it is afflicted with spite and forced to function under the prevailing cloud of vendetta politics.
•The 17 members of the ruling dispensation and the 14 members of the non-BJP dispensation in the GST Council represent exactly one half of India’s population each. However, the non-BJP group contributes a higher share of 60% of overall GST revenues and accounts for 63% of the country’s GDP. With elections to another seven States due next year, these numbers could change dramatically again. If the functioning of the GST Council is subject to the vagaries of elections and consequent vendetta politics, GST will continue to be just a caricature of its initial promise.
•The 15th Finance Commission report formally acknowledges that GST has been an economic failure that did not deliver on its early promises. GST, as postulated by technocrats, was supposed to be the panacea for India’s throttled economy to deliver enormous economic efficiency gains, improve tax buoyancy and collections, boost GDP growth and usher in greater formalisation of the economy. Three years after its launch and even before COVID-19, GST had failed on all those promises.
Problems underpinning GST
•Economists and commentators point to the multiple rates structure, high tax slabs and the complexity of tax filings as the problems underpinning India’s GST. These were indeed the initial problems in the way GST was implemented, leading to some of its current woes. But now, GST has a more fundamental problem — the erosion of ‘trust’ and ‘trustworthiness’ between the States and the Centre. Technical fixes such as simplification of GST rates and tax filing systems to restore GST to its initial promise is akin to applying a pain balm to an injury that needs surgery.
•The States paid a huge price for GST in terms of loss of fiscal autonomy. The promised economic gains are invisible, and India’s federalism has been ruptured. GST in today’s politically acerbic, hate-ridden and divided India is an unviable and unworkable proposition.
•GST has endured so far primarily because the States were guaranteed a 14% growth in their tax revenues every year, which minimised their risks of this new experiment and compensated for their loss of fiscal sovereignty. This revenue guarantee ends in July 2022. This can lead to a crumbling of the precarious edifice on which GST stands today.
•In a situation where the States have no taxation powers, their GST revenues are uncertain, the supposed economic benefits seem phantom, and the hypocrisy of ‘cooperative federalism’ looms large, what is the incentive for States to continue in a GST regime? When the Prime Minister can impose a draconian lockdown in a ham-fisted manner without consultation or play favourites with critical oxygen supplies during an emergency, there seems very little motivation for the States to cooperate in a chase for an elusive economic goal by sacrificing their significant economic powers of taxation.
•Technocratic cheerleaders of GST failed to factor in India’s unique political economy and its ramifications. Striking a balance among diverse interests of India’s numerous parties in a larger political climate of spite and suspicion to arrive at a uniform tax policy for the nation is a near impossibility. Tamil Nadu’s new Finance Minister P.T.R. Thiagarajan and I had warned of these exact issues in an article in 2017 in this newspaper.
•The tapestry of India’s GST was stitched on a fabric of implicit trust and painted with vibrant economic colours. The fabric is now torn and the colours have faded. The loose thread of guaranteed revenues that holds this together is about to snap. The end of India’s grand GST experiment seems inevitable unless there is a radical shift in the tone and tenor of India’s federal politics, backed by an extension of revenue guarantee for the States for another five years.
📰 Tackling rural economic distress
There is an urgent need to strengthen the public distribution system and the MGNREGS
•Several States are under lockdown again. This will have severe implications for the livelihoods of those in the informal sector. There is adequate evidence that migrant workers and the rural poor have been facing great distress over the past one year and the crisis for food and work is only going to intensify further.
Hunger and distress
•A few months ago, the Right to Food campaign and the Centre for Equity Studies published a ‘Hunger Watch’ report which compared the pre-lockdown situation last year to the situation in October 2020 to assess the impact of the nationwide lockdown. The survey involving 4,000 respondents across 11 States exposed the life and livelihood uncertainties of people belonging to low-income categories in the informal sector. In October 2020, 27% of the respondents said that they had no income; 40% respondents said that the nutritional quality of food had become “much worse”; and 46% of the respondents said they had to skip one meal at least once in the day in October 2020.
•The migrants have again become vulnerable due to the lockdown in different cities. While many have once again headed to their villages, a large population has got stranded in different parts of the country without work. The Stranded Workers Action Network, a group of individuals helping distressed migrant workers since last year, has been reaching out to workers for providing essential help. According to them, 81% of the people whom they reached out to said that work had mostly stopped since April 15, 2021 and 76% of the workers said they are short of food and cash and require immediate support.
•In this context, there is an urgent need to strengthen the public distribution system (PDS) and the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). The government announced 5 kg free foodgrains for individuals enlisted under the National Food Security Act (NFSA), for May and June 2021. The government should expand PDS coverage immediately and include all eligible households under the schemes. According to an independent study, about 100 million people are excluded from the ration distribution system owing to a dated database based on the 2011 Census.
•The Centre should also extend the free foodgrains programme to a year instead of limiting it to two months. The economic crisis is likely to last for a long time. It is being reported that India procured record amounts of rice and wheat last year through mandis. The total procurement is way more than the current requirement for PDS. It is thus quite possible to expand the safety net of the NFSA.
Inadequate provisions
•The Centre had allocated ₹73,000 crore for 2021-22 for MGNREGS and notified an annual increment of about 4% in wages. Both these provisions are inadequate to match the requirements on the ground. The central allocation for MGNREGS is about ₹38,500 crore less than last year’s revised estimate. Of the 7.56 crore households which worked in MGNREGS in 2020-21, even if 1 crore households opt out of the scheme this year, the Centre should still budget for 75-80 days of employment in the year for 6.5 crore families given the current scale of economic distress. By this rationale, at the current rate of ₹268/day/person, at least ₹1.3 lakh crore will have to be budgeted. The government should also re-consider its decision of a mere 4% increase in MGNREGS wages and hike it by at least 10%. This will mean another ₹10,000 crore. Therefore, at least ₹1.4 lakh crore will be required to ensure uninterrupted implementation during the year.
•A large population is facing hunger and a cash crunch. The situation is only becoming more dire as the pandemic continues to rage on. Therefore, the Union government should prioritise food and work for all and start making policy reforms right away.
