📰 ‘Right to sit’: TN tables Bill mandating establishments to provide seating for employees
•In a move that would benefit thousands of employees of large and small establishments, particularly those working in textile and jewellery showrooms, the Tamil Nadu government on Monday tabled a Bill in the Legislative Assembly making it mandatory for establishments to provide seating facilities for employees.
•The Bill introduced by Labour Welfare Minister and Skill Development C.V. Ganesan sought to amend the Tamil Nadu Shops and Establishments Act, 1947 by adding a sub section to mandatorily provide seating facilities for the staff.
•The proposed Section 22-A to the Act reads: “The premises of every establishment shall have suitable seating arrangements for all employees so that they may take advantage of any opportunity to sit which may occur in the course of their work and thereby avoid ‘on their toes’ situation throughout the working hours.”
•The Bill said that persons employed in shops and establishments in the State “are made to stand throughout their duty time” resulting in varied health issues.
•“Considering the plight of the employees who are on their toes throughout their duty time, it is felt necessary to provide seating facility to all the employees of the shops and establishments,” it said.
•The subject of providing seating facility to the employees was placed in the State Labour Advisory Board Meeting held on September 4, 2019 and was unanimously approved by the members of the Board.
•A few years ago, workers of textile showrooms in Kerala had gone on a protest demanding the ‘Right to Sit’, prompting the government there to amend the Kerala Shops and Establishments Act in 2018 to provide seating arrangements for them.
Villagers who provide 20 kg of cow dung and farmyard waste as day for vermicomposting, get free LPG refills in a novel project in Bihar’s Madhubani district
•While the rising prices of LPG cylinders are pushing refills out of reach for most people, especially in rural areas, bucking the trend is Munni Devi, a mother of three sons and owner of three cows in Sukhet village in Jhanjharpur block of Bihar’s Madhubani district.
•Earlier, most of Munni Devi’s time was spent over an earthen stove in a corner of her house. Fired with wood, crop waste and cow dung, the stove billowed noxious smoke into the house, leaving her ill and breathless. Every month she had to consult a local doctor for huffani (breathing) problem.
•Sixty-something Rampari Devi and her daughter-in-law Lalo Devi too had similar stories of ill-health and visits to doctors.
•Though they had LPG connections, the rising cost of refills put the cleaner cooking fuel out of reach.
•But not any more.
•In the last six months, the lives of these rural women has changed dramatically with the Sukhet model which allows them to get their LPG cylinders refilled every two months in exchange for cow dung and the farmyard waste. The unique programme, which was lauded by Prime Minister Narendra Modi in his latest episode of Mann ki Baat on August 29, offers four-fold benefit to the villagers: it ensures a pollution free environment at home, waste disposal, monetary assistance for LPG cylinders and availability of organic fertiliser to the local farmers.
•Today the mud stoves of Sukhet lie abandoned.
Man on a mission
•The Sukhet model is an initiative by the Dr Rajendra Prasad Agriculture University (RPAU) at Pusa in Samastipur district and the brainchild of Vice-Chancellor Dr. Ramesh Chandra Srivastava, a vermicompost enthusiast on a mission to popularize the organic manure for the farming community and institutions.
•“I was quite impressed with the government’s Ujjawala Yojna to provide free LPG connections to people but I found out that in rural areas people are not being able to refill LPG cylinders for two reasons: their economic condition and the patriarchal nature of society. I mulled over the problem and later introduced this model, popularly known today as the Sukhet model for refilling their cylinders in exchange for farmyard waste and cow dung,” Dr. Srivastava told The Hindu.
•The agri scientist had earlier launched vermicomposting to produce organic manure in two unlikely settings — the famous temples of Baba Baidyanath Dham in Deoghar of Jharkhand and Garib Nath Temple of Muzaffarapur in Bihar — where flowers and leaves offered to the deities are collected and composted.
•Under the Sukhet model, two local workers visit households which have cattle to collect cow dung and farmyard waste and bring it to a vermicomposting yard.
•“Any family which gives us 1,200 kgs of cow dung and wet garbage waste every two months gets their LPG gas cylinders refilled for free. Everyday, they have to meet the target of 20 kg of cow dung and garbage waste to avail the refill. Since February 4, 2021, as many as 44 households of this village are getting this facility while many more have evinced keen interest,” said Sudhir Das, in-charge of the Sukhet model and the Jhanjharpur Krishi Vigyan Kendra (KVK) . “The target is to take this model to 100 households of the village in first phase,” he added.
•Sukhet panchayat consists of five villages — Sukhet, Godhanpur, Mazidi, Bisoul and Balliyari. The panchayat has 2,500 households and 7,000 voters and has mixed population of all castes and communities.
•“However, out of total 44 households availing the Sukhet model facility, more than half are from Yadav caste,” said Ashutosh Yadav, a research fellow of RPAU, Pusa.
•A resident of Ayodhya in Uttar Pradesh, Mr. Yadav has been camping in Sukhet village since December 2019 to take this model to each and every household there.
•“The only problem is that only those household who have cattle to give us cow dung are able to benefit from the Sukhet model,” he pointed out.
•Along with Mr Das and Mr. Yadav, two supporting staff, two drivers and a scientist from Pusa are engaged to make this model a “role model for other villages and panchayats in the State”.
Scaling-up
•“RPAU, Pusa is going to emulate Sukhet model in seven more places in Bihar — East Champaran, West Champaran, Siwan, Saran, Gopalganj, Vaishali and Samastipur,” said Dr. Srivastva.
•The model is going to be implemented at Supaul and Mokama too, added Mr Das.
•“Our plan is to implement this Sukhet model in 16 districts of Bihar where KVK units are located under RPAU, Pusa. It will also generate employment for local youth and to make village soil nutrient self-sufficient,” said Dr Shankar Jha, assistant professor, soil sciences, at RPAU.
•On why Sukhet was chosen to pilot the model, he said: “We undertook a survey in the village and found that most of the villagers have LPG connections but they were unable to afford refills.”
•On the sustainability of the model, Dr. Srivastava said: “Primarily I would suggest three points to be taken care of — treat it as micro industry, consider the contract work under MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) scheme and through CSR funds by industries.”
•Sunil Yadav, a villager, has donated 3.5 kattha of his land to set up a bamboo-roofed vermicompost unit at the entrance of the village, just one kilometre off the National Highway 57. He also has been appointed as supervisor of the Sukhet model and gets a monthly salary of ₹10,608. Two other workers, who collect dung and farmyard waste from the households, are paid ₹9,600 each.
•“The villagers also purchase the good organic manure produced here at the unit at ₹600 per quintal,” said Mr Das.
•Ramesh Yadav, a farmer who had just bought a 50 kg sack of vermicompost for ₹300, said: “We get good quality of vermicompost cheaper than the market price here at our village. What could be better than this?”
•“After five years we’ll hand over the whole structure with all facilities to Sunil Yadav to sustain the model in the village,” said Mr Das.
📰 11 persons show Nipah symptoms; 30 healthcare workers isolated
A special laboratory under the aegis of the National Institute of Virology lab, Pune, had been set up at the MCH, Kozhikode
•The number of people symptomatic for Nipah infection rose to 11 on Monday, a day after Mohammed Hashim, 12, of Pazhoor near Chathamangalam in Kozhikode district of Kerala succumbed to the virus at a private hospital here.
•Health Minister Veena George told the media late in the evening that among those symptomatic are Hashim’s parents, Vayoli Aboobacker and Wahida, their close relatives and healthcare workers.
•“Their condition is stable. The boy’s mother had fever on Sunday night, but it has subsided now,” Ms. George said. Persons on the contact list of the deceased has gone up to 251, which, Ms. George said, could increase further . Of the total contacts, 129 are healthcare workers. Of the 54 high-risk contacts, 30 are healthcare workers and have all been quarantined at the Government Medical College Hospital (MCH), Kozhikode.
•“The boy was taken to at least four healthcare institutions, including the MCH, Kozhikode, before being admitted to the private hospital where he died. That is why a majority of the contacts are healthcare workers,” the Minister said. Two of them are from Malappuram and Kannur districts, because of which an alert was sounded in those places on Sunday.
Special lab ready
•The Minister said a special laboratory under the aegis of the National Institute of Virology lab, Pune, had been set up at the MCH, Kozhikode. It would have facilities to conduct both point-of-care and RT-PCR tests. The samples of three symptomatic persons would be tested here and those from eight others were being sent to Pune. The results from Pune are expected late on Monday.
•Meanwhile, officials from the Department of Animal Husbandry collected the blood and oral swab samples of two goats from the premises of the deceased.
•The goats were reportedly unwell recently. The samples will be examined at the National Institute of High Security Animal Diseases at Bhopal in Madhya Pradesh to find out if the animals had been infected.
•Some half-eaten rambutan fruits too were collected from the neighbourhood of the boy’s house in Pulparamb near Koolimad after it was revealed that he had eaten them. The boy’s parents had informed the special team of the National Centre for Disease Control that the area had the presence of fruit bats, considered to be the natural carriers of the virus.
•Another habitat of bats had been identified across the river which flows near the area. A special team from the NIV would reach Chathamangalam on Wednesday to collect the body fluid samples of fruit bats from the area, Ms. George said.
📰 From fighters to rulers: on Taliban
India must use its voice on the international stage to make Taliban respect freedoms, rights
•After postponing the announcement twice, Taliban spokesmen have said that they expect to have a new government in Afghanistan this week. There has been some speculation over the delay, more than three weeks after Taliban gunmen walked into Kabul and President Ashraf Ghani fled. While some have said the Taliban were waiting to take control of the last hold-out province of Panjshir, and others even suggested there was some symbolism attached to timing it with the 20th anniversary of 9/11, the real reason appears to be differences within various Taliban factions over the government’s structure and composition. In particular, the differences between the Taliban leadership in Helmand, Kandahar, and the political office in Doha, seen as the more “moderate” face, as well as between the “original” Afghan Taliban leadership and the Pakistan-based Haqqani network, a designated terror entity. The jockeying is reportedly over cabinet portfolios, the appointment of governors in the 34 provinces, control of the cities and the possibility of including non-Taliban Afghan leaders. Reports of the differences have escalated and the appearance in Kabul of the Pakistan ISI chief, Lt. Gen. Faiz Hameed, is believed to have been an attempt to smooth over the cracks in government formation. At the base of the differences is the tussle between the Taliban’s push to consolidate their takeover of Afghanistan and implement an Islamist agenda, and the desire to receive recognition from the international community and its continued financial support.
•The outcome holds the key not only to the future of Afghanistan but also to New Delhi’s engagement with the new regime. Any government that gives the Haqqani group key positions will make it difficult for India to have a role in either diplomacy or development projects in Afghanistan, given previous terror attacks. Any overt role for Pakistan, as well as China, will also raise red flags for New Delhi. The Modi government has announced that it is now engaging the Taliban, with the first publicly acknowledged meeting in Doha last week; the MEA says it conveyed concerns on the safety of Indians in Afghanistan and ensuring Afghan soil is not used for attacks in India. Any engagement with the Taliban beyond this is contingent on the composition of the new power structure and how much the new government in Afghanistan is amenable to international expectations of it, in terms of representation, rights, and in allowing UN agencies to monitor development. To this end, India must use its voice on the international stage forcefully. This includes blocking any move at the UNGA and UNSC to recognise the new regime, and stopping the delisting or exemptions to Taliban leaders at the 1988 sanctions committee, which India chairs, until the Taliban regime shows a willingness to comply.
📰 A Taliban-led Afghanistan and the Chinese conundrum
The U.S. move of vacating Afghanistan — a nation vital for the Belt and Road Initiative — may prove costly for Beijing
•Recent weeks have been unsettling for the people in Afghanistan. A devastating bomb blast, on August 26, outside Kabul airport, killed many people, soldiers and civilians. Not the first of its kind, the region has seen umpteen number of bomb blasts, including the one at the Gwadar, just a few days earlier, targeting Chinese nationals. For an economy driven by the opium trade and ruled by tribal leaders, the new normal is bound to be governed by instability, fighting groups, and thereafter, boom, gloom, and doom.
After the long war, the spoils
•In fact, the United States did the smart thing by leaving Afghanistan. The Afghan occupation was costing it more than what it was getting in return. An estimate by Brown University, U.S. (https://bit.ly/3n5cPLJ), suggests that since 2001, the U.S. has spent $2.26 trillion, out of which $1.53 trillionwas spent on defence. The Afghan economy did not flourish, with 90% of its population still living below poverty line, with less than $2 a day. The only thing that the economy can still brag about is its ability to produce opium and mercenaries.
•But then Afghanistan has a few other things that are valuable — rare-earth metals and huge deposits of copper. The Chinese in particular will be happy about it as they have the technology to excavate them. In fact, the return of the Taliban is seen as a victory of Chinese diplomacy and a debacle for the United States; comparable to the U.S.’s symbolic evacuation of Saigon, in 1975, at the end of the Vietnam war. Indeed, China (also, Russia) have kept their embassies running in Kabul while the western embassies have disappeared. Moreover, China is engaging with the Taliban, with an eye to complete the new Belt and Road Initiative (BRI) investment. And a Chinese presence in Afghanistan with an all-weather ally Pakistan may sound ominous for India.
Crucial link in the BRI
•Afghanistan is indeed vital for the BRI. Without counting on Afghanistan, the bulk of Chinese investment in the China-Pakistan corridor will be at risk. Considering the heavy infrastructure investment sunk in the BRI, only many years of successful operation could repay it. In such a project, spending is easy, but getting back the money is extremely hard. The amount of trade that should flow through the new Silk Road should be massive and long term. Otherwise, it will cost money and effort.
•In fact, the Chinese successfully implemented this investment strategy, and it worked well in the context of Southeast Asia and Africa. First, the cost of production being lower in Southeast Asia meant Chinese firms could gain by shifting their production bases outside China. Second, investing in these regions meant access to bigger markets for Chinese firms and more uniform regional development. For instance, the relatively underdeveloped Kunming region in Yunnan province became a commercial hub. Third, Chinese firms could evade protectionist measures targeted at their exports when they began exporting from Southeast Asian countries instead. Fourth, investing in Africa and Asia has also reduced some of China’s energy requirements, enabling Beijing to access cheaper foreign energy (oil and power) and minerals. Chinese firms have also constructed hydropower plants and a thermal power station in Myanmar. China has also invested in power transmission and copper processing activities in Vietnam. The Chinese want to mimic the same strategies in the case of Afghanistan and Pakistan.
•Success in these two countries would imply that China will be able to bring together a large part of the Indian Ocean littoral and Eurasia through high speed rail lines, pipelines, and maritime linkages. The idea of connecting to the rest of the world stems from China’s aspiration to get out of manufacturing, go up the global value chains, and start focusing on product designing and innovation. According to the government of China, the development of the BRI would impact 4.4 billion people and generate trade worth $2.5 trillion within a decade.
The shadow of terror
•But here is the flip side. Afghanistan and Pakistan are not comparable to the Association of Southeast Asian Nations (ASEAN). The recent suicide attacks in Kabul and Gwadar are a pointer and may even indicate the resurgence of terrorist groups such as al Qaeda, Daesh, and the Islamic State. No businesses can flourish in the presence of terrorism, especially when the Taliban are known to have a soft corner for the East Turkestan Islamic Movement — a militant group active in the Uighur province of China. No matter how much the Chinese leadership has a desire for inclusive and peaceful development in Afghanistan, in reality, things stand out in stark contrast.
•Even considering Pakistan, a country relatively better off than Afghanistan, the Chinese are facing problems. Pakistan is unable to repay a China-funded energy project, built under the BRI. The economy of Pakistan faltered because of dynastic politics and corruption. To top it off, there is an excessive dependence of the political class on the military. Business decisions are not economically driven but are motivated by vested interests with the army calling the shots.
•There are good reasons to believe that the return of the Taliban in Kabul will spell gloom and doom for the Chinese. The Taliban ruling groups are far from united, making it impossible to make any reliable domestic and international policy predictions. The dependence on opium export makes Afghanistan vulnerable to world mafias and corruption. All this implies that its undemocratic rulers are not comparable to China-like autocracies, with an inherent stable character. Embargoes, rebellions, factional wars, will be the likely events in Taliban-controlled Afghanistan. These issues will spread to Kazakhstan, Turkmenistan, Turkey, and other essential rings in the BRI chain.
Sanctions as disruptor
•Additionally, the Taliban are among the world’s least acceptable ruling elite for the western countries. The enormous markets controlled by the western powers are the most lucrative for China. Hence, the next decade will likely show a sequence of BRI trade flow stop-and-go following likely European and American decisions to block or sanction trade from Afghanistan. Given the unfriendly relations between the U.S. and China, any excuse will basically be picked up and used by the White House to stop trade along the BRI. Hence, the cash flow into the BRI will constantly face a risk of interruption. The financial market will incorporate this expectation and make the funding of the remaining parts of the BRI more expensive and restricted. In a game of chess, the U.S. move of vacating Afghanistan may in fact prove costly for China.
📰 Spirit of federalism lies in consultation
Unilateral legislation without taking States into confidence will see more protests on the streets
•Recently, various State governments raised concerns about Central unilateralism in the enactment of critical laws on subjects in the Concurrent List of the Seventh Schedule of the Constitution. Kerala Chief Minister Pinarayi Vijayan stated that it is not in the essence of federalism for the Union government to legislate unilaterally, avoiding discussions with the States on the subjects in the Concurrent List. Tamil Nadu Chief Minister M.K. Stalin raised the issue by calling on other Chief Ministers against the Union government usurping powers under the State and Concurrent Lists. The Kerala Legislative Assembly unanimously passed a resolution against the Electricity (Amendment) Bill, 2020, while the Tamil Nadu Legislative Assembly passed a resolution against the controversial farm laws. The States and the Legislative Assemblies standing up for their rights assumes significance in the wake of the Union government introducing a number of laws without taking the States into confidence, thereby undermining the federal principles.
•Around a year back, Parliament passed the farm laws without consulting the States. The laws, essentially related to Entry 14 (agriculture clause) belonging to the State List, were purportedly passed by Parliament citing Entry 33 (trade and commerce clause) in the Concurrent List. According to various decisions of the Supreme Court, beginning from the State of Bombay vs F.N. Balsara case, if an enactment falls within one of the matters assigned to the State List and reconciliation is not possible with any entry in the Concurrent or Union List after employing the doctrine of “pith and substance”, the legislative domain of the State Legislature must prevail.
•The farm laws were passed by Parliament even as it does not have legislative competence to deal with agriculture. The lack of consultation in a matter that intrinsically deals with millions of farmers also led to massive protests that, incidentally, still continue in streets across India.
‘Redundancy of local laws’
•When the Major Ports Authorities Act, 2021, was passed by Parliament earlier this year, even the Bharatiya Janata Party (BJP)-ruled State government in Goa objected to the law, stating that it would lead to the redundancy of the local laws, including the Goa Town and Country Planning Act, the Goa Municipalities Act, the Goa Panchayat Raj Act, the Goa Land Development and Building Construction Regulations, 2010, and the Goa Land Revenue Code.
•When it comes to non-major ports, the field for legislation is located in Entry 31 of the Concurrent List. According to the Indian Ports Act, 1908, which presently governs the field related to non-major ports, the power to regulate and control the minor ports remained with the State governments. However, the new draft Indian Ports Bill, 2021, proposes to change the status quo by transferring the powers related to planning, developing and regulating the non-major ports to the Maritime State Development Council (MSDC), which is overwhelmingly controlled by the Union government. Coastal States like Odisha, Andhra Pradesh, Tamil Nadu and Kerala have objected to the Bill that proposes to seize the power of the State government with respect to non-major ports.
•Various States like West Bengal, Tamil Nadu and Kerala have also come forward against the Electricity (Amendment) Bill, 2020. The field related to electricity is traceable to Entry 38 of the Concurrent List. The power to regulate the sector was vested with the State Electricity Regulatory Commissions (SERCs), which were ostensibly manned by individuals appointed by the State government.
•However, the proposed amendment seeks to change the regulatory regime from head-to-toe with the establishment of a National Selection Committee, dominated by members nominated by the Union government that will make appointments to the SERCs. Further, the amendment proposes the establishment of a Centrally-appointed Electricity Contract Enforcement Authority (ECEA) as the sole authority having jurisdiction over matters regarding the performance of obligations under a contract related to the sale, purchase or transmission of electricity.
•In effect, the power to regulate the electricity sector would be taken away from the State government. This is apart from other proposed changes, including changing the licensing regime to facilitate private sector entry without State government approval.
Cause of concern
•The Union government increasingly extending its hands on subjects in the Concurrent List is a cause of grave concern as the balance of the Constitution is now turned on its head. The model envisioned in the Government of India Act, 1935, was adopted by the framers of the Constitution and certain subjects were put in the Concurrent List by giving the Union and the State Legislatures concurrent powers regarding them.
•The fields in the Concurrent List were to be of common interest to the Union and the States, and the power to legislate on these subjects to be shared with the Union so that there would be uniformity in law across the country. However, one of the worst fears of Constituent Assembly member K.T.M. Ahmad Ibrahim Sahib Bahadur has now come true, with subjects in the Concurrent List being transferred to the Union List over a period of time due to the Union government’s high-handedness.
•The Sarkaria Commission Report had specifically recommended that there should be a “coordination of policy and action in all areas of concurrent or overlapping jurisdiction through a process of mutual consultation and cooperation is, therefore, a prerequisite of smooth and harmonious working of the dual system”. It was further recommended that the Union government, while exercising powers under the Concurrent List, limit itself to the purpose of ensuring uniformity in basic issues of national policy and not more.
•The National Commission to Review the Working of the Constitution (NCRWC), or the Venkatachaliah Commission, had recommended that individual and collective consultation with the States should be undertaken through the Inter-State Council established under Article 263 of the Constitution.
•As the Supreme Court itself had held in the S.R. Bommai vs Union of India case, the States are not mere appendages of the Union. The Union government should ensure that the power of the States is not trampled with. The intention of the framers of the Constitution is to ensure that public welfare is subserved and the key to that lies in listening to stakeholders. The essence of cooperative federalism lies in consultation and dialogue, and unilateral legislation without taking the States into confidence will lead to more protests on the streets.
📰 The long and the short of the NMP
It is surprising the Government has avoided mentioning the consequences of asset monetisation on ordinary citizens
•In the Budget for 2021-22, the Finance Minister, Nirmala Sitharaman, had announced the Government’s decision to monetise operating public infrastructure assets, declaring this as an important financing option for constructing new infrastructure. She announced that a “National Monetization Pipeline” (NMP) would be launched to achieve this objective (https://bit.ly/38KdR7s). Just months later, the NMP was unveiled, which shows that the Government intends to raise ₹6-lakh crore over the next four years by monetising several “core assets”. The term asset monetisation is not new in this government’s lexicon. It has been used during the proposed disinvestment of Air India and other public sector enterprises. Thus, asset monetisation is de facto “privatisation” of government-owned assets by another name.
Trying to make a distinction
•One possible reason for the change in the terminology is the strong political undertones associated with the term “privatisation”. A two-volume NITI Aayog report (https://bit.ly/3h7gFQt), which serves as the “asset monetisation guidebook”, explains that the NMP will help in “evolving a common framework for monetisation of core assets” and this will help draw a distinction from privatisation. But is there a functional distinction between asset monetisation and privatisation?
•The NITI Aayog report describes asset monetisation as “transfer of performing assets … to unlock ‘idle’ capital and reinvesting it in other assets or projects that deliver improved or additional benefits”. In our view, asset monetisation raises three sets of questions. First, are the assets identified for monetisation “idle” or “performing”? Surely, they cannot be both. Second, can the country’s ordinary citizens expect to receive the purported “additional benefits”? And, finally, could the Government have looked for other avenues for mobilising resources, rather than selling tax-payers’ assets?
•The Government has identified “performing assets” to transfer to private entities and these are both strategic and significant. These include over 26,700 kilometres of highways, 400 railway stations, 90 passenger trains, 4 hill railways, including the Darjeeling Himalayan Railway. Moreover, existing public sector infrastructure in telecoms, power transmission and distribution and petroleum, petroleum products and natural gas pipelines are included in the NMP. If such assets were not offered, would the private sector be interested in acquiring rights over them?
Some data
•Under the NMP, the Government intends to lease or divest its rights over these assets via long-term leases against a consideration that can be upfront and/or periodic payments. Thus, expected financial flows from leasing or divesting the Government’s share in these entities would be a major benefit for the central government, which is in the throes of a fiscal crisis. At the end of 2020-21, the central government’s debt to GDP ratio had exceeded 60%, increasing from 48.6% a year before. Current expectations are that in 2021-22, this figure will be close to 62%. Given this situation, the NMP is being projected as the ability of the Government to raise resources and to work its way out of the fiscal logjam.
Significant impact
•The most surprising aspect of the Finance Minister’s announcement regarding the NMP is that the Government has avoided mentioning the consequences of asset monetisation on the ordinary citizens of the country. To understand this issue, two obvious dimensions need to be considered. First, the assets that are being offered for leasing or divestment have all been created through substantial contribution by the tax-paying public, who have stakes in their operation and management. Second, these assets have, until now, been managed by the Government and its agencies, which operate in public interest and are not driven by the profit-making considerations.
•Therefore, charges borne by the public for using these assets have remained reasonable. With private companies getting the sole responsibility of running all these assets, from highways and railways to all the major utilities such as power, telecom and gas, the citizens of this country would be double-taxed. First, they paid taxes to create the assets, and would now pay higher user charges.
•The reason for this is simple. Unlike the public sector entities, private companies are mandated, and quite justifiably so, to maximise their profits and to increase the returns enjoyed by the shareholders. In other words, it is not social benefit, but higher private returns that drives the corporates. Therefore, as the Government prepares to transfer “performing assets” to the private companies, it has the responsibility to ensure that user charges do not price the consumers out of the market. This critical dimension has not clearly been spelt out even in the NITI report. It is evident that consumers’ interest can be protected only if the Government can curb profit-maximising tendencies of the companies through regulators.
•In the past episodes of privatisation of utilities, instead of effective regulation, there have been instances of regulatory capture instead, resulting in the exploitation of consumers. Take for example the privatisation of the power distribution system in the country’s capital. The then Congress government privatised power distribution, and this resulted in a steep increase in power charges that not only threatened to price out the poorer sections but adversely affected the middle class as well. Providing cheaper power was one of the main election promises of the Aam Aadmi Party, which was fulfilled by providing subsidised power to the consumer. But little does the capital’s electorate realise that the Government is providing subsidies from the taxes it collects. This implies that the city’s taxpayers are either paying higher taxes and/or foregoing public services for “benefiting” from “cheaper” power charges, while the companies are continuing to earn their promised profits.
Tapping the tax route
•Finally, since the proposed asset monetisation has resulted from the resource crunch faced by the Government, a pertinent question is whether there were other avenues that it could have been tapped for plugging the resource gap. One possibility was to increase the tax revenue, for at 17.4% in 2019-20, India’s tax to GDP ratio was relatively low, as compared to most advanced nations. Improvements in tax compliance and plugging loopholes have long been emphasised as the surest way to improve tax revenue, but little has been done, as the following example shows. Since 2005-06, the Government has been providing data on the profits declared and taxes paid by companies that file their returns electronically. This data reveals that in 2005-06, 40% of these companies had declared that they were not earning any profits, and this figure had increased to over 51% in 2018-19. Further, the share of the reporting companies earning profits of ₹1 crore or less was 55% in 2005-06; this figure had declined to 43% in 2018-19. These numbers lend themselves to only one conclusion. India’s large companies have been exploiting the loopholes for reporting lower profits and to escape the tax net. But why have successive governments been so indulgent?
On public sector efficiency
•According to NITI Aayog, the “strategic objective of the Asset Monetisation programme is to unlock the value of investments in public sector assets by tapping private sector capital and efficiencies”. The NITI Aayog objective assumes that public sector enterprises are inefficient, which is contrary to the reality. In 2018-19, while 28% of these enterprises were loss-making (https://bit.ly/3jLPHQ7), the corresponding figure for large companies was 51%. Is it realistic to assume that the asset monetisation programme would deliver efficiencies?
