Finance Commission's New Problem: A Separate Defence Fund

The original terms of references for the FFC themselves were contentious. Based on the wrong assumption that the last Finance Commission was overly generous towards the states, the terms were designed to nudge the FFC towards reducing the tax devolution to the states in order to meet the requirements of central schemes of the Union government. If that wasn’t enough, an additional term of reference has now been recommended by the Union cabinet tasking the FFC “to ensure an assured allocation of resources towards defence and internal security imperatives.”Allocating adequate, secure, and non-lapsable funds for the security of India is indeed an urgent priority. There can be no quarrel about that objective. But the move to provide for these funds through the FFC is problematic for several important reasons.Read the full article on Deccan Herald here.

Article 370 and the rough ride ahead

The analogy of a hornet’s nest fits here. A nest in our backyard is a nuisance and an occasional sting is a minor inconvenience compared to what could be in store now that we have stirred the proverbial nest. Should we batten down the hatches in anticipation of the worst or is there another way?Read more

Indian govt can make taxes look good – by taxing bad behaviour, like honking

An overall look at the second Modi government’s first budget reveals an underlying commitment to raise revenues, mainly in the form of new taxes. In the face of a slowing economy, higher taxes can exacerbate matters. Money in the hands of citizens and investors does a lot more for India than the money that passes through the hands of governments. Given the narrowness of the tax base, it is unfair to levy more taxes on those who are already paying taxes without making greater attempts to bring more people and firms into the tax net. If raising taxes on goods, income, profits and beneficial economic are bad, what option does the government have? Can there be “good taxes”? Yes. They are taxes on the bads.Read more

Need to Protect Soldiers from False FIRs

At the heart of the matter is the urgent necessity of protecting the soldiers from harassment to which they are subjected from the prolonged investigative procedures that ensue. The investigative process itself, for a soldier acting in good faith and in accordance with the orders of his superiors, is a form of punishment that could also entail financial costs through legal fees, disruption of normal life, and deep psychological strain of the proverbial legal sword hanging over their heads.Read more

Budgetary allocations reveal real priorities of NDA 3

The Union budget speech invites a lot of attention in India. However, it is far more useful to look at the budget statements that get released on the day the speech is read out in Parliament. Comparing the vision articulated in the budget speech with the promised allocations in these statements separate the wheat from the chaff.Read more on Deccan Herald Online

Need to Update Competition Law

There are other major deficiencies in the competition law when it comes to understanding internet companies, Manur said. “Without establishing that a company is dominant, the CCI cannot take any action. But we haven’t clearly defined what the relevant markets are for internet companies. Are Ola and Uber the two largest cab companies? Or are they small players in a very large transportation market that included cabs, metros, trains, etc?" This is one of the defences used by internet companies—that their relevant market isn’t restricted to the internet space. For instance, Google and Facebook argue that they are small players in the larger advertising market, online and offline.As it stands, the competition law is not even equipped to detect some of the antitrust issues in the internet space, added Manur, an antitrust regulation researcher.Manur said it was imperative to add the data footprint of an internet firm as one of the metrics in considering the impact on competition. “The consumer data owned by an internet company is one of the most important indicators of its dominance and impact. In gauging M&As in the internet space this factor needs to be added to the list of considerations."Read more

Like Swachh Bharat, Modi wants mission Save Water. Stop free water first

Modi has called for a mass movement — like Swachh Bharat — to save water. Since the new government took office, it has created a water ministry by folding up two older ones, set itself a goal of delivering piped water to all households by 2024, created a water management index that ranks states, and is set to roll out a whole host of measures to conserve water.But, contrary to popular belief and experience, we are not running out of water — 71 per cent of the earth’s surface is covered by water. The problem does not lie in nature, but in the fact that Indian society is unable to cooperate in a manner that ensures each one of us has adequate water.Read more

Bihar encephalitis to lynchings to #MeToo – why Indians don’t take issues to the finish line

The Supreme Court Monday “came down heavily on the Centre and Bihar government” for the rising number of Acute Encephalitis Syndrome deaths in Nitish Kumar’s Bihar. Chances are that in 10 days, we won’t remember that over 150 children had died in Muzaffarpur as the news cycle would have turned three or four times by then and we would all be outraging about some entirely different issue. It appears that in India at least, outrage cycles have failed to create change. Even the #MeToo movement has run aground.Read more

Equity sans reservations: Imagining alternate ways for affirmative action

Affirmative action aimed at ending discrimination has a long and complex history in India. A new chapter was added to this story on May 10 when the Supreme Court upheld a Karnataka law, saying quotas for promotion of scheduled caste and scheduled tribe candidates in public employment was constitutional and did not require demonstrating ‘backwardness’ of the community.Even groups opposed to quotas want the same benefit extended to them. For long, this has been the only solution to address inequity in India. So these recent developments provide a good opportunity to reflect on the question: can we imagine better ways to achieve social equity goals?Consider this thought experiment. There are no predetermined quotas for any posts. Positions are filled only based on a composite score of all applicants. The composite score is a combination of two measures. The first is an inequity score — calculated to compensate for the relative disadvantage faced by an applicant.The second measure strictly represents an applicant’s ability to be effective for the position they are applying for. Selection is on the basis of the composite score. No seats are reserved and yet the score allows for addressing multidimensional inequity much better than current methods.Read the full article on FirstPost here. 

This Lok Sabha election, don’t fall for these seven deadly myths

If you are reading this, chances are that you get most of your political information online, on television or on your smartphone. Many myths are floating around these media, and given the echo-chambers and the tribal battlefields that we inhabit, some of the myths are left so unchallenged that they are accepted as truths. Let me debunk some of the most prominent ones.1. Nobody has a monopoly on nationalism. Just because the BJP’s leaders and supporters throw the term “anti-national” at anyone they disagree with, it does not follow that nationalism is the sole preserve of one party. It may be that other parties don’t proclaim nationalism as their main proposition, but it does not follow that they are any less sensitive to national interest.Also, nationalism and patriotism are two different things — like Rabindranath Tagore, you can be a patriot (a person who loves his country) without being a nationalist (a person who believes in the superiority of the national identity).Read more

We need more tourists but not an insurge that overwhelms us

There is a company in Gujarat that is pioneering election tourism in India. It currently offers foreign tourists 15 packages, with names as delightful as “Hustings in Himachal", “Republic of Rajasthan", “Grassroot Democracy of Kerala" and so on.The couple of thousand tourists who have signed up to witness political rallies and follow campaign trails constitute a curious footnote to India’s multi-billion dollar election economy, but the enterprise is still a promising sign as far as the tourism industry is concerned.Read more

Focus on Voting Security Instead of Just EVM Security

Unlike those of other countries, India’s machines are offline, inaccessible via the internet. In India, what started out as genuine concerns have transformed into a thinly veiled excuse each time parties lose elections — no matter that the Election Commission of India (ECI), recognised across major democracies for its independence, has taken steps to address the worries.EVMs have made “booth capturing” — where supporters of a party physically capture a remote polling station and stuff the ballot box to influence the total count — a thing of the past. Make no mistake, India’s electoral process has flaws — fraudulent voter IDs, difficulties eligible voters face in registering and fake news. It’s these challenges India needs to focus on — when votes are counted on May 23, the EVMs can be trusted.Read the full article on ozy. 

Modi govt’s data war: Economists & accountants are fighting for political power like rivals

The recent public intervention by a group of economists over data published under the Narendra Modi government and a rejoinder to them by a bigger group of chartered accountants makes it appear as if public policy is a numbers game. And as if economics and accountancy are two rival ideologies contending for political power. Both these impressions are wrong, dangerous for public policy and corrosive for democracy. Here’s why.At a time when India needs greater expertise in public policy, the oversimplified “economists vs chartered accountants” framing seems to suggest that the two disciplines are substitutes, and in doing so, devalues the role of any expertise in public policy.Just as it would be very unwise to approach an economist to help you with corporate structuring or tax planning, it would be wrong to rely on chartered accountants for recommendations on monetary policy, welfare schemes or public finance.Read More

Lokpal Is the Latest Miracle ‘Weight-Loss Pill’ We Have Bought

Many newspaper editorials, activists and citizens are elated that the Modi government has finally appointed the first chairperson of the Lokpal. Since seven more members remain to be selected and appointed, and the entire organisation has to be staffed according to government rules, it’ll be some time before the institution begins to function. We are still years away from a properly staffed, adequately resourced, and well-functioning anti-corruption ombudsman.Read more

Terrorism needs an audience. Facebook gave Christchurch shooter more than he asked for

To be effective, terrorism must have an audience. The New Zealand attackers simply used a GoPro and live streaming on Facebook while they carried out the massacre. With social media and the mobile internet, terrorists can not only reach a global audience, they can get their message across unfiltered. These, unfortunately, are near-perfect conditions for terrorism.When Brenton Harrison Tarrant, the terrorist who carried out the atrocity at two mosques in Christchurch last week, killing at least 50 people, streamed his act live on Facebook, he proved, yet again, that terrorism is theatre. Brian Jenkins, an early analyst of terrorism, argued in 1975 that in “the age of mass communications…terrorism is aimed at the people watching.”While some terrorists make specific demands — like seeking the release of their fellows — the strategic purpose of the terrorists’ actions is to draw attention to their political cause, widen their gross public support and enlist new followers. Terrorism is, as a 19th century political activist described it, “propaganda of the deed.”Read More

Night-time commerce offers India a growth opportunity

With Future Retail signed up as its master franchise, the 7-Eleven convenience store chain will open its iconic shops in many Indian cities this year. Unlike in almost all the 18 other countries where it is “always close, but never closed", it won’t be able to operate round the clock in India. As Kishore Biyani says, “We will be open 24 hours wherever we can."That is because India ignores and often looks down on its night-time economy. Mention the phrase and the first thing that comes to mostpeople’s mind is not just nightlife, but the seedy side of it, involving dance bars, prostitution, drunken driving, gang fights and other crime. Police commissioners will refuse permission for retail establishments to stay open late because of “law and order" problems, some communityleaders will complain of the evils that go with nocturnal activities and civic groups will protest noise, traffic and rowdyism. In most cities, after-dark economic activity starts slowing down at 10pm, though restaurants and bars in a few big cities remain open until 1.30am.Read More

We need more trade, not a trade war

The decision by the Trump administration to withdraw preferential treatment to Indian goods should serve as a strong warning to the New Delhi that prioritising narrow domestic politics over good economic policy can have dangerous consequences.Trump’s decision to levy import duties on erstwhile exempted goods did not, as commonly understood, come out of the blue, nor was it the first strike in an emerging trade dispute. The US Trade Representative has appealed to New Delhi multiple times in the past to remove the trade barriers that it has imposed on US goods and investments. This move by the US is largely due to three distortions introduced by the government that hurts not only US business interests but also Indian consumers. These are the price caps on cardiac stents and knee caps, the new FDI in e-commerce industry rules that prohibit foreign e-commerce firms to run inventory based retail, and the ban on American dairy products.It is not in India’s national interest to get into a trade war with the US. We have more to lose than them by doing so. India should drop the threat of escalating the trade war. Relative size of an economy and dependence on trade with the other partner are crucial in determining whether trade barriers can achieve the necessary outcomes. The US is a lot more important trading partner for India than India is to the US.Geopolitical realism instructs us that India cannot afford to indulge in such a trade war and that the damage we can inflict upon the US is not big enough to force it to change its trade regime. If India escalates the matter, it could very well lead to a full-blown trade war that could potentially witness bigger retaliation from the US in the form of higher tariffs on pharmaceutical products or non-trade barriers on Indian software products, which can truly hurt the Indian economy. We could also suffer due to decreased investment by US firms in India and, at a time of decreasing domestic investment, this can be damaging.Read more at: https://www.deccanherald.com/opinion/panorama/we-need-more-trade-not-a-trade-war-with-us-722934.html 

Without realistic rules, Election Commission can’t monitor social media before polls

The Election Commission has announced that it will closely monitor the social media campaigns of parties and candidates in the upcoming Lok Sabha elections. It has enlisted the cooperation of Google, Facebook and Twitter to uphold “the integrity of the political campaigns on their platforms”. As much as the Election Commission must be commended for factoring in social media activities in its overall governance of the electoral process, it is unclear how effectively it can manage to do this.Even if a significant number — around 40 per cent in urban and 20 per cent in rural areas — of the 90 crore eligible Indian voters are on social media, let us be clear that tackling the regular offline issues during elections is far more important.Read More

From Jobless Growth to Job-Loss Growth

This is the eleventh edition of The Jobscape, our weekly round-up of news and opinion on the state of employment and job creation in India. In this edition, we look at recruitment in the armed forces, women and jobs in STEM, artificial intelligence, and the woes of youth.Read more

Reliability of GDP data

In terms of the reliability of official data, India is getting dangerously close to Chinese territory. The year that witnessed demonetisation, when 86% of the cash in circulation was declared as illegal tender overnight and which was perhaps one of the greatest assaults on private property in recent history, is now being touted as the year of highest GDP growth in the last eight years. This was the year when all other macroeconomic indicators took a nose-dive, but the GDP for that year has been inexplicably revised upwards to 8.2%, which has left everyone confounded.Good policy-making requires reliable data. Collecting and publishing data has always been a difficult affair in India, given the magnitude of the task, compounded by the presence of a large informal and unorganised sector. We do not need deliberate manipulation and withholding of data to make the task even harder.Read more