Not Swadeshi, Samarthya is the answer to India’s Economic Nationalism

The roots of swadeshi lie in the triple whammy encountered by 19th century India.

First, European colonialism resulted in the loss of political power to a foreign race and a sense of being dominated by the British overlords. The Raj was resolute in keeping Indians as subjects and away from the corridors of political, bureaucratic and military power. Britain saw itself as lord and the Indian colonies as subject – and the people of India were clearly aware of it. The seeds of Indian economic nationalism lay in the resistance to being ruled by foreign overlords and in the rejection of their norms.Second, the era of globalisation and free trade of the mid-19th century affected economic players in different ways. Traders from communities that were capable and did not impose social restrictions on travel could benefit from national and international trade. The majority of the population, however, was unable to adapt to the changes in the international economic pattern and faced intense competition from foreign imports. The colonial government was unconcerned about helping this population make the transition and improve its productivity and competitiveness.

Third, the Industrial Revolution transformed the relative competitiveness of goods produced in Britain and India. Not only were imported goods better than domestic products, they were cheaper. India did not industrialise in the 19th century because the colonial government either actively discouraged it, or failed to create the environment for it. Another reason is that Indian society was unable to create effective mechanisms to convert savings into capital and allocate it effectively.It was in this broad context that the disempowered elites of a subordinate polity sought to change consumer preferences – the only area they had influence over. We see this in the early phase of swadeshi, which was mostly pursued through increasingly organised social mobilisation.Read the full article in ThePrint

Govt owes Indians an Explanation. Or its Gag Order & Pension Rule can be seen as Blackmail

Gag orders are increasingly being issued globally in this information age and becoming fashionable even in democracies. India is also in this race. Former US President Donald Trump’s gag orders were directed at serving government officials and deemed illegal. India seems to be a step ahead of the US, as its latest gag orders have a particular category of retired officials as their target. The Union government’s new order bars retired civil servants who worked in India’s security and intelligence bodies from publishing “details involving the affairs of the organisation without clearance from the head of the organisation”. Violation of procedure will lead to stoppage of pension.

The gag order was issued on 31 May through a notification by the Department of Personnel and Training (DoPT) that is directly under the PMO. The notification inserts an amendment to the Central Civil Services (Pension) Rules, 1972, and is applicable only to the central services cadre, including the Indian Foreign Service. It is not applicable to the Indian Administrative Service (IAS), Indian Police Service (IPS) and Indian Forest Service (IFS) because they belong to the All India Services. It also does not include the armed forces.Read the full article in ThePrint

Don’t rush into Sainik School public-private partnership. It can dilute and corrupt

Finance Minister Nirmala Sitharaman, in her 2021-22 Budget speech, announced the Narendra Modi government’s intention of setting up an additional 100 Sainik Schools in partnership with NGOs, private schools and states. The move was received positively. There is, however, a need for caution and further introspection.

The initiative renews India’s involvement with schools established with the intent to provide future military leaders. The first wave began in 1922 with the setting up of the Royal Indian Military College (RIMC), Dehradun, and was followed up by the five Royal Indian Military Schools (RMS). It was part of an effort to Indianise the officer cadre of the British Indian Army. The British believed that public school education would make them suitable for the rigours and self-discipline of Army life. These schools are now controlled, financed and administered by the Army.

Read the full article on ThePrint 

Blaming the government’s pandemic response? Do it for the right reasons

The Union government has received a lot of flak over its management of the pandemic response, and deservedly so. But I want to look at three incorrect — or at least problematic — frames being used to blame the government’s pandemic response, inadequate and confused as it already is. The intention is to focus on questions that matter.Incorrect Frame #1: Blame Vaccine DiplomacyAs cases have skyrocketed and vaccine supplies have plummeted, India’s vaccine diplomacy has come under the scanner. Today’s dominant narrative is that by prioritising vaccine exports over domestic inoculation, India did a disservice to its people. I disagree. It’s not altruism but national self-interest that guides international humanitarian assistance efforts by all states. By giving away vaccines to smaller states in the subcontinent, India signalled the positive role it can play in the world order. Another way of thinking about vaccine diplomacy is to think of its opportunity cost. At the current vaccination rate, India would’ve had just five additional days of supplies had it not given any of the nearly 10.7 million doses as gifts to other countries. A majority of the deliveries (almost 35 million) have been under commercial terms between manufacturers and other countries. Moreover, had India blocked commercial exports earlier, India would’ve received much less enthusiastic support from other countries in this moment of crisis.Holding the Union government accountable for its mistakes is essential. Equally important is identifying what the exact error was. The original sin was not placing enough vaccine orders because the government was complacent about having conquered the virus. It calculated that the pandemic would peter out even with a snail-paced domestic vaccination campaign.By internalising that India was wrong in extending its help to other countries in its own time of predicament, we would be learning the wrong lesson. Such heuristics tend to stick around for long in the Indian strategic affairs community. Try arguing for developing overseas operations military capability of any kind, and the idea will be shot down, citing the Indian Peace Keeping Force (IPFK) failure in Sri Lanka nearly three decades ago. Vaccine diplomacy mustn’t be perceived as another IPKF moment.Read the full article in Times of IndiaImage credits: Illustration by Freepik Storyset

A top Army doctor transferred in middle of pandemic says a lot about India’s civil-military ties

In India’s military history, sacking a field commander during the course of a battle has been rare. Even if done, it is usually the judgement call of the top military leadership and not of a politician. That norm has now been shaken in a different type of war – by the sudden removal of Major General Vasu Vardhan, the Commandant of Delhi’s Army Base Hospital, who was a critical field commander in the military’s battle against the Covid-19 pandemic.

The authority to take such a decision rests with the defence minister. The official justification that it is a routine transfer and merely a part of a larger human resource management exercise will not fool anyone and is an insult to basic intelligence. The medical pedigree of Maj. Gen. Vardhan is impeccable. He is the topmost pulmonologist in the Army, a branch of medicine at the forefront of the war against the pandemic. His professional competence was not in question and he had only three more months to go before retirement. Some attempts are being made on social media to tarnish the image of Maj. Gen. Vardhan by questioning his administrative abilities.

From my personal interaction with several recovered Covid patients, it is clear that the Base Hospital’s handling of this challenging situation has been commendable. The performance of the hard-pressed staff has been widely praised.There is definitely more than what meets the eye.

What about military ethics?

It is well known that the Commandant was faced with a severe shortage of beds, medical support facilities and staff. It is possible that the Commandant’s transfer was provoked by his resistance to accommodate non-entitled persons or provide critical medicines in short supply to persons not authorised but who perhaps were being sent by the Ministry of Defence with the Directorate General of Armed Forces Medical Service (DGAFMS) acting as a conduit. Such unreasonable demands could also have been made by the military. Whatever the actual detail, Maj. Gen. Vardhan stood his moral ground when asked to carry out actions that were unauthorised and violated ethical and professional standards.The Commandant could have crossed paths with the Army brass, the political leadership, or both. If it was only with the Army, the Ministry of Defence would have certainly questioned the removal, and the file would never have been processed and cleared with such speed. Postings of Major Generals and above require the defence minister’s signature. Even if the Army leadership had objected to the move, they must have been overruled. But the military’s top leadership can be exculpated, only if they have put their objections in writing and tried to hold the hand of a subordinate who has taken an ethical stand. If the military has not objected in writing or the Ministry of Defence has decided despite written objections, then the matter suggests a certain degree of politicisation of the military and exposes the merging of military ethics with that of the civil society.It can be reasonably assumed that after being Commandant of the Army Base Hospital for 18 months and with only three months to retire, it is a punishment posting. A tool that is well known and used to put people in their place, and which politicians routinely use to keep the civil services in check. Percolation of such practices into the armed forces would be severely harmful to its institutional culture, which is on a different plane altogether.If the above explanation is indeed true, the Ministry of Defence’s actions are ethically questionable and bring to the fore the pathologies that afflict India’s civil-military relations.

An ethical failure

As explained in my column last week, the danger wrought by politicisation of India’s military is not so much of a coup, but one in which the constitutional gap between the military and party in power is narrowed and misused. Parenthetically, the medical component of the armed forces under the DGAFMS is placed directly under the defence secretary in the Department of Defence and all attempts to place it under the Integrated Defence Staff have been successfully thwarted. It is an open secret that due to structural proximity, over a period of time, the higher military medical fraternity has established a reciprocal and cosy relationship with the civilian power centres in the Ministry of Defence. The civilians are believed to be provided mostly unauthorised access to medical care especially in the premier Research & Referral (R&R) Hospital in Delhi. Reciprocally, postings, promotions and approval for premature retirement are taken care of.

The structural relationship of the medical services exposes the pathologies of the proximity and control in civil-military interactions. The recently created Department of Military Affairs (DMA) and induction of uniformed personnel in integrated civil organisations like the National Technical Research Organisation (NTRO) could be similarly infected if lessons learnt from the medical services experience is ignored. For, eventually, the ethical fibre of the uniform should not fray when blended with civilian moral values, which are far less stringent.The Ministry of Defence has taken an action and is hiding behind a body of seeming falsehoods. Since the official reason is that it is a routine move, the file contents can be known through RTI. If the Army has not objected and the Ministry of Defence has also not questioned the move, the falsehood stands exposed. It also exposed if the Army has objected and the Ministry of Defence has overruled. Agreeably, once the defence minister has authorised the posting, the Armed Forces have no option but to implement it. Regrettably, it seems that the military leadership has opted to be part of the cover-up and this is reflected in its detailed official statement. The defence ministry and the Army’s reaction to the transfer of Maj. Gen. Vasu Vardhan signals to all others the price that they will have to pay if they do not bend even though their stand upholds the highest and precious value of the uniform – its ethical rectitude. The politico-military reaction is an ethical failure, the resonance of which will reverberate down the line.

Between obedience and conformity

The ultimate strength of India’s armed forces is its spirit of sacrifice, and of unfailingly placing the nation before self. While soldiers on the front line are duty-bound to risk their lives, the military leadership is expected to play a role as exemplars who protect the military institution from the negotiable morals that are frequently observed to be the normal fare in our society. It finally boils down to their willingness to sacrifice personal gain in terms of promotions and postings, which the civilians control.The heart of the problem is the growing ability of politico-bureaucratic authorities to bend the rules and the simultaneous failure of the military leadership to stand their moral ground. Though Maj. Gen. Vardhan’s case can easily be dismissed as sui generis even as the official explanation passes it off as a routine HR move, the warning signs may be ominous. Over a period of time, such signals from the top hierarchy can only weaken the military’s ethical fabric leading to the moral factor losing its weight to reflect in personal behaviour. What requires to be understood is that obedience to authority and conforming to questionable morals are two entirely different things.The potential toxic combination is of the political leadership’s inappropriate actions being supported by the ethical frailty of the higher military leadership. The combination could be dealt with by appointing a defence minister with a military background who is known for their ethical credentials and professional competence. In the existing ambience, the civil-military module requires political support to deliver quick and effective results. Fortuitously, unlike the dynamics of civil society, military’s special legal provisions and disciplined character make it feasible to rein in ethical weakness that could have seeped into its institutional culture. All it requires is for the higher military leadership to set an example and ruthlessly implement it.There is indeed a fine line between obedience and conformity in civil-military relations. Obedience is mandatory but conformity by the military to the ethical value system of civil society could be deleterious to India.Lt Gen Prakash Menon (retd) is Director, Strategic Studies Programme, Takshashila Institution, and former military adviser, National Security Council Secretariat. Views are personal. This article first appeared in ThePrint

Modi’s only respite now is to adopt Kautilya’s doctrine. But first, own up your mistake

India is in the midst of a national health emergency of an unprecedented scale. Once again, it shines a spotlight on decision-making of the political leadership, and once again, the political elites could do well by taking a leaf out of Kautilya’s Arthashastra.

The catastrophic scale of the Covid-19 second wave calls into question the State’s basic duty of providing raksha (security) and palana (welfare). Rajdharma (duty of the king), as espoused in the ancient treatise, throws light on a scientific process of decision-making with an ethical underpinning, looped together by the text’s philosophical foundation (Anvikshiki). This, perhaps, is the need of the hour.

Right decisions at the right time is Kautilya’s mantra of success. He ranks good counsel (mantrashakti) higher than the State’s armed might (prabhavashakti), and the power of bravery (utsahshakti). But, how should one arrive at a decision, and for what end?

The four core sciences outlined in the treatise are Philosophy (Anvikshiki), Vedas (Trayi), Economics (Varta), and Political Science (Dandaniti), and they broadly correspond to the text’s trivarga, or three aims — artha (material well-being), dharma (spiritual good) and kama (pleasures). Each of the sciences lends value to efficient statecraft but it is Anvikshiki (science of inquiry), the lamp of all sciences, that illuminates the worth of the branches of knowledge and their relative weight in a given concrete situation. It is the power of critical thinking and reasoning alone through enumeration in Sankhya, breaking down, synthesis in Yoga, and pure empiricism in Lokayat that shapes a sound decision.

One wheel alone does not turn

Rulership can be carried out with the help of associates. The final decision taken by the sovereign is the last step of a systematic and logical process of policy-making. A matter of critical importance is discussed with the ‘councillors’ and ‘council of ministers’ and the king decides on the course of action based on what the majority among them declare or what is favourable to the success of the work.The opinion of the ministers is important for two reasons. One, they are responsible for the successful execution of all undertakings, protection against calamities, and overall development of settled lands. Two, they are the ‘go-to’ source for credible information gathering. The role of the ministers, as the ‘eyes’ of the ruler, is clearly outlined – providing knowledge of the unperceived, corroborating what is known, removing doubt in case of two possible alternatives, and furnishing complete information on a partly known fact. The preceptors and ministers were also tasked with providing checks and balances for the ruler who may potentially err in performing his duties by ‘pricking him with the goad’.The other set of inputs in decision-making was provided by the ‘councillors’. All undertakings were preceded by consultations with three or four councillors who would give their opinion individually and jointly, along with reasoned justification for holding them. This helps bring about the threefold affairs of the king: directly perceived (by the king), unperceived (through the ministers), and inferred (evidence-based deductions).

The buck stops here – swamin 

Kautilya lays a premium on the political performance of the ruler (swamin); the king and his rule is the sum-total of the constituents of the State. Therefore, the very first book of the treatise is dedicated to the training of the ruler – casting out of the group six enemies (lust, anger, greed, pride, arrogance, and foolhardiness) for cognitive clarity, cultivating intellect through association with elders, acquiring discipline and a scientific temper (through intentness on truth, reflection, rejection of false views, and understanding through retention), keeping a watchful eye by means of spies, securing the well-being of the subjects, and maintaining the duties of the subjects by performing his own duties.

Perhaps, the two most important aspects of Kautilyan rulership, which are imparted through training in science, are logic and ethics. In a consideration regarding calamity of the king and kingship, a ruler deviating from science is a graver misfortune than a blind king; the latter may be well advised by his associates but the former ruins the kingdom and himself through injustice.

But what holds the key in a calamity is a timely decision; not impulsive, but quick. The king is advised to hear an urgent matter and not put it off because an affair postponed becomes difficult, or even impossible, to settle.How Prime Minister Narendra Modi has fared in dealing with the Covid-19 pandemic and the related challenges will finally be judged by the people in the next Lok Sabha election, which is more than three years away. Currently, it seems that he has kept his distance from the Kautilyan precepts. The quality of advice from the ministers and councillors is questionable. The other is one of misidentification. The ruled are identified and dealt with according to their support to the ruling party, rather than garnering the support of all through reasoned, rational actions. Permitting the Kumbh Mela tells the story. This is fine for electoral politics but is out of place for governance. Because governance requires the pursuit of Yogakshema, the welfare of all its citizens through righteous conduct strongly predicated on empirical soundness.Furthermore, decision-making should not equate the opposition to the enemy of the State and deal with them as such. The pervasive use of the National Security Act being the prime example. People are being denied access to the truth by a media that has acquired a reputation for pliancy. Controlling informational access and purveying the facts has not been dented even during the health emergency. Attempts to hide and contest the extent of governance failure will surely sully India’s image both abroad and among its own citizens.It is perhaps overdue that India’s ‘swamin’ acknowledges that the buck stops with him and owns up to mistakes in decision-making, even if he is not directly responsible, due to poor advice or other unknown and uncontrollable reasons produced by a virus that is mutating and spreading at a speed beyond human ability to check. Such an admission will allow for altering the course of future actions and hopefully assist India to recover better from the ongoing tragedy.Kautilya rightly reminds us that in the happiness of the subject lies the happiness of the king and what is beneficial to the subjects is to his own benefit. Admitting to mistakes along with embrace of objective and sound decision-making will generate better quality of interventions. More importantly, it may repair and arrest the waning confidence of Indians in their swamin at a time of a grave national catastrophe.Dr Kajari Kamal is Research Faculty at Takshashila Institution. Lt Gen Prakash Menon is Director, Strategic Studies Programme, Takshashila Institution, and former military adviser, National Security Council Secretariat. Views are personal.This article was first published in ThePrint

We need to reengineer India’s entire system of administration

This article was first published in The Mint.Following Adar Poonawalla’s statements to the British media, on 3 May India’s government issued a media release stating that it had placed new orders for 110 million doses of Covishield and 50 million doses of Covaxin from Serum Institute of India and Bharat Biotech, to be delivered over the next three months. Refuting allegations that fresh orders had not been placed, the government revealed that these purchases had been paid for in advance in the last week of April. The release also noted the government’s previous order of 100 million and 20 million doses of the two respective vaccines, of which 87% and 44% had been fulfilled as on that date. The earliest order was perhaps placed in January, after vaccines received regulatory approval and before India’s vaccination programme started in the middle of that month.

In contrast, the British government ordered 90 million doses of the AstraZeneca vaccine as early as May 2020, enough to cover 67% of its population. The same month, the US government ordered 300 million doses, adequate for 46% of its population. By September 2020, Japan, the EU, Australia, Canada, Germany and Brazil had all placed significant orders. Now here’s the most important part—all these countries placed orders for a vaccine that didn’t exist back then. These were not purchases. They were bets. Of course, by placing such large bets, they reduced their risks as more money raises the likelihood of the development of a successful vaccine.

Can the Indian government purchase things that do not yet exist? The answer, of course, is yes. It is very powerful. Both the Constitution and extant rules can be interpreted or changed for it to do what it wants. That’s the theory. But the practical question is this: Which public official, minister or civil servant would want to sign off on such a purchase? It would take a very courageous joint secretary (in the Humphrey Applebyan sense) to even recommend as much. In case the purchased non-existent vaccine fails to materialize, not only would careers come to a premature end, jail terms would beckon. Indeed, there is nothing to prevent an ambitious government auditor or opportunistic politician from raking up a ‘scam’ years later, long after people have forgotten the context.

So it should not surprise us that India ordered its first vaccines in January, after they came into existence. It should also not surprise us that the order quantities were small, for without a directive from the top political level, the system dare not commit to more than the production capabilities of manufacturers.None of this is to absolve political lapses. But if we are to secure better governance outcomes, we must understand the limitations of our administrative structures and decision-making culture. As we saw over the past decade, it is a comforting myth that enacting a legislation, securing a Supreme Court verdict or electing different leaders will change outcomes. Unless we reform how India is governed, the structures, processes and culture of government, we will continue to be disappointed by what the system actually delivers.Take another case. Given that healthcare capacity is exhausted in many places and families and civil society groups are frantically arranging vital supplies from across the country and abroad, it would be prudent to remove all duties, taxes and bureaucratic friction on them until the pandemic is under control. Yet, while the finance ministry waived customs duties on many medical goods, GST is a different matter. Many goods received as donation for free distribution are tax exempt until 30 June, but firms and non-profit organizations that buy them even for free distribution are not automatically exempt. Chief secretaries of states have been asked to appoint nodal officers so that “entities desirous of importing COVID relief material for free distribution may approach them for certification". I am sure that ministers and civil servants know that the best thing to do at this time is to waive GST and paperwork on anything remotely related to healthcare, and not sit in judgement on whether the item is useful for covid treatment or not. Yet, they find this extremely difficult to do, for the rate structure is not the only thing that is complicated about the GST framework.If a system works, it is because the outcomes of the actions of its good people outweigh those of the bad ones. If those good people do not have the power, authority and incentives to act, then the system does not deliver. We cannot depend on exceptional, courageous, heroic and career-suicidal officers. All officials should be able to exercise judgement within their scope of duties and act in the public interest. The pandemic highlights the need for a fundamental rethink of our administrative goals, structures and processes. From national defence to public health, India has been let down by the inability of our government to act early, take necessary risks and procure what’s needed.Political responsibility is easy to identify, and in elections we have a regular accountability mechanism. Whether and how citizens choose to exercise it is another matter. What is less obvious is the task of re-engineering government that has been overdue for two decades or more. It would be a shame if the immense pain and suffering we are now going through does not push us to pay attention to it.

Don’t just game the system, return to Kautilya’s goal of happiness in Covid 2nd wave

Gaming the system is a term that usually carries negative connotations of achieving desired outcomes by manipulating rules and procedures that are meant to protect and regulate the system. However, it can also be utilised for benevolent purposes. At the core, it is power play. But ultimately, how power is wielded and what purposes are achieved for the common good, provide scope for an informed judgement.

The passing but devastating second wave of the Covid-19 pandemic has brought focus on India’s health care system, and calls to strengthen it will rent the air until either another wave arrives or another event, good or bad, gains centre stage.

But these constant streams of events blind us to perceive the issue as a whole or how the second wave of the pandemic in India connects to the extant strengths and weaknesses of the Indian State. In particular, the State acts through its political system, which is the fountainhead that provides the wherewithal to tackle the menaces as well as to discern, create and exploit opportunities. The sole purpose in theory is one of improving the welfare of its citizens. This is what Kautilya describes as the central focus of statecraft — Yogakshema. Read the full article on ThePrint

It's time to bid goodbye and good riddance to board examinations

This article was originally published in The MintGuess where these words are from: Examinations have “grown to extravagant dimensions, and their influence has been allowed to dominate the whole system of education in India, with the result that instruction is confined within the rigid framework of prescribed courses, that all forms of training which do not admit of being tested by written examinations are liable to be neglected." Answer: From a report on education policy prepared by the government of George Nathaniel Curzon, Viceroy of India, in 1904. What about this one? “The system of examinations prevailing in our country has proved a curse to education". Answer: The Congress’s Zakir Husain Committee report on Basic National Education, 1938. I found these damning indictments of board examinations in a powerful essay by Azim Premji University professor B.S. Rishikesh on why school board examinations must be scrapped permanently.

As he argues, the pandemic has exposed the pointlessness of these expensive ritual ordeals. We found that we could easily cancel Grade 10 board exams without any significant consequences. Grade 12 board exams are somewhat different—they perform some functions for which there are no immediate alternatives—but there is a case to eventually get rid of them too. Today, these examinations mostly serve the interests of education bureaucracies, the coaching industry, test-preparation publishers and unscrupulous entrepreneurs who try to make a quick buck by exploiting the hopes and insecurities of parents. To the extent that they have any useful role in education itself, there are cheaper and less harmful alternatives that can replace exams.The case against Grade 10 examinations is clear. There was perhaps a time, 40 years ago, when formal schooling up to secondary school would have been adequate. Thus, the secondary school leaving certificate and equivalent qualifications acted as credentials signalling the completion of essential basic education. This is no longer the case. A young person anywhere in the world cannot expect lifelong employability without, at the very least, having 12 years of schooling. Indeed, science and mathematics are no longer optional for generations that have to deal with the complexities of life, work and citizenship in the Information Age.In today’s world, Grade 10 is no different from Grade 5 or 7, in that it is merely another step in a 12-year journey. Therefore these students can be evaluated just as those in grades below them. Not only are board exams unnecessary at this level, but to the extent they signal that schooling is ‘complete’, they discourage students from studying further. We should immediately do away with secondary school board examinations.While Grade 12 exams have limited utility from an educational perspective, they function as a gateway to higher studies, vocational education and employment. Also, while subjective assessments—as done in many Western countries—appear to be more suitable than examinations, there are a number of sociocultural and capacity-related prerequisites for them to work effectively. This calls for a more measured approach in transitioning away from the current system. As much as I favour jettisoning board examinations, I am sceptical about the political economy of subjective assessments, for there is no reason why schools will be able to avoid the favouritism, corruption and discrimination that are extant in the rest of our society. It is prudent to set a transition period of five or more years to reach a more desirable equilibrium, during which the school system can create the mindset and capacity required for it.

What does a better alternative look like? Students completing Grade 12 can be issued certificates of their educational performance, extra-curricular activities, sports and social service record by their own schools. Below this level, the Central Board of Secondary Education and other boards can offer optional standardized tests. These will be useful when students have to change boards.As a student, I had to move across four boards in five cities, my parents concerned whether transfer certificates would be recognized. With increased national mobility, we should expect that the number of students who will shift cities and boards will grow. The availability of a standardized test will facilitate student mobility across the country. Schools can recognize these tests or conduct their own to grant admission.At the Grade 12 level, instead of a single mandatory board examination, there can be optional tests on demand, taken if and when students need them. Universities should be free to determine what courses of study require such tests. Professional courses already have national entrance tests for which board exams are superfluous.We have lost sight of the purpose of schooling: it is to equip future citizens with a good grasp of language, mathematics, the scientific method, humanities and civic values. It is ultimately about enabling them to exercise their capacity for reason and make good decisions. Many of these qualities are not examinable. Excising board exams from education has long been necessary. The pandemic has shown us that it can easily be done.

Time to depoliticise Indian police. It can be Modi’s Sudarshan Chakra

The tragic loss of 22 policemen in a Naxalite ambush in the jungles of Chhattisgarh on 4 April invoked memories of earlier such incidents with the worst being the loss of 76 lives in Dantewada in 2010. As part of an old pattern, political and institutional homilies followed promises of revenge. One can be fairly certain that the matter will be officially investigated, and a politically patronised cover-up carried out, with only the lower-level officials facing the brunt. Life will continue as before, till another incident comes along, and the cycle will be repeated ad nauseam. The police leadership will continue to promise solutions to politicians as long as their numbers are increased, and going by the recent raising of CRPF battalions, financial constraints do not seem to come in the way of pumping up numbers. If only somebody educated India’s politicians that the qualitative inadequacies in the CRPF cannot be made good by numbers.The bigger picture and the truth is that for a long period of time, nearly 4,000 square kilometres of territory in south Bastar was in control of the Naxals. In a recent interview, the IG Police, Bastar, said that it has now been shrunk, but an area of 1,000 square kilometres is still with the Naxals. The executive is fully aware of it. Parliament and the media have chosen to remain silent.Running in parallel is l’affaire Param Bir Singh, the former DGP of Maharashtra, who after being sacked went to court complaining against former state home minister Anil Deshmukh. From what is publicly known so far, the role of the toxic underbelly, which is an admixture of corruption, criminality and political chicanery involving the nexus of political executive-bureaucracy, seems all too evident. As details keep emerging, it seems that the political-police nexus was all-pervasive. It stinks.No doubt, both these incidents have completely different contexts. One is about the avoidable loss of lives in a situation of armed uprising in the tribal belt of central India. The other is about corruption and possible murder by the law keepers themselves under the tutelage of their superiors. Both these incidents may seem unconnected, but even a casual look reveals that the dramatis personae remain unchanged, except they appear in different forms and contexts. Both incidents relate to politicisation and control by the executive of the police, and in both, the executive and the police lack accountability.Read the full article on ThePrint

Dear Govt of India, Here’s Why a Cess Needs Impact Analysis Report

 During the 2021-22 Union Budget speech, Union Finance Minister Nirmala Sitharaman announced yet another cess — an Agriculture Infrastructure and Development Cess of Rs 2.5/litre on petrol and Rs 4/litre on diesel.At first glance, this just means that your commute got dearer. But scratch beneath the surface and you’ll realise that cesses such as these are gnawing away at India’s federalism. Here’s how.The divisible pool comprises taxes like corporation tax, taxes on income, customs, union excise duties, etc. It is called so because this pool of money gets ‘divided’ between the Union and the State governments through a formula recommended by the Union Finance Commission.In contrast, the money that union governments raise by levy of cesses and surcharges is not shared with the states. Cesses are earmarked taxes levied for specific purposes to provide necessary financial impetus to a particular sector/area. Surcharges are additional charges or taxes levied on existing taxes. A surcharge is calculated on payable tax, and not on income generated. Over the last few years, the union government has been increasingly relying on both cesses and surcharges, resulting in lesser resources being transferred to the states.Read the full article on The Quint

India should cooperate with Africa in renewable energy

Recently, India entered a strategic partnership with the International Energy Agency. “India will have a critical role in shaping the world’s energy and climate future,” said the executive director of the IEA.Now, India will see great potential in creating renewable energy and must partner up with other countries in this space. Africa has been seeing positive developments, mainly in its solar energy expansion. The two regions seem to have a great future ahead of them and could create greater results by cooperating.South Africa and Egypt are leading the race as big solar powers in the continent. The two are also the only countries to be a part of the solar “gigawatt club” – nations with the capacity to produce 1GW of solar power.Read the full article on AsiaTimes 

Consumers need to pay more if workers are to be given a fair deal

This article was originally published in National Herald.President Joe Biden’s administration was able to push through a major fiscal package in March worth 1.9 trillion dollars and includes another round of 1400 dollars of stimulus cheques for individual Americans, 350 billion dollars to states and local governments as grants, and 160 billion dollars for coronavirus testing, tracing and vaccines. But it failed to get the voting support needed to raise the nationwide minimum wage to 15 dollars an hour. The Democrats have a comfortable majority in the Congress (the lower house), but it is a knifeedge situation in the Senate (the upper house). And within the party itself, there are voices opposing increase in the minimum wage which is currently 7.25 dollars per hour.This minimum wage number was set back in 2009. However, individual states in the federal system are free to add to that and have done so. For instance, in New York, Washington DC etc., the minimum wage is far higher. For the rest who follow the 2009 number, in inflation adjusted terms, the minimum wage is even below what prevailed in the 1970s. Surely that needs a correction.

But Republicans and a significant number from the Democrats feel that this increase would put an undue burden on employers, at a time when the economy is coming out of a deep recession. As a compromise, don’t be surprised if an 11-dollar wage is voted successfully. But that is yet to happen. It may also subsequently get indexed to the inflation rate.

That this is happening in capitalist America is a very significant development. Even in the United Kingdom, which has had a conservative, pro-business, pro-employer government for more than 10 years, the minimum wage has been raised to 8.7 pounds for all adults above the age of 25. This may go up further. This wage is roughly two third of the median wage earned by all workers in the UK.In America too, if the 15-dollar minimum wage is imposed, it would be close to two third of the national median. As such the total income (i.e. earnings from wages, salaries and other sources) for a median American household has stagnated for nearly four decades. This has happened despite the growth in national income, and a roaring stock market. Which means that substantial gains of income and wealth were going to the top tier in society.This has lessons for India. Wages have to grow, if incomes and standards of living have to improve. Will a higher minimum wage help? Will that crimp employers and lead to lower employment?While per capita income rose by nearly 7 per cent per year during 2003 to 2012 in India, subsequently this growth has slowed down. This was also a period when rural wages were rising. India’s labour market has 90 per cent of its workforce in the informal or unregistered sector. Which means that they work either without a written contract, or without any health and retirement benefits.Even in sectors where there is a significant registered (‘permanent’) employment, the ratio of permanent to contract workers is very skewed, which is also reflected in their respective benefits and pay. Sometimes this creates a de facto caste system, where for the same work, a contract worker is paid much less than a permanent worker.Such conditions can create stress and unrest, sometimes leading to intemperate outcomes, like the violence a few years ago in an auto plant in Manesar. Due to the large number of informal and seasonal workers, the data on wages and earnings is notoriously bad. But survey data indicates that wages have stagnated. Of course, during the pandemic, there have been large scale job losses too.When surplus labour moves out of agriculture, it is coming from disguised unemployment, so productivity is nearly zero. Hence even a small wage is a decent improvement on zero. This process of absorbing surplus labour from zero wage, can continue for a long time, until agriculture no longer has any surplus labour.Indeed, this was the strategy of sustaining high growth and high exports, at low and constant wages, in China. The low wage workers were taking away higher wage jobs from advanced countries. The low wages in China meant that much of the benefit of high GDP growth was going to capitalists, in this case mostly State-owned enterprises. That profit was continuously re-ploughed leading to high GDP growth rate.To some extent it can work in India, only if industrial employment increases continuously. But unlike China, India’s services sector is nearly 60 per cent of the GDP (national income). It employs only 25 per cent of the workforce. Besides India’s consumption expenditure as a share of GDP is much larger than in China.It is not as if raising the minimum wage in India will make the jobs vanish out of the country. This is because these low paying jobs are mostly in services sector, which is a non-tradable sector. Besides if the increase in the minimum wage is not very large, it does not even affect the demand for those services. Think of the wages paid to farm labour, or security guards, or courier services workers. An increase in their wages surely will not affect the demand for those services, nor will it lead to a decrease in employment. The increase in minimum wages in most sectors just means that consumers pay more. When a McDonald worker gets a fifty per cent higher minimum wage, the burger price goes up by 25 cents.This is a way of transferring incomes from consumers to workers, without causing a burden to the exchequer. It is similar to increasing the minimum support price to farmers, so that urban consumers pay a bit higher for food, and the farmer earns a bit more. This removes the urban bias of the food policy.Similarly, an increase in minimum wage will remove the pro-employer bias of the wage policy. The current national minimum wage of 176 rupees per day certainly needs to be revised upward.Dr. Ajit Ranade is an economist and Senior Fellow, Takshashila Institution. Views are personal 

The current national minimum wage of Rs 176 per day must be revised upward

This article was first published in Free Press JournalPresident Joe Biden’s administration was able to push through a major corona-relief fiscal package this month. It is worth $1.9 trillion and includes another round of $1,400 in stimulus cheques for every American, $350 billion to states and local governments as grants, and $160 billion for coronavirus testing, tracing and vaccines. But it failed to get the voting support needed to raise the nationwide minimum wage to $15 an hour. The Democrats have a comfortable majority in the Congress (the Lower House), but it is a knife-edge situation in the Senate (the Upper House). And within the party itself, there are voices opposing what they consider a steep increase in the minimum wage, which is currently $7.25 per hour.This minimum wage number was set back in 2009. However, individual states in the federal system are free to add to that and have done so. For instance, in New York, Washington, etc., the minimum wage is far higher. For the rest who follow the 2009 number, in inflation-adjusted terms, the minimum wage is even below what prevailed in the 1970s. Surely that needs a correction? But the Republicans, and a significant number from the Democrats feel that this increase would put an undue burden on employers, at a time when the economy is coming out of a deep recession. As a compromise, don’t be surprised if an $11 per hour wage is voted successfully. But that is yet to happen. It may also subsequently get indexed to the inflation rate.Significant development

That this is happening in capitalist America is a very significant development. Even in the United Kingdom, which has had a conservative, pro-business, pro-employers’ government for more than 10 years, the minimum wage has been raised to £8.7 pounds for all adults above the age of 25. This may go up further. This wage is roughly two-thirds of the median wage earned by all workers in the UK.

In America too, if the $15-dollar minimum wage is imposed, it would be close to two-thirds of the national median. As such, the total income (i.e. earnings from wages, salaries and other sources) for a median American household has stagnated for nearly four decades. This has happened despite the growth in national income and a roaring stock market. Which means that substantial gains of income and wealth were going to the top tier in society, and for the vast majority incomes were stagnating.This has lessons for India. Wages have to grow, if incomes and standards of living have to improve. Will a higher minimum wage help? Will that crimp employers and lead to lower employment, or will it help workers?While per capita incomes rose by nearly seven per cent per year from 2003 to 2012 in India, subsequently, this growth has slowed down. This was also a period when rural wages were rising. India’s labour market has 90 per cent of its workforce in the informal or unregistered sector. Which means that they work either without a written contract, or without any health and retirement benefits. Even in sectors where there is a significant registered (‘permanent’) employment, the ratio of permanent to contract workers is very skewed, which is also reflected in their respective benefits and pay.De facto caste systemSometimes, this creates a de facto caste system, where for the same work, a contract worker is paid much less than a permanent worker. Such conditions can create stress and unrest, sometimes leading to intemperate outcomes, like the violence a few years ago in an auto plant in Manesar. Due to the large number of informal and seasonal workers, the data on wages and earnings is notoriously bad. Anecdotal and survey data indicate that wages have stagnated in recent years. Of course, during the pandemic, there have been large-scale job losses too.When surplus labour moves out of agriculture, it is coming from disguised unemployment, so productivity is nearly zero. Hence, even a small wage is a decent improvement on zero. This process of absorbing surplus labour from zero wage, can continue for a long time, until agriculture no longer has any surplus labour. Indeed, this was the strategy of sustaining high growth and high exports at low and constant wages, in China. The low-wage workers were taking away higher wage jobs from advanced countries.The low wages in China meant that much of the benefit of high GDP growth was going to capitalists, in this case mostly state-owned enterprises. That profit was continuously re-ploughed, leading to high GDP growth rate. To some extent, it can work in India, only if industrial employment increases continuously, like it did in China. But unlike China, India’s services sector is nearly 60 per cent of the GDP (national income). It employs only 25 per cent of the workforce. Besides India’s consumption expenditure as a share of the GDP is much larger than in China.Jobs won't vanishIt is not as if raising the minimum wage in India will make the jobs vanish out of the country. This is because these low-paying jobs are mostly in the services sector, which is a non-tradable sector. Besides if the increase in the minimum wage is not very large, it does not even affect the demand for those services. Think of the wages paid to farm labour or security guards, or courier services workers. Even the gig economy workers, such as hail tax drivers feel the squeeze. An increase in their wages surely will not affect the demand for those services, nor will it lead to a decrease in employment.This has been amply documented by researchers in America, who show that contrary to populist caricaturing, the increase in minimum wages in most sectors just means that consumers pay more. When a McDonald worker gets a fifty per cent higher minimum wage, the burger price goes up by 25 cents. This is a social tug of war. This is a way of transferring incomes from consumers to workers, without causing a burden to the exchequer.It is similar to increasing the minimum support price to farmers, so that urban consumers pay a bit higher for food and the farmer earns a bit more. This removes the urban bias of the food policy. Similarly, an increase in minimum wage will remove the pro-employer bias of the wage policy. The current national minimum wage of Rs 176 per day certainly needs to be revised upward.The writer is an economist and Senior Fellow, Takshashila Institution.

Fukushima's lesson is the need for effective nuclear regulation

This article was first published in The MintIt has been a decade since 11 March 2011, when the most powerful earthquake recorded in Japan triggered a tsunami and killed over 19,500 people and displaced over 230,000. It was the country’s worst natural disaster since 1995. The ‘Great East Japan Earthquake’ or ‘Great Tohoku Earthquake’ is better known as the ‘Fukushima nuclear disaster’ and often cited as Exhibit A in the case against nuclear energy. Yes, the quake and tsunami caused a catastrophic failure of three reactors at Fukushima Daiichi power plant, leaving a contained radioactive mess that will take decades to clean up, and triggered a mass evacuation during which 2,313 people died. Yet, for all the horror stories, the actual number of deaths or cases of radiation sickness due to the accident is—take a deep breath—zero. Coinciding with the tenth anniversary of the disaster, a United Nations scientific committee confirmed findings that there have been no adverse health effects linked to radiation exposure. Nobody died and no one fell sick due to the reactor accident.

That’s not all. The popular narrative often neglects to mention that there were 11 operational reactors—including the three at Fukushima Daiichi—at four nuclear power plants in the region. All of them shut down automatically, but the three at Fukushima failed to complete the process. Sixty kilometres away, three reactors at Onagawa were undamaged and shut down safely, despite being closer to the epicentre and suffering a more powerful tsunami. None of this is to downplay the human, environmental and economic damage that the Fukushima accident caused, or indeed the risks arising from nuclear power plants; only to put it in perspective. What we have is a case for greater attention to safety and governance, not a knee jerk rejection of nuclear energy as we saw in many Western countries soon after the incident.A dispassionate assessment of technology and economics suggests that nuclear energy has to be part of the civilizational response to climate change. In its latest report, the International Energy Agency points out that while wind and solar power are already competitive compared to fossil-fuels, nuclear “remains the dispatchable low-carbon technology with the lowest expected costs in 2025." The cost structure for renewable energy must include that of energy storage systems if it is to replace coal and gas for base-load capacity. Even if, in line with current expectations, the economics of renewable energy become more attractive over time, nuclear will remain an important source of low-carbon diversity. As a country dependent on fuel imports, India must invest in renewable energy, but cannot afford to ignore nuclear.Vaclav Smil, one of the world’s most thoughtful energy analysts, calls nuclear energy “a successful failure" for its inability to gather public support despite its ability to deliver. Despite the facts, ‘Fukushima’ is a one-word argument made around the world to silence any debate on building new nuclear power stations.The derogation of nuclear energy is not a failure of technology or economics. It is a failure of public policy. In that sense, India’s 2010 civil liability law is not unique in preventing greater investment, innovation and development of nuclear energy. It is a nearly global phenomenon. Other than Russia and China that have used the decade since the Fukushima accident to become global leaders in the field, almost every other country has adopted statutes and policies that strangle the development of the nuclear industry.India has done well to remain invested in nuclear despite the adverse global sentiment, but the pace has been slower than estimated, and, more importantly, the industry governance structure remains unreformed. Against the promise of producing 20,000MW of nuclear power by 2020, India currently has operational capacity of 6,780MW, constituting only 2.4% of the electricity generated. In addition to the eight under construction, the government has approved 12 more reactors, targeting 22,480MW by 2031.In a reply to a Lok Sabha question, the government stated that it has no plans to promote domestic and foreign investment in the sector.This makes Fukushima’s lesson especially relevant for India. The causes of that accident were traced to a poor safety culture arising from regulatory capture and poor oversight. Investigators blamed a “mindset that emphasises hierarchy and acquiescence and discourages asking questions."If India’s nuclear industry is government-run for the foreseeable future, then it is all the more important to restructure its governance. The case for an industry regulator and safety auditor independent of the India’s atomic energy establishment has been clear since 1995, a point re-iterated in a 2015 review by an independent international expert group.The Narendra Modi government should restructure the civilian nuclear energy establishment in the manner it did the space sector last year: structurally separate the policymaker, regulator, research and development, and commercial operators. Safety requires more, timely and better information. Not everything needs to be in the public domain, but an effective governance structure will give the government better-quality information on the state of affairs in the sector.

The number game: Making sense of GDP estimates

This article was first published in Financial ExpressThe second advance estimates of GDP for the current year, along with the third quarter estimates, released by the Ministry of Statistics and Programme Implementation (Mospi) do not come as a surprise. The estimates of 1% GVA and 0.4% growth in GDP mark the end of the recessionary phase.As expected, agriculture continues to perform well. In fact, all the sectors except (i) mining and quarrying, (ii) trade, hotels, transport and communication services and (iii) public administration, defence and other services have recorded positive growth in the third quarter; even in other sectors, the contraction is lower by varying magnitudes. And industry as a whole too has moved into the positive territory. Services, which face higher restrictions due to social distancing norms, continued to shrink, but by just 1%. Significant improvement is seen in the performance of construction, up from -7.2% in Q2 to 6.2% in Q3, and financial and real estate sector (up from -9.5% in Q2 to 6.6% in Q3). The contraction in trade, hotels and transport continues to be high at -7.7% in Q3, though this is a significant improvement from -15.3% in Q2.Public administration, defence and other services performed better than the -9.3% growth recorded in Q2, but continued to contract at -1.5% in Q3. It was hoped that increase in the Centre’s spending after October would take it to positive growth. However, the state governments, which contribute to over 70% of public consumption spending, seem to continue their austerity given the revenue constraints. Sectors like education and healthcare too have not recovered to the pre-Covid levels. The increased GST collections of more than Rs 1 lakh crore and the record collection of Rs 1.2 lakh crore in January also indicated recovery.However, increased collections seem to as much due to an increase in consumption as due to better enforcement. With the technology platform stabilising, the government could use the data to undertake invoice matching to detect taking false input tax credit through fake invoicing. With businesses having turnovers of more than Rs 100 crore required to issue e-invoicing from January 2021, both enforcement and compliance of the tax are likely to show further improvement in the coming months.It is, however, too early to celebrate the news of the economy entering the positive growth phase. It is true that there has been a steady recovery of almost all the sectors, as indicated by the leading indicators. In fact, the median market expectation for the third quarter was a growth of 0.6%. While it is futile to quibble over a few decimal points, it is necessary to note that one reason for the lower than the expected growth is the significant downward revision in the third quarter growth of FY20. The GDP growth in the third quarter of FY20 was revised from 4.1% to 3.3%. There were large revisions in the growth of GVA for several sectors.If the whole year contraction of 8% as against the earlier estimate of 7.7% holds true, then the fourth-quarter estimate of GDP will be negative 1.1%, though the GVA will continue to be positive at 2.5%. The downward revision of GDP in the first quarter from 23.9% to 24.4%, even though there was a marginal upward revision in the second quarter, reduces the overall growth rate for the year as well as for the fourth quarter.Besides, as the GDP at constant prices is now estimated at market prices rather than factor cost, indirect taxes and subsidies also pull down the GDP estimate for the year as well as for the fourth quarter. It must be noted that the revised estimate of subsidies for FY21 is at Rs 5.9 lakh crore as against the budget estimate of Rs 2.5 lakh crore. This seems to be mainly due to the clearing of the off-budget liabilities on food subsidies arising from FCI borrowing from the NSSF.While it is a favourite pastime of economists to quibble on the growth rates on a few decimal point differences from what they had expected, it is important to note for the current year, all these estimates are likely to undergo substantial revisions. The revision in the first quarter estimate from 23.9% to 24.4% is not surprising. Even in normal years, significant revisions are made, as was seen in the case of Q3 in FY20, and in this abnormal year, as more information on the urban informal sectors become available, there would be further revisions. In the meantime, we will continue to characterise growth in terms of alphabets we choose—“V”, “K”, or “W”.The sector-wise estimate for the fourth quarter, deciphered from the estimates for the three quarters and the second advance estimate for the whole year, does not make much sense. Agriculture and allied sectors are estimated to grow just at about 1.9% in Q4, it has already registered an average growth of 3.4% in the three quarters, and the whole year growth of the sector is pegged at 3%! The mining sector is estimated to contract by 9.2% during the year and having progressively reduced the contraction from 18% in Q1 to 5.3% in Q3, it is estimated to contract by 16.3% in the fourth quarter!In contrast, the construction sector is estimated to show a negative growth of 10.3% during the year, and that would require it to register a positive growth of 12.5% in Q4. Even a sector like trade, hotels, transport and communication is estimated to register positive growth in Q4 at 1.8%. For the optimists, the good news is that in Q4, both agriculture, industry and services will see positive growth. It is difficult to make much sense of these estimates, but let us keep our fingers crossed.Perhaps we should wait for the provisional estimates of GDP, which are supposed to be released in May, to get a better sense of the recovery. 

We should not forget the equity dimension of PSU privatization

Prime Minister Narendra Modi’s statement that “the government has no business to remain in business" is the clearest articulation of the reason why India must privatize the hundreds of public-sector enterprises that its Union and state governments run. In doing so, he departs from earlier prime ministers, who preferred incremental dilution of government shareholding, or a cautious one-by-one approach in the sale of public enterprises. The invention of the term ‘disinvestment’, which for two decades has been used to describe the privatization of public sector enterprises in India, showed both a lack of clarity of purpose on the part of previous governments and also their need to apologetically cloak the policy against criticism from ideologues across the political spectrum. It is to Modi’s credit that he has decided to use his political capital to declare that privatization of public sector enterprises is in the national interest and thus ought to be carried out whole-heartedly. This is a welcome break from the past.

To realize the ambition of raising over ₹2.5 trillion from the monetization and sale of state-owned businesses and assets, the Modi government will have to get two crucial things right.The first is well known: Process. After Niti Aayog recommends what to do with each of the 300-odd public enterprises, it will be examined by a committee of secretaries, then by a committee of ministers, before the Department of Investment and Public Asset Management (DIPAM) puts it to the Cabinet Committee on Economic Affairs (CCEA) for ‘in-principle’ approval. Instead of this long route, either Niti Aayog or DIPAM should directly take it to the CCEA.The Union government currently does not have an administrative setup and sufficient talent with the professional skills needed to carry out what is at its core a corporate mergers and acquisitions role. What is more, good civil servants will hesitate from taking up the job for fear of a career- or retirement-ruining scandal. Outsourcing the job to private investment banks could bring greater efficiency to the process if done right, but opens up a host of conflict-of-interest issues that would be difficult to manage in the Indian context. The ideal setup is a special purpose department that has political sponsorship, administrative clout, professional talent, incentives for transparency, rewards for performance, and insulation from scandal. So it will have to be a new hybrid species of the genus Governmenta, incorporating many genes, functions and adaptations from the genus Privata. For if we continue with the current administrative machinery and processes, the gap between the country’s disinvestment targets and actual proceeds will yawn even more widely.The second issue is perhaps more important but gets a lot less attention: Equity. Not equity as in shares, but equity as in fairness. The Prime Minister mentioned stakeholder mapping in the context of transparency and competition in implementation. For privatization to be successful, widely accepted and in the public interest, stakeholder mapping should be vastly expanded to cover all sections of society that will be affected by the reforms.The government has done well to announce that the proceeds from the sale of public-sector enterprises will be routed “to public welfare schemes in areas like water and sanitation, education and healthcare." Finance minister Nirmala Sitharaman noted that the money is "not being raised to fill acertain hole in the Consolidated Fund of India. The money being raised from disinvestment will go towards infrastructure." The promise that the sale of public assets will be used for long-term investments in human and physical infrastructure addresses the baseline equity issue. It will be a good idea to put legislative safeguards on this promise, to prevent governments from violating the compact in the future. Let’s recall that the National Investment Fund (NIF), set up in 2005 with similar intent, saw a withdrawal in 2009 “in view of the difficult economic situation caused by the global slowdown of 2008-09 and a severe drought in 2009-10".Next, there are misgivings that privatization will lead to job losses and that candidates entitled to job reservations will be worse off. The former can partly be addressed as part of the privatization agreement. The latter requires political engagement and policy solutions. One way is for the government to upgrade its investment in promoting Dalit entrepreneurship in particular. Equity considerations thus demand that public policy creates better upfront pathways for people to attain a higher socio-economic status than they stand to lose once public sector enterprises are privatized.Many public sector businesses were created by governments at a time when India was poorer, incomes were smaller, the tax base narrower and tax rates higher. They were financed using large parts of our parents’ and grandparents’ incomes. Is it not fair that the original investors should benefit from the sale of assets that the government created with their money? There is an argument for putting part of the proceeds in the retirement accounts and pensions of our oldest taxpayers, as a way to compensate them for the sacrifices they made to finance the socialist state. Their voice is not politically strong, their demands not strident, but recognizing their contribution is the right thing to do.This piece was originally published in The Mint

Making State Finance Commissions work

State Finance Commissions (SFC), constitutional bodies that recommend allocating resources between state and local governments, have had a chequered history in India. In yet another attempt to revive these institutions, the Fifteenth Union Finance Commission (15th UFC) recommended that the submission of SFC reports be a precondition for local governments to receive additional grants. The intention here is to nudge state governments to take SFCs seriously. In this article, we look at how this attempt might play out.Read the full article in Deccan Herald

Does the budget meet India’s Defence requirements?

Until 2019, defence spending made headlines around just two events in a year. The first was when the Union budget was tabled in Parliament, and the second was when the Swedish thinktank, SIPRI, released its formidable comparative military expenditure report. That scenario changed in FY 2020-21. China’s incursions in Ladakh highlighted the urgent and long-term need to prioritise defence. It brought home the point that the central focus of military planning should be China, not Pakistan. This need for prioritisation came even as the pandemic caused a drop in both economic activity and government revenue. Given this backdrop, the government had a challenging task on its hands. There are four key takeaways from the Union Budget 2021-22 for defence.Read the full article on Hindustan Times

Budget’s disinvestment targets are heroic. Modi govt must show unprecedented transparency

More than macroeconomic numbers like fiscal deficits, outlays and revenue targets, we can get a good sense of the Budget by looking at the tax rates. If there are new or higher taxes, or more complicated tax rules, it is usually a bad Budget. If there are lower taxes and compliance simplified, it’s a great Budget. And if, like the Budget Finance Minister Nirmala Sitharaman presented Monday, where the taxes remain unchanged amid an attempt to simplify their administration, then it’s a decent Budget. Considering that the Narendra Modi government does not intend to raise direct taxes amid the additional spending in the wake of the Covid-19 pandemic, by the tax-rate yardstick, we can grant that it is a fairly good Budget.Read the full article on ThePrint