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Reduced Share of States in Division of Central Taxes Can Have Adverse Impact on Welfare Programs

24 Aug 2022

GST

Most of the discussion on budgets in India is dominated by the discussion of union budget and hence adequate attention is not drawn to trends in state budgets. However this much is well-known that state governments have faced increasing pressure in recent years to meet the extra needs of people caused due to the adverse economic situation related to demonetization, the pandemic, prolonged lockdowns, adverse weather conditions and disaster situations, very high levels of unemployment combined with significant price-rise.

Of course the situation is not the same in all states in all these respects but by and large we can say that in most parts of India the people, particularly the weaker sections and the unorganized sector, not having employment security and social security, have been suffering the most on account of all these factors and hence there is a genuine need as well as pressure on state governments to increase various welfare expenditures to provide much needed relief to people.

In these conditions of enhanced responsibility, the difficulties of state governments have increased due to the fact in recent times states have received a significantly lesser share of central taxes compared to the legitimate expectation, based on finance commission recommendations, as well as the peak achieved earlier. According to the latest Finance Commission Report the share of states should be around 40% of gross taxes, but instead this has been around 29-30% in recent times. The union government has been resorting more and more to cesses and surcharges for raising resources, with their share in gross tax revenue almost doubling from around 10% to 20% within the last decade or so. As these cesses and surcharges are mostly not shared with states, the size of the divisible tool to be shared with states has been shrinking in relative terms.  On top of it , cesses and surcharges are not always being used for the purpose for which these were raised, thereby further messing up fiscal responsibility and transparency.

In fact the need to be fair to states has increased after the GST regime of indirect taxes was established as this greatly limits the capacity of any state government to raise resources  quickly, autonomously and more in keeping with their circumstances, as the power to decide indirect taxes is now more with the union government and the GST Council. Of course states are represented in the Council but their immediate ability to raise resources has certainly been affected adversely. The compensatory regime which was established for a limited period to temporarily sweeten the GST pill for state governments is also ending now and so it is all the more important for the union government to be more sensitive towards the financial needs of state governments. Unfortunately the union government has not quite lived up to this federal responsibility in recent times.

This can have adverse impacts at state level in several contexts but two of these adverse impacts may be emphasized here in particular. First and foremost, the welfare of people particularly weaker sections may be adversely affected in some crucial contexts, particularly in terms of the resources needed for the welfare initiatives which state governments want to take on their own, keeping in view also their special needs and circumstances as well as independent thinking, consultations with people regarding their needs and promises to people based on this. If states are unable to meet their share of contribution for some central programs and schemes, they may additionally lose more funds. Hence there may be a compelling need to provide this contribution. However if they prioritize this the most  in a situation of resource constraints, then what they are left with for their own welfare schemes, which may be more relevant to their specific needs, may get reduced further.

Secondly, in a situation of such overall resource constraints, state governments may become more dependent on those kinds of revenue sources which may have very harmful social and ecological costs. Some states have been desperate to increase their excise earnings by promoting liquor consumption and opening more liquor vends even in more remote villages. The new controversial excise policy of the AAP government in Delhi sought to increase revenue by increasing the number of liquor vends in Delhi at one go from around 630 to about 850. Some states have been more eager to promote earnings from excessive and indiscriminate mining and quarrying with very high environmental costs.

Both these trends have been reported from several states and while narrow local and personal factors may also be involved here, one compelling factor has also been to tap to the maximum whatever quick revenue increasing sources may still be within the grasp of the state government concerned, to make up for resource shortages.

To avoid such adverse situations which are harmful for people, the union government should give much more attention to ensuring that states get their just share. The demands for a higher share of taxes to be provided to state governments and extension of GST compensation to them, which have have been frequently voiced in recent times, deserve urgent attention and sympathetic consideration from the union government.

Bharat Dogra is Honorary Convener, Campaign to Save Earth Now. His recent books include Planet in Peril, Man over Machine and India’s Quest for Sustainable Farming and Healthy Food.

Reduced Share of States in Division of Central Taxes Can Have Adverse Impact on Welfare Programs

GST

Most of the discussion on budgets in India is dominated by the discussion of union budget and hence adequate attention is not drawn to trends in state budgets. However this much is well-known that state governments have faced increasing pressure in recent years to meet the extra needs of people caused due to the adverse economic situation related to demonetization, the pandemic, prolonged lockdowns, adverse weather conditions and disaster situations, very high levels of unemployment combined with significant price-rise.

Of course the situation is not the same in all states in all these respects but by and large we can say that in most parts of India the people, particularly the weaker sections and the unorganized sector, not having employment security and social security, have been suffering the most on account of all these factors and hence there is a genuine need as well as pressure on state governments to increase various welfare expenditures to provide much needed relief to people.

In these conditions of enhanced responsibility, the difficulties of state governments have increased due to the fact in recent times states have received a significantly lesser share of central taxes compared to the legitimate expectation, based on finance commission recommendations, as well as the peak achieved earlier. According to the latest Finance Commission Report the share of states should be around 40% of gross taxes, but instead this has been around 29-30% in recent times. The union government has been resorting more and more to cesses and surcharges for raising resources, with their share in gross tax revenue almost doubling from around 10% to 20% within the last decade or so. As these cesses and surcharges are mostly not shared with states, the size of the divisible tool to be shared with states has been shrinking in relative terms.  On top of it , cesses and surcharges are not always being used for the purpose for which these were raised, thereby further messing up fiscal responsibility and transparency.

In fact the need to be fair to states has increased after the GST regime of indirect taxes was established as this greatly limits the capacity of any state government to raise resources  quickly, autonomously and more in keeping with their circumstances, as the power to decide indirect taxes is now more with the union government and the GST Council. Of course states are represented in the Council but their immediate ability to raise resources has certainly been affected adversely. The compensatory regime which was established for a limited period to temporarily sweeten the GST pill for state governments is also ending now and so it is all the more important for the union government to be more sensitive towards the financial needs of state governments. Unfortunately the union government has not quite lived up to this federal responsibility in recent times.

This can have adverse impacts at state level in several contexts but two of these adverse impacts may be emphasized here in particular. First and foremost, the welfare of people particularly weaker sections may be adversely affected in some crucial contexts, particularly in terms of the resources needed for the welfare initiatives which state governments want to take on their own, keeping in view also their special needs and circumstances as well as independent thinking, consultations with people regarding their needs and promises to people based on this. If states are unable to meet their share of contribution for some central programs and schemes, they may additionally lose more funds. Hence there may be a compelling need to provide this contribution. However if they prioritize this the most  in a situation of resource constraints, then what they are left with for their own welfare schemes, which may be more relevant to their specific needs, may get reduced further.

Secondly, in a situation of such overall resource constraints, state governments may become more dependent on those kinds of revenue sources which may have very harmful social and ecological costs. Some states have been desperate to increase their excise earnings by promoting liquor consumption and opening more liquor vends even in more remote villages. The new controversial excise policy of the AAP government in Delhi sought to increase revenue by increasing the number of liquor vends in Delhi at one go from around 630 to about 850. Some states have been more eager to promote earnings from excessive and indiscriminate mining and quarrying with very high environmental costs.

Both these trends have been reported from several states and while narrow local and personal factors may also be involved here, one compelling factor has also been to tap to the maximum whatever quick revenue increasing sources may still be within the grasp of the state government concerned, to make up for resource shortages.

To avoid such adverse situations which are harmful for people, the union government should give much more attention to ensuring that states get their just share. The demands for a higher share of taxes to be provided to state governments and extension of GST compensation to them, which have have been frequently voiced in recent times, deserve urgent attention and sympathetic consideration from the union government.

Bharat Dogra is Honorary Convener, Campaign to Save Earth Now. His recent books include Planet in Peril, Man over Machine and India’s Quest for Sustainable Farming and Healthy Food.

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Govt ‘Favouring’ Private Telcos, ‘Ignoring’ BSNL: Trade Unions

The Centre is silent on the launch of BSNL’s much-delayed 4G services.

23 Aug 2022

5G

Kolkata: The Azadi Ka Amrit Mahotsav celebrations turned out be a non-event for the Bharat Sanchar Nigam Limited (BSNL) staff. Around 10-12 weeks before Independence Day, the Sanchar Bhawan indicated that Prime Minister Narendra Modi could announce a date for the launch of BSNL’s much-delayed 4G services during his I-Day address to the nation.

Subsequently, however, another story was doing the rounds: Modi might only announce a token launch from either Chandigarh or Ambala, where public sector technology firm Centre for Development of Telematics (C-DOT) was testing its core network with the radio equipment of Tejas Networks Limited and other software components of Tata Consultancy Services (TCS).

Together, Tejas—a part of the TCS Group outfit—TCS and C-DOT “have been entrusted the responsibility by BSNL” for executing its 4G entry as a symbol of Modi’s Atmanirbhar Bharat drive and facilitating the graduation into 5G in due course. Though this information is in the public domain, the intriguing official silence on the role of the three companies continues. The three companies themselves are also mum. 

The optimism of BSNL employees about the launch of 4G services can partly be traced to the Union Cabinet’s announcement of Rs 1.64 lakh crore revival package for the beleaguered telecom service provider (TSP) on July 27. In the media briefing the same day, Union minister for communications Ashwini Vaishnaw went to the extent of predicting the telco’s return to profit by 2026-27 on execution of the four-year rescue package but was silent on when allotment of 4G spectrum and the timeline for its launch. 

However, a leaked audio of Vaishnaw’s first meeting with senior BSNL senior executives on August 4 revealed the minister warning the employees of voluntary retirement if they don’t’ perform. “I will be measuring the performance every month. Those who don’t want to work can take voluntary retirement and go home. Or you will be made to take voluntary retirement—like what happened in the Railways,” he was heard saying in the clip.

Warning the employees that “this is going to be the new normal from now on”, Vaishnaw further warned, “Perform or perish. Only your performance can save you in this competitive industry. I want to see the results in the next 24 months. I will see monthly report on your performance.” 

According to sources, Vaishnaw’s sudden warning has anguished and demoralised the BSNL employees. He blamed the employees for the telco’s present condition while not arranging for the spectrum and equipment needed for the launch of 4G services. 

On August 18, Vaishnaw announced on Twitter and Koo that 5G spectrum assignment letters had been issued to TSPs. “5G update: Spectrum assignment letter issued. Requesting TSPs to prepare for 5G launch,” he tweeted.

https://twitter.com/AshwiniVaishnaw/status/1560126664805613569

Further, The Economic Times had reported on August 15 that the department of telecommunications (DoT) has started to unlock and sell an additional 5,500 MHz of 5G spectrum worth more than Rs 35,000 crore. A strategy to incorporate 37.0-42.5 GHz as international mobile telecommunications (IMT) bands will be worked out by DoT’s internal committee, which will help in offering 5G fixed wireless access service. 

This will be another avenue for growth of private TSPs, trade unions alleged. All Unions and Associations of BSNL (AUAB) chairman Chandeshwar Singh, Bharatiya Mazdoor Sangh national executive member SVS Subrahmanyam and BSNL Employees Union general secretary P Abhimanyu alleged that Vaishnaw is being “unfair” to the employees. 

“Some disgusted and angry employees feel that they were much better off in DoT,” said Singh. Subrahmanyam informed that “only some time back, our men erected a mobile tower at a widely visited temple at Saharanpur, UP, in just 20 days. The minister does not make note of such achievements. Our men provide services in extremist-infested areas and sensitive areas of the Northeast and also play a key role in defence communications”. 

Further mentioning the importance of BSNL, Singh said, “BSNL was asked in 2018 to implement the Network for Spectrum project, under which as a reciprocal gesture for release of spectrum held by the armed forces, the Centre had increased the allocation of funds for laying alternate communication network for the defence sector. Our engineers have often to spend a part of their salaries to keep the system going. They know that they will have to wait indefinitely for reimbursement if at all made by the company.” 

Abhimanyu said that “we will have no inhibition if we are asked to work with indigenously developed but proven technology”. But the government is “allowing private TSPs to import commercially proven technology and asking us to work with untested domestically developed technology”, he alleged. “Records will show how many times BSNL has been prevented from procuring equipment for 4G and upgradation of the existing network of base transceiver stations,” he further alleged.

“If roadblocks were not created, the company could have begun 4G services, at least, two years ago. The biggest damage to BSNL’s prospects was caused during the UPA regime by telecom minister A Raja,” Subrahmanyam alleged pointing out that “wage revision has been pending since 2017”.

For the record, the second rescue package of Rs 1.64 lakh crore has a cash component of Rs 43,964 crore and a non-cash component of Rs 1.2 lakh crore. A purpose-wise break-up is given below:

*Administrative allocation of spectrum in 900/1,800 MHz band at a cost of Rs 44,993 crore through equity infusion

*Capex support of Rs 22,471 crore over the next four years to boost development and deployment of  Atmanirbhar 4G stack

*Rs 13,789 crore to be provided as viability gap funding for commercially unviable rural wireline operation undertaken between 2014-15 and 2019-20 as part of the Centre’s social objectives

*To distress the company’s balance sheet, its statutory adjusted gross revenue dues (spectrum usage charges and licence fees) of Rs 33,404 crore will be settled by conversion into equity

*Balance sheet distressing action plan also includes providing sovereign guarantee for Rs 40,399 crore the company will raise by issuing long-term bonds to repay high-cost debt 

*Company to reissue preference shares of Rs 7,500 crore to the Union government

*Bharat Broadband Network Ltd, initially DoT’s SPV for incremental laying of optical fibre in gram panchayat areas and later converted into a PSU, is to be merged into BSNL [Scheme originally called National Optical Fibre Network and later rechristened BharatNet]  

*The company’s authorised capital is to be raised to Rs 1.5 lakh crore in lieu of dues, capex and allotment of spectrum. 

Vaishnaw told the media on July 27 that in the government’s reckoning, BSNL would emerge as a profit-earning entity in 2026-27 as these measures get executed in a pre-determined timeframe. [Rescue package I was granted on October 23, 2019, when the ministry was headed by Ravi Shankar Prasad. The bulk of the funds was meant for implementing the country’s most sweeping VRS which saw the exit of more  than 92,000 employees—78,000-plus from BSNL and the rest from MTNL on January 31, 2020—in one go. To leave no scope for any recruitment in their place, the DoT simultaneously abolished the posts.   

The writer is an independent journalist. Views expressed are personal

Courtesy: Newsclick

Govt ‘Favouring’ Private Telcos, ‘Ignoring’ BSNL: Trade Unions

The Centre is silent on the launch of BSNL’s much-delayed 4G services.

5G

Kolkata: The Azadi Ka Amrit Mahotsav celebrations turned out be a non-event for the Bharat Sanchar Nigam Limited (BSNL) staff. Around 10-12 weeks before Independence Day, the Sanchar Bhawan indicated that Prime Minister Narendra Modi could announce a date for the launch of BSNL’s much-delayed 4G services during his I-Day address to the nation.

Subsequently, however, another story was doing the rounds: Modi might only announce a token launch from either Chandigarh or Ambala, where public sector technology firm Centre for Development of Telematics (C-DOT) was testing its core network with the radio equipment of Tejas Networks Limited and other software components of Tata Consultancy Services (TCS).

Together, Tejas—a part of the TCS Group outfit—TCS and C-DOT “have been entrusted the responsibility by BSNL” for executing its 4G entry as a symbol of Modi’s Atmanirbhar Bharat drive and facilitating the graduation into 5G in due course. Though this information is in the public domain, the intriguing official silence on the role of the three companies continues. The three companies themselves are also mum. 

The optimism of BSNL employees about the launch of 4G services can partly be traced to the Union Cabinet’s announcement of Rs 1.64 lakh crore revival package for the beleaguered telecom service provider (TSP) on July 27. In the media briefing the same day, Union minister for communications Ashwini Vaishnaw went to the extent of predicting the telco’s return to profit by 2026-27 on execution of the four-year rescue package but was silent on when allotment of 4G spectrum and the timeline for its launch. 

However, a leaked audio of Vaishnaw’s first meeting with senior BSNL senior executives on August 4 revealed the minister warning the employees of voluntary retirement if they don’t’ perform. “I will be measuring the performance every month. Those who don’t want to work can take voluntary retirement and go home. Or you will be made to take voluntary retirement—like what happened in the Railways,” he was heard saying in the clip.

Warning the employees that “this is going to be the new normal from now on”, Vaishnaw further warned, “Perform or perish. Only your performance can save you in this competitive industry. I want to see the results in the next 24 months. I will see monthly report on your performance.” 

According to sources, Vaishnaw’s sudden warning has anguished and demoralised the BSNL employees. He blamed the employees for the telco’s present condition while not arranging for the spectrum and equipment needed for the launch of 4G services. 

On August 18, Vaishnaw announced on Twitter and Koo that 5G spectrum assignment letters had been issued to TSPs. “5G update: Spectrum assignment letter issued. Requesting TSPs to prepare for 5G launch,” he tweeted.

https://twitter.com/AshwiniVaishnaw/status/1560126664805613569

Further, The Economic Times had reported on August 15 that the department of telecommunications (DoT) has started to unlock and sell an additional 5,500 MHz of 5G spectrum worth more than Rs 35,000 crore. A strategy to incorporate 37.0-42.5 GHz as international mobile telecommunications (IMT) bands will be worked out by DoT’s internal committee, which will help in offering 5G fixed wireless access service. 

This will be another avenue for growth of private TSPs, trade unions alleged. All Unions and Associations of BSNL (AUAB) chairman Chandeshwar Singh, Bharatiya Mazdoor Sangh national executive member SVS Subrahmanyam and BSNL Employees Union general secretary P Abhimanyu alleged that Vaishnaw is being “unfair” to the employees. 

“Some disgusted and angry employees feel that they were much better off in DoT,” said Singh. Subrahmanyam informed that “only some time back, our men erected a mobile tower at a widely visited temple at Saharanpur, UP, in just 20 days. The minister does not make note of such achievements. Our men provide services in extremist-infested areas and sensitive areas of the Northeast and also play a key role in defence communications”. 

Further mentioning the importance of BSNL, Singh said, “BSNL was asked in 2018 to implement the Network for Spectrum project, under which as a reciprocal gesture for release of spectrum held by the armed forces, the Centre had increased the allocation of funds for laying alternate communication network for the defence sector. Our engineers have often to spend a part of their salaries to keep the system going. They know that they will have to wait indefinitely for reimbursement if at all made by the company.” 

Abhimanyu said that “we will have no inhibition if we are asked to work with indigenously developed but proven technology”. But the government is “allowing private TSPs to import commercially proven technology and asking us to work with untested domestically developed technology”, he alleged. “Records will show how many times BSNL has been prevented from procuring equipment for 4G and upgradation of the existing network of base transceiver stations,” he further alleged.

“If roadblocks were not created, the company could have begun 4G services, at least, two years ago. The biggest damage to BSNL’s prospects was caused during the UPA regime by telecom minister A Raja,” Subrahmanyam alleged pointing out that “wage revision has been pending since 2017”.

For the record, the second rescue package of Rs 1.64 lakh crore has a cash component of Rs 43,964 crore and a non-cash component of Rs 1.2 lakh crore. A purpose-wise break-up is given below:

*Administrative allocation of spectrum in 900/1,800 MHz band at a cost of Rs 44,993 crore through equity infusion

*Capex support of Rs 22,471 crore over the next four years to boost development and deployment of  Atmanirbhar 4G stack

*Rs 13,789 crore to be provided as viability gap funding for commercially unviable rural wireline operation undertaken between 2014-15 and 2019-20 as part of the Centre’s social objectives

*To distress the company’s balance sheet, its statutory adjusted gross revenue dues (spectrum usage charges and licence fees) of Rs 33,404 crore will be settled by conversion into equity

*Balance sheet distressing action plan also includes providing sovereign guarantee for Rs 40,399 crore the company will raise by issuing long-term bonds to repay high-cost debt 

*Company to reissue preference shares of Rs 7,500 crore to the Union government

*Bharat Broadband Network Ltd, initially DoT’s SPV for incremental laying of optical fibre in gram panchayat areas and later converted into a PSU, is to be merged into BSNL [Scheme originally called National Optical Fibre Network and later rechristened BharatNet]  

*The company’s authorised capital is to be raised to Rs 1.5 lakh crore in lieu of dues, capex and allotment of spectrum. 

Vaishnaw told the media on July 27 that in the government’s reckoning, BSNL would emerge as a profit-earning entity in 2026-27 as these measures get executed in a pre-determined timeframe. [Rescue package I was granted on October 23, 2019, when the ministry was headed by Ravi Shankar Prasad. The bulk of the funds was meant for implementing the country’s most sweeping VRS which saw the exit of more  than 92,000 employees—78,000-plus from BSNL and the rest from MTNL on January 31, 2020—in one go. To leave no scope for any recruitment in their place, the DoT simultaneously abolished the posts.   

The writer is an independent journalist. Views expressed are personal

Courtesy: Newsclick

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Corporate tax cuts: Revenue lost could have funded important welfare projects

Amount could have doubled the budget for 20 crucial ministries and departments

18 Aug 2022

Corporate tax
Image: PTI

In 2019, the Government of India announced a reduction of corporate tax rate from 30 per cent to 22 per cent, along with a further reduction to 15 per cent for new corporations. The Parliamentary Committee on Estimates has recently stated that this has led to a revenue loss of Rs. 1.84 lakh crore to the public exchequer in the two years: 2019-20 and 2020-21.

This raises the question regarding how much we have lost in terms of funds that could have been utilized for priority tasks. What we should not forget is that many important schemes and programs have been facing severe resource constraints. Inadequate allocations have been made for important welfare and development programs, and then further cuts have been made, citing resource constraints. Hence questions are bound to be asked regarding the additional funds that could have become available for priority needs if this loss of revenue amounting to Rs. 1.84 lakh crore had not taken place.

Here we present calculations to show that an amount of Rs. 1.84 lakh crore would have been adequate to exactly double the allocations for as many 20 departments and ministries which are very important for welfare and development.

In the table below we show the combined actual expenditure for 2019-20 plus 2020-21 for 20 ministries and departments. By adding these we get a figure of Rs. 1.84 lakh crore. In other words, if the loss to revenue caused by corporate tax cut had not taken place, then there was a potential of exactly doubling the budget/expenditure of all these 20 departments and ministries.

The expenditure data has been taken from the expenditure profile for these two years provided by the Budget Division of the Ministry of Finance, and then adding the figures for the two years.

Combined Actual Expenditure of 20 Ministries and Departments for 2019-20 and 2020-21

1. Ministry of Environment, Forests and Climate Change – Rs. 4,486 crores

2. Ministry of Labor and Employment—Rs. 23,003 crores

3. Ministry of Minority Affairs—Rs. 8,351 crores

4. Department of Social Justice and Empowerment—Rs. 16,771 crores

5. Department of Empowerment of Persons with Disabilities—Rs. 1,864 crores

6. Ministry of Tribal Affairs—Rs. 12,821 crores

7. Ministry of Women and Child Development—Rs. 42,395 crores

8. Ministry of Youth Affairs and Sports—Rs. 4,384 crores

9. Department of Science and Technology—Rs. 10,300 crores

10. Department of Health Research—Rs. 4,984 crores

11. Ministry of Ayush—Rs. 3,910 crores

12. Department of Pharmaceuticals—Rs. 1,009 crores

13. Ministry of Culture—Rs. 4,629 crores

14. Ministry of Development of North-Eastern Region—Rs. 4,510 crores

15. Department of Animal Husbandry and Dairying—Rs. 5,175 crores

16. Department of Water Resources, River Development and Ganga Rejuvenation—Rs. 14,650 crores

17. Ministry of Micro, Small and Medium Enterprises—Rs. 12,152 crores

18. Ministry of New and Renewable Energy—Rs. 6,051 crores

19. Ministry of Panchayati Raj—Rs. 1,184 crores

20. Ministry of Planning-Rs. 1,316 crores

Total—Rs. 1.83,945 crore (approximately Rs. 1.84 lakh crore).

As can be easily seen, several very important ministries and departments are covered in the table above, including the Ministry of Women and Child Development, Ministry of Labor and Employment, Ministry of Tribal Affairs, Ministry of Minority Affairs, Department of Social Justice and Empowerment and Department of Science and Technology.

Several schemes and programs of these various ministries and departments have been suffering due to lack of availability of adequate resources and have been in news due to this. Imagine what a relief it would be if the resources available could be doubled, as would have been possible if the loss on account of arbitrary and unwarranted cut of corporate tax was avoided.

Here it may be recalled that this cut in corporate tax, announced in September 2019 just before the Howdy Modi event organised in the USA, had attracted a lot of criticism at that time as well.

The lesson for future is that in situations of severe resource constraints revenue opportunities should not be squandered just to appease some powerful interests. The costs for people can be very heavy, as was soon seen during the pandemic times which followed this tax cut.

*Views expressed are the author’s own. The writer is Honorary Convener, Campaign to Save Earth Now.

Other articles by Bharat Dogra:

Himachal Pradesh: Apple growers continue protest over adverse impact of Big Business

80th Anniversary of Quit India Movement

Why the Struggle of Dhinkia Deserves Wide Support

Corporate tax cuts: Revenue lost could have funded important welfare projects

Amount could have doubled the budget for 20 crucial ministries and departments

Corporate tax
Image: PTI

In 2019, the Government of India announced a reduction of corporate tax rate from 30 per cent to 22 per cent, along with a further reduction to 15 per cent for new corporations. The Parliamentary Committee on Estimates has recently stated that this has led to a revenue loss of Rs. 1.84 lakh crore to the public exchequer in the two years: 2019-20 and 2020-21.

This raises the question regarding how much we have lost in terms of funds that could have been utilized for priority tasks. What we should not forget is that many important schemes and programs have been facing severe resource constraints. Inadequate allocations have been made for important welfare and development programs, and then further cuts have been made, citing resource constraints. Hence questions are bound to be asked regarding the additional funds that could have become available for priority needs if this loss of revenue amounting to Rs. 1.84 lakh crore had not taken place.

Here we present calculations to show that an amount of Rs. 1.84 lakh crore would have been adequate to exactly double the allocations for as many 20 departments and ministries which are very important for welfare and development.

In the table below we show the combined actual expenditure for 2019-20 plus 2020-21 for 20 ministries and departments. By adding these we get a figure of Rs. 1.84 lakh crore. In other words, if the loss to revenue caused by corporate tax cut had not taken place, then there was a potential of exactly doubling the budget/expenditure of all these 20 departments and ministries.

The expenditure data has been taken from the expenditure profile for these two years provided by the Budget Division of the Ministry of Finance, and then adding the figures for the two years.

Combined Actual Expenditure of 20 Ministries and Departments for 2019-20 and 2020-21

1. Ministry of Environment, Forests and Climate Change – Rs. 4,486 crores

2. Ministry of Labor and Employment—Rs. 23,003 crores

3. Ministry of Minority Affairs—Rs. 8,351 crores

4. Department of Social Justice and Empowerment—Rs. 16,771 crores

5. Department of Empowerment of Persons with Disabilities—Rs. 1,864 crores

6. Ministry of Tribal Affairs—Rs. 12,821 crores

7. Ministry of Women and Child Development—Rs. 42,395 crores

8. Ministry of Youth Affairs and Sports—Rs. 4,384 crores

9. Department of Science and Technology—Rs. 10,300 crores

10. Department of Health Research—Rs. 4,984 crores

11. Ministry of Ayush—Rs. 3,910 crores

12. Department of Pharmaceuticals—Rs. 1,009 crores

13. Ministry of Culture—Rs. 4,629 crores

14. Ministry of Development of North-Eastern Region—Rs. 4,510 crores

15. Department of Animal Husbandry and Dairying—Rs. 5,175 crores

16. Department of Water Resources, River Development and Ganga Rejuvenation—Rs. 14,650 crores

17. Ministry of Micro, Small and Medium Enterprises—Rs. 12,152 crores

18. Ministry of New and Renewable Energy—Rs. 6,051 crores

19. Ministry of Panchayati Raj—Rs. 1,184 crores

20. Ministry of Planning-Rs. 1,316 crores

Total—Rs. 1.83,945 crore (approximately Rs. 1.84 lakh crore).

As can be easily seen, several very important ministries and departments are covered in the table above, including the Ministry of Women and Child Development, Ministry of Labor and Employment, Ministry of Tribal Affairs, Ministry of Minority Affairs, Department of Social Justice and Empowerment and Department of Science and Technology.

Several schemes and programs of these various ministries and departments have been suffering due to lack of availability of adequate resources and have been in news due to this. Imagine what a relief it would be if the resources available could be doubled, as would have been possible if the loss on account of arbitrary and unwarranted cut of corporate tax was avoided.

Here it may be recalled that this cut in corporate tax, announced in September 2019 just before the Howdy Modi event organised in the USA, had attracted a lot of criticism at that time as well.

The lesson for future is that in situations of severe resource constraints revenue opportunities should not be squandered just to appease some powerful interests. The costs for people can be very heavy, as was soon seen during the pandemic times which followed this tax cut.

*Views expressed are the author’s own. The writer is Honorary Convener, Campaign to Save Earth Now.

Other articles by Bharat Dogra:

Himachal Pradesh: Apple growers continue protest over adverse impact of Big Business

80th Anniversary of Quit India Movement

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‘Self-reliance for Poor and State Support for Business is the New Motto’—Jean Dreze

The noted economist and activist says the goal of public policies should be to improve people’s lives instead of being swayed by the interests of the privileged few.

16 Aug 2022

economy

Economist Jean Dreze has played a pioneering role in shaping India’s public and social policy. He is most well-known for his advocacy for the employment-guarantee legislation MGNREGA and the National Food Security Act (NFSA). In this interview with NewsClick, he talks about India’s social and economic policies, including the relationship between Hindutva and the economic model pursued today. He says is difficult to see a coherent strategy in current economic policies, while in the social sphere, ‘Rights are out, duties are in’. Edited excerpts.

Economic nationalism informed the freedom movement, which meant Indians took control of the economic sphere. Also, it meant boosting the public sector. What was the purpose behind it, and have we realised the goals?

Economic nationalism, like nationalism itself, can take many forms. I don’t think that it provides much policy guidance unless we spell out how national interests are defined. When India became independent, the control of the economy shifted from the colonial power to an elected national government, and that was certainly a good thing. It also ended the economic stagnation of the first half of the twentieth century and paved the way to sustained development. But does this mean that ‘Indians took control of the economic sphere’? Some did, some did not. Landless labourers, for instance, remained landless labourers, except in Kashmir, where there were extensive land reforms. By and large, the levers of the economy remained in privileged hands. The transfer of power from the colonial government to a privileged Indian minority was a limited form of economic nationalism, with slim results on its own for large parts of the nation.

One problem for India is to reconcile the conflict between capital and labour. What does the state’s retreat from production and public sector sell-off mean for the majority of working Indians?

Public enterprises can resolve the conflict between capital and labour only for a minority of public sector employees. Contrary to public perception, India’s public sector is one of the smallest in the world in terms of employment—barely 5 per cent of the workforce, compared with 12 per cent in Brazil, 22 per cent in the United Kingdom and 28 per cent in China according to ILO data. There is certainly much scope for expansion, especially in sectors like health and education. The fact remains that the bulk of the workforce will be employed in the private sector in the foreseeable future. The conflict between capital and labour there cannot be reconciled, but the state can help workers to handle it by expanding their rights, for instance, the right to decent work conditions and social security benefits. Workers’ organisations are also important in this regard, especially in the informal sector, where they are still few and far between. 

Taking a longer view, a more radical change in terms of the conflict can be achieved by giving workers more say in the management of private enterprises, if not control of it. In principle, many enterprises could be managed by the workers or by managers accountable to the workers. The bosses, of course, are not going to bow out sweetly, but an organised working class could possibly overcome their resistance step by step.

Hindutva is also a form of nationalism, which is proving very destructive. What is the economic model of today promoting? Like in the social sphere, does it also have hidden motives? 

Hindutva is a political movement, and its toll is more political than economic, whether it is the end of democracy or the breakup of the social fabric. In economic policies, there is more continuity than change. If anything, business-driven policies have intensified because business and Hindutva stand in a relation of mutual support. Hindutva adds some new elements, like the devaluation of rational thinking, the obsession with superpower status, the passion for centralisation, and the suspicion of anything foreign. But the material interests that drive economic policy are much the same as before, at least for now.

In matters of social policy, we did see major changes in the last eight years. Rights are out, duties are in. This change is reflected, for instance, in the central government’s hostility towards social programmes like the rural employment guarantee, maternity benefits, social security pensions and even child nutrition schemes. All of them have been undermined in one way or another. Self-reliance for the poor and state support for business seems to be the real meaning of Atmanirbhar Bharat.

How do you see the control of magnates over the economy and the tax breaks they get? Is it that Indians feel their power is not exploitative because they are not British companies as in the colonial era?

I think a lot of people have a vague awareness of corporate power and the wealth of the super-rich without necessarily realising their enormity. In the latest Mood of the Nation poll, the majority of respondents felt that today’s economic policies benefit big business. On the other hand, when it was pointed out a few days ago that it would take one million years for a hundred workers working at the minimum wage to earn as much as Gautam Adani already has, there was a flutter on social media, suggesting that most people do not realise how rich and powerful the super-rich are. But even if they do, it makes little difference because the public has little influence in these matters. Most people in India would probably support a wealth tax on the super-rich or higher property taxes, but none of that is likely to happen in a hurry. The power of the super-rich includes the power to defend their privileges.

Are ordinary farmers aware of how the terms of trade go against them?

I doubt that most farmers have a clear view of the terms of trade. They are obscure enough for economists. And they may or may not matter much to individual farmers. Roughly speaking, the terms of trade capture what the agricultural sector can buy from the rest of the economy per unit of produce sold in the market. This would be a useful statistic for a surplus farmer. On the other hand, consider farmers in Jharkhand, where I live. Most of them are deficit farmers who grow some of their food and buy the rest, along with other items, from their earnings as wage labourers in the non-agricultural sector. An improvement in the terms of trade may or may not help them. They have many other things to worry about, starting with the drought that is sweeping large parts of the state right now.

What most farmers do understand, I think, is that farming is not a very rewarding occupation, especially in dry-land areas. Their job is full of arduous work, hardships and uncertainty, but at the end of it, they can barely make ends meet. And it doesn’t get much better over time because productivity growth barely compensates for the shrinking of per-capita landholdings. Meanwhile, the rest of the economy is growing relatively fast, so farmers tend to be left behind. It is this relative loss, I think, that creates frustration among farmers and makes them look for alternatives.

How do you view the talk about ‘handouts’ and ‘doles’?

We should not use propaganda terms like doles and freebies used by the corporate-sponsored media to attack whatever subsidies they dislike. We should assess subsidies on their own merit. Subsidies may be justified on various grounds, such as social equity, public health or the protection of the environment. If they have no justification, you could call them wasteful subsidies. The bulk of wasteful subsidies in India benefits privileged groups and the corporate sector, for instance, in the form of over-subsidised power, tax concessions, unrecovered loans and privatisation of natural resources. These are the big handouts if you insist on using that sort of term. Some wasteful subsidies may benefit poor people as well, but they are quite small in comparison.

Redistribution is an essential role of the state, and there is nothing wrong with assisting the poor by providing certain facilities or commodities to them for free. Politicians often make exaggerated promises for their own purpose, which is not always a healthy thing. But it is only by extracting these sorts of promises that the poor get anything in India’s lopsided democracy. Most of the big steps of social policy in the recent past, like the employment guarantee act and the National Food Security Act, were made possible by democratic politics. The idea of restraining this process, as the Supreme Court reportedly suggested, is quite dangerous.

Is India facing a crisis of what should be its next development strategy? And what is the way out?

It is indeed difficult to see a coherent strategy in current economic policies beyond the general love of business. The NDA government came to power with a clarion call for the return of black money stashed abroad, but this turned out to be a wild goose chase. A surgical strike on black money at home was the next move, but this backfired badly when demonetisation sent the economy off the rail. The trail of confused policies continued with Make in India, Smart Cities, Atmanirbhar Bharat, “one district-one product”, and quixotic goals like doubling farm incomes by 2022 (that’s today) or making India a $5 trillion economy by 2024.

The common denominator of these policies is that they leave a lot to the imagination, so the specifics are easily turned into business sops. Atmanirbhar Bharat, for instance, quickly metamorphosed into the so-called “production linked incentive scheme”, a Rs 2 lakh crore shower of subsidies for big business, including foreign companies like Ola and Apple. As Raghuram Rajan pointed out, we are in danger of a return to some sort of Licence Raj.

The way out is to strive for public policies that focus on improving people’s lives instead of being swayed by privileged interests. The expansion of human capabilities is not just a welfare issue, it is also a springboard for development. A modest increase in the tax-GDP ratio, cuts in wasteful subsidies and a big investment in health, nutrition, education and social security would be a good start. It would serve the triple goal of economic development, helping the poor and curbing India’s huge inequalities.

Courtesy: Newsclick

‘Self-reliance for Poor and State Support for Business is the New Motto’—Jean Dreze

The noted economist and activist says the goal of public policies should be to improve people’s lives instead of being swayed by the interests of the privileged few.

economy

Economist Jean Dreze has played a pioneering role in shaping India’s public and social policy. He is most well-known for his advocacy for the employment-guarantee legislation MGNREGA and the National Food Security Act (NFSA). In this interview with NewsClick, he talks about India’s social and economic policies, including the relationship between Hindutva and the economic model pursued today. He says is difficult to see a coherent strategy in current economic policies, while in the social sphere, ‘Rights are out, duties are in’. Edited excerpts.

Economic nationalism informed the freedom movement, which meant Indians took control of the economic sphere. Also, it meant boosting the public sector. What was the purpose behind it, and have we realised the goals?

Economic nationalism, like nationalism itself, can take many forms. I don’t think that it provides much policy guidance unless we spell out how national interests are defined. When India became independent, the control of the economy shifted from the colonial power to an elected national government, and that was certainly a good thing. It also ended the economic stagnation of the first half of the twentieth century and paved the way to sustained development. But does this mean that ‘Indians took control of the economic sphere’? Some did, some did not. Landless labourers, for instance, remained landless labourers, except in Kashmir, where there were extensive land reforms. By and large, the levers of the economy remained in privileged hands. The transfer of power from the colonial government to a privileged Indian minority was a limited form of economic nationalism, with slim results on its own for large parts of the nation.

One problem for India is to reconcile the conflict between capital and labour. What does the state’s retreat from production and public sector sell-off mean for the majority of working Indians?

Public enterprises can resolve the conflict between capital and labour only for a minority of public sector employees. Contrary to public perception, India’s public sector is one of the smallest in the world in terms of employment—barely 5 per cent of the workforce, compared with 12 per cent in Brazil, 22 per cent in the United Kingdom and 28 per cent in China according to ILO data. There is certainly much scope for expansion, especially in sectors like health and education. The fact remains that the bulk of the workforce will be employed in the private sector in the foreseeable future. The conflict between capital and labour there cannot be reconciled, but the state can help workers to handle it by expanding their rights, for instance, the right to decent work conditions and social security benefits. Workers’ organisations are also important in this regard, especially in the informal sector, where they are still few and far between. 

Taking a longer view, a more radical change in terms of the conflict can be achieved by giving workers more say in the management of private enterprises, if not control of it. In principle, many enterprises could be managed by the workers or by managers accountable to the workers. The bosses, of course, are not going to bow out sweetly, but an organised working class could possibly overcome their resistance step by step.

Hindutva is also a form of nationalism, which is proving very destructive. What is the economic model of today promoting? Like in the social sphere, does it also have hidden motives? 

Hindutva is a political movement, and its toll is more political than economic, whether it is the end of democracy or the breakup of the social fabric. In economic policies, there is more continuity than change. If anything, business-driven policies have intensified because business and Hindutva stand in a relation of mutual support. Hindutva adds some new elements, like the devaluation of rational thinking, the obsession with superpower status, the passion for centralisation, and the suspicion of anything foreign. But the material interests that drive economic policy are much the same as before, at least for now.

In matters of social policy, we did see major changes in the last eight years. Rights are out, duties are in. This change is reflected, for instance, in the central government’s hostility towards social programmes like the rural employment guarantee, maternity benefits, social security pensions and even child nutrition schemes. All of them have been undermined in one way or another. Self-reliance for the poor and state support for business seems to be the real meaning of Atmanirbhar Bharat.

How do you see the control of magnates over the economy and the tax breaks they get? Is it that Indians feel their power is not exploitative because they are not British companies as in the colonial era?

I think a lot of people have a vague awareness of corporate power and the wealth of the super-rich without necessarily realising their enormity. In the latest Mood of the Nation poll, the majority of respondents felt that today’s economic policies benefit big business. On the other hand, when it was pointed out a few days ago that it would take one million years for a hundred workers working at the minimum wage to earn as much as Gautam Adani already has, there was a flutter on social media, suggesting that most people do not realise how rich and powerful the super-rich are. But even if they do, it makes little difference because the public has little influence in these matters. Most people in India would probably support a wealth tax on the super-rich or higher property taxes, but none of that is likely to happen in a hurry. The power of the super-rich includes the power to defend their privileges.

Are ordinary farmers aware of how the terms of trade go against them?

I doubt that most farmers have a clear view of the terms of trade. They are obscure enough for economists. And they may or may not matter much to individual farmers. Roughly speaking, the terms of trade capture what the agricultural sector can buy from the rest of the economy per unit of produce sold in the market. This would be a useful statistic for a surplus farmer. On the other hand, consider farmers in Jharkhand, where I live. Most of them are deficit farmers who grow some of their food and buy the rest, along with other items, from their earnings as wage labourers in the non-agricultural sector. An improvement in the terms of trade may or may not help them. They have many other things to worry about, starting with the drought that is sweeping large parts of the state right now.

What most farmers do understand, I think, is that farming is not a very rewarding occupation, especially in dry-land areas. Their job is full of arduous work, hardships and uncertainty, but at the end of it, they can barely make ends meet. And it doesn’t get much better over time because productivity growth barely compensates for the shrinking of per-capita landholdings. Meanwhile, the rest of the economy is growing relatively fast, so farmers tend to be left behind. It is this relative loss, I think, that creates frustration among farmers and makes them look for alternatives.

How do you view the talk about ‘handouts’ and ‘doles’?

We should not use propaganda terms like doles and freebies used by the corporate-sponsored media to attack whatever subsidies they dislike. We should assess subsidies on their own merit. Subsidies may be justified on various grounds, such as social equity, public health or the protection of the environment. If they have no justification, you could call them wasteful subsidies. The bulk of wasteful subsidies in India benefits privileged groups and the corporate sector, for instance, in the form of over-subsidised power, tax concessions, unrecovered loans and privatisation of natural resources. These are the big handouts if you insist on using that sort of term. Some wasteful subsidies may benefit poor people as well, but they are quite small in comparison.

Redistribution is an essential role of the state, and there is nothing wrong with assisting the poor by providing certain facilities or commodities to them for free. Politicians often make exaggerated promises for their own purpose, which is not always a healthy thing. But it is only by extracting these sorts of promises that the poor get anything in India’s lopsided democracy. Most of the big steps of social policy in the recent past, like the employment guarantee act and the National Food Security Act, were made possible by democratic politics. The idea of restraining this process, as the Supreme Court reportedly suggested, is quite dangerous.

Is India facing a crisis of what should be its next development strategy? And what is the way out?

It is indeed difficult to see a coherent strategy in current economic policies beyond the general love of business. The NDA government came to power with a clarion call for the return of black money stashed abroad, but this turned out to be a wild goose chase. A surgical strike on black money at home was the next move, but this backfired badly when demonetisation sent the economy off the rail. The trail of confused policies continued with Make in India, Smart Cities, Atmanirbhar Bharat, “one district-one product”, and quixotic goals like doubling farm incomes by 2022 (that’s today) or making India a $5 trillion economy by 2024.

The common denominator of these policies is that they leave a lot to the imagination, so the specifics are easily turned into business sops. Atmanirbhar Bharat, for instance, quickly metamorphosed into the so-called “production linked incentive scheme”, a Rs 2 lakh crore shower of subsidies for big business, including foreign companies like Ola and Apple. As Raghuram Rajan pointed out, we are in danger of a return to some sort of Licence Raj.

The way out is to strive for public policies that focus on improving people’s lives instead of being swayed by privileged interests. The expansion of human capabilities is not just a welfare issue, it is also a springboard for development. A modest increase in the tax-GDP ratio, cuts in wasteful subsidies and a big investment in health, nutrition, education and social security would be a good start. It would serve the triple goal of economic development, helping the poor and curbing India’s huge inequalities.

Courtesy: Newsclick

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Banks write off about Rs 10 lakh crore in last five financial years

Highest number of wilful defaulters reported during 2020-21

10 Aug 2022

Finance

New Delhi: A recent Parliament reply disclosed that scheduled commercial banks have written off loans worth about Rs 10 lakh crore in the last five financial years.

According to a reply by the Finance Ministry, during 2021-22, the write-off amount came down to Rs 1,57,096 crore compared to Rs 2,02,781 crore in 2020-21.

As per the written reply by Minister of State for Finance, Bhagwat K. Karad in Rajya Sabha, during 2019-20, the write-off was worth Rs 2,34,170 crore, down from Rs 2,36,265 crore, the highest in five years recorded in 2018-19. During 2017-18, the write-off by banks stood at Rs 1,61,328 crore.

In all, bank loans to the tune of Rs 9,91,640 crore have been written off in the last five years — 2017-18 to 2021-22.

He also said that “scheduled commercial banks (SCBs) and all Indian financial institutions report certain credit information of all borrowers having aggregate credit exposure of Rs 5 crore and above to RBI under its Central Repository of Information on Large Credits database.

As per the data, the highest number of 2,840 wilful defaulters reported during 2020-21 was followed by 2,700 in 2021-22. The number of wilful defaulters stood at 2,207 at the end of March 2019 that rose to 2,469 in 2019-20.

Gitanjali Gems topped the list of 25 wilful defaulters followed by Era Infra Engineering, Concast Steel and Power, REI Agro Ltd and ABG Shipyard Ltd.

Similarly, Mehul Choksi’s company Gitanjali Gems owes banks a whopping Rs 7,110 crore while Era Infra Engineering owes Rs 5,879 crore and Concast Steel and Power Ltd Rs 4,107 crore.

Courtesy: The Daily Siasat

Banks write off about Rs 10 lakh crore in last five financial years

Highest number of wilful defaulters reported during 2020-21

Finance

New Delhi: A recent Parliament reply disclosed that scheduled commercial banks have written off loans worth about Rs 10 lakh crore in the last five financial years.

According to a reply by the Finance Ministry, during 2021-22, the write-off amount came down to Rs 1,57,096 crore compared to Rs 2,02,781 crore in 2020-21.

As per the written reply by Minister of State for Finance, Bhagwat K. Karad in Rajya Sabha, during 2019-20, the write-off was worth Rs 2,34,170 crore, down from Rs 2,36,265 crore, the highest in five years recorded in 2018-19. During 2017-18, the write-off by banks stood at Rs 1,61,328 crore.

In all, bank loans to the tune of Rs 9,91,640 crore have been written off in the last five years — 2017-18 to 2021-22.

He also said that “scheduled commercial banks (SCBs) and all Indian financial institutions report certain credit information of all borrowers having aggregate credit exposure of Rs 5 crore and above to RBI under its Central Repository of Information on Large Credits database.

As per the data, the highest number of 2,840 wilful defaulters reported during 2020-21 was followed by 2,700 in 2021-22. The number of wilful defaulters stood at 2,207 at the end of March 2019 that rose to 2,469 in 2019-20.

Gitanjali Gems topped the list of 25 wilful defaulters followed by Era Infra Engineering, Concast Steel and Power, REI Agro Ltd and ABG Shipyard Ltd.

Similarly, Mehul Choksi’s company Gitanjali Gems owes banks a whopping Rs 7,110 crore while Era Infra Engineering owes Rs 5,879 crore and Concast Steel and Power Ltd Rs 4,107 crore.

Courtesy: The Daily Siasat

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Free-wheeling remarks on freebies

10 Aug 2022

MGNREGA

Suddenly the country is abuzz with freebies.The media resounding with high-minded denunciation of them.Experts,opinion makers,op-ed writers are homing in on them.The Supreme Court is shaking its head.Now a committee of taxpayers are to decide if parties can promise freebies before elections.That too at a time when prices of gas cylinders etc are hurtling through the roof.One question continues to nag the mind:What about the freebies the ruling party has already handed out?The opposition circles are however subdued.Perhaps they feel their hope of going one better than the government in offering freebies is getting dashed.Yet they too may end up demanding a level playing field on freebies.

But why all this pother now,when only a little while ago the government itself was handing out dollops of them to cheering crowds?To find an answer one has only to look at the collapsing economies on the country’s borders.The Covid,the oil crisis and the Ukraine war have put them under severe strain and ham-handed handling of the strain have built up pressures until they have nearly broken down.Their governments failed to respond appropriately to the crisis and their ineptitude aggravated it.Though our government is reluctant to admit it, its cavalier attitude to the economy seems to bring on dangerously similar consequences.Neo-liberal economies are difficult to turn around,as they depend on mysterious market forces while the state just monitors the ups and downs.The great virtue of business that can supposedly self-correct with rational analysis fails to work at this point.

But those whose eyes are not blinkered can perceive how the state in such an economy sleepwalks into a mire with unacknowledged interventions.The magic formula of ease of doing business leads to unacknowledged freebies to big business.Tax rebates to the tune of ten lakh crores of rupees in five years(as acknowledged in parliament on August 7)had not led to any noticeable spurt in investments.What is it if not freebies,though by another name?

But no.Freebies are what you hand out to the people,not what you gift the captains of big business.The same goes for the debt defaults on banks  turned into NPAs,thrice as much in amount.What you mark down for curtailment and elimination are the doles to the cussed lazy and unproductive plebs.The SC had on earlier occasions refused to interfere with policies,but are freebies not also policies?Even in countries with blazing capitalist banners there are subsidies and ‘incentives’ and food stamps during grave economic crisis.Since wise heads have decided that our blessed country is  immune to such crisis,it is therefore fair enough to let prices of essential goods soar and come down with a heavy hand on freebies.And hands off policies!

But when the freebies ARE ingredients of policies designed to protect people from starvation and want and alleviate poverty,is there any point in condemning them because they are not market-driven or not solely designed to benefit the wealthy?

Suppose the same imp  returns to power by casting black magic on the adversaries,as is the roaring practice now?Safe for another five years will it be legally entitled to roll back the flagship MGNREGA scheme?Bharat Dogra in his invaluable article some two or three issues back,shows the government under its spell  is starting to skimp funds for it,in latest move by some 30 p.c.Only fear of massive upsurge all over the country might deter it.But who knows?If they are mesmerized into  feeling securely entrenched,they could be ready for a bloody showdown.All one can say is,‘God forbid.’

But should MGNREGA have been the albatross around the government’s neck?Back in late nineteen sixties,American economist Robert Heilbroner,no fan of socialism or Mao,had admiringly noted that poor Chinese peasants had built massive infrastructure for an agricultural revolution with very basic tools and human labour and it would bear fruit in the next decade.His words proved prophetic and right through the upheavals of the Cultural Revolution it raised the Chinese economy to a higher level for take-off to a higher stage of growth.Why cannot the MGNREGA be  put to the same use and purpose?

Especially for planned water management and storage purposes with embankments,tanks,canals with a judicious mixture of local knowledge,civil engineering and environmental science?

It will then no longer be a tainted freebee,but a boon.

People should pay more attention to such possibilities in stead of blindly follow the inhuman maxims of neo-liberal economics.The money spent on them,not as naked bribes for votes,could also be spent in such a way as to enable the common man to produce more for himself and the country.The rebates on electricity in these days of high prices and meagre wages could not only brighten their lives,but also could be in exchange for rotator community service,again properly planned by grassroots activists.Neo liberal economics always ellides the human factor and turns the economy into a Fate. It is still possible to put people back into the scene as active voluntary agents,at least to some extent.As long as the logic of the masters is not allowed to control everything.

A friend from the countryside has complained that every family of small farmers in the state is getting free rice up to  60 or  70 kgs.This is the free gift of the BJP government,and farming being more than the price of rice in the market here,these lakhs of small farmers no longer work on their farms nor engage in any other productive work.As a family does not need so much rice they sell the excess amount for other necessaries,and as a result they are losing their working skills as well as willingness to work.When the Congress government was giving rice to such people at two-three rupees a kg,the BJP used to rend the skies with outraged protests for turning people into dependants,and now they ply the same trade with much greater fervor.Are they giving freebies or not?

The government in our country has for the better part of a decade been treating the economy like an automaton,hoping the market will correct the errors automatically.But the consequences have been unobtrusively piling up until they have  become a huge drag on the economy.And they are frantically searching for quick fix solutions,hoping there would be surgical strikes within reach.They may be disappointed,a small price for them,but the costs will  be huge and frightening for the country and the people.

If better sense prevails they would still admit their mistakes and reach out to the opposition if only to rise from the morass.

Hiren Gohain is a political commentator

Courtesy: https://countercurrents.org

Free-wheeling remarks on freebies

MGNREGA

Suddenly the country is abuzz with freebies.The media resounding with high-minded denunciation of them.Experts,opinion makers,op-ed writers are homing in on them.The Supreme Court is shaking its head.Now a committee of taxpayers are to decide if parties can promise freebies before elections.That too at a time when prices of gas cylinders etc are hurtling through the roof.One question continues to nag the mind:What about the freebies the ruling party has already handed out?The opposition circles are however subdued.Perhaps they feel their hope of going one better than the government in offering freebies is getting dashed.Yet they too may end up demanding a level playing field on freebies.

But why all this pother now,when only a little while ago the government itself was handing out dollops of them to cheering crowds?To find an answer one has only to look at the collapsing economies on the country’s borders.The Covid,the oil crisis and the Ukraine war have put them under severe strain and ham-handed handling of the strain have built up pressures until they have nearly broken down.Their governments failed to respond appropriately to the crisis and their ineptitude aggravated it.Though our government is reluctant to admit it, its cavalier attitude to the economy seems to bring on dangerously similar consequences.Neo-liberal economies are difficult to turn around,as they depend on mysterious market forces while the state just monitors the ups and downs.The great virtue of business that can supposedly self-correct with rational analysis fails to work at this point.

But those whose eyes are not blinkered can perceive how the state in such an economy sleepwalks into a mire with unacknowledged interventions.The magic formula of ease of doing business leads to unacknowledged freebies to big business.Tax rebates to the tune of ten lakh crores of rupees in five years(as acknowledged in parliament on August 7)had not led to any noticeable spurt in investments.What is it if not freebies,though by another name?

But no.Freebies are what you hand out to the people,not what you gift the captains of big business.The same goes for the debt defaults on banks  turned into NPAs,thrice as much in amount.What you mark down for curtailment and elimination are the doles to the cussed lazy and unproductive plebs.The SC had on earlier occasions refused to interfere with policies,but are freebies not also policies?Even in countries with blazing capitalist banners there are subsidies and ‘incentives’ and food stamps during grave economic crisis.Since wise heads have decided that our blessed country is  immune to such crisis,it is therefore fair enough to let prices of essential goods soar and come down with a heavy hand on freebies.And hands off policies!

But when the freebies ARE ingredients of policies designed to protect people from starvation and want and alleviate poverty,is there any point in condemning them because they are not market-driven or not solely designed to benefit the wealthy?

Suppose the same imp  returns to power by casting black magic on the adversaries,as is the roaring practice now?Safe for another five years will it be legally entitled to roll back the flagship MGNREGA scheme?Bharat Dogra in his invaluable article some two or three issues back,shows the government under its spell  is starting to skimp funds for it,in latest move by some 30 p.c.Only fear of massive upsurge all over the country might deter it.But who knows?If they are mesmerized into  feeling securely entrenched,they could be ready for a bloody showdown.All one can say is,‘God forbid.’

But should MGNREGA have been the albatross around the government’s neck?Back in late nineteen sixties,American economist Robert Heilbroner,no fan of socialism or Mao,had admiringly noted that poor Chinese peasants had built massive infrastructure for an agricultural revolution with very basic tools and human labour and it would bear fruit in the next decade.His words proved prophetic and right through the upheavals of the Cultural Revolution it raised the Chinese economy to a higher level for take-off to a higher stage of growth.Why cannot the MGNREGA be  put to the same use and purpose?

Especially for planned water management and storage purposes with embankments,tanks,canals with a judicious mixture of local knowledge,civil engineering and environmental science?

It will then no longer be a tainted freebee,but a boon.

People should pay more attention to such possibilities in stead of blindly follow the inhuman maxims of neo-liberal economics.The money spent on them,not as naked bribes for votes,could also be spent in such a way as to enable the common man to produce more for himself and the country.The rebates on electricity in these days of high prices and meagre wages could not only brighten their lives,but also could be in exchange for rotator community service,again properly planned by grassroots activists.Neo liberal economics always ellides the human factor and turns the economy into a Fate. It is still possible to put people back into the scene as active voluntary agents,at least to some extent.As long as the logic of the masters is not allowed to control everything.

A friend from the countryside has complained that every family of small farmers in the state is getting free rice up to  60 or  70 kgs.This is the free gift of the BJP government,and farming being more than the price of rice in the market here,these lakhs of small farmers no longer work on their farms nor engage in any other productive work.As a family does not need so much rice they sell the excess amount for other necessaries,and as a result they are losing their working skills as well as willingness to work.When the Congress government was giving rice to such people at two-three rupees a kg,the BJP used to rend the skies with outraged protests for turning people into dependants,and now they ply the same trade with much greater fervor.Are they giving freebies or not?

The government in our country has for the better part of a decade been treating the economy like an automaton,hoping the market will correct the errors automatically.But the consequences have been unobtrusively piling up until they have  become a huge drag on the economy.And they are frantically searching for quick fix solutions,hoping there would be surgical strikes within reach.They may be disappointed,a small price for them,but the costs will  be huge and frightening for the country and the people.

If better sense prevails they would still admit their mistakes and reach out to the opposition if only to rise from the morass.

Hiren Gohain is a political commentator

Courtesy: https://countercurrents.org

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Endless Wait of 60 million Senior Citizens for Pensions

05 Aug 2022

Senior citizens

The most important support needed by elderly persons is for regular and adequate pensions. Only about 10 per cent of senior citizens in India have access to regular and reasonable pensions. They are mostly those who have served in the civil government, armed forces and related parts of the formal sector. For the remaining over 90 per cent of senior citizens, pensions either do not exist, or else are irregular, uncertain or extremely inadequate.

The pensions for this unorganized sector are provided mainly by the National Social Assistance Program or NSAP (and to a lesser extent by some other programs). Out of the nearly 82 million elderly citizens in this informal sector, this scheme of the Union Government manages to reach just about 22 million people. Many eligible and selected  persons have been denied pension due to insistence on Aadhar and biometric recognition, various irregularities and other factors. Thus around 60 million elderly people are still waiting to get any pension. There are separate pension schemes for widows under NSAP.

This scheme of the Union Government distinguishes between two age groups of elderly citizens—60 to 79 years and 80 years onwards. In the second age-group the Union government provides Rs. 500 per month per person. However the overwhelming majority of the elderly people are in the former age-group. For this age group the contribution of the Union government is just Rs. 200 per month.

At a time when  highly dubious projects worth tens of thousands of crores have been cleared without much thought and huge income raises are provided to senior officials and politicians as a routine matter, when the number of billionaires in the country is higher than ever before, the pension offered to most elderly citizens who toiled from morning to night as farmers and workers for at least four decades by the union government is just Rs. 200 per month.

This was fixed about a decade back and has not been changed since then despite many demands, protests and recommendations to increase this. During this period the value of this amount in present day prices has dwindled to just about Rs. 85 or so.

To this amount provided by the union government the state government generally adds a contribution of its own under this scheme. In some of the smaller states like Goa, Kerala and Delhi the state governments for a long time have been making a significant contribution so that the selected elderly citizens (not all elderly citizens) in these few states are able to get a higher pension than in most other states, but this is available to only a few compared to the national level numbers.

In several states with much higher population of elderly citizens the contribution of the state government is also very small. For example in Uttar Pradesh, Madhya Pradesh and Bihar the pension under this scheme even after adding the state contribution is extremely less.

So on the one hand about 60 million elderly people are not getting any pension and on the other hand most of them who manage to get a pension get a very meager amount. Even these pensions often do not reach them in time and many of these elderly persons have to spend a lot of effort and often some money to obtain their pension.

Their problems increased significantly after the introduction of Aadhar and biometrics based identification. The system of grievance removal which exists today leaves much to be desired and it is difficult for elderly people to get prompt action on their complaints. Pensions of several elderly persons are sometimes stopped arbitrarily and they keep running from pillar to post to renew them.

A justice-based solution, which is workable within existing  fiscal constraints,  is to provide at least one half of the minimum legal wage to all senior citizens. This should be unconditional for all except those in a very high wealth and income slab, without the recipient contributing to this. Those who are getting higher pensions under various provisions will continue to do so.

In practical terms what this means is that if the legal minimum wage is Rs. 300 per day, then an elderly person will get a pension of Rs. 4500 per month, and a couple will get Rs. 9000.

This objective can be achieved if the Indira Gandhi National Social Assistance Program can get an allocation of around 1.80 per cent of GNP (compared to about 0.03 per cent which it gets today). Considering that allocations for this program have not been raised for a long time, this demand should get priority attention.

Bharat Dogra is Convener, Campaign to Save Earth Now. His recent books include A Day in 2071 and India’s Quest for Sustainable Farming and Healthy Food.

Courtesy: https://countercurrents.org

Endless Wait of 60 million Senior Citizens for Pensions

Senior citizens

The most important support needed by elderly persons is for regular and adequate pensions. Only about 10 per cent of senior citizens in India have access to regular and reasonable pensions. They are mostly those who have served in the civil government, armed forces and related parts of the formal sector. For the remaining over 90 per cent of senior citizens, pensions either do not exist, or else are irregular, uncertain or extremely inadequate.

The pensions for this unorganized sector are provided mainly by the National Social Assistance Program or NSAP (and to a lesser extent by some other programs). Out of the nearly 82 million elderly citizens in this informal sector, this scheme of the Union Government manages to reach just about 22 million people. Many eligible and selected  persons have been denied pension due to insistence on Aadhar and biometric recognition, various irregularities and other factors. Thus around 60 million elderly people are still waiting to get any pension. There are separate pension schemes for widows under NSAP.

This scheme of the Union Government distinguishes between two age groups of elderly citizens—60 to 79 years and 80 years onwards. In the second age-group the Union government provides Rs. 500 per month per person. However the overwhelming majority of the elderly people are in the former age-group. For this age group the contribution of the Union government is just Rs. 200 per month.

At a time when  highly dubious projects worth tens of thousands of crores have been cleared without much thought and huge income raises are provided to senior officials and politicians as a routine matter, when the number of billionaires in the country is higher than ever before, the pension offered to most elderly citizens who toiled from morning to night as farmers and workers for at least four decades by the union government is just Rs. 200 per month.

This was fixed about a decade back and has not been changed since then despite many demands, protests and recommendations to increase this. During this period the value of this amount in present day prices has dwindled to just about Rs. 85 or so.

To this amount provided by the union government the state government generally adds a contribution of its own under this scheme. In some of the smaller states like Goa, Kerala and Delhi the state governments for a long time have been making a significant contribution so that the selected elderly citizens (not all elderly citizens) in these few states are able to get a higher pension than in most other states, but this is available to only a few compared to the national level numbers.

In several states with much higher population of elderly citizens the contribution of the state government is also very small. For example in Uttar Pradesh, Madhya Pradesh and Bihar the pension under this scheme even after adding the state contribution is extremely less.

So on the one hand about 60 million elderly people are not getting any pension and on the other hand most of them who manage to get a pension get a very meager amount. Even these pensions often do not reach them in time and many of these elderly persons have to spend a lot of effort and often some money to obtain their pension.

Their problems increased significantly after the introduction of Aadhar and biometrics based identification. The system of grievance removal which exists today leaves much to be desired and it is difficult for elderly people to get prompt action on their complaints. Pensions of several elderly persons are sometimes stopped arbitrarily and they keep running from pillar to post to renew them.

A justice-based solution, which is workable within existing  fiscal constraints,  is to provide at least one half of the minimum legal wage to all senior citizens. This should be unconditional for all except those in a very high wealth and income slab, without the recipient contributing to this. Those who are getting higher pensions under various provisions will continue to do so.

In practical terms what this means is that if the legal minimum wage is Rs. 300 per day, then an elderly person will get a pension of Rs. 4500 per month, and a couple will get Rs. 9000.

This objective can be achieved if the Indira Gandhi National Social Assistance Program can get an allocation of around 1.80 per cent of GNP (compared to about 0.03 per cent which it gets today). Considering that allocations for this program have not been raised for a long time, this demand should get priority attention.

Bharat Dogra is Convener, Campaign to Save Earth Now. His recent books include A Day in 2071 and India’s Quest for Sustainable Farming and Healthy Food.

Courtesy: https://countercurrents.org

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'Grossly inadequate': NREGA allocation 0.29% of GDP, World Bank recommended 1.6%

04 Aug 2022

NREGA

A civil society tracker, seeking to periodically analyse the implementation of the Mahatma Gandhi Rural Employment Guarantee Act (NREGA), has said that NREGA budgetary allocation is only 0.29% of GDP and 1.85% of the total government expenditure of the financial year 2022-23, which is grossly inadequate. Thus, “As per estimates of researchers of the World Bank, for NREGA to run robustly, its allocation must at least be 1.6% of the GDP.”

Prepared by the People’s Action for Employment Guarantee (PAEG), a group of activists, academics and members of people’s organizations, who came together to advocate for NREGA in 2004 in order to catalyse discussion and strengthen the top Government of India rural jobs guarantee scheme, the tracker states, the NREGA budget as percentage of the total government expenditure has also decreased -- it stands at 1.85% for FY 2022-23, just about half the level in FY 2020-21 (3.65%).

The tracker, titled “Meagre Funds and Unlawfully Low Wages: How the MGNREGA is Being Squeezed”, says, “The programme guarantees 100 days of employment to each household at minimum wages. Yet, the provisioning has been significantly less than required, despite soaring demand for employment in recent years.”

The tracker raises the alarm, “By July 21, 2022, the Union government has already exhausted two-thirds of its budget, with eight months remaining”, predicting, “The pending dues are expected to increase.” It adds, “Pending payments at the end of FY 2021-22 amount to 16% of the budgetary allocation for FY 2022-23. Except for the pandemic year, FY 2020-21, the pending payment has been higher than 15%.”

Pointing out that “each year, a significant proportion of the budget allocated to NREGA is used to pay for previous years’ pending liabilities, leaving the budget remaining grossly inadequate for the current financial year”, the tracker notes, “In FY 2022-23, Rs 11,464 crore has been spent as on July 31, 2022 to clear previous years’ liabilities.”

“Another worrying concern”, says the tracker, is that “the NREGA wages have not increased in tandem with inflation. When we look at the national average, we find that the percentage increase in NREGA wages was about 4.7 percentage points less than the average rural inflation rate. Only in Kerala, Karnataka and Bihar was the percentage increase in NREGA wages higher than the rural inflation rate.”

 

Further, the tracker notes, “NREGA wage rates remain much below the need-based national minimum wage of Rs 375 recommended by the expert committee under the chairmanship of Anoop Satpathy in early 2019. Average daily NREGA wage per personday is 13.8% less than the national average notified NREGA wage rate. While this difference is close to 0 in some states, it is about 40% in Telangana.”

The tracker asserts, “In its pre-budget statement, the PAEG warned that with the pending dues of over Rs 21,000 crore by the end of FY 2021-22, and a meagre budget of Rs 73,000 crore for FY 2022-23, the programme would be able to provide employment of only 21 days on minimum wage to each household that demanded work in FY 2021-22.”

It adds, “The immediate result of the budget shortfall is reflected in the fact that the recorded unmet demand for employment is currently as high as 20.6%. That is, one out of every five households that have demanded employment in these four months has not been provided employment.”

 


Asserting that it had recommended budgetary allocation of Rs 2.69 lakh crore for the programme”, the tracker insists, “The government can and must allocate this much in order to ensure those who demand work under NREGA are employed for 100 days and are paid the minimum wages for their work, as guaranteed in the Act.”

It continues, “Recently, the government reduced the corporate tax rates by 8-10% that resulted in a revenue loss of Rs 2.09 lakh crore. Despite such high levels of corporate tax cuts, corporations have not created significant employment, while they have been registering record profits year after year. The tax cuts have also not increased investment, or thereby demand.”
Meanwhile, it says, “Unemployment rates have reached record highs and demand for NREGA work is still higher than pre-pandemic levels. At present, the economy is in a downturn and employment has still not recovered to pre-pandemic levels. Steep levels of unemployment and inflation add further distress to an already Covid-affected rural poor.”

“In such a situation”, the tracker believes, “NREGA becomes a crucial safeguard that ensures that poor workers can have at least some minimal incomes and security, by guaranteeing them the right to work. The Act specifies that up to the limit of 100 days of work per household, the actual employment provided must be driven by the demand for work, and not constrained by prior budgetary allocations.”

The tracker accuses the Government of India for “constantly allocating inadequate funding for NREGA” and “not providing funds as required by states”, which is in contravention of “both the letter and the spirit of the Act...” The result is, “In addition, by illegally fixing low wage rates, and not paying even these low wages fully, it has also slowly eroded workers’ interest in the Act. If the current trend continues, it will not be long before the Act becomes a hollow shell.”

Courtesy: Counterview

'Grossly inadequate': NREGA allocation 0.29% of GDP, World Bank recommended 1.6%

NREGA

A civil society tracker, seeking to periodically analyse the implementation of the Mahatma Gandhi Rural Employment Guarantee Act (NREGA), has said that NREGA budgetary allocation is only 0.29% of GDP and 1.85% of the total government expenditure of the financial year 2022-23, which is grossly inadequate. Thus, “As per estimates of researchers of the World Bank, for NREGA to run robustly, its allocation must at least be 1.6% of the GDP.”

Prepared by the People’s Action for Employment Guarantee (PAEG), a group of activists, academics and members of people’s organizations, who came together to advocate for NREGA in 2004 in order to catalyse discussion and strengthen the top Government of India rural jobs guarantee scheme, the tracker states, the NREGA budget as percentage of the total government expenditure has also decreased -- it stands at 1.85% for FY 2022-23, just about half the level in FY 2020-21 (3.65%).

The tracker, titled “Meagre Funds and Unlawfully Low Wages: How the MGNREGA is Being Squeezed”, says, “The programme guarantees 100 days of employment to each household at minimum wages. Yet, the provisioning has been significantly less than required, despite soaring demand for employment in recent years.”

The tracker raises the alarm, “By July 21, 2022, the Union government has already exhausted two-thirds of its budget, with eight months remaining”, predicting, “The pending dues are expected to increase.” It adds, “Pending payments at the end of FY 2021-22 amount to 16% of the budgetary allocation for FY 2022-23. Except for the pandemic year, FY 2020-21, the pending payment has been higher than 15%.”

Pointing out that “each year, a significant proportion of the budget allocated to NREGA is used to pay for previous years’ pending liabilities, leaving the budget remaining grossly inadequate for the current financial year”, the tracker notes, “In FY 2022-23, Rs 11,464 crore has been spent as on July 31, 2022 to clear previous years’ liabilities.”

“Another worrying concern”, says the tracker, is that “the NREGA wages have not increased in tandem with inflation. When we look at the national average, we find that the percentage increase in NREGA wages was about 4.7 percentage points less than the average rural inflation rate. Only in Kerala, Karnataka and Bihar was the percentage increase in NREGA wages higher than the rural inflation rate.”

 

Further, the tracker notes, “NREGA wage rates remain much below the need-based national minimum wage of Rs 375 recommended by the expert committee under the chairmanship of Anoop Satpathy in early 2019. Average daily NREGA wage per personday is 13.8% less than the national average notified NREGA wage rate. While this difference is close to 0 in some states, it is about 40% in Telangana.”

The tracker asserts, “In its pre-budget statement, the PAEG warned that with the pending dues of over Rs 21,000 crore by the end of FY 2021-22, and a meagre budget of Rs 73,000 crore for FY 2022-23, the programme would be able to provide employment of only 21 days on minimum wage to each household that demanded work in FY 2021-22.”

It adds, “The immediate result of the budget shortfall is reflected in the fact that the recorded unmet demand for employment is currently as high as 20.6%. That is, one out of every five households that have demanded employment in these four months has not been provided employment.”

 


Asserting that it had recommended budgetary allocation of Rs 2.69 lakh crore for the programme”, the tracker insists, “The government can and must allocate this much in order to ensure those who demand work under NREGA are employed for 100 days and are paid the minimum wages for their work, as guaranteed in the Act.”

It continues, “Recently, the government reduced the corporate tax rates by 8-10% that resulted in a revenue loss of Rs 2.09 lakh crore. Despite such high levels of corporate tax cuts, corporations have not created significant employment, while they have been registering record profits year after year. The tax cuts have also not increased investment, or thereby demand.”
Meanwhile, it says, “Unemployment rates have reached record highs and demand for NREGA work is still higher than pre-pandemic levels. At present, the economy is in a downturn and employment has still not recovered to pre-pandemic levels. Steep levels of unemployment and inflation add further distress to an already Covid-affected rural poor.”

“In such a situation”, the tracker believes, “NREGA becomes a crucial safeguard that ensures that poor workers can have at least some minimal incomes and security, by guaranteeing them the right to work. The Act specifies that up to the limit of 100 days of work per household, the actual employment provided must be driven by the demand for work, and not constrained by prior budgetary allocations.”

The tracker accuses the Government of India for “constantly allocating inadequate funding for NREGA” and “not providing funds as required by states”, which is in contravention of “both the letter and the spirit of the Act...” The result is, “In addition, by illegally fixing low wage rates, and not paying even these low wages fully, it has also slowly eroded workers’ interest in the Act. If the current trend continues, it will not be long before the Act becomes a hollow shell.”

Courtesy: Counterview

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Dhinkia: Betel plantation destruction hits local economy

With land being transferred, allegedly without consent of villagers for a "development project, and alleged police pressure, the future appears bleak

21 Jun 2022

economic crisisImage Courtesy: india.mongabay.com

More than half of Dhinkia villagers in Jagatsinghpur district of Odisha are protesting the loss of a local Betel plantation, their main source of livelihood, to a "development project".

For years now, Dhinkia residents have protected their land against government-sanctioned developmental projects. The people’s movement began with the anti-POSCO movement in 2005. Locals resisted the idea citing the issue of settlement of forest rights under the Forest Rights Act 2006. It was a triumphant moment for the people when the company backed out in 2017. Still, the High-Level Clearance Authority (HLCA) chaired by Chief Minister Naveen Patnaik transferred the land to the JSW Utkal Steel Limited (JUSL).

This move in itself violated the Land Acquisition, Rehabilitation and Resettlement Act (LARR) of 2013. Yet, authorities even granted a forest clearance despite claims that the villagers faced severe oppression from police. By December 2021, locals voiced complaints of administrative attempts to destroy the betel vines in the area.

This forceful demolition of the traditional betel vines has particularly affected the women and children in the region. Majority of the women in the village either worked as daily labourers in the betel plantations, or were involved in the export process. With the destruction of the plantation, 50 percent villagers engaged in betel cultivation and another 30 percent vine owners have lost their main source of livelihood without any other alternative.

“They don’t have any [other] skill set. Forceful demolition of yards or vines resulted [in] them being jobless and penniless not only to them but also to their families,” said anti-Jindal movement leader Prashant Paikray.

More than 60 people were arrested then released on bail since January 2022, following 72 criminal cases against nearly a thousand people. While there are already over 400 false pending criminal cases against 2,500 people from the Anti-POSCO movement, the alleged police aggression this year adds to the physical and mental pain of locals.

Already, seven leaders have been arrested including the man who led the movement from the beginning, Debendra Swain. Aside from this Paikray spoke of how a family with an 18-year-old daughter were put in jail while their 20-year-old son had gone missing on January 14.

Impact on children and elderly

Following conflicts between local police and villagers, children have also been kept from attending schools. Police personnel occupied all nearby primary and secondary schools, making it impossible for students to attend schools.

“There is now a struggle to get a proper meal for most of the Dhinkia villagers who are mostly of a scheduled caste and were self-dependent upon their long traditional culture and were living happily before, depending upon their forest,” said Paikray.

However, with the heavy security deployed around the area, villagers also cannot remain dependent on forest produce any longer. It is noteworthy that the company has repeatedly attempted to get an environmental clearance from the Union Ministry of Environment, Forest and Climate Change (MoEFCC) since 2018. However, as per the Environmental Impact Assessment (EIA) Notification 2006, the EC requires the permission of the affected people via gram sabha consent.

Villagers claim that authorities called a public hearing that was allegedly hijacked by District Collector Sangram Mohapatra, the Land Acquisition Officer during the earlier POSCO project. Villagers then called for a “palli sabha” (Village meeting) and passed a resolution rejecting the proposed project of JSW Utkal Steel Ltd. However, since the EC request is yet to be dismissed, Dhinkia villagers have repeatedly demanded the completion of their individual and community forest rights claims on land.

Related:

Spate of arrests in Orissa’s Dhinkia, protesting activists held
Odisha: 3 activists arrested for speaking truth to power in fact-finding report
Dhinkia: A story of perseverance against administrative oppression
End police oppression! FIAN Int. stands with Odisha’s adivasis
Odisha Police beat up Adivasi villagers
Tougher than Steel: Odisha villagers condemn govt's to attempts to usurp their land

Dhinkia: Betel plantation destruction hits local economy

With land being transferred, allegedly without consent of villagers for a "development project, and alleged police pressure, the future appears bleak

economic crisisImage Courtesy: india.mongabay.com

More than half of Dhinkia villagers in Jagatsinghpur district of Odisha are protesting the loss of a local Betel plantation, their main source of livelihood, to a "development project".

For years now, Dhinkia residents have protected their land against government-sanctioned developmental projects. The people’s movement began with the anti-POSCO movement in 2005. Locals resisted the idea citing the issue of settlement of forest rights under the Forest Rights Act 2006. It was a triumphant moment for the people when the company backed out in 2017. Still, the High-Level Clearance Authority (HLCA) chaired by Chief Minister Naveen Patnaik transferred the land to the JSW Utkal Steel Limited (JUSL).

This move in itself violated the Land Acquisition, Rehabilitation and Resettlement Act (LARR) of 2013. Yet, authorities even granted a forest clearance despite claims that the villagers faced severe oppression from police. By December 2021, locals voiced complaints of administrative attempts to destroy the betel vines in the area.

This forceful demolition of the traditional betel vines has particularly affected the women and children in the region. Majority of the women in the village either worked as daily labourers in the betel plantations, or were involved in the export process. With the destruction of the plantation, 50 percent villagers engaged in betel cultivation and another 30 percent vine owners have lost their main source of livelihood without any other alternative.

“They don’t have any [other] skill set. Forceful demolition of yards or vines resulted [in] them being jobless and penniless not only to them but also to their families,” said anti-Jindal movement leader Prashant Paikray.

More than 60 people were arrested then released on bail since January 2022, following 72 criminal cases against nearly a thousand people. While there are already over 400 false pending criminal cases against 2,500 people from the Anti-POSCO movement, the alleged police aggression this year adds to the physical and mental pain of locals.

Already, seven leaders have been arrested including the man who led the movement from the beginning, Debendra Swain. Aside from this Paikray spoke of how a family with an 18-year-old daughter were put in jail while their 20-year-old son had gone missing on January 14.

Impact on children and elderly

Following conflicts between local police and villagers, children have also been kept from attending schools. Police personnel occupied all nearby primary and secondary schools, making it impossible for students to attend schools.

“There is now a struggle to get a proper meal for most of the Dhinkia villagers who are mostly of a scheduled caste and were self-dependent upon their long traditional culture and were living happily before, depending upon their forest,” said Paikray.

However, with the heavy security deployed around the area, villagers also cannot remain dependent on forest produce any longer. It is noteworthy that the company has repeatedly attempted to get an environmental clearance from the Union Ministry of Environment, Forest and Climate Change (MoEFCC) since 2018. However, as per the Environmental Impact Assessment (EIA) Notification 2006, the EC requires the permission of the affected people via gram sabha consent.

Villagers claim that authorities called a public hearing that was allegedly hijacked by District Collector Sangram Mohapatra, the Land Acquisition Officer during the earlier POSCO project. Villagers then called for a “palli sabha” (Village meeting) and passed a resolution rejecting the proposed project of JSW Utkal Steel Ltd. However, since the EC request is yet to be dismissed, Dhinkia villagers have repeatedly demanded the completion of their individual and community forest rights claims on land.

Related:

Spate of arrests in Orissa’s Dhinkia, protesting activists held
Odisha: 3 activists arrested for speaking truth to power in fact-finding report
Dhinkia: A story of perseverance against administrative oppression
End police oppression! FIAN Int. stands with Odisha’s adivasis
Odisha Police beat up Adivasi villagers
Tougher than Steel: Odisha villagers condemn govt's to attempts to usurp their land

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Modi’s RBI and its myopic monetary measures

After demonetization, GST and Covid, India is still limping to a new economic normal

13 May 2022

Modi

Even though the primary objective of the Reserve Bank of India (RBI), as mandated by the Finance Act - 2016 under the Modi Government, is to “maintain price stability” through formulating appropriate monetary policies, the RBI has miserably failed to fulfil the same.

Its incapability has become more visible in the last few months. The inflation was beyond comfortable limit of 4% for more than a year now. While the 2016 act, stipulates the permissible inflation rate at 4% with a band of plus or minus 2%, the retail inflation in India had crossed 6% mark by January itself. According to the recent statement by the RBI, the retail inflation for the month of April has not only breached 7% mark, but also reached an all-time high of 7.69%.

Modi Model and Inflation

The inflation or the price rise, in generic term, is always bad news for the have nots. Inflation is an “indirect taxation” by which the market sucks extra money from the people without any legislation. Inflation becomes deadly to people’s lives and nation’s economy when the real wages and incomes, and hence, the demand, is in decline. Since the inflation cuts into the purchasing power of the masses, consumption decreases. This in turn results in fall in demand leading to decline of business. This may further result in unemployment, under employment and increased poverty. This is a vicious cycle.

India is facing such gory economic situation since demonetisation. This Modi-made economic disaster resulted in at least a fall of 2% of GDP affecting the informal sector, the MSMEs, and the farmers where 92 % of Indian work force is employed. Even before recovering from this shock, GST was imposed which further pushed the informal sector to big chaos. The consumption data partially released and later officially withdrawn from the Modi government, during that period, showed how these policies caused decline in consumption which was lowest in the last four decades. Thus, even before the Covid  pandemic, the real wages of the people and the demand in the economy was declining resulting in the continuous decline in the GDP growth rate.

This situation got aggravated in the wake of Covid pandemic and especially by the most arbitrary and unscientific lockdowns imposed by the Modi government. While more than 4 million lives were lost due to Covid, crores of people have yet to regain their livelihood and gainful employment due to lock downs. Even for those who are in the jobs and semi jobs the wages have been decreasing in its real value.

This situation has moved from bad to worse due to the continuous increases of the prices of essential commodities like rice, wheat, edible oil, vegetables, and above all the prices of petrol and Diesel, which is in fact inflation multiplier, in the last one year. The retail inflation which is calculated on the basis of Consumer Price Index, where food basket constitutes more than 45%, has reached intolerable level of 7%. Even the prices of cement, steel, and manufactured goods are also increasing. Most crucial is the increase of prices of petroleum products, of which 85% are imported by the country. Hence part of the inflation is imported.


Inflated ego and deflated Rupee

Now that the exchange rate of rupee against the dollar has fallen to a historical low of Rs. 77.40/-, and is likely to depreciate further in the coming weeks, Indian imports are certain to become costlier, since the dollar component dominates Indian foreign trade. Because of the slump in the international commodity market, Indian commodity exports are not picking up. In spite of high  claims of the Modi government about the record exports, the fact remains that while India exported USD 417 billion worth of goods in 2021-22, the imports were to the tune of USD 610 billion an increase of more than USD 200 billion than the previous year.

So much for the economy of Hindu Atmanirbharata.

This chronic import dependence has resulted in depreciation of the Rupee against the Dollar since Indian Independence which has become unmanageable after the neoliberal reforms initiated in 1991, where administered exchange rate regime was changed to partial convertibility of rupee rate and later to full convertibility.

Thus, while at the time of independence the exchange rate of rupee against the dollar was Rs. 4.70, it slowly raised to Rs. 17 at the beginning of corporate capital reforms in 1991. After the exchange rate liberalisation was implemented, the exchange rate rose to Rs. 43 in 2000 and to around Rs 55 before 2014.

One of the electoral planks of Modi and BJP was that during the UPA regime the value of rupee and hence the dignity of the nation was depreciated. It was caused not because of any economic compulsions but due to political mismanagement and corruption of the Congress party

The present state president of BJP in Karnataka, Mr. Nalin Kumar Kateel, even went to an extent of publicly claiming that if Modi comes to power, with in a span of two years, Indian economy will  become so strong that instead of an exchange rate of Rs 60 to a dollar, an exchange rate of USD 15 for a rupee will be realised!

Any way… no magic happened. Rather economy declined further, import dependence multiplied and hence historic decline of Rupee to Rs. 77.60 against dollar. Thus, the decline of rupee will make imports costlier which in turn would lead to higher prices and inflation.


Political risk and capital flight            

Another reason for the depreciation of the rupee and hence inflation is capital flight of foreign investors from the Indian stock market. It is said that after the “second coming” of Modi, more than 22 billion dollars of foreign institutional investment has been withdrawn due to the increasing political risk to their investment due to growing polarisation and violence in the country. After the war broke out the sentiment of uncertainty made the foreign investors pull out of Indian market further.

While these are the inherent reasons for the increasing inflation, there are also additional and immediate reasons like the Russia- Ukraine war. The war has poured salt to the wound of Indian  inflation.

Due to the war induced geo-economic situation, the international crude oil prices are increasing. On the other hand, Indonesia has declared ban on its edible oil exports and likewise Malaysia. India imports 60% of its edible oil from Indonesia, Malaysia and Ukraine. All these factors have increased the prices of food items so, says the Modi government to paint a helpless picture.

But the prices of both petroleum products and edible oil in India is exorbitantly high not only because of increase in its international prices but majorly because of excise duties and the cess imposed, primarily, by the Central government and state governments. 50 to 60 of prices of the petroleum products are taxes and cess and 40 to 50 of price of imported edible oils are import duties.

Modi Made Inflation

Thus, the inflation in India is:

1) Imported- excessive dependence on Imports, aggravated during Modi regime but has its roots in the neoliberal policies for which previous governments are also responsible.

2) Modi Made-

a) Because the prices of imported goods are artificially exorbitant due to Modi taxes

b) The capital flight of investors resulting in decline of rupee and costlier imports due to Modis politics of Hindu majoritarianism.

Hence the moot question is whether these politico-economic factors causing inflation be mitigated by narrow financial instruments available to RBI?

After the Financial amendment act of 2016, the primary objective of the RBI is to control inflation through monetary policies. That is by controlling money flow in the economy.

Myopic monetary instruments and Monstrous Political Economy

The monetary instruments available to RBI to control money flow are by controlling the interest rates through imposing flexible Repo rates and controlling money available for transactions to the banks by imposing flexible CRR – Cash Reserve Ratio.

When the economy is facing demand crunch, the RBI reduces Repo rate thereby effecting the interest rate on the loans there by encouraging spending and investing, which in turn is expected to stimulate demand. Likewise, the Cash ratio, the amount of cash per deposit each bank is expected to rest in RBI is also decreased so that more money is available with banks for transactions.

On the other hand, when the prices are increasing, RBI construes the reason behind it as the over supply of money in the economy. So, to suck back the extra money it increases the interest rates and the CRR so that money available for transactions are curtailed.

The underlying dogma of the central Banks like RBI, under neoliberalism, in controlling inflation is: the primary and sole reason for the inflation is over flow of the money in the economy.

This may be true in some circumstances where economy is over performing. But price rise also happens when there are supply side constraints., when cost of production is increasing due to mismanagement of the economy or chronic import dependence. The Interest rate increase or effecting the decrease of money flow in the economy would not result in inflation control in such circumstances because the root cause of inflation is entirely different.

Such myopic monetary policies may result in an economic disaster in countries where the real income and the demand in the economy is already hit badly and the growth is already declining. In such a situation policies like interest rate hikes may result in further decline of economic activities creating a situation of Stagflation and economic crisis also.

Indian economy is facing a situation similar to the second example. Indian economy needs more demand push, more money flow in the hands of MSMEs etc. The recent RBI measures in the name of curbing inflation by hiking the Repo rate from 4 to 4.4% and the CRR hike from 4 to 4.5% will lead to further demand crunch, further unemployment without decreasing the inflation. Because inflation  in India at present is mainly due to Petroleum and edible oil price hike, which is caused by the taxation policies of the Modi government and not due to overflow of money or excessive economic activities.

It is said that RBI has been suggesting the government to reduce the excise duties to tame the inflation but the Modi government is not heeding. Hence the RBI, in its extraordinary meeting resorted to repo rate and CRR hike.

Through this myopic monetary policy RBI might have satisfied the inflated ego of the prime minister, but these measures will deflate the living conditions of the broad masses of the people.

This might also satisfy the credit agencies who subscribe to neoliberal monetary policy of inflation control, price stability etc., serving the needs of finance capital. But these policies will only protect the billionaires of corporate finance, but result in total destabilisation of the lives of crores of people.

*Views expressed are the author’s own. The author is a Karnataka-based journalist and activist.

Modi’s RBI and its myopic monetary measures

After demonetization, GST and Covid, India is still limping to a new economic normal

Modi

Even though the primary objective of the Reserve Bank of India (RBI), as mandated by the Finance Act - 2016 under the Modi Government, is to “maintain price stability” through formulating appropriate monetary policies, the RBI has miserably failed to fulfil the same.

Its incapability has become more visible in the last few months. The inflation was beyond comfortable limit of 4% for more than a year now. While the 2016 act, stipulates the permissible inflation rate at 4% with a band of plus or minus 2%, the retail inflation in India had crossed 6% mark by January itself. According to the recent statement by the RBI, the retail inflation for the month of April has not only breached 7% mark, but also reached an all-time high of 7.69%.

Modi Model and Inflation

The inflation or the price rise, in generic term, is always bad news for the have nots. Inflation is an “indirect taxation” by which the market sucks extra money from the people without any legislation. Inflation becomes deadly to people’s lives and nation’s economy when the real wages and incomes, and hence, the demand, is in decline. Since the inflation cuts into the purchasing power of the masses, consumption decreases. This in turn results in fall in demand leading to decline of business. This may further result in unemployment, under employment and increased poverty. This is a vicious cycle.

India is facing such gory economic situation since demonetisation. This Modi-made economic disaster resulted in at least a fall of 2% of GDP affecting the informal sector, the MSMEs, and the farmers where 92 % of Indian work force is employed. Even before recovering from this shock, GST was imposed which further pushed the informal sector to big chaos. The consumption data partially released and later officially withdrawn from the Modi government, during that period, showed how these policies caused decline in consumption which was lowest in the last four decades. Thus, even before the Covid  pandemic, the real wages of the people and the demand in the economy was declining resulting in the continuous decline in the GDP growth rate.

This situation got aggravated in the wake of Covid pandemic and especially by the most arbitrary and unscientific lockdowns imposed by the Modi government. While more than 4 million lives were lost due to Covid, crores of people have yet to regain their livelihood and gainful employment due to lock downs. Even for those who are in the jobs and semi jobs the wages have been decreasing in its real value.

This situation has moved from bad to worse due to the continuous increases of the prices of essential commodities like rice, wheat, edible oil, vegetables, and above all the prices of petrol and Diesel, which is in fact inflation multiplier, in the last one year. The retail inflation which is calculated on the basis of Consumer Price Index, where food basket constitutes more than 45%, has reached intolerable level of 7%. Even the prices of cement, steel, and manufactured goods are also increasing. Most crucial is the increase of prices of petroleum products, of which 85% are imported by the country. Hence part of the inflation is imported.


Inflated ego and deflated Rupee

Now that the exchange rate of rupee against the dollar has fallen to a historical low of Rs. 77.40/-, and is likely to depreciate further in the coming weeks, Indian imports are certain to become costlier, since the dollar component dominates Indian foreign trade. Because of the slump in the international commodity market, Indian commodity exports are not picking up. In spite of high  claims of the Modi government about the record exports, the fact remains that while India exported USD 417 billion worth of goods in 2021-22, the imports were to the tune of USD 610 billion an increase of more than USD 200 billion than the previous year.

So much for the economy of Hindu Atmanirbharata.

This chronic import dependence has resulted in depreciation of the Rupee against the Dollar since Indian Independence which has become unmanageable after the neoliberal reforms initiated in 1991, where administered exchange rate regime was changed to partial convertibility of rupee rate and later to full convertibility.

Thus, while at the time of independence the exchange rate of rupee against the dollar was Rs. 4.70, it slowly raised to Rs. 17 at the beginning of corporate capital reforms in 1991. After the exchange rate liberalisation was implemented, the exchange rate rose to Rs. 43 in 2000 and to around Rs 55 before 2014.

One of the electoral planks of Modi and BJP was that during the UPA regime the value of rupee and hence the dignity of the nation was depreciated. It was caused not because of any economic compulsions but due to political mismanagement and corruption of the Congress party

The present state president of BJP in Karnataka, Mr. Nalin Kumar Kateel, even went to an extent of publicly claiming that if Modi comes to power, with in a span of two years, Indian economy will  become so strong that instead of an exchange rate of Rs 60 to a dollar, an exchange rate of USD 15 for a rupee will be realised!

Any way… no magic happened. Rather economy declined further, import dependence multiplied and hence historic decline of Rupee to Rs. 77.60 against dollar. Thus, the decline of rupee will make imports costlier which in turn would lead to higher prices and inflation.


Political risk and capital flight            

Another reason for the depreciation of the rupee and hence inflation is capital flight of foreign investors from the Indian stock market. It is said that after the “second coming” of Modi, more than 22 billion dollars of foreign institutional investment has been withdrawn due to the increasing political risk to their investment due to growing polarisation and violence in the country. After the war broke out the sentiment of uncertainty made the foreign investors pull out of Indian market further.

While these are the inherent reasons for the increasing inflation, there are also additional and immediate reasons like the Russia- Ukraine war. The war has poured salt to the wound of Indian  inflation.

Due to the war induced geo-economic situation, the international crude oil prices are increasing. On the other hand, Indonesia has declared ban on its edible oil exports and likewise Malaysia. India imports 60% of its edible oil from Indonesia, Malaysia and Ukraine. All these factors have increased the prices of food items so, says the Modi government to paint a helpless picture.

But the prices of both petroleum products and edible oil in India is exorbitantly high not only because of increase in its international prices but majorly because of excise duties and the cess imposed, primarily, by the Central government and state governments. 50 to 60 of prices of the petroleum products are taxes and cess and 40 to 50 of price of imported edible oils are import duties.

Modi Made Inflation

Thus, the inflation in India is:

1) Imported- excessive dependence on Imports, aggravated during Modi regime but has its roots in the neoliberal policies for which previous governments are also responsible.

2) Modi Made-

a) Because the prices of imported goods are artificially exorbitant due to Modi taxes

b) The capital flight of investors resulting in decline of rupee and costlier imports due to Modis politics of Hindu majoritarianism.

Hence the moot question is whether these politico-economic factors causing inflation be mitigated by narrow financial instruments available to RBI?

After the Financial amendment act of 2016, the primary objective of the RBI is to control inflation through monetary policies. That is by controlling money flow in the economy.

Myopic monetary instruments and Monstrous Political Economy

The monetary instruments available to RBI to control money flow are by controlling the interest rates through imposing flexible Repo rates and controlling money available for transactions to the banks by imposing flexible CRR – Cash Reserve Ratio.

When the economy is facing demand crunch, the RBI reduces Repo rate thereby effecting the interest rate on the loans there by encouraging spending and investing, which in turn is expected to stimulate demand. Likewise, the Cash ratio, the amount of cash per deposit each bank is expected to rest in RBI is also decreased so that more money is available with banks for transactions.

On the other hand, when the prices are increasing, RBI construes the reason behind it as the over supply of money in the economy. So, to suck back the extra money it increases the interest rates and the CRR so that money available for transactions are curtailed.

The underlying dogma of the central Banks like RBI, under neoliberalism, in controlling inflation is: the primary and sole reason for the inflation is over flow of the money in the economy.

This may be true in some circumstances where economy is over performing. But price rise also happens when there are supply side constraints., when cost of production is increasing due to mismanagement of the economy or chronic import dependence. The Interest rate increase or effecting the decrease of money flow in the economy would not result in inflation control in such circumstances because the root cause of inflation is entirely different.

Such myopic monetary policies may result in an economic disaster in countries where the real income and the demand in the economy is already hit badly and the growth is already declining. In such a situation policies like interest rate hikes may result in further decline of economic activities creating a situation of Stagflation and economic crisis also.

Indian economy is facing a situation similar to the second example. Indian economy needs more demand push, more money flow in the hands of MSMEs etc. The recent RBI measures in the name of curbing inflation by hiking the Repo rate from 4 to 4.4% and the CRR hike from 4 to 4.5% will lead to further demand crunch, further unemployment without decreasing the inflation. Because inflation  in India at present is mainly due to Petroleum and edible oil price hike, which is caused by the taxation policies of the Modi government and not due to overflow of money or excessive economic activities.

It is said that RBI has been suggesting the government to reduce the excise duties to tame the inflation but the Modi government is not heeding. Hence the RBI, in its extraordinary meeting resorted to repo rate and CRR hike.

Through this myopic monetary policy RBI might have satisfied the inflated ego of the prime minister, but these measures will deflate the living conditions of the broad masses of the people.

This might also satisfy the credit agencies who subscribe to neoliberal monetary policy of inflation control, price stability etc., serving the needs of finance capital. But these policies will only protect the billionaires of corporate finance, but result in total destabilisation of the lives of crores of people.

*Views expressed are the author’s own. The author is a Karnataka-based journalist and activist.

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