Category: Miscellanea

It would also be peevish of the Reserve Bank of India to impose fines on companies that are giving up their licences. Gatekeepers should not fine people who turn away at the last minute. They should ask why this is so. It is thus more important to understand whether the licensing procedure can be improved so that similar withdrawals are avoided in the future.

Meanwhile, see this as a setback to the ambitious race towards a cashless society

(Source: Quick Edit in Mint newspaper dated 25.05.2016)

Since the European debt crisis kicked in at the tail end of 2009, the European Union has remained stuck in a quagmire. Every hopeful prognosis has proved fleeting. Its economic situation remains precarious, Russia is flexing its muscles to the east and terrorism and the refugee crisis have made for a combustible mix. Little wonder the far right is in ascendance across the union. The question is: Is this perpetual state of semi-crisis the EU’s new normal?

(Source: Quick Edit in Mint Newspaper dated 26.05.2016)

The Indian tax code is numbingly complex. It came to be so because of the high tax rates that India lived with before the 1991 reforms, with powerful interest groups seeking an escape through a web of exemptions. High tax rates, too many exemptions and a deeply ingrained culture of suspicion has victimized honest taxpayers even while millions sit outside the tax net.

The solution is a simple one. Modi must push ahead with the direct taxes code as it was originally designed. A simple tax system, with stable rates and minimal exemptions, is the best long-term antidote to tax terrorism.

(Source: Quick Edit in Mint Newspaper dated 17.06.2016)

It will be interesting to see how things pan out from here as commodity prices are said to have bottomed out and have rebounded considerably from their recent lows.

Since India benefited significantly from lower oil and other commodity prices, investors will be keenly watching the movement as some of the gains could come under pressure. The Reserve Bank of India’s latest monetary policy statement flagged the risk of firming commodity prices. Further increase in prices could not only affect possibilities of monetary accommodation, but also impact margins and earnings in the corporate sector.

(Source: Quick Edit in Mint Newspaper dated 10.06.2016)

As the storm gathers speed, the government is busy settling scores – with the Congress party or with students at various campuses. Or it is fighting banal electoral battles. Our environment minister reports that western cities are badly polluted – apparently this should console us. Niti Aayog breathlessly assures us that growth and reforms are in full swing and ‘achhe din’ are already here.

Meanwhile, India’s water crisis is a clear sign that a storm of epic proportions is on its way. India’s per capita water availability is now below the threshold level of 1,400 cubic metres per person. If so, India is heading from ‘water stress’ to ‘water scarcity’ and the possibility of internal water wars. In 1951, water availability was 5,000 cubic metres per person; in 2050, it could be just over 1,000 cubic metres.

Even if we get a good monsoon next year, the longterm prospects are dire because water scarcity is driven by excessive groundwater use. Interconnecting India’s rivers, another hopelessly dangerous scheme, will only add to the problem: providing more (free) water will not encourage people to conserve water.

Compounding our misery is global warming which will likely increase water demand and could reduce supply. Higher temperatures will damage agriculture. So will the scarcity of water. If sea levels rise, we will lose coastal land, and millions of people will become refugees and be driven inland. Expect social conflict to increase as a result. Temperature rise could cause glacier melt in the Himalayas. That means floods. Hotter weather will also unleash extreme weather events such as cyclones.

Consider India’s demography. In 30 years, we will have 1.7 billion people. China will have 400 million people fewer than us. Population density in India is about 360 people per square kilometre; it will be 500 by 2050. India is already 4 times as crowded as East Asia.

We celebrate our demographic dividend, but note that in 2050 we will have 1 billion working-age people (15-64 years) as against 0.86 billion today. Note too that in 2015, India created the lowest number of jobs in 6 years: in 8 labour-intensive sectors, it added 1,35,000 jobs.

India will grow old before it grows rich – like China. Or perhaps worse than China since it is unlikely we can match China’s spectacular economic growth. By 2050, 34% of Indians will be over 50, and 19% or 323 million will be over 65. Many young people will be supporting many old people because old people in India don’t have pensions. Some Indian states already have an ageing problem.

What is the quality of our people in physical terms? Per capita calorie consumption is probably below the povertyline measure of 2,400 calories. It is falling with economic growth, not increasing. Low-calorie diets are exacerbated by some of the worst sanitation levels in the world (worse than Bangladesh or Pakistan), leaving hundreds of millions of Indians underweight and stunted. Insufficient calories affect mental capacity as well. Speaking of mental capacity, it is estimated that 50% of rural kids in the 5th standard can’t read a 2nd standard storybook, 75% of these 3rd standard children cannot do two-digit subtraction, and 20% cannot recognise numbers up to 9.

All this might be managed if governance capacity were high. It isn’t. India has 4,000 IAS officers for 1.2 billion souls. The policemen-to-population ratio is one of the lowest in the world. We have 1 judge for 1,00,000 people, and 31 million cases are pending in the courts. We also have 1 MP for 2 million people; in Sri Lanka, the ratio is 1:89,000. Only 3% of Indians are persuaded to pay taxes, so the government has no financial sinews either.

Stir into this mess populist leaders, widening economic inequality, increasing religious polarisation, ethnoreligious extremism and a hyperventilating media – and you have not a strong, progressive India but rather a wobbling Pakistan ready to explode.

(Source: Article by Shri Kanti Bajpai in The Times of India dated 21.05.2016)

In India, it is the Constitution which is supreme. It empowers legislature to make laws and judiciary to interpret them in the event of disputes and litigation. The Constitution’s architects envisaged the judiciary as a counter-majoritarian institution which would uphold it in case of deviations. The judiciary has not been passive in this role. For example, in order to enhance access it has been willing to consider even a postcard mailed to it as material enough to act. But apart from ruling on constitutional issues, judicial restraint is essential if harmonious balance between different branches of government is to be preserved.

The equilibrium can be upset when the broad-based nature of a verdict encroaches on the domain of the legislature or executive. Verdicts such as the recent one in Delhi’s air pollution case have asked for an increase in specific environmental tax. Another instance was when Supreme Court recently set a short deadline for government to create a drought mitigation fund. There are two immediate dangers of overstepping. It upsets the balance of power and triggers friction between different branches of government.

It needs to be pointed out, however, that other branches of government have not been blameless in this regard. The executive’s failures and lack of accountability have often led people to approach the judiciary to get existing laws implemented. In a similar manner, legislature has often been unresponsive to changes in society. To illustrate, the first step to provide formal protection against sexual harassment at the workplace was the outcome of judiciary stepping into a vacuum left by legislature.

If democracy is to function smoothly, other branches of government too must raise their game while the judiciary exhibits restraint, keeping in mind that its job is to interpret laws not make them.

(Source: Editorial in The Times of India dated 18.05.2016)

As the Indian economy gets bigger, we invite more foreign investment, and try to expand our tax base, some reforms are needed in the way the tax department does its job. It is one of the few government departments that are in constant touch with citizens. If it continues to operate in an archaic and hostile manner, much of the benefits of policy reforms will never accrue to the economy. Here are ten concrete, doable ideas on what the tax department can do to tax, but with love.

First, treat the taxpayer as a customer. The current tax department mentality is to act like the police and approach the taxpayer as a criminal, unless proved otherwise. It is tough to make people part with their money in any case. The last thing you should do is not be gracious about it. Without the taxpayer, the government can’t function. Seeing the taxpayer as a customer means taking constant feedback, having service benchmarks (eg, turnaround times) and not presuming guilt.

Second, simplify forms. The government has tried but sadly failed to do this. The tax department should download some forms from the Hong Kong or Singapore tax department websites. These are some of the simplest and best forms in the world. Please emulate them.

Third, a good, robust and modern website. India is the land of IT companies. Hire a good company to revamp the customer interface. Again, if you see the taxpayer as a customer, you will approach the website differently. The layout, downloads, language used should all change. Yes, we need an app too.

Fourth, good quality paper. Current tax department communication seems from the 1980s, with cheap quality super thin sheets and envelopes, and poor quality black and white printing. Come on. We are one of the world’s top economies.

Fifth, simpler nomenclature. Names like ITR4 and 26AS intimidate people. Sit down one day and rename and reorganise all the forms that have been amended and become complicated in nomenclature over the years. It’s scary enough to pay taxes. Don’t make it scarier.

Sixth, say thanks and mean it. People who pay taxes are nation builders. Seeing rich people as thieves is a throwback to evil landlord and poor peasant movies of the 1970s. You don’t only become rich by stealing from the poor. You also become rich from creativity, innovation, hard work and enterprise. How can you punish people for that? Not just the top taxpayer, but the top 10% of taxpayers should get a nice letter and memento (not cheap quality please) to thank them.

Seventh, don’t send scary letters. The department officials are under pressure to increase revenue. However, you cannot scare taxpayers. For instance, the department sends letters saying we believe the way things are going you should make 20% more money this year so we hope you will (and better) pay that much more tax. Really? Do we need to be so intimidating?

Eighth, have tax guidance centres. People should be able to go somewhere and figure out how to do their taxes, which doesn’t require a private advisor. Have taxpayer training, inquiry and guidance centres that run well. Again, make them nice. They should not be like a sarkari torture chamber with endless waits and creaky fans. This is the last department that can claim it doesn’t have money.

Ninth, share macro data. Without giving individual details, macro data should be shared with the public to enable us to understand how tax collections are going.

Tenth, share where the tax money was used. Of course, funds are amalgamated at the top. However, it would be nice to hear that your tax last year helped make this road. As Veda Vyasa said in the Mahabharata, a king should collect taxes like a bee collects nectar from flowers, painlessly. It is about time we behaved like a modern, world-class economy when it came to tax collection and learned to tax with love.

(Source: Extracts from Article by Chetan Bhagat in the Times of India dated 11.06.2016)

We examine this question here using economic indicators and conclude that the legacy is an unflattering one. It’s a legacy of retaining power through reckless populism. The numbers depict a key narrative: Building a mountain of subsidies without worrying about its disastrous economic consequences.

We collated data on various economic indicators from the World Bank database. We then separated them by the averages obtained during governments ruled or controlled by The Dynasty and governments ruled by non-dynasts. Thus, the UPA-I and UPA-II governments led by Manmohan Singh are classified as part of the legacy of The Dynasty because we all know Sonia Gandhi controlled the levers of that government through the National Advisory Council. In contrast, the government led by P V Narasimha Rao, whom Congress has banished from its collective memory despite his government heralding economic liberalisation in this country, is categorised under governments not controlled by The Dynasty.

The government led by Rajiv Gandhi, who took several steps towards economic liberalisation and heralded the telecom revolution under Sam Pitroda, belongs to The Dynasty. Of course, the government led by Indira Gandhi, under whom poverty increased significantly despite her vote-catching rhetoric of “garibi hatao”, belongs to The Dynasty as well.

After analysing a plethora of economic indicators, we discovered that the elephant in the room relates to subsidies. Governments run by The Dynasty doled out subsidies and other transfers to the tune of Rs 689,600 crore every year, as opposed to Rs 183,300 crore by nondynastic governments. These figures are in real terms deflated to 2011 levels.

And this is not because there was necessarily more money to dole out during the time of the governments run by The Dynasty. Subsidies doled out by them amounted to 9.2% of GDP, almost double that doled out by nondynastic governments (5.3%). Crucially, subsidies under the governments run by The Dynasty increased at almost 13% year-on-year while this growth was about 4% yearon- year under governments run by non-dynasts.

There were other important ways in which governments run by The Dynasty indulged in bad economics though the differences were not as stark as they are for subsidies. First, governments run by The Dynasty spent more indiscriminately when compared to the governments run by non-dynasts. Expenses amounted to 15.6% of GDP on average under governments run by The Dynasty. This ratio was 14.8% for the governments run by non-dynasts. Moreover, expense grew at 9.1% under governments run by The Dynasty and at 5.6% under the governments run by non-dynasts.

Second, governments run by The Dynasty indebted the economy more than governments run by non-dynasts. Total central government debt and the cash deficit was at least twice as much under governments run by The Dynasty as that under the governments run by nondynasts. While the cash deficit does not account for future revenues that would accrue from current capital investments, it has the key benefit of revealing the deficit by eliminating accounting subterfuge.

As the fixed capital formation under governments run by The Dynasty was not very different from that under governments run by non-dynasts, future revenue accrual would not be very different. So the cash deficit does not certainly overstate the profligacy of governments run by The Dynasty. Also, governments run by The Dynasty reduced the servicing of debt (1.6% of gross national income) when compared to 2.6% of gross national income under governments run by the non-dynasts. Thus, governments run by The Dynasty doled out largesse and spent wastefully while indebting future generations of this country.

However, the outstanding difference pertains to the use of subsidies. The conduit between a government and the intended recipient of a subsidy resembles an open sluice with plenty of opportunities for others to dip into the stream before it reaches its final destination. Furthermore, subsidies create significant distortions in asset use. Subsidies also dampen individual incentives.

Thus, the unabashed use of doles despite their pernicious effects stands out as the key economic legacy of governments ruled by The Dynasty. UP voters would be well served by remembering this important fact as charismatic rhetoric is not going to get them “naukri, paisa aur makan”. Recall that “garibi hatao” by Priyanka’s grandmother was little more than charismatically delivered rhetoric.

(Source: The Times of India dated 07.06.2016)

Any reform involves unsettling rent-seeking groups, often backed by political interests, that benefit from the existing system. Reform beneficiaries are often not as wellorganized. But this is a battle worth fighting. Free markets should benefit both farmers and urban consumers, as the late farmers’ leader Sharad Joshi argued. Let us hope Fadnavis does not blink.

(Source: Quick Edit in Mint Newspaper dated 14-07-2016)

This newspaper had once hoped that Modi would streamline his cabinet by merging ministries and shutting down irrelevant ones. Those hopes have been belied. Modi said in a recent interview that the expansion is to help the government pursue the February budget’s goals.

The jumbo cabinet headed by Manmohan Singh was an example of spreading political patronage across an unwieldy coalition. In contrast, Modi has a strong political mandate to cut bureaucratic flab rather than add bulk. Jumbo cabinets are not exactly the optimal solution to governance challenges.

(Source: Quick Edit in Mint Newspaper dated 06.07.2016)

IMF research shows that investment in corrupt countries is almost 5% less than in relatively corruption-free countries. India needs to generate employment for over 12 million youth every year. And jobs need investment.

Increasingly , the party political system is recognising that jobs are a priority . It is more responsive to the call of corporate institutions for increased levels of transparency and ease of doing business. So, it is timely for corporate India to evaluate how it can contribute to the debate on rooting out corruption in public life.

India Inc needs to first demonstrate its commitment to putting its own house in order. A good place to start is with the adoption of a Code of Conduct by each corporate entity .

A Code guides the behaviour of the people within the corporate house. Its coverage can also be extended to value chain partners, thus increasing its impact. And it sets in motion industry dynamics that create a kind of competition to do good, reflected, for instance, in the integrity pacts that corporate entities have entered into in some overseas markets.

Once a baseline is set with a Code, it also creates sustained pressure on the institutition to keep improving on its own standards.

A key element in ensuring a Code is taken seriously is to encourage employees to speak up when they observe its violations. Such whistleblowing is all too often received badly within organisations. This has to change.

One of the principal reasons for corruption in India is the need to gene corruption in India is the need to generate funds to fight elections. The legislated limits on spending per constituency by candidates Rs.70 lakh in bigger states for general elections are widely acknowledged to be breached by most parties. Corporate houses now have more transparent alternatives to fund political parties in the form of electoral trusts that enjoy the sanction of the law.

The operations of these trusts can be scrutinised by stakeholders. By defining predetermined formulae for allocation of the trust funds, corporate entities can put in place transparent, non-discriminatory and nondiscretionary mechanisms that can significantly insulate them from political pressure. With increased public vigil, including demands to open the books of political parties to public scrutiny , electoral trusts may eventually lead the way to state funding of elections.

A wide cross section of India Inc is not fully aware of the reach and extraterritorial jurisdiction of legislation covering bribery and corruption across countries, including the Foreign Corrupt Practices Act (FCPA) in the US and the UK Bribery Act.

Indian companies are being increasingly questioned on the adequacy of their internal anti-bribery and anti corruption frameworks by potential or actual business partners, particularly from the US and Britain. The actions of Indian companies could expose the foreign partner to unwanted litigation, scrutiny and reputational risk. We are already seeing a rising trend in FCPA enforcements and actions involving the Indian operations of US companies.

The old adage of `what gets measured, gets improved’ holds just as true in the field of ethics and values. At the recent B20 Anti-Corruption Forum meeting in Shanghai, it was clear that the agenda of the most-powerful industrial economies is increasingly focusing on two key areas: identification of beneficial ownership of legal entities and making government procurement more transparent through the use of technology .

At the Brisbane Summit in November 2014, the G20 leaders adopted high-level principles on beneficial ownership transparency , describing financial transparency as a `high priority’ issue.This question has acquired greater urgency following the leak of the Panama Papers.

With the advent of new technological tools, the calls are increasing for automating government procurement and public services. E-custom clearance programmes and e-procurement processes for public procurement are helping to simplify policies, procedures and rules and removing discretion in these areas. Some countries are pushing for adoption of the HLRM (High Level Reporting Mechanism) ¬ a channel for companies to report corrupt behaviour in public procurement. The idea is then to identify and rate companies based on a `corruption index’.

Corruption increases uncertainty and leads to wastage of public resources and fundamentally undermines the rule of law. It is time for corporate India to play a leadership role by engaging in advocacy around the key issues to be resolved. This may be one of the greatest contributions an Indian corporate entity could make towards nationbuilding.

(Source: Article by Mukund Rajan in the Economic Times dated 06.07.2016)

There was a time when scoring 65% meant you were brilliant, and if you touched 70% then Einstein had better watch out! But today anything short of 100% in Higher Secondary does not guarantee admission to a department of choice in Delhi’s top colleges.

In economics, the GDP deflator is used to assess the imdipankapact of inflation on the pricing of goods and services. But what kind of deflator do we need to make sense of grade inflation in high school results?

Scoring 99% in English, once considered impossible, is not uncommon today. The question, therefore, is whether our kids are getting more skilled and more competitive, or whether awarding high marks is a clever way of concealing poor education.

It is comforting to imagine that India is intellectually rising because our school grades are getting better every year. However, all indications show that the reverse is actually true. While at one end, college cut offs keep going up, our international standing in science, technology and innovation keeps going down. In other words, scoring high marks does not necessarily mean learning well, at least in India.

Over the years our students are getting better and better grades on paper, but have these brilliant performances helped to push up our knowledge levels? According to the 2014 Global Innovation Index, 81% of patent applications are from China, the US, Japan, South Korea and the EU. While America leads in computer systems, South Korea has emerged as the new kid on the block. It has overwhelmed all of Europe and ranks second to the US in this very high-tech sphere.

But where is India? In terms of patent applications we cannot match up to any of the world leaders in the field. Curiously enough, patents submitted by Indians abroad are more in number than those that originate in our country. Once again, education here seems to have contributed little.

Worse, our school children fare very poorly when it comes to skills in reading, writing, mathematics and science. Globally we now stand 62nd on this measure, well behind even Jordan and Armenia.

It is bad manners to go on and on, but our famed IITs do not figure among the top 300 institutions of higher education in the world. There is so much pressure in India to win a place in these engineering colleges, so much envy against those who make the grade, yet globally these institutions are minor players.

It is not as if western universities are always on top. Peking University occupies the 48th position, Tsinghua the 49th and even lowly Fudan University, at rank number 193, is way above our best.

The reason why a grade deflator does not work like a GDP deflator does is because the quality of the product that is being accounted for is not the same. True, more and more students are getting higher and higher marks, but the standard of education is going in the opposite direction. There was a time when a first class meant something and one wore that distinction like a badge of honour. But today, those with 60% would happily throw a party if a lowly vocational school lets them in.

The principal reason for grade inflation in school results is the way teachers have traded in their sense of responsibility for comfort. Consequently, question papers have become more and more objective and the right answers are actually screaming in your face. At times it comes down to the presence of a certain word, or sentence, in an answer for a student to max the question.

On the other hand, if you try and be creative, your grades could slide all the way down. Examiners, in the main, do not want to be bothered by reading something new in the answer scripts. Listen up, people; tick the right boxes, say the right thing, take your marks and run.

It is not as if everybody is happy about this outcome; some teachers are actually chafing at the bit. Yet, the educational system is structured such that taking responsibility for quality teaching and marking can become job threatening. All of this suits mediocre instructors excellently; as long as the grades are good, there is little scrutiny and everybody is happy. The more generous the system of marking, the less pressure there is on teachers to perform.

It is not as if such an affliction only attacks schools. Even universities and institutions of higher education happily inflate grades. This is one of the reasons why good school teachers and professors are driven out by bad ones.

In some post graduate departments, it is hard for a student to score below a B plus. This depresses the urge to learn for high grades are like low hanging fruit. Is it surprising then that good marks at home are accompanied by poor performance on the world stage? So when our Higher Secondary grades climb even higher next year, and in every subsequent year, be prepared for a proportionate fall in educational standards.

But how high can these marks go? If 100% is not such a big deal any longer then will we see 105% soon? Or, perhaps even 110% before long?

(Source: Article by Mr. Dipankar Gupta in The Times Of India dated 22-06-2015. The writer is a social scientist.)

Embedding technology into governance processes will do three things: one, transform government and make it more transparent and efficient; two, transform the lives of citizens, especially those at the bottom of proverbial pyramid; three, make our economy more efficient and competitive. A 2014 McKinsey Global Institute report predicts that the large-scale adaptation of technology through Digital India positions India with the biggest opportunity yet to accelerate economic growth.

E-governance and technology in government is not a new idea. This has evolved over years from replacing typewriters with PCs and the process of ‘computerisation’ to a more complex, multi-functional, department-wide application of the concept. However, despite thousands of crores of rupees spent in the last decade in the name of e-governance and efficiency, there has been little change in government as a consequence of these investments.

This is because the process of embedding technology in government has been a bottom-up process. Individual departments and offices are undertaking this independent of each other. Thus, crores are being spent in systems and projects that are incompatible and don’t work with each other, defeating the purpose of e-governance.

Take the huge data collection exercises and databases. The Aadhaar database on biometrics has a different architecture and hardware from other similar large databases overseen by the finance and home ministries. Or the case of data servers and networks ” which have different security and architecture specifications in different departments ” leaving government agencies with differing levels of vulnerability to cyberattacks.

Further, embedding technology into limited silos makes data-driven, real-time analysis of governance and policy action impossible or, at best, inaccurate. This approach is also expensive and inefficient in terms of costs associated with procurement, obsolescence and administration. This silo-based or bottom-up approach to embedding tech also has another big failing: it doesn’t create the process reforms and efficiencies at the top-most levels of government decision-making where it is most required.

More mature democracies such as the US have beaten India in recognising the need for a chief technology officer (CTO ). President Barack Obama made this appointment a centre-point of his 2007 electoral campaign. Obama conceptualised the role of the CTO to be someone that would “focus on transparency” and ensure “that each arm of the federal government makes its records open and accessible as the e-Government Act requires”. India needs to take a similar approach and use this as a precedent while rolling out Digital India.

Government is a sum of various parts. Currently, some of these parts are efficient and technology-enabled while others are sub-optimally enabled or technologically bereft. So government’s efficiency as a whole is measured by its least efficient or least responsive departments, just as governments are known by their worst ministers and not their best.

A good CTO is essential to make the government function as a unified machinery that operates with consistent standards of efficiency, transparency and responsiveness. That is key to realising maximum governance, minimum government.

The focus of the CTO should be to design an architecture that achieves three broad goals: 1) enable easy, transparent access for citizens and business to and from government, 2) enable government departments to operate transparently and efficiently, 3) connect various departments to ensure that government and policymakers operate in a seamless, transparent, responsive and data-driven manner.

For this, the CTO should re-wire the government’s existing technology investment, connectivity and access mechanisms. The CTO can then help embed layers of applications, including security measures into the ecosystem that ensures that the government applies the same standards of responsiveness, transparency and access regardless of department, hierarchy or region. Creating such a standardised architecture will also save thousands of crores in procurement and administering efficiencies.

Digital India promises to ‘transform India into a digitallyempowered society and knowledge economy’. A CTO in the Modi government’s team can help the latter achieve its stated goals of minimum government, maximum governance.

(Source: Article by Mr. Rajeev Chandrasekhar, Rajya Sabha MP, in The Economic Times dated 03/07/2015.)

Yet, Greek culture cannot be a financial band-aid. The idea of a eurozone, where states have no monetary policy but only fiscal and other policy widgets, has been challenged. This time, Greece has stared down its bankers by Getty’s logic. The next time might be different. And policymakers in India, where the economy is slowing, consumption and investment lacklustre and banks are saddled with bad debt, should take note: Greek tragedies might overwhelm Kalidasa’s epic tales of love.

(Source: Editorial in The Economic Times dated 14-07-2015.)

True, government has now offered a voluntary compliance scheme that allows Indians with hidden assets overseas to come clean. However, once the compliance window is shut, anyone charged of wilful attempt to evade taxes will have to pay a stiff penalty and face prosecution. Should IT professionals also use the compliance window, especially since information on undisclosed assets of Indian taxpayers will be available later this year under the Foreign Account Tax Compliance Act? The US had passed the law in 2010 that requires US taxpayers and foreign financial institutions to report information on foreign accounts of US taxpayers. With the Indo-US accord, our tax authorities will secure details of financial accounts held by Indian taxpayers in the US. So, a clarification is in order.

Applying the draconian provisions of India’s black money law to Indian IT professionals is simply unjust. Instead, the government should go after the big fish who dodge the tax net. India certainly needs an IT-empowered, big data-crunching department that can tell a person how much tax she should have paid, instead of the taxpayer saying how much she earns.

(Source: Editorial in The Economic Times dated 14-07-2015.)

Most private banks lend short-term, for working capital, leaving the public sector banks (PSBs) to do the heavy-lifting for large projects, including investment for infrastructure, which India sorely lacks. But here is a problem: key appointments at state-owned banks and their lending decisions tend to be stained by the illicit manner in which Indian politics funds itself — by the proceeds of corruption.

Given the political-bureaucratic connections at play, PSBs lend heavily to politically favoured promoters for their inflated investment proposals, and when these turn sour, are more than willing to ‘restructure’ their borrowings by taking haircuts on the money lent. The power sector is crippled by the bad politics that deems power an ideal giveaway. The end result, as the RBI points out succinctly, is to double the amount of bad debt that the banking system carries: from under 5% of total lending to over 11% today. Yet, these warnings from the central bank cannot solve the bigger problem that eats away at the heart of the economy: the rot in political funding.

In India, this is opaque and driven by illicit cash, stashed away by companies and paid in return for political favours, including bank credit, for dodgy projects ranging from infrastructure to mining. Equity investors have burned their fingers and have become risk averse; the RBI can help by deepening and widening the market for corporate bonds. But the most important reform, that should start at the top, is to clean up political funding: once that system becomes clean and transparent, much of the chain of graft leading from parties to babus, crony capitalists, bank officials and bad loans, will be broken.

(Source: Editorial in The Economic Times dated 30-06-2015.)

While thousands of Indians live in almost similar glass houses, dream of gaming the system and well-networked mini Modis proliferate across India, we are content that a public stoning of Prime Time’s Public Enemy No 1 is going to solve the deep-rooted problem. We hypocritically cling to the adage that to be rich and create fantastically successful cricket tournaments are criminal acts, yet we conveniently overlook the fact that conflict of interest at all levels of society is hardwired into our cultural and institutional DNA.

Extraditing Modi or securing the resignations of Sushma Swaraj and Vasundhara Raje may make for a neat end to the TV drama but unless we understand the institutional nature of the problem, the malaise will only grow. And the malaise is that as a cultural trait we Indians convert professional relationships into family bonds and thus create conflict of interest at all levels of society. How many times have you heard the phrase: Mr. VIP is like my own brother?

Modi has the whacky chutzpah needed to create a massively successful private sector property like the IPL. All the moralistic handwringing about cheerleaders being anti-Indian culture and pure cricket being replaced by casino cricket has been buried under the tidal wave of public enthusiasm for the inter-city tournament.

There is hardly anything morally wrong about big money coming into cricket, provided of course that the money is clean. Modi had the audacity to thumb his nose at UPA when he shifted the IPL to South Africa in 2009. He also has the audacity to openly declare his close relations with various politicians.

And here is where the problem lies. In our culture we too quickly transform public relationships into private ones and professional relationships into family bonds. For us anyone with whom we should have a close professional relationship is instead a feudal attachment of either ‘didi’ or ‘dada’ or ‘tau’ or ‘chacha’. Seeking to make public institutional relationships into private family relationships is the bane of our social life. The dada-didi, chacha-tau syndrome means that loyalty is always to the ‘family’ relationship and not to institutions.

Prurient moralists scream that Swaraj and Modi’s dinner at a London hotel is a criminal act when it emphatically is not. Where the conflict of interest comes is that Swaraj clearly acted on the belief that her ‘family’ ties with Modi and her loyalty to an old close relationship over-rode her institutional public responsibility as minister.

The same goes for Vasundhara Raje. There again a close ‘family’ relationship was seen as more important than her public and institutional role. In fact the dada-didi, chachatau syndrome proliferates across our public life; it is so widespread that we don’t even recognise this serious conflict of interest which is so culturally ingrained. After all, aren’t VIPs duty bound to look after their families well?

Politicians have meddled in the BCCI down the decades, realising the enormous wealth and influence at its command and have sought to enter the IPL, attracted not only by the big money but also because of their so-called penchant for cricket. But do Republican and Democrat politicians in the US also hold important positions on baseball leagues or soccer clubs? Are Labour and Tory politicians office bearers of the MCC?

In India businessmen and politicians are united in a boys club of big money and big power, all of it legitimised in the name of cricket. And if it’s not cricket, it’s real estate, it’s educational institutes, coal allotments and telecom licences where largesse is handed out. In this dance of cronies, the state itself becomes a family enterprise, the Il Familia of Don Corleone, where only individuals matter, not institutions.

There is thus hardly any incentive to clean up the system, hardly any incentive to bring in professional managers or enforce regulations or ensure that black money pitfalls are cleaned up, because all deals are in any case done on a personal basis. Louis XIV’s declaration, ‘I am the state’, echoes eerily with Indian democracy of the 21st century where many Sun Kings and Sun Queens have converted the public realm into their private families.

The privatisation of the public realm means that institutions that belong to the people to ensure the public good simply become the family property of individual politicians or businessmen and the state itself is parcelled out between gangs of politician-tycoons. In an odd twist, in the economic sphere, while massive public sector white elephants urgently await privatisation, it is public life instead which is being busily privatised by the netas. Swaraj and Vasundhara Raje see nothing wrong in extending favours to Modi in their official capacity, because after all he may either be their bhatija or bhaiya or chacha.

As a society we’re trapped in creating honorary brothers, sisters, uncles and aunts instead of establishing modern relationships on the basis of professional responsibility and merit. In western societies, strangers on the street are hardly called chacha or dada. While this may be a heart-warming desi trait for some, it creates a feudal mindset by which private bonds must be honoured at the cost of professional duty. Until we find systemic ways to stop the privatisation of the public realm, a syndrome in which Modi, Swaraj and Raje are all participants, conflict of interest will constantly occur. The Great Indian Parivar is a blessing but also a curse.

(Source: Extracts from an Article by Ms. Sagarika Ghose in The Times OF India dated 24-06-2015.)