The Energetic Modi Doctrine Has Rejuvenated India's Place In The World

The Energetic Modi Doctrine Has Rejuvenated India’s Place In the World

The first 100 days of a newly elected government are its honeymoon period. AB Vajpayee in his boldness and wisdom went nuclear-weaponised within days of taking over at the head of a bulky coalition.  And this, along with The Golden Quadrilateral system of highways, has probably become the Vajpayee government’s lasting legacy.

The nuclear weaponisation of India was certainly a tipping point, thrusting it into the leading ranks of nations with a “credible deterrence”. It also put paid to Chinese inclinations to seriously dominate India. This, while also keeping nuclear Pakistan (which followed suit with a slew of its own nuclear tests), at bay.

President Clinton and others may have slapped economic sanctions on India in the aftermath, but at home, Vajpayee walked on water. Vajpayee had done what no Indian Prime Minister before him had dared to do. But Vajpayee took the risk, changing India’s status into that of a select few nations who could make and deploy nuclear weapons. Today we have a triad capability- we can launch from land, sea and air, simultaneously if need be.

Based on Vajpayee’s bold move, predicated on Indira Gandhi’s “peaceful nuclear test” of years before, Prime Minister Manmohan Singh in UPA I was able to  get India waivers from the Nuclear Suppliers Group (NSG) with promises of the requisite technology/fuel/spares on an ongoing basis.

This, in order to buy and install multiple and “clean” nuclear power plants in a power hungry country. India was acknowledged as a responsible nuclear power that had no truck with proliferation, with the help of President George W Bush.

It is only now however that two Russian made nuclear power plants have been operationalised at last. The ones from France, and ironically, America, have not fructified yet. India, meanwhile is working on its own Thorium based reactors as there is a large supply of the fuel in country .

Meanwhile India is still trying to join the NSG as a full member, but is being stymied by China, because the induction must be unanimous.

But if nuclearisation was the big game- changer in Vajpayee’s term, the equivalent in the Modi government is a completely revamped and reenergized foreign policy. In four years, it has yielded substantial dividends, including the highest level of Foreign Direct Investment (FDI) in India’s history.

Modi won in 2014 with a thumping majority and promptly invited the heads of SAARC to his swearing-in ceremony. Nawaz Sharif of Pakistan attended, along with almost all the others. And, there in one fell swoop, the Modi Doctrine was born, even before the ink was dry on his signature in the Presidential ledger.  

Narendra Modi had, by inviting the regional assembly, already signaled that he was going to revive and hopefully transform India’s approach to its neighborhood.  True to this intent, and many other global bilateral and multilateral goals, Modi has worked on his foreign policy with zeal ever since.

He leads from the front, globe-trotting frequently, with his able Foreign Minister Sushma Swaraj bringing up the rear with a remarkable human face and a concern for the humblest Indian worker stranded or in trouble abroad. She, in turn, works with her twin Ministers of State – one a former Army Chief, and the other a renowned Journalist and Editor.

This phalanx, ably assisted by the professional foreign service( IFS), and the National Security establishment spearheaded by the National Security Adviser (NSA) Ajit Doval, underlines the importance this government attaches to its international links.

Narendra Modi has carefully built upon old relationships with major countries such as Russia and the United States, but moved away from the old UN General Assembly non-aligned block and the post-colonial Commonwealth, despite the continuance of CHOGM.

He has replaced this with a more flexible and dynamic bilateralism, inclusive of many countries in Africa and West Asia. Our relationship with Japan is at an unprecedented zenith. Modi was the first Indian Prime Minister to visit Israel on a State Visit, and this has been warmly reciprocated. This, even as relationships with the UAE, Saudi Arabia, Indonesia, Malaysia, Bangladesh, Myanmar,  Australia, are better than ever before.

At the same time, there are collectives and multilaterals that Modi has enthusiastically joined, most for the first time, including ASEAN, APEC, the EAS, the ARF, as part of the nation’s “Act East” policy.

Others are of course, the G-20, G-8+5 with the developed West,   the regional BIMSTEC that works better than SAARC, the G4 which tries to help each other become permanent members of the UNSC even as the UN loses more relevance everyday.

Closer to home, there is the very important BRICS, the Shanghai Cooperation Organisation (SCO) and so on.

There are security related international organizations India has recently joined- the Missile Technology Control Regime (MTCR), the Australia Group (AG),  and the Wassenaar Arrangement- these latter by invitation only. And guess what, China has not as yet been invited.

Soft power  initiatives like the World Yoga Day that was just celebrated on the Summer Solstice are unique Modi initiatives that have been well received. His constant harping on the scourge of global terrorism has resulted in much greater cooperation and sharing of vital intelligence between nations, including Islamic ones.

At the same time, Modi has made sure that this eager diplomacy has not made India a Nehruvian pushover. It is not the statesmanship label the Prime Minister is after, but greater connectivity and cooperation with multiple nations.

Some of this follows its own script. India enjoys excellent relations with Iran, buys oil from it in the face of threat of US sanctions, and has helped develop Chabahar Port, much to the benefit of land-locked Afghanistan. But India does just as well with Saudi Arabia simultaneously.

The military stand-off with China at Doklam and the surgical strike into PoK, are illustrations of India’s resolve in the face of obvious provocation. And despite a willingness to cooperate with China, there is no joining  of the China Pakistan Economic Corridor (CPEC) that runs from Xinkiang through Indian PoK all the way to Gwadur in Balochistan. Other Chinese attempts to encircle India on the high seas via Sri Lanka and the Maldives are also being countered.

Modi has lately also held one-on-one informal summits with President Xi Jinping of China and President Putin of Russia. More may follow, as it is a very good way of setting mutually beneficial agendas without ambient noise getting in the way. India’s blistering growth rate of  7.4% p.a. in a sluggish world economy, is pushing it towards the top.

The Indian diaspora around the world, and there are few places on earth where Indians cannot be found, is ecstatic. At last an Indian Prime Minister has recognized their salience and contribution. Modi’s considerable oratorical skills, his obvious pride in his country and its 125 crore inhabitants, makes for an inspiring tableau wherever he goes. And the fact that he still enjoys a 70% plus personal popularity rating at home is both impressive and heart-warming.

All in all, the unalloyed success of the Modi Doctrine, could have it go down in history as his best work, despite all the domestic initiatives taken and to be taken as yet .

(1,195 words)

For: New Start Up via Surajit Dasgupta

June 22, 2018

Gautam Mukherjee

Who's Afraid Of Narendra Modi?

Who’s Afraid of Narendra Modi?

Going into election mode in 2013, and winning, with the first majority in 30 years in May 2014, Prime Minister Narendra Modi projected himself as an incorruptible Robespierre-like figure, strong, clear-headed. He promised to shake up the Indian political firmament.

The voting public expected a fresh start and a renaissance rolled into one. The much talked about 56 inch chest was a symbol of the muscularity in governance that was anticipated.

The reality, since, has been somewhat less overwhelming. Surprisingly, and to his detriment, Modi as Prime Minister has made bold to disappoint almost every section of his admirers.

Beyond the invariably fiery rhetoric and the pleasing spectacle of our Prime Minister being treated well and with respect wherever he goes, little has happened that touches ordinary lives for the better. The Modi “Bhakt” is still stubbornly loyal, and consistently hands him 70% plus approval ratings saying he cannot be expected to do in five what has not been done in fifty. But this too could evaporate by the 2019 general election, especially if the BJP loses another state or two in forthcoming assembly polls.

As the only pan-India vote-catcher in the BJP, with only a motley crew in the supporting cast, it is astounding that he prefers to wag his finger at the electorate rather than addressing its needs.  

There is a yawning credibility gap. We are told here and in the cities of the world that the Indian farmer now has ample neem-coated urea. Cooking gas and electricity has touched the lives of lakhs of the poor. Bank accounts, mass medical insurance have come to millions, as has micro-lending to the pakoda seller, etc. . The Aadhar card registration drive has exposed much fakery amongst the takers of government subsidies and saved crores. The implication is that the bottom off the pyramid has been squarely addressed.

Why then don’t the rural/urban poor really think so. Why have prices of almost everything gone up for the housewife with new taxes that have been slapped on?  

His Finance Minister is busy managing the macro economy and there’s the real rub. Fiscal and current account deficits, foreign exchange reserves, and so on, are much better, but what has it done in tangible terms for the man in the street?

Many BJP voters, unwilling to vote for the other side still, have taken to sitting at home, as bye-poll results in Gorakhpur, Phulpur and Khairana in Uttar Pradesh have recently demonstrated. Even if there was no Opposition unity, would the BJP have won? The same thing happened in Rajasthan in a straight fight with the Congress, and, most tellingly, in the hard fought Assembly Elections in Karnataka. Despite pulling out all stops the BJP fell just short of a simple majority and could not cobble together a post poll alliance.

We have only seen a mild prime minister. One, curiously unwilling to rock the boat, of taking a hard line with lazy governance, wary of prosecuting, let alone jailing, the corrupt. One that lets parliament turn into a non-functioning fish market. One who shamelessly plays from the very song book of the Congress he reviled on the stumps.

What we’ve had, in reality, is a more dynamic Congress, without the high level corruption. Modi has also put through a mass of administrative reforms in the minor key, spoiling the effect by simultaneously extracting masses of indirect taxes in the name of everything, including “greening”.

There is an overarching impression that Modi won’t, or can’t, do much about many things affecting the public, including financial skullduggery, blackmail, lynching, rape and murder. There is no putting people in the police lock-up till bail is given or denied by a court. And its various enforcement agencies like the ED, NIA, CBI, the IT Department etc. and even the intelligence agencies move so slowly that it appears the prosecution of the formerly mighty is the last thing they want on their record.

There is, now, some new and some refreshed legislation on nabbing the corrupt and financially delinquent. But even though the law may be there, the efficacy is still a work in progress.

Four years on, the Armed Forces, granted their OROP demands by the Modi government, continue to be ill-equipped.

The traders and SME segment, long time BJP adherents, are yet to receive a single benefit. Instead they face sealings, fines, higher taxes.

Likewise, the middle class BJP supporter, who has had little beyond a direct tax cut, traded for onerous GST on all things, VAT, etc.

There have been no mega bold steps except GST and demonetization. The latter has helped damage Opposition finances for the suddenness of its implementation, but, in retrospect, that is about it. Cash in circulation is once again double that of November 2016. Digitisation has also increased, but not by as much as it was hoped.  

There are no new jobs in numbers hoped for, no defence manufacturing to write home about, next to no privatization or private investment, meagre exports, a languishing stock market - also bedeviled by fresh taxes. The real estate market is languishing, even as talk of smart cities swirls and eddies.

There is not even a single substantial Hindutva move made, unless cancelling the Haj subsidy is to be counted. There is a mess of three steps forward and two steps back in the Kashmir Valley. There is no effort to abolish Article 370 and 35A of the Constitution. No Ram Mandir. The judiciary is unreformed, partisan and obstructive.

Modi has indeed delivered a 7.4 % GDP growth through it all, touted as the highest in the world. The international rating agencies, World Bank, IMF and so forth like it. But, it is based solely on infrastructure spending.

Other programmes, such as the much vaunted Swatchh Bharat, financed by yet another cess, inclusive of its rural toilet-building programme have not worked very well.

Free-float fuel minus subsidies has been handled scandalously. As global crude prices were halved and quartered, the fuel consuming public in India were taxed to the nines.

Is it too late therefore for Modi to reclaim his credibility? It would certainly appear so, given the huge overhang of unfulfilled promises. Modi may therefore rely on the TINA factor alone to see him through. And, given the contours of the proposed mahagatbandhan, he may be right. However, it still leaves a feeling of being cheated, and raises some doubts about his future performance too.

Modi might very well win with the able support of Party President Amit Shah and the legions at the command of RSS Chief Mohan Bhagwat. Still, because of the non-delivery and the mildness, his stature is much diminished. Nobody is afraid of Narendra Modi.

The same question was applied to Virginia Woolf, an English author of the 1920-1940 era, used as liet motif in Edward Albee’s hit play of 1962.

The play, and the movie that followed later, starring Richard Burton and Elizabeth Taylor, was on marital strife. And the modernist novelist, feminist, Adeline Virginia Woolf, is actually a stand-in for “the big bad wolf”.

But the tragedy of the first term of Narendra Modi as Prime Minister is that there has been too much rent-seeking Red Riding Hood, and not a lot of the avenging Big Bad Wolf.

(1,212 words)

For: Surajit Dasgupta’s new launch

June 21^st 2018

Gautam Mukherjee

BOOK REVIEW:THIN DIVIDING LINE By PARANJOY GUHA THAKURTA & SHINZANI JAIN

BOOK REVIEW

TITLE: THIN DIVIDING LINE-India, Mauritius And Global Illicit Financial Flows

AUTHORS: PARANJOY GUHA THAKURTA with SHINZANI JAIN

PUBLISHER: PENGUIN PORTFOLIO, RANDOM HOUSE INDIA, 2017

PRICE:Rs. 599/-

The World of Hawala, Tax-Havens, Round-Tripping, Anonymous P Notes & The Vexed Question of Tax Competitiveness

There are a   plethora of almost no- questions asked “Tax Havens” both onshore and offshore, across the world. Many have been there for a century or more. Much of the money flowing through them is not necessarily ill-gotten, but seek to take advantage of the tax avoidance opportunities proffered. This naturally to the detriment of the taxation authorities in the  country of actual residence.

 However, global as the issue is today, what tickles and tantalizes people in India, are estimates that $62.9 billion or Rs. 400,000 crores is secretly stashed by Indians abroad by way of illicit funds.

This book is something of a companion primer to a documentary of the same name, concentrated quite largely on Mauritius. The authorities in Mauritius have framed their laws and practices in a way that there is no wrong doing as far as they go. Nevertheless, the “Mauritius Route”, with a double tax avoidance treaty, has been controversial since 1982, when Indira Gandhi was Prime Minister. The treaty lay dormant for almost a socialist decade, and was only operationalised with the advent of India’s liberalization in 1991. PV Narasimha Rao  was Prime Minister –assisted, of course, by his economist Finance Minister, Dr. Manmohan Singh.

Soon, 40% of all foreign investment into India, now in many billions of dollars and mostly into the equity market, came in via Mauritius. How much of it is really Indian money turning white from black? All of it has been 100% exempted from capital gains tax for decades.

A clarification was issued to the Central Board Of Direct Taxes (CBDT), by the Finance Ministry when it was inspired to interpret the terms of the treaty differently in 2000.

The CBDT in its wisdom, tried to tax the capital gains of Foreign Institutional Investors (FIIs), High Net Worth individuals (HNIs) etc. despite the Double Tax Avoidance Treaty with retrospective effect. That is, for all the years the FIIs and others using the route were active in India! This naturally raised a hue and cry and the then Finance Minister Yashwant Sinha was forced to intervene. The clarification issued  during the Vajpayee government, said that if an FII was able to establish its “tax residency” in  Mauritius, (which anyway did not have any capital gain s tax itself), then the CBDT could not tax it in India.

But all along the line, there had been criticism of the Mauritius treaty by large domestic institutional investors (DIIs), for creating an uneven playing field albeit to attract foreign investment. This view was echoed by Left-leaning economists, bureaucrats, lawyers, and politicians. It was seen by them to favour FIIs using the debatable argument of “tax competiveness” vis a vis other countries.

This too changed after the global economic crisis of 2008, when the prevailing sentiment underwent a sea- change. Now most developed countries began to call for an end to “tax havens”, because of their allegedly deleterious effect on their domestic economies.

India too decided to go in for a change under the Modi government which has mounted a fairly serious effort against black money, hawala, round-tripping using tax havens and so on.

It has gone ahead and renegotiated various avoidance of double taxation treaties, starting with Mauritius in May 2016. India imposed a withholding tax of 7.5% of capital gains for those using the Mauritius Route for the two years till 1^st April 2019, when the full tax rate of 15% will be applied on foreign investors on par with domestic ones. That is, from financial year (FY) 2020.

For the moment, India’s level of taxation is most competitive, and the move has been generally well-received, mainly because most developed countries have imposed a 10% tax on capital gains presently. After this, India went on to amend its tax treaty with Singapore which was also on similar lines.

However, many FIIs claim that the currency exchange rate risks of operating in a emerging market of about $ 2 trillion market capitalisatiion with the rupee constantly depreciating,  puts them at an additional disadvantage.  

It is difficult to say whether round-tripping of massive hawala funds is really all that bad. Despite the obvious money-laundering, the alternative is that all the money sent out of the country via hawala, fraudulent invoicing and other means, never comes back at all! 

This thought might be behind the government’s reluctance to ban anonymous participatory notes (P Notes), that are accommodated by the registered FIIs. Efforts to regulate and tighten the regulations concerning them have been tried in 2004, without much evident success.

The question of tax residency however has been made redundant. And companies using the Mauritius Route henceforth have to put in Rs. 27 lakhs into the equity of the Mauritius companies they set up. This puts paid to operating via the erstwhile “shell companies”.

The alleged abuses that have involved this infamous route are a morass of legal conjecture, litigation, arbitration, and elevation to the International Court of Justice (ICJ). That clumsy attempts at tax realization from Vodafone and Cairn Energy, some of it retrospectively, has damaged India’s reputation is undeniable.

Author Paranjoy Guha Thakurta is a prominent media person and educator. He has sharply-honed journalistic and investigative abilities. Guha Thakurta’s prose is lucid as he tackles a somewhat dry subject despite its cops and robbers undertone. He also has a proper grasp of the economics and evolving regulatory framework involved. This is, of course, not his first joust with the world of fast-and-loose Capitalism in book form.

His young collaborator on this book, Shinzani Jain, comes in for fulsome praise from Guha Thakurta himself . Again, Jain, who is studying for a Master’s Degree in Sociology, writes articles for a number of print and digital media offerings, and has co-authored another book on the related subject area of black money, cronyism and the damage it is doing to the Indian economy.

For: The Sunday Pioneer BOOKS

(976 words)

June 9, 2018

Gautam Mukherjee

BOOK REVIEW: HICKY's BENGAL GAZETTE

BOOK REVIEW

TITLE: HICKY’S BENGAL GAZETTE-The Untold Story Of India’s First Newspaper

AUTHOR:  ANDREW OTIS

PUBLISHER: TRANQUEBAR, WESTLAND PUBLICATIONS, 2018

PRICE:  Rs. 899/- in Hardback

NOT ONLY INDIA’S FIRST NEWSPAPER BUT ONE THAT CHAMPIONED THE UNDERDOG

Does history repeat itself in the media, just as it does in politics and governance? What are the origins of India’s particularly vibrant freedom of the press? This delightful book from an American PhD scholar, Andrew Otis, at the University of Maryland Philip Merril College of Journalism, suggests it all began in the 1780s.

Otis researched this book in Delhi, Kolkata, Germany and England over a period of six years. He gained a unique perspective on the establishment of “Company Raj”, Robert Clive, Warren Hastings, and their imperial times.  And 90 years after the establishment of the British in Calcutta, came India’s first newspaper.

James Augustus Hicky was a “subaltern”, a poor Irishman out to make his mark in India. He could only afford to live in the “Black Town” of Calcutta, and not amongst the bungalows and gardens of the privileged. He was sent to common jail for being in debt, first for a failed trade, and the latter incarceration was for libel.  

But throughout, once started in 1780, Hicky gave voice to the underdog with his newspaper, Hicky’s Bengal Gazette or The Original Calcutta General Advertiser, which became an instant sensation. So much so, that Governor General Warren Hastings, moved quickly to try and limit its rapidly growing influence. The story of this short-lived but highly influential newspaper, and the dramatis personae of the time, is fascinatingly laid out in this book.

Hicky’s Gazette was priced at Re. 1, expensive for the 1780s, but equivalent to newspapers in England then. It was printed weekly, four or five pages long- two or three of them containing news and opinion letters, and the other two featuring advertisements. The printing press was located at 67, Radha Bazar, Calcutta.

Competition from the establishment that Hicky targeted, came later in the same year. Backed by Hastings, the rival paper was circulated free and without postage via the Indian postal system. 

The India Gazette, founded by Bernard Messink and Peter Reed, propounded British superiority, the viewpoint of the East India Company, and the upper-class. Its advertisements were from private boat rental companies, for hunting dogs, garden houses and dinner clubs. A popular and repeated advertisement was for the buying and shipping of diamonds “home to England”, presumably for corrupt  Companymen, and some of their many contractors.

Hicky, convinced that the powers-that-be were out to ruin him, undertook a series of exposes . This earned him even more repression. Warren Hastings now banned even the paid circulation of Hicky’s newspaper via the postal system, and  ordered that mail that enclosed cuttings from Hicky’s newspaper be stopped too. 

This hurt Hicky’s profits and wider circulation, but made his paper more popular in Calcutta itself, where it was now distributed via runners or hircarrahs, and the number of his subscriptions there increased markedly.

Hicky’s Gazette was the anti-tyranny, anti-corruption, and pro-free speech campaigner of its time. People depended on it to spot and expose “malfeasance, fraud, abuse of power”. Hicky adapted and : “embraced notions of rights to life, liberty and the pursuit of happiness that were coursing through Western Europe and America”.

This tonality and content annoyed most high government functionaries, particularly because of Hicky’s relentless exposure of abuses of power in the government and judiciary, patronage as bribery, and rampant corruption in government contracts.

Hicky’s newspaper often also gave voice to the grievances of the common soldier both British and native, the Anglo-Indian, the injustices borne by ordinary people, the rapaciousness of the evangelical clergy involved in commerce rather than the harvesting of souls, the subversions practiced by a biddable judiciary, and the like. Hicky’s Gazette was also popular for its humorous pieces, satire, and human interest stories. 

Soon assassins, fortunately discovered in time, came for Hicky in the dark of the night. And Hicky, in turn, turned up the journalistic heat. He began suggesting, via anonymous articles using various pseudonyms like Cassius and Britannicus, that it was not a good idea to fight in expansionist wars initiated by Warren Hastings that sacrificed common soldiers for his “personal dreams of conquest”. This, and similar pieces took Hicky to the “edge of sedition”, especially when the articles printed in his paper, suggested mutiny, and the carrying out of a coup.

In consequence, Hicky was slapped with criminal charges of libel against both Hastings and a rich clergyman Kiernander, his bail being set at Rs. 40,000/-, twice his annual income. This forced Hicky to stay in jail.

The newspaper continued however, with Hicky running it from inside the jail, now lampooning all his tormentors including those in the judiciary, with biting satire. After a tumultuous trial, the 24 member jury, many of them East India Company men themselves, returned a Not Guilty verdict. Otis sees this as a landmark judgement for the early “freedom of the press” in India.  iHickyHHH

There were multiple and separate trials with regard to the priest Kiernander and  even sundry others Hicky had offended. Some of these trials returned indictments. In one mounted by Hastings, against Hicky’s paper urging soldiers to mutiny, he was sentenced to a year in jail with fines.

But all this railing at Warren Hastings’ tyranny and corruption had begun to have its effect back in Britain. This, even as the continuous litigation pauperized Hicky and closed down his paper, when his press too was seized in 1782.

The litigation and adverse publicity also drove Kiernander into bankruptcy and penury in his old age.

Next came the karmic retribution for Hastings. The East India Company Act of 1784 put severe curbs on the powers of the Governor General and subordinated his actions to control from the Crown. Hastings decided to go home at this, after three decades in India. But, perhaps as a public relations gesture, not before asking the Supreme Court in India to forgive the rest of Hicky’s fines and let him go free.

Now it was Hastings’ turn to be put under the lash. Parliamentarian and political theorist, Edmund Burke, mounted a bid for his impeachment with twenty-two  separate charges, in the House of Commons.

After 8 years of gruelling parliamentary  investigation, through both the House of Commons and Lords - in July 1795, Warren Hastings was eventually acquitted. But not before his reputation and fortune had been destroyed.

Hicky died at sea aboard the ship Ajax en route to China in 1802. But clearly, he was not the only protagonist in this drama that ended his days in penury.

For: The Sunday Pioneer BOOKS

(1,074 words)

June 1, 2018

Gautam Mukherjee

Petrol Bombing The Public With Lazy Taxation Will Not Do

Petrol Bombing The Public With Lazy Taxation Will Not Do

The price of fuel at the pumps has been hiked everyday for the last 11 days. Petrol is now at Rs.85 a litre in Maharashtra, which also imposes some 40% of state taxes on top of central excise. Diesel, on which our transportation sector largely runs, has also crossed Rs. 70 per litre in more than 15 cities.

These are all-time highs, even as they carry at least 50% in overall taxation, and up to 100%, if the sum is reckoned from the barebones cost of refined petrol and diesel.

What didn’t pinch when international crude prices were at about $40 a barrel, let alone $29 as it was in early 2016, is definitely hurting at $80 . Besides, the taxes imposed on retail fuel were not so high at one stroke. Excise duty has been increased nine times by the central government between November 2014 and January 2016, and cut only once by Rs. 2, and this is before the states get to work .

The states, in fact, realize higher revenues in VAT and Sales Tax, (calculated ad valorem) the higher the price of fuel. If this keeps up though, a customer could conceivably be paying Rs. 100 a litre for petrol in the near future.

Is the government hoping for a downward trend in global crude prices soon? It could, of course, happen, with the easing of tensions, production bottlenecks, increased supply and removal of sanctions. It could also head the other way towards $100 a barrel, if conflict breaks out between America and Iran for example.

The impact of sustained and high global crude prices will weigh heavily on the Indian economy, as it did in the closing years of former UPA rule, when they ruled at $ 112 on average. Weakened macro economic data will harm an India that has currently developed a fine balance sheet. It has low inflation, very little or no current and fiscal account deficits, record foreign exchange reserves, a healthy growth rate in the region of 7.5% per annum, impressive FDI relative to context, little external debt, relatively better international credit ratings, a fairly buoyant stock and debt market, good monsoons/food grain stocks, and so on.

Former Finance Minister P Chidambaram, agent provocateur fashion, has said current retail prices could be cut by Rs. 25 a litre. This, of course, only if a big chunk of the taxation is withdrawn. But consider that the central government realized Rs 2,42,000 crores in excise alone in 2016-17. It is therefore not so easy to let go off. It will, at an estimate, lose Rs. 13,000 crores in excise revenue for every rupee cut in prices.

Reportedly, the government is reluctantly contemplating a Rs. 2-4 cut in excise duties  running at over Rs. 19 per litre of petrol and over 15 per litre of diesel. The States then put on at least as much and are equally loath to cut it back. Appeals to cut VAT on fuel have had just four states responding with mild cuts.

The government on its part, has held inconclusive talks with the oil PSUs with a view to sharing the burden. It seems to be taking its time, despite the threat of looming inflation and the likelihood of a 25 bps interest rate hike to start with, when inflation spikes.

High fuel prices are seen as a direct catalyst to higher prices all around. Meanwhile, Highways Minister Nitin Gadkari, one of the best performing BJP mantris, rose to the defence by saying bringing down fuel prices will hurt the NDA’s Welfare programmes. But can’t the government find the money elsewhere? Why does no government audit its own ever-expanding expenses with a view to making suitable cuts?

Fuel, including aviation fuel, is a convenient thing for a government to tax, as the nation has no choice but to use it. Even cigarettes and alcohol, perennial favorites for taxation, do have a voluntary elasticity to their demand projections. Asking people to use overflowing public transport, or suggesting they cycle or walk, seem to be less than viable alternatives-especially in mid-summer.

Other arguments to keep fuel prices high are even more specious, and range from an environmental push against petrol/diesel run vehicles, to a theoretical bid towards adequate levels of public transportation. Electric vehicles may indeed come to the rescue in the future. And conceivably, nuclear, solar and other green energies could generate all our electricity one day. But for now, the public is being saddled unfairly with onerous and unfair taxation on a near essential commodity.

Cars and other vehicles, not just the luxury ones, including commercial vehicles, are also taxed to the nines by this and former governments. Despite this, because of poor public transport options, people are buying cars and motorcycles in very large numbers. India is today one of the biggest automobile markets in the world.

But, coming back to fuel prices at the pumps, we the public have been deceived. Prime Minister Modi spoke of his own naseeb when he cited how all-time low oil prices from the very start of his government in May 2014, have helped him repair a ravaged economy. 

This more so, because India imports more than 80% of its fuel, and the demand is ever rising in quantum terms.  But what has been good for the government has been far from salubrious for the people.

The doing away with subsidies on petrol, diesel, aviation fuel, liquefied petroleum gas (LPG) to the better off, and even  discontinuation of the humble kerosene, was presented as a move to both improve the nation’s fiscal health, and take advantage of historically low global oil prices. The implication was that the public would receive much lower fuel prices at the pumps too, as they would float day-to-day based on international crude prices, just as they do in many countries abroad.

The fact is, ordinary fuel purchasers abroad get the benefit of lower prices when they obtain, and we don’t. . Here, the government quickly moved in after the subsidies were scrapped, and promptly began enhancing the excise duty on fuel before the States added their VAT and Sales Tax.  

But because the NDA rules in 19 states out of 29 now, can’t petroleum products be brought in within the ambit of GST? However, if the exercise it to be “revenue neutral” per the accepted mantra, then prices cannot be brought down. The culprit is the lack of austerity in governance at the expense of the people.  

So, for now, this lazy but sure-fire taxation on fuel, is hard to replace. The Modi government, despite the public clamour, is still hoping to get away with a minimal cut, because of its increasing reliance on the votes of the poor. The poor, it is reckoned, do not consume much petrol or aviation fuel.

But some amongst them do use diesel, at least when they travel, albeit not those  firmly below the poverty line, who probably don’t buy tickets.

The poor ostensibly get the benefit from the money surreptitiously extorted from high fuel prices at the petrol pumps- at least according to Union Minister Gadkari.  This has been engineered unilaterally, without any publicity or engagement in public discussion. 

This, following on from quite a lot of explanation to build public support for the removal of subsidies on fuel, presented as a general benefit for all. Besides, how Gadkari can draw a direct co-relationship between just one contributor to the government coffers, and the funding of Welfare, is indeed a mystery. It could, after all, be paying some of the bill for all the roads being built by the NHAI under his benign gaze.

High oil prices hurt most of the consuming world. So sorting out the turmoil in Venezuela, a major oil producer in difficulties, and the confrontation with Iran, could resolve the issue at the macro level, sooner rather than later. There is also the mercantile tightening of supply by Russia and Saudi Arabia and lesser oil producers under their influence. America is touting clean coal even as it is ostensibly oil self- sufficient, though fracking does need higher oil prices. But major consuming countries and blocks like the EU, China, and India, are not without influence too.

For: The Sunday Guardian

(1,372 words)

May 24, 2018

Gautam Mukherjee

BOOK REVIEW: BLACK COFFEE IN A COCONUT SHELL

BOOK REVIEW

TITLE:   BLACK COFFEE IN A COCONUT SHELL-Caste as a lived experience

EDITED BY:  PERUMAL MURUGAN

TRANSLATED FROM THE TAMIL BY: C.S. LAKSHMI

PUBLISHER:  SAGE/YODA PRESS, 2018

PRICE: RS.595/-

Fissure Lines Of Tamilian Casteism: A Pan-Indian Mirror For 2018

This is a engagingly written set of unpretentious and short essays, straight from the heart, on the unbending rules and practices of caste in rural Tamil Nadu.

The narratives range from birth and one’s sense of station, to assignations, marriage, and what might have been, the simulations and euphemisms of tact, particularly between religions, and also death – with its separate and stratified final rites. These are stories of personal experience and very touching for their authenticity.

Published by Sage/Yoda Press, the quality of the flawless editing and presentation in this volume is exceptional.  

The essays, serious in content, are written by a pantheon of highly educated academics, authors, poets, editors, even a doctor, who could easily have chosen to be pedantic and pompous, but have instead chosen a quiet tone of dignified poignancy, simplicity, and acute honesty.

If one didn’t read the notes on the contributors, bristling with PhDs, though many were indeed born in the village, you would have taken the entire collective of 31 to be ordinary people, writing directly on their own experience with their caste and religious identities.

The essays, some only two or three pages long, have been impeccably translated by the distinguished Dr. C.S. Lakshmi, specialized in Women’s Studies.

The Editor of this slim but valuable collection, Perumal Murugan, is a professor, author, poet, with what must be a fairly rare PhD in Tamil.

Caste is a formidable construct in India.  The message of this book however is that though it can, and does, much to preserve traditions and structures - with its rigidities, it often destroys lives too.

Recent Assembly elections in Bihar, Uttar Pradesh, Gujarat, the North East, taught us caste, class, creed, tribal loyalties, are all crucially relevant to the “social engineering” aspects of winning State elections.

Such groupings compete with religion, ideology, and the modern, inclusive, siren calls to development, and still hold their own. The vast metro cities with a population in millions are perhaps the only places where these issues loosen their hold, provided one does not seek out familiar ghettoes.

Most recently in Karnataka, we were treated to detailed analyses of Lingayats and Veershaivas, sub-castes, Mahants, Mutts, Vokkaligas, Kurubas, the Muslim- Shia, Sunni Imams, Maulanas, Dalits, Maha-Dalits - all bubbling away in the election cauldron. Along, that is, with money, liquor, fake voters’ lists, intimidation, lies, accusations, promises and hoopla.

Reservations, the modern affirmative action panacea, say some in this interestingly titled book: Black Coffee in a Coconut Shell, are responsible for even more divisions than were originally built into the caste system.

Getting in is one thing, but then cheek by jowl colleagues proceed to snuff each others’ promotions based on caste groupings.

Skin colour, physical features, crudity, refinement, food habits and inclinations, are all repeatedly brought up as visible markers of caste to the discerning observer.  The untouchability of caste practice, though some of the authors attributed it to departed mothers and grandmothers, is heartbreaking- the separate glasses, the laxman rekha of inside and outside, bathing to dispel “pollution”.

It is no wonder, given the childhood trauma, that many of the erudite writers here meekly accept their caste limitations, hinting at genetic probabilities, without demur.

It is poignant to read this. Comparative study would explain to these distinguished professors that the tinker, tailor, butcher, baker, candle-stick maker of “tradesmen entrances”, craftsmen, artisans, would have never climbed into the Boardrooms of Europe and America if this was inviolable. Of course the world wars that wiped out their aristocracy helped.

But also, mongrellisation seems to have worked really well in the “melting pot” that is America, and here we are, hesitating at “inter-caste marriages”, and being routinely lynched by the Tamilian equivalent of Khap Panchayats.

There is a feeling, represented in most of these essays, that caste is immutable in the village. It can, after a fashion, lose itself in the big city, in the Chennai of this book.

But only if the incumbent does not let himself be tortured by its internal dictates even there, amongst all the reasonable anonymity and the cosmopolitanism. A suicide is cited even here though, when the attempt fails.

Caste is heartfelt. The low, the middling, and high-born, all feel its lash in different ways.  This is interesting, and true enough for the articulation. Nobody is really on top anymore, certainly not by right! It is money that is replacing caste, and thank God something is.

Not even the atheist politicians of the South, and their ardent followers, who tried to cut through the Gordian knot are anything but just such and such

(generally low) caste, who say they don’t believe in God anymore. There is a churn, but one must still carry the baggage.

Theoretically, if a person can shed the effects of caste on his developing psyche, particularly if he grew up in Tamil Nadu’s villages, then all is well.

But not one of the authors of these essays dares thumb his nose at the notion. Everyone accepts its pernicious hold in the spirit of age-old Karma. There is no communist or modernist attempt to belittle the meaning of caste and its stratifications in this volume. Perhaps it is not lost on this distinguished assemblage that Karl Marx was himself a Jew.

This realism is indeed remarkable, and at the nub of this book’s honesty. No one celebrates the apartheid of caste, but no one denies its existence either.

Everyone ends individually and separately, with a hope that future generations may make a better job of rendering caste irrelevant than they have.

It is possible. A multi-cultural Europe has blurred colour, ethnicity, race, and cultural lines in the minds of most of its people. A generation or two ago this was unthinkable. Did economics and technology do the trick?  Perhaps the answer is in all of the above, and in the inexorable processes of evolution too.

For: The Sunday Pioneer BOOKS

(977 words)

May 14, 2018

Gautam Mukherjee