Wednesday, February 22, 2017

What is your reason to suspect?

by Harish Gupta, National Editor, Lokmat Group

“I do not want to desert dignity and reason, but if you desert dignity and reason and speak nonsense, your history will always chase you, your evil deeds and sins will always chase you”.

Dear reader, I beg your apology for repeating this quote of Prime Minister Narendra Modi at an election rally. But it has a different context here. As an election speech, it is loaded with unpleasant & unnecessary comments that has now become Modi’s hallmark. It is also somewhat amusing. But there is a sub-text of threat running under the lines, and the tone of a bully is unmissable. But is it for real?

So far, the Modi administration has proved being given more to barking than biting. The pending cases against opposition leaders—be it the National Herald case against the Gandhi family, the alleged land scam of Robert Vadra, the Gandhi son-in-law, or the Saradha/Rose Valley chit-fund cases allegedly involving West Bengal chief minister Mamata Banerjee’s Trinamool Congress—are progressing as sedately as most anti-corruption cases in India. But, underneath the Prime Minister’s rhetorical flourish, the stage is quietly being set for the unrolling of a new hard state. It is in conformity with the current “alt-right” narrative that much of today’s “ills” are due to over-extension of the due process of law.

Its first sign came in finance minister Arun Jaitley’s budget speech, when he proposed to amend Section 132 of the Income Tax Act. It authorises a raid whenever there is a “reason to believe” or “reason to suspect” that the concerned person is hiding his wealth. Tax officers are under no obligation to disclose such “reason to suspect” to anyone, least of all to the targeted assessee. In yet another change, the tax authority will be free to requisition some other authority (Enforcement Directorate, for that matter) to deliver books of account, documents or assets of the assessee. The amendments will take effect retrospectively from the time the concerned laws were enacted, which are April 1962 and October 1975 respectively. The retrospective amendment in the Finance Bill 2017 is a poison dart that not only overturns a basic principle in law that none should be punished for an ‘offence’ that was not deemed an offence at the time of its commission. More significantly, the amendments are indeed very harsh as recording of “reason to suspect” is held to be a safeguard to prevent searches at will or directions and fishing expeditions.

I am told Jaitley seems emboldened by “Pooran Mal Etc V. Director of Inspection (Investigation) of Income Tax” in which a Constitution bench held that Section 132 inter alia did not run against the fundamental rights. But that judgment came in view of the Section as it now exists, not in the context of its proposed mutilation. The amendment, in its present form, may give free play to tax sleuths to unleash the so-called raid raj on assesses based on rumour, canard, whim or unsubstantiated suspicion. The tax officials were fighting for a long time to acquire this draconian power and they succeeded finally. It also looks like a page taken from history as this is exactly how the financial arms of the 1975 Emergency worked under Indira Gandhi, using Conservation of Foreign Exchange and Prevention of Smuggling Activities (COFEPOSA) Act as the fearsome umbrella to detain the regime’s resourceful adversaries without trial. Pranab Mukherjee, presently President of India, was a junior minister in the revenue department.

That Mukherjee did not unlearn his early lessons in “hard state” became evident in his handling of the dispute on transfer pricing of multinational telecom company Vodafone as Finance Minister during UPA-II. It launched the Indian operations by buying stakes in Hutchison Whampoa, a Hong Kong-based company, but Income Tax authorities in India insisted that the transfer pricing, or transaction between two foreign entities for acquisition of a domestic business, would come in its jurisdiction. When the Supreme Court ruled in favour of Vodafone, dismissing IT Department’s jurisdiction, Mukherjee, in his last budget in 2012, brought retrospective amendments to the tax laws. India was globally reprimanded for retrospective amendment of tax laws and subsequently slid sharply down the ladder of ‘ease of business’. Critics of Mukherjee’s apparent overzealousness included most BJP leaders, including Jaitley. 

In his 2014 budget speech, Jaitley was no longer critical of retrospective amendments to tax laws but he was circumspect. “The sovereign right of the government to undertake retrospective legislation is unquestionable. However, this power has to be exercised with extreme caution and judiciousness keeping in mind the impact of each such measures on the economy and the overall investment climate. This government will not “ordinarily” bring about any change retrospectively which creates a fresh liability”. Jaitley said in the same speech that he was committed to a “stable and predictable” tax regime.  

Both Modi and Jaitley had invested a good measure of their youthful days in the struggle against Indira Gandhi’s Emergency. While the former worked for RSS under concealed identity and the latter being kept in detention for the entire period under draconian MISA. Of all the laurels Jaitley has earned at the bar or in the political sphere in his illustrious political career, the shiniest is the sacrifice he made during Emergency. When Modi rants against the corrupt, he commands an unusually large number of sympathetic nods. His demonetisation drive, however painful, got mass acceptance as most felt he was against the privileged class. If Modi continues to command high ratings across the country, Jaitley’s graph as FM rose too. 

But it seems the dark memories of the days when the Constitution was kept in abeyance are fading from Modi’s and my friend Jaitley’s memory. It is unfortunate that the government has  got the math wrong after four decades. 

Saturday, February 18, 2017

India agrees to accept old notes in Nepal, Bhutan

by Harish Gupta, National Editor, Lokmat Group

India to accept old notes in Nepal, Bhutan

RBI's new headache

Harish Gupta

New Delhi, Feb 18

The Modi government has finally bowed to the mounting pressure from the Himalayan Kingdom of Nepal and Bhutan and agreed to accept old Indian high value currency notes  from these countries.

Highly placed sources in the government say that thorny issue relating to demonetized Re 500 & Re 1000 notes held by the citizens in these two countries hanging fire since November 8 last year, has been resolved.

After a series of high level talks with the two friendly neighbouring countries, the Indian government has agreed in principle to accept deposits in old Indian currency notes. But this facility will be given with a number of riders.

One of the riders is that the amount will be limited in quantity for individuals or a companies and it will be opened for a limited period, these sources say. For instance, the facility for Indian citizens was available between November 8 to December 30. But in Nepal & Bhutan, it will be much less.

India has treaty with Nepal & Bhutan for transactions in Indian currency. According to sources India and Nepal have bilateral treaty under which Nepal buys Indian currency to the tune of Rs 600 crores every year by paying in dollars. The treaty was signed sometime 2001 and the Indian government will have to accept at least Rs 10,000 crores in old currency. Secondly, Indian currency is also in circulation in Nepal as local currency. The same goes for Bhutan too though the Bhutanese government’s amount is limited.

A clue to the thinking was available when the Finance ministry admitted that the governments of Nepal and Bhutan have “shared information with regard to the high currency notes held by their respective National Banks”.

This was for the first time that the government officially said that the two neighbouring countries shared information in old Indian bank notes of  Re 500 and Re 1000 denominations.

Minister of State for Finance Arjun Meghwal said that  the governments of Nepal and Bhutan have not been able to give any estimate regarding the amount of Specified Bank Notes (SBNs) held by their citizens.

The government of India wanted these two countries to provide estimates of amount held by their Central Banks as on November 8, 2016. But they needed time to collate the information as Indian currency is virtually used as an official currency by their citizens.

It now transpires that government has given a signal to these countries that a formula is being worked out and the old notes will be accepted next month.This will obviously add to the problems of the Reserve Bank of India which is already struggling with astonishing amount of money deposited and unable to come out with the figure. The deposits from NRIs are still being accepted by the RBI who thronging to their branches across the country.

Friday, February 17, 2017

Modi placates Parrikar, Gives more buying power

by Harish Gupta, National Editor, Lokmat Group

Modi placates Parrikar, Gives more buying power

But Parrikar wants to return to Goa

Harish Gupta

New Delhi, Feb 13

It came as a shot in the arm of Defence Minister Manohar Parrikar. In a recent order, Prime Minister Narendra Modi armed Parrikar with enormous financial powers and more leeway to improve defence procurement and services.

In a far reaching development, the Prime Minister enhanced Parrikar’s financial muscle four fold in one go. The Defence Ministers prior to Parrikar, had the financial power to purchase defence equipment & systems for Rs 500 crores only at their level.

However, Parrikar was handed down the power to purchase defence systems & platform to the tune of Rs 2000 crores. The Cabinet Committee on Security (CCS) cleared this proposal last week brought before it by the PMO. After this order, Parrikar need not go to the Cabinet or any other ministry seeking sanction before buying equipment upto Rs 2000 crores. Parrikar was also given additional power to purchase equipment worth Rs 3000 crores. However, Parrikar will require the sanction of the Finance Minister, Arun Jaitley for purchases above Rs 2000 crores to Rs 3000 crores.  

The big shot for Parrikar came at a time when the Defence Minister has been publicly expressing his desire to return to state politics in Goa. While the BJP president Amit Shah and Road Transport Minister Nitin Gadkari only hinted that Parrikar’s return to state politics may be considered, the Defence Minister declared that he will go back.

When Lokmat recently talked to him informally about all the talk of going back to the state, he said, “yes.” He went on to say, “Can’t you see, I have lost my weight here.” Parrikar was talking literally as he had lost almost five kg of his weight during the past one year. The reason given by him was that the food here was bad and even the water didn’t suit him. However, Modi’s move to arm Parrikar with more leeway and powers is aimed at placating him and retaining him in the Lutyen’s Delhi as there isn’t enough talent in the party to hold the key portfolio.

External Affairs Minister Sushma Swaraj is already handicapped due to her recent kidney transplant and her functional capability has come down drastically. The performance of some of the senior Cabinet Ministers is also very poor and some of the performing ministers do not enjoy PM’s confidence either.

Therefore, it will be extremely difficult for Modi to spare Parrikar for Goa under the circumstances. However, Parrikar is determined to return to his home state irrespective of the poll outcome.

Parrikar’s argument is that the BJP in Goa is sinking and he alone can hold the ship given the political situation.

Modi-govt judiciary bonhomie in top gear

by Harish Gupta, National Editor, Lokmat Group

Modi-govt judiciary bonhomie in top gear

5 SC judges appointed

150 HC judges next in line

Harish Gupta

New Delhi, Feb 15

After prolonged delays, five new judges were today appointed to the Supreme Court. The appointments are reflection of new found bon-homie between the Modi government and the judiciary after Justice J S Khehar took over as Chief Justice of India early last month.President Pranab Mukherjee signed their Warrants of Appointment and the notifications will be issued shortly.

Lokmat was the first to break the story on January 28 saying that the Modi Government is now working in tandem with CJI J S Khehar and there is every possibility of return of the “Achchhe Din” (good days) in the judiciary.

The Lokmat had also said “If reports are to be believed, most of the vacancies in Supreme Court will be filled during the next few weeks and also in high courts.”

Those elevated to the apex court are : Madras High Court Chief Justice Sanjay Kishan Kaul, Rajasthan HC Chief Justice Naveen Sinha, Kerala HC Chief Justice Mohan M Shantanagouder, Chhattisgarh HC Chief Justice Dipak Gupta and Karnataka HC judge S Abdul Nazeer.

The working strength of the Supreme Court has received a fillip with the fresh appointments. Though it has a sanctioned strength of 31, the top court was working with only 23. Now the strength has gone up to 28.

The SC collegium will meet shortly to recommend the remaining three names for the highest court. The reason for not picking the remaining names was lack of consensus within the collegium itself.

The vacancies in SC and various high courts had been stuck as former CJI T S Thakur and Modi were not on the same page. Those familiar with behind-the-scenes goings-on, majority of vacancies in the high courts will also be filled on a priority basis.

The government resolved the issue after CJI Khehar went public saying that the much-delayed Memorandum of Procedure (MoP) for the appointment of judges will be decided shortly.

The bon-homie will ensure that more than 152 vacancies in various high courts also filled sooner than expected.

Sources say that the Prime Minister walked an extra mile to develop rapport with CJI Khehar when he rang him on the  New Year to congratulate him. Later, they had a meeting and also at a state banquet  at the Rashtrapati Bhawan. The two have met on more than three occasions during the past 25 days.

CJI Khehar is workaholic, tough and doesn’t believe in hogging the lime-light. He wants to cut delays at courts right from the district level and in perfect harmony with the digitization program.

PM shifts NHAI chief for 'non-performance'

by Harish Gupta, National Editor, Lokmat Group

“You don’t give grape juice to a Sugar patient” Modi told IAS officer  Raghav Chandra

Harish Gupta

New Delhi, Feb 16

The Modi government has sent shivers down the spine of the bureaucracy. If three senior IAS & IPS officers have been sacked unceremoniously for “non-performance”, National Highway Authority of India chairman Raghav Chandra removed in a mid-night order recently.

The sudden removal of Raghav Chandra took even the Road Transport & Shipping Minister Nitin Gadkari by complete surprise.

Highly placed sources in the Prime Minister’s Office say that Chandra was responsible for his own sacking. It so happened that the PM called for a review meeting of projects of the NHAI. The PM holds such review meeting one-on-one basis with the heads without the presence of Ministers concerned to review projects.

When the PM asked Raghav Chandra about the progress with regard to the Rs 10,166 crores 14-lane
Delhi-Meerut Expressway project, Chandra reportedly explained difficulties in completing the project in time. It was in December 2015 when Modi had laid the foundation stone of the project not only easing Delhi’s traffic congestion but also to woo the BJP’s crucial vote bank in the Jat heartland and trading community. The total land required for three packages is 348.6 hectares of which 343.36 hectare had already been acquired when Modi laid the foundation stone.

What sealed Chandra’s fate was that he went a step further and started explaining to the PM how the NHAI is completing other important projects in UP.

The PM, sources say was losing his patience and told Chndra curtly, ““If you give grape juice to a sugar patient, can he survive ? The sugar patient requires Bitter Gourd  (karela) juice.” And the meeting ended abruptly. It was 12.30 midnight when the meeting ended and Raghav Chandra’s transfer orders were on the website of the government website next morning.

For Gadkari, it was another shocker as he had seen three chairmen at the NHAI during his three years’ stint. Raghav Chandra was shunted out to an insignificant post as secretary, national commission for Scheduled Tribes. Yudhvir Singh Malik, who was cooling his heels as special secretary in the Niti Aayog, was sent to NHAI. Malik shot into prominence when he banned Nestle’s products as chairman of the FSSAI. The ban was removed by courts and Malik was shunted out to NITI Aayog a year ago. Interestingly, Gadkari had no clue either of Chandra being shunted out or Malik being brought in.

Umang Narula, an lAS officer belonging to the Jammu and Kashmir cadre and CMD of India Tourism Development Corporation was sent back to his parent cadre. It is learnt he was slow in divesting ITDC hotels.

Wednesday, February 15, 2017

It's Modi Vs Gandhis, let India wait

by Harish Gupta, National Editor, Lokmat Group

As a joke, it is clever but contrived. As a jibe in parliament, it is rank graceless. Prime Minister Narendra Modi’s latest remark in the Rajya Sabha about his predecessor Dr. Manmomohan Singh—only Doctor saab knows the art of bathing wearing a raincoat in the bathroom—looks like having put paid to the budget session when it resumes on March 9 after a month-long adjournment. The Congress, which is Lilliputian in the Lok Sabha but ‘big brother’ in the Upper House, has threatened to keep out of the rest of the session if Modi doesn’t apologize. And that’s asking for the moon unless the stand is changed after March 11.

However, beyond the frightening display of “indigestion”  at the highest level of India’s political life, the incident also highlights just what CPI(M) party chief and Rajya Sabha member Sitaram Yechury  remarked, that it is not a reply (to President’s address) but an election speech. For that matter, on demonetisation, none from the treasury benches, including the Prime Minister, ventured to respond to the fact of the GDP dropping a full percentage point post-note ban. During the winter session, it was Dr Singh who had got Modi’s goatby forecasting that GDP would be dented by a percentage point, and even upped the ante, in an uncharacteristic way, by calling demonetisation as “organized loot” and “legalized plunder”. Dr Manmohan Singh’s sharp attack on the Modi government surprised all because he rarely spoke in such strong words before, even when Rahul Gandhi tore his Ordinance in full public view. Modi who was sitting in the Rajya Sabha then, kept his cool and waited for an opportune time to strike back. And when he did, all hell broke.

Congress’ leaders did their best to counter Modi’s offensive, but it was not enough. BJP president Amit Shah promptly sprinkled salt on the wound by reminding Congress vice president Rahul Gandhi about his mother Sonia Gandhi’s famous invective at Modi during the days when he was chief minister of riot-hit Gujarat, that he’s maut ka saudagar (merchant of death). Shah did a bit more chest-thumping as he claimed that BJP has given a prime minister who “speaks” and before him “there was one whose voice could be heard only by you and your mother”.

It is evident that if the existing ill will between BJP and Congress continues—and there is not a snowball’s chance in hell that it will go anytime soon—there will hardly be any significant legislative action in the present Lok Sabha. Modi’s ‘raincoat’ jibe was undoubtedly unbecoming of him, but so was Manmohan Singh’s “organised loot” and “plunder”, words that the Prime Minister said Singh had been “made to utter” (implying off-stage prompting by the Congress president). Looking backward, it is obvious that what was mere obstructionism by BJP during UPA 1 (2004-09) turned into splenetic outbursts in the UPA 2 (2009-14) period, when the opposition led by BJP blocked every legislative move by the UPA. Political analysts gave it a sober name, ‘policy paralysis’, but it was actually a series of outbursts against the Congress’ dynastic leaders.

Now the table has turned, and it is ‘Modi V. Dynasty’. At an election rally in Haridwar last week, Modi was at the height of vexation with the Congress’ top leadership. “I tell the Congress leaders: hold your tongue, else I have your detailed horoscope. I do not want to desert dignity and reason, but if your desert dignity and reason and speak nonsense, your history will always chase you”. It can well be empty bluster; but who knows if it has ammunition?

Beyond the clash of ego, however, there is a looming threat that the medium to long term effects of demonetisation by the Modi administration may put India on an unexpectedly slippery slope of economic slow growth against strong global headwinds. IMF has trimmed India’s growth forecast for current (2016-17) and next fiscal by one percentage point (giving some credence to Manmohan Singh’s forecast though he said there will be two per cent fall ) and 0.4 percentage point, respectively, primarily to choking of consumption due to cash shortage and payment disruptions across the economy. But the same IMF, in its World Economic Outlook (WEO) update, has upped China’s growth estimate for 2016-17 from 6.5 per cent to 6.7 per cent. China is an aging country with a per capita GDP over five times that of India. It will be difficult, if not impossible, for India to catch up with economies that have raced ahead if it has no national strategy to put its youthful population to productive use. But, going by the Modi-Gandhi feud, national consensus on any issue is unlikely.

It is even more unfortunate that India’s electoral politics does not hold out any prospect for political unanimity on national cause. It is because over time, particularly in the present decade, the two warring parties, BJP and Congress, are increasingly becoming driven by personalities. Modi and the Gandhis, to be precise. If there are others, they’re bit players. Or like new organs growing from original stem cells, like Sasikala has grown out of the late Jayalalithaa of Tamil Nadu. The party system is under pressure, not merely in India but all over. The Grand Old Party of America, the Republican Party, has been totally eclipsed by Trump, who is anything but a republican, be it a small ‘r’ or capital. The British Labour Party is on stretcher and the Conservative Party died with Brexit. In India, the Congress resembled a party in the classical sense so long as it had a full-scale party as its main adversary, the BJP. But the fig-leaf is gone. And a couple of battling individuals have taken the charge to define the destiny of the world’s largest democracy!

Wednesday, February 8, 2017

Trump: Never Forecast Future

by Harish Gupta, National Editor, Lokmat Group

Donald Trump is undoubtedly a complex personality, too complex to paint him, as the so-called liberal media in the West is doing, as an unredeemable rogue. On the other hand, it is too difficult to see the logic, if there’s any, in the statement of Shalabh Kumar, the Indian American Trump acolyte and founding chairman of Republican Hindu Coalition: “Mr. Trump is all about development, development, development; prosperity, prosperity, prosperity”. How will Trump be seen by his countrymen, or the world, a few years or even a few months from now? Nobody knows.

Wednesday, February 1, 2017

Never a vote-less Year

by Harish Gupta, National Editor, Lokmat Group

India is a nation with its carnival of elections. The Lok Sabha election is a colossal affair that involves a population nearly a seventh of humanity. Yet it does not speak the last word even for a year or two. In 2014, the consummate victory of BJP under Narendra Modi kept doubts and disgruntlement on a low key. But that was only for a while. The very next year, in the city state of Delhi, the fiercely anti-BJP Aam Aadmi Party (AAP) swept the 70-member assembly, grabbing 67 and leaving only three seats for BJP. The BJP succeeded in grabbing Haryana, Jharkhand and Maharashtra (with Shiv Sena help). But after a few months, in the crucial state of Bihar, it was repeated. RJD chief Lalu Yadav and incumbent chief minister Nitish Kumar, sworn enemies over a decade, made friends; their alliance trounced BJP. All this led to an unprecedented national mood-swing to the detriment of Modi, holding up his reform plans and denting his authority. Is it good for democracy, or not? 

One argument is that the division of power in a democracy is all about checks and balances, and, being so, it is perhaps good for the nation to keep the party in power accountable throughout its tenure, with the series of assembly elections being a way of keeping it on the edge. On the flip side, though, it invites too much discordance for the Central government to carry out its mandate, leading ultimately to ‘policy paralysis’, the malady that plagued the previous UPA-II government. Democracy, like the judicial system, is certainly adversarial at its core. But for a government to perform it needs consensus, which an unending procession of elections can disrupt. 

This February-March, there will be elections, not only in the mega-state of Uttar Pradesh but in six more, including Punjab and later this year in Gujarat. 

The 2018 calendar too is ‘eventful’, with elections due in Congress-ruled Karnataka and the BJP-ruled Chattisgarh, Madhya Pradesh and Rajasthan. Even in 2019, when the next general election is due, as many as eight states, including key states like Maharashtra, Andhra Pradesh and Telangana, will have their assemblies re-elected. There is no guarantee that all the elections will be synchronous. The cycle of elections got disrupted in the late Sixties, with the rise of anti-Congress parties across north India leading to dissolutions of legislative houses at the Centre and states. It is now like a clock that has its movements gone haywire. They must be reassembled if the clock has to tick on. 

Efforts towards it are in progress, though there is no consensus in sight. The government now seems willing to go by the decision of the parliamentary Standing Committee on Personnel, Public Grievances, Law and Justice, headed by Dr. E. M. Sudarsana Nachiappan (Congress), which has made the following recommendation: that elections be held in two phases, first, that of some legislative assemblies bunched together around the mid-term of the Lok Sabha, and the rest of the assemblies going to poll at the end of the Lok Sabha’s term. The idea is to club together all state assemblies going to poll in a span of six months to one year. If, for instance, such a law were already in place, Delhi, Haryana, Jharkhand and Maharashtra would have gone to poll in sync with 2014 general election, and Bihar, Uttar Pradesh, Bengal, Punjab, Tamil Nadu. Puducherry etc. were to hold elections on a fixed date (or dates) this year. 

It also implies that a good many states in which polls are due in 2018 must wait for up to a year if their elections are to synchronise with 2019 general election. On the other hand, to make elections simultaneous, it may be necessary to shift the timing of Lok Sabha elections too. 

All this require amendment to Article 83(2) providing for a term of five years for the House of the People, and Article 172(1) providing for a five-year tenure for the legislative assemblies from the dates of their first sitting. The Committee has recommended that in order to hold early elections to Lok Sabha and state legislative assemblies, one of the two conditions must be met: (a) a motion for an early general election must be passed by the House, or (b) a no-confidence motion must be passed by the House, with no alternative government being passed, with no alternative government being elected within 14 days. Dr. Nachiappan’s party, Congress, is not in favour of the changes on the ground that these are “impractical, unworkable and can lead to a scenario where the necessary balance in the Indian democracy given the diversity of the country is lost”. Now the Congress has suggested that there should be a Constitutional amendment bill if Modi wants his wish to be implemented.

The liberal camp views the move with apprehension. It smells a political motive. It is generally believed that when elections are held together voters act similarly. Popular wisdom, though, is that Indian voters are “astute” enough to distinguish between voting for government at the state level and that at the Centre. But IDFC Institute, a Mumbai-based think tank, has, in a research paper, has established, based on data since 1999 elections, that there is 77 per cent probability of an Indian voters preferring the same party at the Centre and state if elections are held simultaneously. So there may not be much evidence in support of our voter’s fabled “astuteness”. 

Interestingly, the Election Commission of India and President Pranab Mukherjee have also come forward to support the government desire to hold simultaneous polls.

But the core problem for Modi is to persuade the non-Congress opposition to come on board. Modi succeeded in getting all including Congress together on the GST issue as it was to benefit all. But the opposition suspects simultaneous poll to be a ruse to shrink the space for making up in the subsequent innings.