The flying dragon and the oversized elephant

It has been a busy year for India when it comes to international relations. India has already hosted leaders of 4 of the P5 countries and the 5th will be coming soon. The most awaited visit was that of Wen Jiabao in the context of growing tensions between the two.

Despite the panchsheel and myriad other agreements China finds means and ways to irritate India. The latest being the stapled visa issue. India’s response has often been weak to the challenges thrown up by China. Post crisis China ‘s stakes in the global economy has raised to high and it now wields great power. But with great power comes great responsibility which is clearly lacking in the chinese way of politicking. It has constantly been at loggerheads with its neighbours be it japan, India or South Korea.

The growing presence of India in international fora has clearly irked China which seeks to be the dominant power down south. India’s policy towards China is flawed and lacks direction. At a time when China is putting its foot forward aggressively India is taking a step backward and pacifying the dragon. When China began throwing tantrums on Arunachal issue, India declared that it supported one China policy. At a time when trade deficit has reached unsustained levels, we have doubled our trade targets. While china puts up trade barriers for frontline indian industries, we are opening up our sensitive sectors like banking and finance to China .

On the stapled visa issue, India has been repeatedly imploring China to review its policy despite China giving a crass reply that it is an administrative issue!!How can a state belonging to India be an administrative issue for a foreign nation?? India needs to take a tit for tat stance on Tibet. In this regard India seems to have made some progress by not mentioning that it supports the one China policy in the joint statement. Also India’s decision to attend nobel prize ceremony should have sent a clear message to China .

Post 1962 war China captured a large chunk of J&K area known as aksai chin. Till date India has never demanded China to return back the land and even China has never bothered to tender apology to India for violating the panchsheel doctrine.

The widespread public view is that with the growing trade ties, China would be less aggressive and more obliging to India’s concerns. That doesn’t seem to be true. During the visit none of the core concerns of India seem to be addressed by China . The joint statement says that the ties have now be elevated form bilateral to global level. But what use are ties when they have divergent views? Even on a issue like terrorism, China refrained form taking a hard position.
India and China have agreed to cooperate on nuclear disarmament declares the joint statement. This seems to be more of a platitude than a commitment. This is clearly reflected in the fact that China has been actively empowering Pakistan , a state that is on the brink of failure, with nuclear technology.

On the whole Mr Wen’s trip was a mere PR operation. In the last 5 years there have been 4 high level delegation visits by India to China while from China this is the only visit. This sums up how the relationship is playing out. We need to make amends on our policy towards China .

THE telangana turmoil

On Dec 31st whole world would be gearing up to party while in AP the situation is gonna be tense. This is coz Sri Krishna committee will be submitting its report on dec 31st. Sri krishna committee was setup to determine the legitimacy of demand for a separate telangana state, an area in north AP.
Over the last few years, the stir for a separate state has been intensified. During the rule of YS rajasekhar reddy(YSR), he managed to keep them subdued with his leadershipa nd coercive skills. With his untimely demise in a helicopter crash ins ept 09, the state has been left without a strong leader.
K Rosaiah , aveteran politician with over 4 decades of experience took on the burden of carrying on governanc e of a state where revenue was dwindling and separatist forces were gaining popularity.
Yesterday all of a sudden, K Rosaiah stepped down citing health concerns. The new CM announced is Kiran Kumar reddy. A comparatively younger and inexperienced congressman. This will be his 1st post in the government. This might seem a heroic move and a sign of encouragement for young politicians. But deep beneath lies a different reason.
With the state heading towards tough times in december, a lot of pressure would be there on CM . At this hour AP needs a strong leader. Rosaiah with his vast experience could have steered the ship through but seems like he has hsied away form taking on the challenge. Instead an inexperienced Kiran has been put onto the high pedestal. This is for sure a makeshift arrangement coz no big leader wants to take on the helm at this time and take the risk of losing their image and credibility post dec 31st.
With such a selfish mentality, it is hard for congress to survive long in AP . Only time will tell how AP repsonds to the situations and how the inexperienced CM handles it.

Charity: losing its sheen?

Charity has been part of many a religious texts. According to dharma shastra of hinduism, charity should be anonymous and selfless. It was based on principle of left hand not knowing what right hand was doing and vice versa. Donations were anonymous and were genuine. Over the years , the selflessness and anonymity is being replaced by selfishness and publicity.
With the end of soviet era and the fall of communism, the states turned more capitalist. The global south or the 3rd world soon adopted to the western models of export led intensive growth and hoped for a trickle down of benefits to pull people out of poverty.
But the heady cocktail of corruption, redtapism and nepotism was too large an absorbent to let anything trickle down to the lower strata of society.Democracies turned into plutocracies. The result was a growing and diversifying divide. From a primitive rich poor divide, today we have the caste divide, the digital divide and so on. Humanity has been dissected and trisected according to the whims and fancies of the opportunist politicians.
All these have lead to a growingly selfish and sinful society. Surprisingly a major change is occuring in this world of narcists. One mister Gates suddenly got enlightened and opened up the gates of his bank account to let the wealth flood into the global south and help in bridging the very divides that companies like his created. Even in war torn countries like Iraq and afghanistan, the capitalists are leaving no stone unturned to publicise their brands.
Lord Blalaji of tirupathi today receives gifts amounting to crores of rupees from affluent people amidst full media glare. Donation which was once a low profile anonymous event has not become a PR event. Such has been the commercialisation/westernisation in our society.
India had assumed to itself a socialist pattern of society in 1970s , but this seems to be fast changing into a opportunist society where every activity is performed based on a cost benefit analysis.

Tax reforms

Tax Reforms
Why tax reforms?
India after independence decided to tread the socialist path and govt took upon itself the onerous task of wiping the tears of the poor. However in its effort towards delivering services to all and ensuring equitable growth, its expenditure on social sector shot up. It established numerous public sector industries to manufacture goods right from bread to ambassdor cars. All these resulted in heavy spending. However governments revenues remained weak. One of the main source of government revenues are tax revenues. Tax revenue was alarmingly low because of the regressive tax structure we had. This called for a tax policy reform. Finally the fiscal crisis of 1990 forced us to unlash a series of reforms in our economy popularly known as LPG(Liberalisation, privatisation, globalisation) reforms.
The tax policy pre 1991 suffered from following drawbacks
• It was retrogressive ie it taxed both the poor and rich equally. Majority of government revenue was from indirect taxes. Indirect taxes like excise duty , custom duty don’t differentiate between rich and poor
• It was irrational with tax rates going up as high as 97.6%(i.e. for every 100 rs earned 97.6 rs goes to govt)!!!
• Irrational policies discouraged people from paying taxes and lead to tax evasion
• The more the rules, the more the loop holes. With so many rules in the income tax act people with help of their chartered accountants could easily exploit the loop holes and thus managed to legally avoid tax
• All this lead to a huge fiscal deficit for government which mad eit imperative on govt to undertake tax policy reforms
What were the tax policy reforms?
The need for tax policy reforms was
• To improve tax to GDP ratio
• To progressively tax people ie tax the rich more and the poor less
• To increase revenue from direct taxes
• To improve the fiscal balance of govt
• To lower tax rates and widen tax base
Keeping these objectives in view MMS formulated a meticulous fiscal policy which worked wonders for our country.
He undertook following steps
• Earlier cotton cloth was subjected to 50 different tax rates depending upon quality of cotton. Such multiplicity of rates resulted in administrative complexity. This was borugh down to a uniform single rate called CENVAT
• Earlier our tax dept spend rs 1.2 per rupee to collect Tax!!! By leveraging technology and optimising the administrative structure today the cost of collection is 6 paise per rupee
• The tax slabs were reduces encouraging more people to pay taxes. As a result the direct taxes have increased and are today almost equal to indirect tax revenues
• The cascading effect of taxes on industry was corrected by implementing the advalorem taxation system through VAT
So what next?
The next step is to simplify our tax laws. The IT act of 1961 has become voluminous and is not in sync with current demands of economy.
Hence the government is undertaking GST and DTC to put in place a simplified, transparent tax system.
A transparent tax system will lead to a situation where people would start voluntarily filing tax leading to surplus revenue with govt which could be beneficially invested in social sector schemes. This would help in achieving our goal of financial inclusion. It would encourage people to save more leading to higher savings rate and hence promoting investments. This would lead to a great thrust to our economy and will jettision us into the league of developed nations.
So the need of the hour is a swift and smooth passing of DTC and GST bill

India: Bullying a billion

“Whenever the Indian Prime Minister speaks, the whole world listens to him”-Barrack Obama
The statement was a shot in the arm for the visionary leaders who envisage a vision of India as a superpower by 2020. But they fail to realize that before we can claim a role of superpower, we need to empower our people. Today more than 50% of population lives on less than Rs 20 a day (official figures still show it 26%). The concept of holistic growth and inclusiveness is a far cry from the present Indian system of governance. The hasty legislations have become mere paper tigers. In the absence of proper machinery and infrastructure, many policies like the right to education and setting up of green tribunals are yet to be implemented.
The pompous inauguration of T3 terminal of New Delhi, built in record time of 37 months, lays out a red carpet welcome to all our international guests. At a time when our Human development index is nose diving, child malnutrition is on a rise, we are more worried about getting Indira Gandhi international airport into the top ten airports of the world rather than addressing the problems of the poor.
The constitutional ideals of sovereignty, secularity and democracy are in danger. In the north J&K curfews and stone pelting have become a regular occurrence. The short lived calmness in valley has ended with the mindless shooting and Killings by the paramilitairy forces. Down at Haryana, Khap panchayats are running a parallel judiciary system openly defying the laws of the land. The principles have natural justice have been thrown out of the window in the name of honour of a group of people.
Delhi is busy with arrangements for CW2010. Common wealth games in India was to project india to the world. In this regard a string of welfare and poverty allievation programs should have been taken up. Atleast an effort to alleviate poverty in NCR should have been taken up. Instead they turned a blind eye to it and went on a spending spree to pep up the city for the International event. The RTE act which has the potential to change the future of India has not been implemented owing to lack of funds. I wonder how they were able to pump in crores of rupees in City planning and beautification.
The Bhopal gas tragedy was back in news after 26 years thanks to the inconsequential judgement in Keshub Mahindra case. The government in a bid to console the people of Bhopal gifted them a toothless Green tribunal to resolve any future accidents of such sort.
AP seems to be on a downward spiral under the reign of Rosaiah. Ever since he took over after the shocking demise of YSR, the funds have dried up and its reached near bankruptcy with many welfare schemes being stalled or restricted to certain regions. In a bid to garner the necessary funds for welfare programs, govt came up with idea of selling licenses for liquor shops. What a gem of an idea! Getting funds for welfare programs at the cost of health of its subjects.
The roads of India are one of the dangerous in world. Lack of
i) lane discipline
ii) Safety infrastructure
iii) Stringent rules
have led to accidents which take away lives of 350 people a day. That is equivalent to an plane crash every day. Instead of improving the safety standards of existing roads, the road ministry is busy making up plans of laying another 43000 km of roads and thus laying more deathtraps.
For sure our economy is robust and is leading the world out of recession with its vast experience in monetary and fiscal policy making of a nation of a billion. But it is also a selfish and witty one at bullying the poor and making way for the rich to prosper.