Daily Excelsior... Editorial

EDITORIAL

Bring transparency

Dispensable discordance

American interests
and South Asia

By Samuel Baid

False arguments
against SSIs

By Bharat Jhunjhunwala

What ails India's Higher Education?

By Dr. Navin Chandra Joshi

EDITORIAL

Bring transparency

If there be a single factor that goes against the public weal, smoothens the rise of sycophants, leads to the common good being ignored and personal and private ends being promoted as policy, that fosters haughtiness and disregard for the truth, dulls the sense of duty and tempers truth, it is the mask of secrecy the Government often wears. The Government, which is 'by, of and for’ the people hides everything from the public, treats every administrative decision as a State secret and throws a thick veil of concealment over all things that should have been open and public. The ordinary orders are not available, copies of the decisions taken are delivered to select points and even the aggrieved persons rarely get to know how their rights have been trespassed, how they have been deprived of their dues and how baisedly the decisions have been taken. Governance lies in a thick shroud and the result is that we have armies of yes-men for administrators, hawaris for the upright men in public service and court jesters where there should have been no-nonsense steely men in charge.

In this hideous culture of cover and concealment, even the statutory regulatory orders are often untraceable. It needs the detective skills of the most astute order to unearth the documents of deeds, which should never have been done. Accordingly, all these documents become explosive revelations when thus 'exposed’. Appointment orders are often kept under wraps and promotion orders are not revealed till the (favored) incumbents have safely taken charge. Thousands of allotments by the ministries, government functionaries even boards remain the properties of the few for whom they are made. The general public, by and large remains largely ignorant what their government has done, or undone, in their name. Under this colossal camouflage hide evil intents, selfish interests, gross incompetences and raging mediocrity. And favoritism, the mother of all deviations. No government can become responsive till it places everything on the table, opens up things for the public to see and scrutinize and demolishes the high walls of secrecy that have been raised around the functioning of Government, at all levels in this State.

That, of course, is included in the right to information for which the conscientious people have been struggling for a long time. But most of the things would not need even that formal right. The case here is that the government or its functionaries take a decision and pass orders. Access to the process of decision- making concerns the right to information. The public, in whose name all these decisions are purported to have been taken, has a due right to know how those decisions were taken. But here one is talking of the final outcome only. That is already in the public domain. The orders have been issued to be served. Yet they remain in wraps and rarely become wide public knowledge. The public is ignorant of them and the concerned parties do not know of what has been done. On the one hand it shields the wrong doer; on the other hand it mystifies the administration and governance. Administration that should be an open concern becomes a conspiracy. It is there, under those secret layers that the evil gets bred, breathes and lives to haunt the general public. Do away with it and half the evil is rooted out.

Dispensable discordance

When the former Army Chief laid down office he claimed that his army had reduced the infiltration by half, Now as performance goes, that is a good one. As security, that is a nice assurance. That, probably, would also blunt the easy confidence the terrorists garner when the top functionaries say that they are not able to control the ingress. But even before one could try to assimilate the fact, the defense minister comes out with the revelation that there has been ‘very minor’ decrease in infiltration from across the border adding that the role of Pakistan army and Pak attitude continues to be ‘one of hostility’. Of course, there can be no easing of tensions if Pakistan continues to be hostile sending in terrorists in unabated frequency. But then, why should the outgoing Army Chief claim substantial reduction in the infiltration? The infiltration numbers have indeed become something of a chameleon changing contours every season depending upon the attitude of the Government and its functionaries, and what they want to prove on the occasion.

But these things are no meaningless chants. They have implications in the international context. They have a deep impact on the life and security of the people, too. Take the so-called ceasefire in view of the Ramadan month. That the earlier gesture by the Prime Minister himself was met with assertions from the terrorist fold that the Muslim month of austerities was specially suited for hostilities and war. Even history and legend was quoted to support the contention. Nobody made the offer now, but the army has declared an embargo upon it self in view of the Muslim holy month. And the next day, as if on cue, the defense minister went out with a denial that there would be any ceasefire. Technically that may be quite correct but in the public realm technical nuances only confuse the people and negate whatever good outcome the gestures may produce. Now the army would be on hold, the general public would not perceive it, and the terrorists would garner easy psychological advantage. In the meantime, the task of the security people would have been increased many fold while the people would have no respite from the stranglehold of terrorists. The nation as well as the people could have easily done without these futile discordances.

American interests and South Asia

By Samuel Baid

Media in India and Pakistan shows remarkable restraint when it comes to commenting on the United States pursuit of its national interests in the subcontinent no matter how devastating they prove for the region. Perhaps this restraint is show in deference to the sensitivies of this sole world power. Or, may be, there is a lurking belief on both sides of the India-Pak border that the US influence on the other may be a restraining factor. That both countries keep on complaining to the US against each other reflects this belief.

The American friendship with the Pakistani military regimes ( and not with Pakistan) in the past 48 years has produced three diabolic results - (a) It has stifled democracy for a long time to come, (b) As a corollary to the first result, fundamentalism that has bred Islamic terrorism has flourished, (c) Again as a corollary to the first two results, hostility with India has almost become a dire necessity for the survival of US supported dictatorial regimes in Pakistan.

It will be hard to believe that these three results happened unintentionally. Democracy in Pakistan could not be acceptable to the US in the 1950s when the cold war had started fiercely and politicians, especially from East Bengal, protested against Pakistan's involvement in the US led defence pacts. That explains why Ayub Khan's coup occurred and the USA connived at all his anti democracy measures and actions.

After Ayub's coup of October 1958, one sees a glaring pattern of military or civilian coups followed by developments in the region that brought the USA here with full force.

For example, Prime Minister Zulfikar Ali Bhutto was deposed by Gen. Zia-ul-Haq in July 1977 and a ten months later the Afghan problem started and brought the Soviet troops in that country in December 1979. Three months before his removal, Bhutto had publicly accused the American Embassy in Islamabad of funding the opposition Pakistani National Alliance (PNA) to topple him. The PNA was known to be close to Gen. Zia. A disinformation campaign succeeded in convincing many in India and Pakistan that Bhutto was being penalised by the United States for his nuclear ambitions. But how serious the USA was about Pakistan's nuclear programme was to become clear in the following decade when President George Bush (Senior) kept on issuing certificates that Pakistan was not engaged in the production of nuclear weapons while former Pak Army Chief Gen. Aslam Beg was to reveal after his retirement, that the bomb was ready in 1989.

Americans connived Pakistan's clandestine nuclear programme because their main target was the Soviet Union, which had got itself trapped in Afghanistan by sending its army there.

If Bhutto is to be believed Gen Zia's coup had the backing of the United States. The way Zia's actions against political freedom, civil and human rights and the press and his continued involvement in drug and gun running were condoned gives some weight to Bhutto's Charge. Zia was encouraged to take measures that backwardised Pakistan in the name of Islamisation and turned the country into a cradle of senseless global terrorism.

Among many rewards Zia received from the USA and the Western world was a special session of the UN General Assembly in 1985 when he was presented as the leader of the Muslim World. That his ADC tried to carry drugs hidden in onyx lamps was hushed upto be leaked later. These lamps were ostensibly meant for presentation to selected dignitaries in New York.

During the cold war it had been the US policy to befriend Islamic obscurantist countries and discard and malign moderate Muslim nations. Similarly, in individual countries it supported communal against secular elements. It suspected all secular and nationalist forces supported the Soviet Union. In Pakistan, it launched a massive programme for producing Jehadis during the Afghan war. Thousands of Madrasas were set up with the help of the ISI and with funding from Muslim and Western countries. Islamic Zealots from all over the world were welcomed to join the US led war against the Soviet Union in Afghanistan. It was then that men like Osama bin Laden came to Afghanistan. It is notable that indoctrination to these Jehadis was provided even by a team of Israelis who stayed in a hotel in Peshawar in 1985 according to a later disclosure by Khan Abdul Wali Khan.

In short, it was during the revived friendship between the United States and the Pakistani Army that was latter clandestinely acquired nuclear power which was to be later shared with others including North Korea, (ii) democracy and modernity received a big jolt (iii) drug and gun running generated parallel economy, (iv) Jehad that came to be known as terrorism, was promoted, (v) terrorism became a State Policy and (vi) terrorism became a big road bloc in the way to normalisation of India - Pakistan relations.

Like Mr Zulfikar Bhutto's Government had to go to clear the way for the US final war against the Soviet Union, his daughter Benazir Bhutto's Government too, was removed 3 years later in 1990 by then President Ghulam Ishaq Khan, who was once alleged to be a CIA agent in Pakistan. According to Pakistani writer Mumir Ahmed, Will Pakistan break up? Ms. Bhutto had to go because she was not willing to allow Pakistani troops join the US led forces for attacking Iraq. Ahmed writes that US Ambassador Robert Okley stayed in the President's House untill Ishaq Khan signed the order sacking Ms Bhutto's Government and dissolving National and Provincial Assemblies on August 6, 1990.

The defeat of Ms Bhutto's PPP and the victory of Mr Nawaz Sharif's Muslim league in the mid term elections later that year were alleged to be the result of massive rigging. Gen Aslam Beg who was the Army Chief then, revealed that the ISI distributed money among politicians to defeat the PPP.

When Nawaz Sharif became the Prime Minister, he addressed his nation on TV and radio to justify Pak army's support to the US led forces against Iraq. Iraq, he said had done no service to Islam or supported Pakistan on Kashmir. But the 1991 war on Iraq made the beginning of the alienation of the so far pro US Islamic fundamentalists. There were anti US agitations in Pakistan. This alienation increased when the USA talked of a new world order after the warning against the Muslim world now that communism had been vanquished.

This alienation further increased when the US mariners rained missiles on Southern Afghanistan in August 1988 in an attempt to destroy Al Qaida's training camps. The USA was retaliating against bombing of its two embassies in East Africa. Taliban, whose emergence from Pakistani madrasas in 1994 the USA had hailed, were the main opponents of anti US terrorist forces. The US marine attacks on Afghanistan were successful. In the meantime, anti US frenzy increased in Pakistan. Ironically, the very madrasas which the USA helped to establish during the 1980s were now producing terrorists for the USA and other countries including India.

It is quite possible that an all out attack on Afghanistan to flush out Al Qaida and Taliban had been planned after the August 1998 failure of US marines' missile attacks. If so, Pakistan had to be controlled not by an elected Government but by a military dictator. This writer suspects that the decision to ease out Nawaz Sharif had been taken in 1998 itself.

Ironically, the USA now expects Gen. Pervez Musharraf to reverse Jehad and the Islamic militancy for the promotion of which it spent billions of dollars in the 1980s. It is now spending tons of money on sustaining Gen. Musharraf who they Muttahida Majlis-e-Amal (MMA) in October 10 elections in Pakistan shows that either the Army has failed to do for which it is paid by the USA or it is quietly helping them.

American support to military regimes in Pakistan has been a major factor in India-Pak had relations. Pakistani Army believes that perennial hostility with India is a guarantee of its survival. When India and Pakistani elected Governments reach a peace accord, the Army intervenes to frustrate the peace and efforts. See, for example the fate of the Shimla Accord and the Lahore Declaration. The USA cannot be expected to be ignorant of the impact of its alliances with Pakistani Army on India Pakistan relations and the peace in the region.

False arguments against SSIs

By Bharat Jhunjhunwala

Economic Advisor to the Finance Ministry Vijay Kelkar has suggested that the exemption for Small Scale Industries be reduced by one-half from present Rs one crore to Rs fifty lacs. In doing so he has forgotten that the purpose of economic policy is not faceless economic growth or generation of revenue for the Government. Economic growth is desirable only because it leads to the welfare of the people. Government policy towards SSIs should be determined by examining their contribution to the welfare of the people, not taxes alone.

Kelkar recognizes that the SSIs have a major contribution to make. He writes that 95% of the industrial units, 40 percent of the value added in manufacturing, 34 percent of our exports and 7 percent of our GDP is contributed by the SSI sector. He concludes from these figures that such a large part of our economy should contribute proportionally to the taxes. He expresses dismay at the fact that the SSIs are contributing only 3.4 percent of the excise duties. This betrays the fact that Kelkar is looking at only the tax aspect of the SSIs. He ignores the fact that SSIs are generating most of the employment and also are the breading ground of our entrepreneurial talent.

Economists use the concept of 'shadow costs' to calculate the true value of an activity. The SSIs may not contribute much to the taxes but what is the economic value of the entrepreneurship that they generate? If Dhirubhai Ambani did not get protection as a small time businessman he may never have risen to put up Reliance Industries. Secondly, the employment that SSIs generate reduces the load upon the government to provide benefits under the PDS and other poverty alleviation schemes. These services provided by the SSIs should be treated as payments in lieu of taxes. The direct payment of taxes by the SSIs may be less but their 'shadow' contribution may be much larger. Kelkar ignores these payments by SSIs.

Kelkar gives many other arguments for imposing higher taxes on the SSIs. He says that the level of exemption for SSIs in the industrial countries is around Rs 30-40 lacs, therefore, higher exemption in India is not justified. But this ignores the fact that India needs to generate employment and entrepreneurship at a much larger scale than the industrial countries. They can tax their large corporations and provide unemployment compensation to their unemployed. Can we ?

Another argument is that SSIs do not really themselves 'pay' the excise duty. The excise duty is passed on to the consumers. The consumer is the one who is affected; therefore, SSIs should not oppose higher taxes. This argument fails because the market price of a product is determined in the market by supply and demand. The SSIs cannot 'pass on' the higher excise burden to the consumer because the market will not pay a higher price. For practical purposes, all manufacturing units pay excise duty from their own pockets.

Kelkar says that presently SSIs are entitled to avail of SSI exemption if their turnover is less than Rs three crores. The production of items for exports is not included for determining their taxability. An SSI unit can therefore produce up to 10 or 20 crores worth of goods for exports and yet pay not taxes on its domestic sales as long as they are less than Rs three crores. Kelkar says that this could not have been the objective of SSI exemption. Kelkar has a point here. Large export-oriented units may be misusing this benefit. But including exports in determining eligibility could solve this problem. It is not necessary to reduce the limit for SSIs for this purpose.

Another point is that SSI exemption has become a route for evading excise duty on goods of luxury consumption. For example, a SSI unit can manufacture air conditioners and pay no taxes on them. The affluent classes use these air conditioners and this becomes a route subsidize the consumption by the affluent. This problem is genuine. Indeed the affluent must pay taxes on their consumption. But then the same logic should apply to all goods. But Kelkar makes no distinction between luxury- and common man's consumption goods in his basic tax proposals. Both are suggested to be taxed at a common rate of 16 percent. It is strange that Kelkar is concerned when SSIs make goods for consumption by the rich and not when the large industries do the same.

He says that the present exemption of up to Rs one crore leads to tax evasion in various ways. The SSIs produce goods in No 2 because units having turnover of up to Rs 90 lacs are exempted from registration from the excise authorities. This leads to downstream evasion of sales tax and income tax as well. It leads to the generation of black money. This argument is not acceptable. The evasion of sales tax and income tax should be dealt with the respective authorities. Moreover, imposition of a token tax of say one percent can bring all the SSI transactions into scrutiny.

Kelkar says that SSIs help evade taxes in yet another way. The buyers buy the goods from SSIs but take bills from large units. It is show in their books as if they have been produced in large units. The bill is taken from large units while goods are taken from small units. This is really a compliance issue. We do not close the banks because thefts take place. Similarly we cannot reduce the SSI exemption because there is some evasion.Kelkar says that SSI exemptions lead to a break in the Value Added Tax chain. Normally, the second producer takes refund of the excise duty that has been paid on the raw materials consumed by him. Ultimately excise duty is paid only once by the final producer who sells the goods in the market. Kelkar says that this chain is broken because one SSI unit in the middle does not pay excise duty on the goods that it sells. But Kelkar forgets that this is beneficial to the Government. The Government does not have to refund the tax paid on the purchase of the goods by the SSIs. So what is the problem?

Another contention is that exemption for SSIs leads to absence of data for planning purposes. That is a frivolous argument. It is like saying that all persons should die in hospitals alone and not in their homes so that their numbers can be counted! It is the Government's job to collect the numbers, period.

None of the arguments extended by Kelkar for reducing exemptions for SSIs is valid. BJP should realize that it has been losing its popular base because it has followed policies that are framed by bureaucrats who have no understanding of people's welfare. Hypnotized by their stint at the IMF they have become advocates of faceless economic growth and have dragged the BJP into loosing 18 out of 19 state elections that have been contested under the leadership of Vajpayee. The BJP should beware !

What ails India's Higher Education?

By Dr. Navin Chandra Joshi

While nearly one-third of the total outlay on education in India is spent on higher education, reaching hardly 10 per cent of the appropriate age-group, it is mostly the children of middle and upper classes who benefit at the cost of 90 per cent of the people who may be equally deserving to receive higher education. This is unjust as it perpetuates gross inequalities in income and social status which are directly related to the levels of higher education in the country.

A study sponsored by the Planning Commission has rekindled the debate on the need to privatise higher education in the country. The National Institute of Educational Planning and Administration, (NIEPA) has been commissioned to study the role of the private sector in financing and management of higher education.

An earlier report by the Prime Minister’s task force on education had suggested withdrawal of Government funding from higher education and restricting the role of the University Grants Commission (UGC) to that of a funding entity except in the liberal and performing arts. It also suggested enacting a law "to encourage establishment of new private universities in the fields of science and technology, management, economics, financial management and other criticial areas with commercial applications."

Today, over 50 per cent of the world’s illiterate live in India. This situation calls for proper planning and action in order to correct the present ill-conceived pattern of education, particularly at the higher level in the country.

Serious thinking and action are needed to improve the present ill-conceived pattern of education, particularly at the higher level. This is no reason why precious resources be wasted in each university trying to run small under-staffed departments for certain subjects which attract only a handful of students.

There is also a woeful duplication and dead uniformity in the’ teaching programmes of our universities regardless of the varying problems of the communities they claim to serve. There should be a coordinated programme for imparting instructions and offering research facilities of a higher order with adequate staff and libraries by dividing among the several universities the various subjects, thereby avoiding duplication.

Presently, to meet the ever-increasing demands of higher education, the system of financing colleges and universities through grants by the Central and State Governments should undergo drastic change. The university product, who is the main beneficiary of higher education, derives greater returns and therefore needs to make some sacrifice in a country where illiteracy is still rampant.

Indeed, higher education must be allowed to grow and develop on its own strength by generating internal resources and depending less and less on public funds. Also, there is need to strengthen non-formal education which should be functional and job-oriented.

This could be done by creating a vast network of short-term training courses to improve productivity in various sectors by enhancing the functional efficiency of the masses engaged in different occupations in the country. This would be the only way for making higher education more egalitarian, The cost of such education must be distributed among those who benefit by it. It is quite possible to measure the cost of education and its returns to the individuals concerned by devising suitable methods.

A high-level of education is not, by itself, sufficient for rapid growth of the economy. Experience from all over the world shows that education is necessary for economic take-off and modernisation. With the globalisation of markets and spread of technology, India needs a high quality labour force to become much more efficient in the competitive environment. As such, more resources need to be invested in education for the illiterates, and more importantly they must be spent effectively.

Somehow, on one hand we have not been able to provide free education to all up to the age of 14, which is our constitutional obligation; on the other hand, general education at higher level, which caters to the relatively better-off people, is almost free and given to who ever wants it. For instance, nine out of eleven students leaving the secondary stage in schools join universities/colleges in India. This does not happen anywhere else in the world. In developed countries, only one out of ten joins a university.

The recent recommendations by an expert committee in the Planning Commission to step up expenditure on education have not come a day too soon. It has been well over three decades since the Kothari Commission suggested increasing the expenditure on education to six per cent of the Gross Domestic Product (GDP). If the country has barely crossed the halfway mark, it is, above all, for lack of a firm political commitment to the social sector in general and education in particular.

The Committee urged that the country as a whole reach the six per cent mark by 2007. Keeping the national figure in view, the Committee asked every state to target spending six per cent of the GDP. It further suggested overall increase under the heads of per capita expenditure, plan outlay and primary education..

The other recurrent theme is the restructuring of allocation priorities within educational budgets. Financing basic education, girls, education, technical and vocational training will have to replace the existing bias in favour of higher education. It has even been suggested that over 70 per cent of the education budget allocation be made for primary education. There is much that India can learn from neighbouring and developing countries in many of these areas.

For instance, Sri Lanka and the Maldives have already achieved near-universalisation of primary education leaving India, Pakistan and Bangladesh way behind.

While traditional social status continues to be attached to university degrees in India, the remedy is not to be found by continuing the status quo. Some way has to be found out for financing higher education through private funds in a situation, where most of the general degree-holders (and they constitute the overwhelming majority of the beneficiaries) end up performing the most routine of clerical jobs.

It is, therefore, essential that only those who have the aptitude and capability for higher studies should be allowed to go in for higher education. Schemes for award of scholarships, concessions, etc., would take care of those who are poor but brilliant students. There is little justification for velvet globe treatment accorded to higher education. Privatisation would ensure quality in education and performance capabilities of teachers if higher learning institutions have to survive. Ultimately, it would be good for the society at large.

What is more, the frustration among the unemployed calls for urgent remedial measures. Most of the causes of this frustration are ascribed to be the shortcomings of the educational system itself. Somehow, our colleges and universities are churning out more graduates than can be absorbed in jobs, requiring degrees or diplomas. For example, every year about 40 lakh students pass out but only six lakh of them get jobs in the organised sector. It is time that we should think of how we can use the reservoir of educated youth to spread education for all.

There is a distorted pattern of financing higher education in as much as during the last 50 years or so, the share of primary education in budgetary allocations has come down from 56 per cent to 29 per cent, whereas the share of higher education has increased from 18 per cent to 44 per cent. obviously, such a state of affairs cannot be allowed to continue.

It may be pointed out that no good university, public, private or in-between anywhere in the world can hope to recover the whole or a very large part of the running cost of higher education and research from the fees charged from students. Good private universities in the United States do not even try to do that. They subsidise their prestigious non-profit-making departments seeking out private endowments and investments for support wherever public subsidy falls short.

In France and Germany, students have to pay somewhat less than what is the case in the United States. In all these and other developing countries, commitment for non-profit private investment in education is quite strong and as such, privatisation of higher education is the order of the day.

Privatisation of higher education can be justified for promoting and fulfilling the objective of equity.

But then, it is also felt that only the Government can ensure national uniformity, protect all sections of society by providing universal access and finance a large number of projects and educational institutions. Even if the private institutions are allowed to provide higher education, it must remain the major responsibility of the Government to make sure that the quality and standards are maintained and no one is exploited.

All in all, the providing of higher education in India should be the joint responsibility of the private sector and the Government in their respective functional areas so that there is complete regulation by the Government with a scheme of checks and balances, and the private sector should serve as education to students.

In this context, it is pertinent to observe that in August 1995, the Union Government introduced in the Lok Sabha a Bill called the private Universities (Establishment and Regulation) Bill "to provide for establishment of self-financing private universities in the country and to regulate their functioning by enacting an enabling law on the subject. It was felt that such universities could play a subsidiary and supportive role to the State-run universities in the teritary education sector." The Bill debarred private universities from receiving grants-in-aid or any other financial assistance from the Central Government, any State Government, the U.G.C. or any other authority. It is yet to be seen whether the Government at the Centre now reintroduces the Bill in the coming sessions of Parliament, The issue of financing higher education in the country must be seen in the broader context of rampant illiteracy, falling educational standards in higher levels of education, growing unemployment amongst the educated youth and fruitless pursuits in the name of higher studies.