Daily Excelsior... Editorial

EDITORIAL

By S. Sethuraman

Finance Minister Chidam- baram, who is keen on high growth, fiscal consolidation despite increase in development spending, easier credit and financial sector reforms, faces challenges of a different kind in budgeting for 2008-09, a year of global downturn with some spillovers expected for emerging economies.. ..more

NREGA should
benefit poor

By J.D. Sethi

Quota controversy

By Sunita Vakil

With the Home Minsiter Shiv Raj Patil voicing the government's intent to provide reservation for minorities in education and government jobs, the UPA seems to have moved back to its pet peeve of indulging in communal politics under the guise of Secularism. Indeed, the Congress led UPA Government is at it again. The party's preoccu- pation with finding a way on Reservation for Minorities has once again exposed its loyalty to the Muslim ..more

EDITORIAL

Freeloaders all?

The question of how much a minister should spend on his travels is not easy to answer. There was a time not very long ago when one and all looked askance at ministers if they used helicopters or planes for their trips. They were dubbed as "flying Maharajas" which sarcastically meant that they had simply replaced feudal lords of the yore while assuming democratic garbs. These days it is taken for granted that not only they but even officials concerned must fly at least in the event of emergencies. How else can one reach Padar or Lolab fast from Jammu or Srinagar? It is perfectly in order to have the latest means of transport. The failure to do so could mean only one thing: we have not made enough progress. It is expected, however, that those employing them don't betray the public trust. It requires that they judiciously utilise the government exchequer. In no case should they fritter it away by exploiting the available facilities for personal purposes. For instance, it is gross abuse if they avail themselves of flying machines for their or their families' pleasure. On the face of it an expenditure of Rs 11.74 crores made by ministers and chairpersons of public sector undertakings on consumption of fuel from November 2002 to 2007 appears to be whopping. It averages more than Rs 2.5 crores a year. Can the State like ours afford to foot this bill? Is there scope for us to tighten our belts? These questions are important. However, one is constrained to say that one can't reach a conclusion in the absence of requisite details. There is no critical analysis of the spending. We don't know about the nature of work that has necessitated it. We don't even have the names of ministers who have incurred the costs.

All that the Government has given us is a list of ministries and departments and the extent of money spent by each of them on fuel utilisation. It has left for us (as Minister for Consumer Affairs and Public Distribution Taj Mohiuddin deputising for the Chief Minister has done it while replying to National Conference's Devinder Singh Rana in the Legislative Council) to draw our own inferences about who spent how much by establishing the link between ministers and the departments under their charge. It does leave room for speculation, which is otherwise avoidable, as there are ministers who have managed more than one ministry from November 2002 onwards. As our report has pointed out there have been at least three ministers in charge of the Rural Development Ministry since then namely Mr Mula Ram, Mr Jugal Kishore and Peerzada Mohammad Sayeed. Together they have exhausted Rs 29.82 lakhs on travel alone. Who among them is No 1? It remains a mystery. It must be understood that the idea is not to split hairs but arrive at a definite conclusion about how the taxpayers' money is being handled.

The break-up about some other ministries is: Rs 30.02 lakhs (Industries and Commerce), Rs 23.22 lakhs (Finance), Rs 20.55 lakhs (Housing and Urban Development), Rs 20.31 lakhs (Health and Medical Education), Rs 18.89 lakhs (Revenue), , Rs 19.57 lakhs (Power Development Department), Rs 19.17 lakhs (Social Welfare), Rs 18.49 lakhs (CAPD), Rs 16.87 lakhs (Roads and Buildings), Rs 15.80 lakhs (School Education), Rs 14.58 lakhs (Forest), Rs 14.11 lakhs (Chief Minister's Secretariat), Rs 12.07 lakhs (Agriculture Production), Rs 11.29 lakhs (Public Health Engineering), Rs 8.79 lakhs (Tourism), Rs 2.51 lakhs (Law) and chairpersons of PSUs (Rs 18.50 lakhs). In addition, there are daily and travel allowances. We are constrained to note that allegations and counter-allegations have been made in this regard on the floor of the Council. The NC has charged the ministers with pulling vehicles out of official duties and keeping them at the disposal of their families and relatives. On the other hand, the Congress and the People's Democratic Party have demanded to know the financial outflow under the same head when the NC was in power between 1996 and 2002. This game of one-upmanship would not serve any objective. All parties should jointly evolve an approach to put the system on a sound footing for the sake of their own credibility. They can't be unaware that there is general impression that the political class especially its ruling elite revels in extravagance. Transparency will ensure that all that they do is motivated by the best intentions and that they are not simply freeloaders.

Vigilant enough

There can't be two opinions that the State Vigilance Organisation (SVO) has been able to make an impact howsoever limited it may be. There is at least fear among unscrupulous elements in bureaucracy that its hands may reach them. Armed with the powers to attach property it has a potent weapon in its hands. It is handicapped, however, because of inadequate infrastructure. Yet, its report card of performance during the last two years is fairly good. According to information given by the Government in the Legislative Council, it has registered cases against 37 officials after conducting raids on their premises. It has attached properties of 12 of them. Three officers have been absolved of charges that they had faced. Investigation was in progress in the majority of cases covering a large number of departments. The Government's view of the SVO's performance is that it is doing an excellent job keeping in view the well-intentioned aim to curb corruption. The percentage of vigilance matters and their disposal has been high. Indeed, the SVO has emerged as an effective instrumentality. The fact, nevertheless, is that it alone is not in a position to eradicate financial dishonesty in our political and administrative dispensation. The major reason is that mostly junior functionaries are its target. It is unable to catch the high and mighty particularly those calling the shots in the real corridors of power. If presently it is seized of a matter involving a former minister it is only because an independent legislator has been successful in having his say in the Assembly. Greater chances are that it may end up flogging a dead horse now that the politician concerned is deprived of all his resourceful embellishments.

This is not at all to say that the SVO is not playing its part. As stated earlier also it has made its presence felt. All that is needed to be done is that it is further strengthened in every sense. Why should it have difficulty in accessing top echelons of governing apparatus? If it faces hurdles on the way these should be removed without any delay..

Challenge for Finance Minister

By S. Sethuraman

Already, there are clear signs of a growth slowdown at home. Fiscal consolidation has progressed so far, no doubt, thanks to revenue buoyancy, barring the outstanding liabilities of the Centre inclusive of the growing oil bonds.

The Budget for 2008-09 would likely aim to bring down the revenue deficit to around one per cent and peg fiscal deficit at 3 per cent of GDP in terms of Fiscal Responsibility and Budget Management legislation. (Both Centre and States are called upon to phase out revenue deficit by March 2009 when the fiscal deficit should not exceed 3 per cent of GDP) .The Finance Minister cannot set a different example to states which, taken as a whole, have almost eliminated revenue deficit and are close to the 3 per cent fiscal deficit target at the end of March 2008.

This is notwithstanding the weaker record of several states, and with elections due in more than half a dozen states during 2008, their revised estimates for 2008-09 by next year could reveal some undoing of the process. Hanging over the Centre and the States is the burden from the Sixth Pay Commission due to present its report by March 2008, which would have to be acted upon expeditiously with the expected pressures from employees and politicians, Left and Right as the country nudges toward national elections.

Economic growth forecasts have been revised for the current year which showed 9.1 per cent for the first half (April-September) but the Finance Minister is optimistic that for the full year, it would be not less than 9 per cent. Other forecasts, global and national, are in the range of 8.5 per cent (RBI) to 9 per cent. However, for 2008, the World Bank and IMF have projected 8.4 per cent while the UN report on world economy's estimate is only 8.2 per cent, reflecting the impact of the weakening of US growth bordering on recession. For 2008-09, the second year of the 11th Plan (2007-12), the Budget is likely to assume not less than a 9 per cent to meet the plan average of 9 per cent for the first four years with a 10 per cent in the final year (2011-12).

Notwithstanding revenue buoyancy with over 40 per cent growth in direct tax collections, the economy has begun to experience a slowdown in some sectors like manufacturing, and more significantly in the core industries of infrastructure, according to data till November. Besides deceleration in industrial growth, the exchange rate appreciation is affecting some smartly performing sectors like IT and labour-intensive manufactures (textiles, leather etc), the trade imbalance is widening and exports are not measuring to the targeted 160 billion dollars in 2007-08. Large capital flows have added to the liquidity in the economy with inflationary potential and the overall global outlook is bleak from the protracted financial market turmoils leading to a lowering of world growth estimates by UN, World Bank and IMF.

In the run-up to the presentation of the Budget on February 29, the Finance Minister has heard conflicting views from a cross-section of interests -business, labour, farmers and economists. Industry, as in the pre-liberalisation era, came up with a wish list with demands for cuts in direct and indirect taxes, adducing the industrial slowdown, though corporate profitability has not suffered in the first half of the year. Also, there was unmistakable undertone for protection of industry against certain imports as from China as rupee appreciation was edging out Indian competitiveness.

Farmers' representatives called for cheaper rural credit while trade unionists wanted the budget to focus on agriculture and social development, especially health, education and sanitation, and on the unfulfilled promises in the Common Minimum Programme. Economists were averse to tax reductions at a time when Government needed to mobilise more resources for development but some of them favoured rationalisation on the indirect side especially import duties on petroleum products as well as a tax on speculative capital flows into equity market and real estate.

The Finance Minister must be already doing some tentative exercises, keeping his options open within the broad framework in which the fiscal strategy would be set. He has to relate fiscal policy proposals based on the magnitude of expenditure in the coming year. The budget will certainly provide for a larger plan outlay with enhanced level of central assistance to states, the incremental part of which would be settled in consultation with the Planning Commission.

The Commission has even suggested deferring the elimination of revenue deficit at present considering the resource challenge for meeting the requirements of both infrastructure and inclusive growth. One major programme is the extension of the National Rural Employment Guarantee Programme to all the districts in the country from April 1. Pension and other welfare schemes announced over the last few months would have to be fitted into the budget.

Both the Prime Minister and the Finance Minister have spoken of the need to reduce subsidies and expressed serious concern over the impact of energy prices on the country's long-term growth prospects. International oil prices are extremely volatile and though by mid-January, it had retreated from the 100 dollar mark it touched in December, high prices have come to stay and the Indian crude average price has gone up from year to year necessitating some pass-through to the consumer. There is a case for leaving the price mechanism to the oil companies, mostly in the state sector.

A major objective would be to provide some stimulus to productive sectors through tax and non-tax incentives, with the assumption of monetary authority acting in concert both to soften interest rate for borrowers and contain inflation at targeted levels, below 4 per cent, as it has been over the last few months. RBI would like to achieve a target of 3 per cent over the medium-term target. RBI's third quarter review at the end of January would provide some strength to the Finance Minister's budget formulation in terms of macro-economic stability while focusing on both higher growth and price stability.

The UPA Government is determined to make the fifth budget a full-fledged exercise so that it has more time to implement its programmes, those already launched like the employment guarantee, Bharat Nirman, and education, rural health and urban renewal missions as well as those that would form part of the budge in order to render a credible account to the electorate in 2009. (IPA)

NREGA should benefit poor

By J.D. Sethi

The National Rural Employment Guarantee Act (NREGA) on which the UPA Government has spent Rs. 40,000 crore has come under scrutiny by the Comptroller and Auditor General (CAG). The study by the CAG has revealed leakage of funds, and the money earmarked has not reached the poor for whom the scheme was formulated. The main focus of the report is on the conformity of the programme with the provisions of the Act as well as with the operational guidelines. The report points out, quite rightly, that the guidelines are routinely violated. This applies, in particular, to the transparency safeguards, making the programme vulnerable to leakages.

There is an important message here, but it is not the same as to say that NREGA funds "don't reach the poor." A large proportion of these funds does reach, and makes a big difference to the lives of, the rural poor. This crucial point should not be lost in the din of arguments for and against the NREGA. Further, recent studies clearly show that it is possible to enforce the transparency safeguards, and that this can go a long way in preventing corruption. This view is fully consistent with the CAG's analysis.

The key message of the draft CAG report is a constructive one, summed up in the concluding paragraph: "The Ministry of Rural Development needs to ensure that state governments take swift and immediate action to remedy these deficiencies and improve their administrative and technical infrastructure…, so that the forthcoming expansion of NREGA to cover all rural districts in the country can be successfully implemented." The report presents useful recommendations on how to strengthen the required support structures, relating for instance to staff appointments, record-keeping and financial management.

The Central government would do well to heed this constructive message. The extension of the NREGA to the whole country, just three months from now, is one of the biggest organisational challenges any government has ever faced. It is also an unprecedented opportunity to build the foundations of a social security system in rural India, revive village economies, promote social equity, and empower rural labourers.

As things stand, however, this bold initiative looks like a political stunt, shorn of the far-reaching preparations that are required to make it a success. It is in this context that the draft CAG report needs to be treated as a useful wake-up call, rather than as another stick to beat the Act with.

Ever since its enactment in mid-2005 NREGA has been a target of relentless attacks in the corporate-sponsored media. Numerous business columnists most of whom have never seen an NREGA worksite (except perhaps from an airplane); have gone out of their way to rubbish this programme. "Expensive gravy train", "money guzzler", "costly joke" and "wonky idea" are the colourful terms they have used to describe it.

It would be surprising if this had nothing to do with the "subversive" character of the NREGA. Indeed, the Act runs counter to the current reorientation of economic policy and state intervention in favour of corporate interests, misleadingly known as "market-oriented reforms."

As one commentator recently put it, the NREGA is a prime case of "meddling in markets". It is another matter that the state freely "meddles with markets" when it suits business interests, whether it is by forcibly acquiring land on their behalf, or by creating special economic zones, or by defending the so-called "intellectual property rights." The difference is that the NREGA empowers the working class-there lies the danger.

The Act has some major flaws, and there is much scope for reasoned critiques of it as well as for searching assessments of its implementation on the ground. What is striking, however, is that informed critiques of the Act have been few and far between. Instead, a plethora of shallow arguments have been invoked to deride it.

By way of illustration, prominent media attention was given a few months ago to a so-called "study by the India Development Foundation," allegedly showing that the NREGA caused inflation. This is an outlandish claim. One fails to understand why this particular item of government expenditure was singled out as being responsible for inflation, as opposed to, say, the defence budget, which is almost 10 times as expensive. Further enquiry revealed that this "study" did no exist; it was just a speculative remark made at a panel discussion by a member of this Foundation. Nevertheless, this hot air was promptly pumped into the propaganda balloon.

To put things in perspective, there has also been much "pro-NREGA" propaganda, mainly from the Government. For instance, according to a recent note from the Press Information Bureau (released on December 28, 2007), the NREGA is nothing short of a "tremendous success." This assertion, not backed by any serious evidence, is typical of the ostrich-like attitude of the Central government to the hurdles that are holding up the implementation of the NREGA. Government propaganda, however, is relatively innocuous since the public knows that official claims have to be taken with a pinch of salt. Corporate propaganda is more subtle, and thus more insidious. INAV

Quota controversy

By Sunita Vakil

Indeed, the Congress led UPA Government is at it again. The party's preoccu- pation with finding a way on Reservation for Minorities has once again exposed its loyalty to the Muslim interests. In what could rake up a fresh controversy over "communal quota," Mr Patil's recent statement can be seen as yet another attempt of the UPA Government to court the minority community in a bid to widen its support base. Shedding all pretensions of secularism with its eyes on minority votes, the Centre is seeking to provide reservation for minorities in educational institutions and jobs. "We can't say that quota cannot be given to the minorities. Whatever ingenuity can be used in order to help the people who should be helped in these areas should be taken. The Government is looking into these aspects without coming to the final conclusions," Mr patil said while addressing a conference of State Minorities Commissions in the capital on Wednesday. His statement indicated that the government was giving a serious mind to the issue of reservation of minorities as a prescription to uplifting the community socially and economically.

He went on to say that whatever has to be done towards achieving this goal, should be done. "We have to apply our minds and try to find out how the Quota for minorities in academic institutions and jobs be provided in the best possible manner," The Home Minister added. Suggesting that his government was looking into the issue of giving land to the landless members of minorities. Mr Patil assured them that they would continue to enjoy their constitutional rights to propagate their religion. As such, the Home Minister's remarks provide a window into the government's crass communal mindset. Also, these clearly signify that it will not even stop short of packaging welfare schemes exclusively for the benefit of Muslims.

When seen through the political prism, Mr Patil's speech sends out the message that the UPA is almost desperate to mend fences with the minorities, particularly after the drubbing the party received in Gujarat and Himachal Pradesh. It is becoming abundantly clear that the Congress has always succumbed when it comes to minority separatism. The party often demonstrates its penchant for appeasing Muslims even at the cost of jeopardising national interest. Our secular policy, that is heavily tilted towards minorities has allowed for a special treatment to Indian Muslims. It is a sordid reality that Muslims have throughout been perceived as potential vote banks who have to be treated differently from other communities. In keeping with its myopic minorityism, the UPA Government has commun- alised budgeting, banking and financial institutions. It even tried to communalise the armed forces. Now its more aggressive demands for minority Quota in education and jobs is sure to invite criticism from the opposition parties besides being coerced by other parties to walk the talk. Infact, the Government seems to be unfazed by such reckless demonstrations of perverted secularism.

Mr Patil also indicated that it was the duty of the government to protect the life, property and culture of minorities so that the country remains united. "It was the duty of the Government to provide full opportunities of development to minorities and protect their life, property and culture," he said. Does it conversely mean that the government has no responsibility towards other communities ? As we all know, the PM represents all sections of the society irrespective of their caste, creed and religion. It is his moral obligation to instil utmost faith and confidence in each and every person. No doubt that all those who lag behind deserve to be uplifted but the government's attempt to shower special favours on one single community at the cost of others smacks of religious discrimination.

Infact, there are people from other communities also who are poorer than the average SC/ST Muslims. Why is not any reservation in place for them. Why then the preferential treatment to Muslims? The Congress obsession with Muslims has led to resentment in society besides nurturing divisive forces. It is very much disconcerting that the party has allowed its concern for the community override issues of strategic interest. This has undoubtedly led to a total failure of governance as well as rise of Islamic and naxal terrorism. The country will be better served if the ruling party refrains from offering sops to a particular community and focuses instead on providing an efficient governance.

The same Congress that is now showing undiminished gusto to undo its so called mistakes with regard to Muslims did not spare little thought for the minority Kashmiri Pandit community which has been hounded out of its home and reduced to live a life of refugees in its own country for the past 17 years. Unfortunately, while harping on the Gujarat riots, the secular brigade within the ruling regime remained selectively silent when it came to Kashmir, which was even a greater tragedy. Obviously, this warped vision of the UPA motivates it to clamour for a blanket quota policy in keeping with its deplorable votebank politics.. Isn't it the duty of the government to provide for the development of the ethnic minority which has been neglected by the bankrupt and opportunistic politicians down the years? More recently the Punjab Governments absurd decision to challenge High Court's verdict that Sikhs are not a minority in the state is yet another manifestation of votebank politics corrupting secular principles and eventually destroying the social fabric of the nation.

Even as the UPA Government is planning to highlight minority welfare schemes during the forthcoming budget session of Parliament, the BJP has come out in severe criticism of the former's alleged move to provide reservation to Muslims. Demanding a clarification from the Prime Minister Manmohan Singh in the wake of contradictory statements coming forth from two senior Cabinet Ministers, the opposition party has come down heavily on Patil for leaning in favour of minorities for extending quota benefits. "The Home Minister's statement is political brickmanship at its worst. The BJP rejects the move outright," BJP spokesperson Ravi Shankar Prasad is reported to have said.

As former President Abdul Kalam has rightly said that "dependency syndrome has stunted performance and diminished transparen- cy". Given the failure of casteism for attaining social justice, why do politicians keep on raising the bogey of quotas which have, if nothing, led to more corruption besides lopsided development. It is time for the Government to shun appeasement of minorities and instead concentrate on eradicating poverty and good governance.