Editorial 1/Taxing the mind
Editorial 2/Whole state
Cautionary tales
Letters to the Editor

Nurturing what he called the “revolutionary potential” of knowledge based industries like information technology was given pride of place in the budget speech of the Union finance minister, Mr Yashwant Sinha. Despite rhetorical flourishes about the coming together of Saraswati and Laxmi, budget 2000’s initial impact on the infotech industry was to extinguish several billions of rupees of market capitalization. It was more a statement about the industry’s resilience than Mr Sinha’s abilities that many shares rallied soon after. Admittedly, what seems to have been a punitive measure — taxing infotech exports — was probably to the industry’s long term benefit. Other industries have long complained infotech has too many inbuilt subsidies. Exemption from export tax being the most blatant sop. There can be no doubt that India’s infotech success will be shortlived if industry profits are dependent on subsidies. Government handouts will eventually deprive firms of the incentive to be competitive. In the same way spoiled children grow up to be faulty adults, subsidy fed industries can never become creators of wealth. Phasing in the 20 per cent export tax over five years gives firms more than enough time to adjust. A similar case for making the industry stand on its own two feet buttresses the decision to end the 10 year tax holiday for new software units in export processing zones. To their credit most software companies merely shrugged their shoulders on hearing that their benefits had been trimmed.

While the government is rightly phasing out sops, it is moving too slowly at cutting the red tape and resolving the infrastructure problems that hamper Indian infotech’s attempts to fight in the world market. Mr Sinha failed to end the double taxation of employee stock options. Stock options are crucial to infotech, both in terms of providing incentives to workers and in allowing new companies to launch with minimal capital. The present tax structure is an example of old regulation strangling a new economy innovation. Ending double taxation for venture capital fund investors is at best a partial compensation. Another lacuna is the failure to increase the amount of money Indian firms can spend on buying overseas companies. Infotech is nightmarishly competitive and buying firms is a key means by which firms stay ahead of the pack. The present $100 million limit is absurd when Indian infotech firms are worth tens of billions of dollars. Again, the promise to allow foreign investors to hold 40 per cent of an Indian firm only undoes part of the damage. There is complete silence about alleviating the onerous infrastructure bottlenecks of the infotech sector — most of which are fallouts of the Indian state’s socialist hangovers. The overall impression is of a finance minister who, while talking of knowledge based industries as “the front runners” of the economy, is hobbliing them out of a sheer lack of nerve.    

Militancy rears its purblind head in Assam again. After a deceptive lull of five months, the outlawed United Liberation Front of Asom has claimed responsibility for the death of the minister of public works and forestry, Nagen Sarma. General secretary of the ruling Asom Gana Parishad and a prominent leader of the Assam movement in the Eighties, Sarma’s death comes at the end of a series of unsuccessful attempts on the lives of other ministers. Sarma’s political career shows how hopelessly intertwined Assamese subnationalism is, at its origins, with mainstream politics in the region. Suspicion of collusion between some of his aides and the militants has been voiced inconclusively. Terrorism in the Northeast is homegrown, arising out of the peoples’ long relationship with the land and their sense of that history. Hence, it becomes difficult to separate the alignments and identifications of the militants from, say, those of local security personnel or even political leaders. Sarma’s brutal killing illustrates, yet again, what has been pointed out to the state and Central governments repeatedly, but to little avail.

First, the law and order aspect of the situation can be tackled only through a thorough upgrading of every component of the unified command. The geographical information package system for a comprehensive surveillance of the state’s burgeoning capital, proposed by the police, should be passed immediately and implemented with financial assistance from the Centre. Second, the unified command’s operations would be immensely facilitated if the neighbouring government of Bhutan is forced to disallow the militants from hiding in its forested territory. An agreement with Bangladesh to this effect has made a significant difference to the elusiveness of the insurgents, and India should involve Bhutan in a similar manner, if necessary using a forum like the South Asian Association for Regional Cooperation. Third, when being forced to spell out its policies regarding insurgency in the Northeast, the Centre must be made to perceive security and development as inter-related issues. No progress can be made without endeavouring to lift the region out of its current economic morass. Assam is rich in natural resources. Tea, forests, oil, natural gas — all these spheres of revenue generation have been targeted by insurgents, creating an acute financial crisis in the state. It remains imperative for the Centre to ensure not only the funding of economically regenerative projects, but also their proper implementation. This must encompass the power sector and information technology, together with rural infrastructure and border area development. It is only a clearsighted and vigilantly holistic approach that can salvage the state from what could become an insurmountable crisis.    

The news from Bihar has a cautionary tale or two for every party. Most party bosses have no cause to bewail the fractured verdict of the voters in the elections to the state assembly. They got only what they asked for, having worked overtime to cut up political groups into ever smaller fragments which they are now unable to shore up against their ruin.

Yet, Bihar’s woes for over a decade during which the state was pushed deeper into the mire of poverty and crime had nothing to do with fragmentation. Most of the ruling party there remained loyal to Laloo Prasad Yadav for 10 years. His folksy ways, including dress and idiom, endeared him to the people who looked upon him as one of their own.

His rhetoric abolished for the moment the boundaries dividing fact from fiction, progress from regression, and myth from the dread realities of the education, health care and even road systems going derelict and most welfare schemes developing leaks through which vast sums of public money flowed into the pockets of corrupt politicians and bureaucrats.

Even when he was hauled up for his suspected involvement in the fodder scandal, which defrauded the state exchequer of Rs 1,000 crore over a decade, he turned his journey to an improvised jail in a bungalow into a triumphal march. Elsewhere they make a society of spectacle out of an excess of riches. Laloo Prasad’s brand of politics created one in the midst of grinding poverty and a rising crime graph.

The cautionary tale here is that political stability by itself cannot prevent a state’s descent into anarchy if the people allow themselves be taken for a ride by a man with the gift of the gab. Laloo Prasad Yadav had the needed backing of the state assembly to rule Bihar and time enough to deliver on his promises. But his mandate was won by conmanship, not by integrity of purpose or commitment to serving the poor.

He managed to confound the pollsters who gave him a mere 60 seats this time by more than doubling that score. But it looks as if power is as out of his reach as that of the NDA. And this is where one has to look for another cautionary tale. The struggle for division of seats between potential allies of the Rashtriya Janata Dal, and even members of the National Democratic Alliance, created such mutual antipathies and antagonisms as to make reconciliation after the elections impossible.

Those who suffered humiliating defeats at the hands of Laloo Prasad’s nominees are not likely to support a government led by his wife. That is why the Congress wants to have no truck with him. Sonia Gandhi cannot risk a split in the Bihar unit of her party by backing Laloo Prasad after her image has taken a severe beating in Orissa. The Bharatiya Janata Party, too, realizes that its chances of mobilizing the requisite support in the assembly even for a bare majority are pretty slim. Else it would not have handed the leadership of the alliance in the state assembly to Nitish Kumar whose party’s strength in the house is just a half of its own.

The report in the media about the possible option of keeping the legislature in a state of suspension in this situation cannot be dismissed as idle gossip. If the governor finds that neither the NDA nor the RJD can get the needed letters of support to form a credible government, the only choice before him will be between dissolving the new house or keeping it in suspension to give the members enough time to rethink the pros and cons of their present stance.

Perhaps the fear of seeing all their expense of spirit and money on the elections go waste can finally lead to a realignment of forces which produces a coalition with a majority in the house. It is highly unlikely, however, whether a gunshot marriage like this can last for long or a government formed under duress can revive a state ravaged by too prolonged a spell of misgovernance.

That Bihar’s new predicament is by no means confined to it is one more cautionary tale. The forces that have conspired to deliver a fractured electoral verdict in that state are also at work elsewhere. After all, the whole country has had to go to the polls three times in the last four years. And even before completing its first year as chief partner in the new government in office, the BJP cannot hide its discomfiture both over the ground it has had to yield to its allies under pressure and over the tensions that have developed between the hardliners and the softies in its own ranks.

It is not only the major setback the party has suffered in Bihar that has brought these tensions into the open. That Naveen Patnaik in Orissa and Om Prakash Chautala in Haryana can now stay in power on their own strength means a virtual loss of these two states to the BJP. The two men may even become more overbearing in dealing with the Centre. This is enough to make those close to the Rashtriya Swayamsevak Sangh feel more restive than before.

It is indeed hard to believe that the Gujarat government took the decision to allow RSS members to enter government service without some prodding by the hardliners to test Atal Behari Vajpayee’s nerve and have a clearer idea of the point at which he might prefer confrontation with those who have not yet reconciled themselves to the blurring of the BJP’s identity while its allies are busy sharpening theirs.

Many in the party are also asking pointedly in private whether the Centre, even while in the throes of a fiscal crisis, can afford to lose Rs 1,200 crore by deferring the proposed hike in kerosene and diesel prices for a month just to please N. Chandrababu Naidu who may win a few extra seats in the local elections in his state by this stratagem. A coalition government cannot be run, whatever the ethos appropriate to it, by a hard pressed prime minister telling every ally: “No more, dear love, for at a touch I yield.” He must have the guts to resist unreasonable demands from any quarter. Piling up new loads on an already overburdened exchequer is a travesty of both good governance and efficient crisis management.

Even the rhetoric about a tough budget has turned out to have been hollow. Such cuts in subsidies as the Union finance minister has made do not go far enough, considering the hefty increases in the government employees’s salaries, the costs of the Kargil war, the dramatic rise in defence expenditure and the crying need for much greater investment in education, health care, cleaner environment, urban renewal and infrastructure. No government can get its priorities right or summon the nerve to do what has got to be done if it lives constantly in fear of every fall in its popularity ratings.

The government is afraid of alienating not only its allies and the public even in the short term but also of anything that hots up the cold war between the hardliners and the weak-kneed in the party. The real question before the RSS fraternity is to make up its mind on the prickly issue of whether its final aim is better served by wielding power even under the handicaps imposed by allies who will neither have any truck with its Hindutva agenda nor allow it to expand its base in their fiefs at their expense or by reverting to the role of an opposition party until it can capture power at the Centre on its own.

The RSS is, however, not so out of touch with the ground realities at home — the splintered polity, the active insurgencies, the unmanageable internal situation in Kashmir, the alarming increase in the incidence of crime, the many unresolved issues concerning the nuclear deterrent, the still unattained goal of putting the country on a fast growth track, the more aggrandized communal, caste and ethnic identities, the desperate need for a package of policies to attract foreign investment on a much larger scale and the discontent caused by the growing regional and personal income inequalities — as to entertain any illusions about the possibility of the BJP winning a majority by itself in the Lok Sabha.

After the length to which the splintering of political life has gone, it is quixotic to hope for a reversal of the current trends one fine day. Even the expectation that the multiplicity of political parties, which gives small groups a stake in unstable ruling coalitions, will in time yield place to a two-party system or to two neat coalitions based on the divide between left and right or between communal and secular forces looks more and more like a fantasy. If anything, the new processes — global, regional, communal and casteist — are likely to make this confusion worse confounded. The crucial question is: does the present party system have in it the stuff to create some order out of this bedlam?    


Sights trained on popularity

Sir — It may actually pay to have arch-rivals at the state and the Central governments. The West Bengal chief minister, Jyoti Basu and his Trinamool Congress rival, Mamata Banerjee, have generated hopes in this direction (“Basu offers helping hand to Mamata”, Feb 27). Not only did Basu not criticize Banerjee’s maiden rail budget as is traditional among opposition members, but he also arranged for the immediate acquisition of land for the Digha-Tamluk railway project 24 hours before the budget. And Banerjee replied by giving five of the nine new trains to West Bengal, besides a Sealdah- New Delhi Rajdhani express, five new rail line projects and a handsome sum for the extension of the Calcutta Metro railways. Let’s not have any illusions about it. The will to do good for the people of West Bengal is not uppermost in the minds of either Basu or Banerjee. Both are intent on playing a game of oneupmanship. But if the end result is the allotment of more welfare projects for West Bengal and completion of the innumerable pending ones, then who’s objecting?

Yours faithfully,
S.P. Moitra, Calcutta

Hardly civil

Sir — The strike by the lawyers against the proposed amendments to the civil procedure code and the entry of foreign law firms is unwarranted (“Lawyers and lawkeepers slug it out”, Feb 25). In fact the proposed amendments to the CPC are quite welcome as they will partially mitigate the problems of litigants and save them from entering into never ending legal battles. By abolishing appeal before a high court division bench after the plaint has been once defeated in the lower court, the amendments seek to save time. Also, the law minister should curtail the excessive vacations enjoyed by the higher courts. At present, the higher courts enjoy approximately 175 holidays in a year. That leaves barely six months for the courts to function. In view of the large number of cases piling up, the judiciary cannot afford the luxury of summer vacations, Christmas holidays and suchlike. The government need not develop cold feet in bringing these changes, for they will lead to an overall improvement in judicial proceedings.

Yours faithfully,
Pradeep, Calcutta

Sir — Lawyers all over the country had decided to go on strike to protest against the proposed amendment of the CPC by the Union law ministry (“Lawyers to go on strike for five days”, Feb 19). The CPC, if amended, will imply that an order from a single bench of a high court can only be challenged in the Supreme Court. The proposed amendment will affect the litigants more than the lawyers, since few litigants can afford to fight a case in the Supreme Court. The problem can be best solved by having circuit benches of the Supreme Court in state capitals, or at least in the four metropolitan cities. Incidentally, Pakistan has circuit benches of its supreme court in all its state capitals.

Yours faithfully,
A.K. Dutt, Calcutta

Sir — The report, “Strike trial for legal reforms” (Feb 22) reflects the growing discontent among lawyers against proposed amendments to the CPC. Litigation today is an expensive and time consuming process, often failing to satisfy the litigants owing to inordinate delay. However, amendments to the CPC cannot solve all the problems. In fact, some of the proposed changes will hurt the interests of the litigants, like the proposal that litigants will not be allowed to appeal before the high court division bench once defeated before a lower court bench. The proposed amendments are designed to decrease the importance of the high court and to shift the limelight to the Supreme Court. As a result, the unfortunate litigants who cannot afford the expenses of the apex court will be denied justice. It is ironic that a reputed lawyer like Ram Jethmalani should be the architect of the proposals which might curb the rights of lawyers and litigants alike.

Yours faithfully,
Hrishikesh Chakrabarti, Agartala

Sir — Aniruddha Bose’s article is distressing since he focusses on intricacies that are meaningless in a set-up that effectively perpetuates injustice (“Justice hurried is justice buried”, Feb 23). He ought to have remembered that in this country no judicial proceeding is concluded within a decade. In innumerable cases where injustice has been done, the aggrieved party does not even approach the court for he knows no redressal is possible within the existing system and within a meaningful time frame.

It is preposterous that lawyers should have gone on strike entirely for self-interest while pretending they were acting in the interest of the litigant. The government should not give in to their whims. In addition, it should undertake full computerization of court records. This will promote transparency in routine legal matters. Bose and his colleagues should reflect if they should be acting in defence of a system that has become totally inadequate and now merely extort those it is supposed to protect.

Yours faithfully,
Alok Sarkar, Calcutta

Sir — Lawyers, long known to go on strike at the drop of a hat, seem to be acting sensibly for a change. Notwithstanding the financial pinch they would invariably feel, discontinuing the litigant’s right to appeal to a higher court definitely curtails legal freedom. Is there any guarantee a lower court order would do justice to a litigant?

Yours faithfully,
Shyamaprasad Mahato, Calcutta

Wind in the wrong direction

Sir — This refers to the news item, “US smells Pokhran spill on Pak” (Feb 19). As has been mentioned several times earlier, the Indian nuclear tests carried out at Pokhran in May 1998, were fully contained. There has been no contamination of radioactivity even in the immediate surroundings of the test site as measured just after the tests as well as later on during the environmental surveys.

The tests were very carefully designed to fully contain radioactivity. Meteorological data at the site was studied over extended periods and as a matter of caution it was ensured that wind direction both on the surface as well as at higher altitudes was away from Pakistan and avoided populated areas in India.There is no substance in the story which seems to be mischievously fabricated.

Yours faithfully,
A.P. Jayaraman, head, media relations, Bhabha Atomic Research Centre

Sir — Members of the Press Club, Calcutta are surprised with the report which states the proposal for a railway booking counter at the club tent is likely to be shelved because of objections from the army( “Army blocks Maidan rail counter” Feb 29) The booking counter as sanctioned by the Union railway ministry has already been set up in the club tent. Not a single brick has been made for this. The counter has been arranged for within the existing available space. The counter is to be inaugurated by the Union railway minister. None from the army establishment has any query so far. Such questions do not arise since there has not been any construction or expansion.

Yours faithfully,
Raj Mithaulia, secretary, Press Club, Calcutta

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