Editorial 1/Against the grain
Editorial 2/Doff the cap
Agenda radical and hidden
Letters to the Editor

 
 
EDITORIAL 1/AGAINST THE GRAIN 
 
 
 
 
For quite some time now, policymakers in India have been remarkably successful in warding off inflationary pressures. The economy has had its ups and downs with growth rates plummeting in the wake of the east Asian meltdown, but the price level has been remarkably stable throughout this period. The annual rate of inflation has rarely crossed the five per cent mark. Are we now entering a new phase? This question arises because the annual rate of inflation, calculated on the basis of the wholesale price index, has for the first time in 70 weeks crossed the six per cent mark for the week ending April 22. A disaggregated look at the index suggests that there is no immediate cause for panic. The most important reason for the sharp increase in inflation has been the steep increase in electricity tariffs, which has gone up by 15 per cent. Since electricity charges fall within the class of administered prices, there is every reason to believe that electricity tariffs will remain stable in the near future. In other words, any further increase in the level of inflation must come from other sources. In this context, it should be added that indices of two of the three major groups — primary articles and manufactured products — actually declined during the week. The index for the third group — fuel, power, light and lubricants — naturally increased because of the steep rise in electricity tariffs.

However, the government cannot afford to ignore the possibility of a fresh round of inflationary pressures later in the year. It now appears that for the first time in several years, the rain gods are going to be uncharitable. Since the current monsoon is forecast to bring inadequate rainfall, the harvest will be affected. Despite huge expenditures on irrigation, Indian agriculture is still heavily dependent on rainfall. An appreciable drop in food grains output has almost always been associated with sharp increases in prices. Cash-starved governments with empty granaries have been powerless to combat the forces of excess demand. However, there is every reason to believe that a watchful government can in the present situation mount effective supply management tactics to counter inflationary pressures. The government is lucky to have huge stocks of food grains lying in the warehouses of the Food Corporation of India. It can use these surplus stocks to augment the current harvest.

But the important issue is whether the government will act in time. If it waits for supply shortages to become apparent in the form of rising prices, then it will also have to contend with speculators. The speculators may aggravate supply shortages by withholding stocks from the market. Once the government is armed with preliminary estimates of the actual shortfall in the current year’s grain output, it can immediately start releasing food stocks into the market. This timely release of food grains will ensure that food prices are stable from the beginning. In this case, speculators will not even begin hoarding operations. In this connection, it is also important for the government to do some homework on the delivery system. Governments at all levels typically mess up drought relief measures because of the lack of adequate planning. The exercise to release vast quantities of food grains into the domestic economy has some resemblance to drought relief, and the government must not be caught on the wrong foot.    


 
 
EDITORIAL 2/DOFF THE CAP 
 
 
 
 
The insurance regulatory development authority deserves kudos for diluting the absurd equity limit placed on foreign insurance investment. The limit had been awkwardly placed at 26 per cent of total equity. At that low level, most foreign insurance companies were expected to refrain from investing more than nominal sums. As important, they would not bring their marketing and financial expertise. However, the insurance authority has decided Indian companies investing in insurance, but whose ownership is partly foreign, will not fall under the 26 per cent equity cap. This is just as well. Otherwise, even well known Indian firms like the Housing Development Finance Corporation would have been straitjacketed by rules meant for foreign firms. This sort of silliness is not dissimilar from what has happened to telecommunications, where holding companies are used to get around the 49 per cent equity cap on foreign companies. With billions of dollars in foreign money sloshing around India’s stockmarket it is becoming increasingly difficult to distinguish between what is Indian and foreign. The situation will become even more blurred as Indian software firms begin buying up Western startups. It is time to accept that these caps and curbs on foreigners are little more than posturing. They cannot be enforced, and if they were, the purpose of liberalizing a sector would be lost.

The Indian insurance sector needs infusions of foreign capital and expertise more than most. The nationalized insurance companies are dinosaurs. They have tapped only a small fraction of India’s potential clientele. Their ability to calculate risk both for policyholders and their own investments is primitive. Their conservatism is one reason few Indians have health insurance coverage and none have crop insurance. The returns they give are so poor that the share of financial savings that Indians put into life insurance has been stagnant at about six per cent since 1991-92. Perhaps most damaging has been that insurance companies worldwide like to put their money in safe, long term investments like infrastructure. This has not happened here. Instead, infrastructure has been starved of funds despite the insurance sector’s Rs 400 billion annual turnover. Insurance is today a brake on the economy. It is time to make it an engine of growth.    


 
 
AGENDA RADICAL AND HIDDEN 
 
 
BY ASHOK MITRA
 
 
Is it buffoonery, or something more invidious that is at work? The Union law minister was the picture of innocence: what, pray, is wrong with a constitutional review committee? He is prepared to give a prior undertaking — the changes the committee might propose will not affect more than five per cent of the Constitution.

The law minister could not have been serious. In case he was, woe betide the country, for how do you satisfy the conditionality of redrafting only five per cent of the Constitution? Amending five per cent of the total number of articles in the Constitution? Altering the contents of five per cent of the total number of pages covered by the Constitution? Or are the proposals to aim at affecting five per cent of the aggregate fiscal and monetary resources flowing from the consolidated fund of India? Or could it be that the changes are intended to influence five per cent of the items in the Union list of the sixth schedule? Or five per cent of the items covered by the state or concurrent list?

The underlying issues are much weightier than what the law minister’s frivolity hints at. Should the orbit of five per cent he has in mind cover the relevant articles touching the directive principles of state policy and fundamental rights, all of us will be in very deep trouble indeed.

The law minister cannot therefore avoid further interpellations. What sort of general guidance has the government given to the committee that has been set up to review the Constitution? The committee obviously cannot operate in a vacuum. The focus therefore has to be on the contents of its terms of reference. In all official documents, these terms of reference are usually drafted with elliptical wording; each of them can be interpreted in 20 different ways. It is relevant against this background to enquire whether the authorities have indeed a hidden agenda. The eminent judicial personality named as the chairman of the committee may not even be aware of the processes of the official mind. There could well be attempts to take him for a ride, with the prime minister not being in the know, and not even the law minister, for there is a tide in the affairs of men which makes it supposedly unstoppable.

At this juncture, further questions are posed though. The hide and seek the government plays with the purported purpose of the committee raises a whole series of questions. Do the authorities nurture a surreptitious hope that while Kesavanand Bharati will formally remain sacrosanct, certain amending passages could yet be smuggled into the relevant articles and the exercise would be as good as sabotaging the basic structure of the Constitution from within? Or is the appointment of the committee merely a ploy to postpone implementing decisions the authorities do not like? For it is atrocious that the Sarkaria commission’s recommendations, submitted a full decade ago on a number of crucial issues, are yet to be implemented.

Successive governments at the Centre, including the United Front regime, cannot escape the blame for this gross procrastination. To prove its bona fides, the present government could have first cleared the decks by announcing its verdict on the Sarkaria commission recommendations. That would have connoted progress of a major sort and dispelled suspicions on the motives and intentions of the government.

Is not a further comment in order? In case the authorities venture to claim an open mind, could they not have exhibited a degree of catholicity in the composition of the commission? It is the left who had, in the post-Emergency years, spearheaded the agitation for restructuring of Centre-state relations through suitable amendments to the Constitution. Many misgivings could have been dispelled if at least a couple of individuals included on the committee were from the radical side of the political divide.

For there are ways and ways of playing the game of redoing the Constitution. Twenty years ago, enthusiasts, for instance, concentrated on the demand for scrapping Article 356 and thereby ensure the demise of the authoritarianism latent in the Constitution, summarily approving the removal from office democratically elected state governments. The invoking of the provisions of Article 356 to remove the Bharatiya Janata Party regime in Uttar Pradesh in the wake of the Babri Masjid demolition has induced second thoughts in some minds on the usefulness of the article. It is however the principle of the issue which should matter. Even with Article 356 not being around, it should still be possible, for instance, by availing of Article 256, to cope with a state government which has travelled beyond the pale of reason.

There are other hardy annals the debate on constitutional reforms is likely to provide a renewed impetus to. For example, those chewing their heads off on the issue of deficit budgeting may appear on the scene and suggest a constitutional amendment which sets a limit to the size of the fiscal deficit, such as in terms of a maximum percentage of gross domestic product. They will however turn out to be no fiscal wizards. Where the government enjoys a comfortable majority in Parliament, a constitutional amendment indicating an upper limit to fiscal deficit is unlikely to be little more than an irritant.

Should the authorities feel the need to breach the constitutional barrier, they could simply walk into Parliament, propose to raise the ceiling of the deficit and hawk the necessary amendment with the state legislatures. Should the background provide a conflict-like ambience with this or that neighbouring country marked out as the number one enemy, the amendment is bound to be approved with lightning speed by both Parliament and the state legislatures.

And if the claim proferred is to introduce radical changes while encouraging the process of reviewing the Constitution, what about a couple of suggestions from, so to say, the floor? Let the focus be on the defence budget. For a poor country the most effective defence policy, it has been strongly maintained, is to implement a wise and thoughtful foreign policy which will mitigate the need for additional defence outlay every year, including outlay for expanding nuclear capability.

Pokhran and Kargil, in the view of the peace-mongers, have set the nation on a wrong track. The milieu is comprehensively hostile. Even so, this cheeky, idealistic crowd would perhaps not restrain itself from mentioning what it considers to be changes essential in the Constitution.

At least some of this crowd would love to see the insertion of a new article which prohibits defence expenditure each year from exceeding four per cent of the GDP. Some others would like the instrumentality of the Constitution to put a seal of approval on a fiscal arrangement whereby the public outlay on education is not allowed to fall below six per cent of the GDP. Will the committee set up to review the Constitution have the catholicity of attitude to consider incorporating such limits, positive as well as negative, on individual items of public expenditure?

Who knows, once the committee’s work gets going, it will develop an impulse of its own, spawning a built-in uncertainty where it will all end. Satisfactory, as Nero Wolfe might say. But then, even the law minister perhaps does not know of the Hidden Agenda.    


 
 
LETTERS TO THE EDITOR 
 
 
 
 

Women of some importance

Sir — The Andhra Pradesh chief minister, N. Chandrababu Naidu, seems to have forgotten that hell hath no fury as a woman scorned (“Women put Naidu through flashlight trial”, May 7). Women in Andhra Pradesh have every reason to lose patience with the Telugu Desam Party. First, Naidu betrayed his female electorate by lifting the ban on the sale of liquor that had earned him their overwhelming support and first brought him to power in 1992. Adding insult to injury, he went on to repeal the two rupees ceiling on prices of foodgrains. He compounded his crime by failing to mitigate the hardships from crop failures and the severe drought in some districts of the state. Naidu probably thinks that infotech will solve the basic problems of the poor, like hunger and thirst. That is as it may be, but governance is also about perceptions. Naidu should at least give the impression of caring, if he does not want to lose the votes of the female electorate and thus be deprived of the chance to bring about his infotech revolution.

Yours faithfully,
Swati Banerjee, Hyderabad

Officious out of office

Sir — Instead of visiting Gujarat, Rajasthan and the drought affected areas of the country it is amazing that the four former prime ministers, I.K. Gujral, Chandra Shekhar, H.D. Deve Gowda and V.P. Singh, came to Calcutta to have dinner with the chief minister of West Bengal, Jyoti Basu (“Four former PMs to meet Basu in city”, April 29).

The least they could do is show evidence of a social conscience to deserve the handsome allowances they draw from the government. After all, London is almost Singh’s second home just as it is Basu’s, given the frequency with which he goes to the city for medical treatment.

None of these politicians knows anything about the conditions of the poor in India and yet talks about “mass awakening” and “saving democracy”. The people have elected the National Democratic Alliance, it is they who will throw it out if it fails to deliver. These men of yesterday should not be allowed to hatch a conspiracy to confuse the people as they have done in the past.

They should gracefully accept the fact that they are political has-beens. These men profess to be concerned about the so called communalism among Hindus, but they refuse to see that Islamic fundamentalism is more dangerous in the Indian subcontinent.

Before asking Basu to lead the “third front”, they should conduct a thorough tour of West Bengal to see how Basu has made the state into a “Waste” Bengal. Communism thrives on poverty. Violence by the Communist Party of India (Marxist) cadres has stemmed any mass awakening in the state. The former prime ministers do not know that Basu’s cadres have broken the backbone of the Bengali spirit.

It is time the question is posed as to whether the former prime ministers should be allowed to thus interfere with the functioning of an elected government. If they remain active in politics or contest elections, they should not draw the allowances of a former prime minister.

Yours faithfully
Sunil Kumar Pal, London

Sir — V.P. Singh has broken his sanyas by courting contempt of court and opposing the Delhi high court’s order to evict public land of jhuggi dwellers. This is another of the many instances when Singh has tried to get some cheap publicity and votes by siding with the misguided actions of people. In reality, Singh does not care much for the poverty of the slum-dwellers. If he did, he would use his influence to make them adopt measures in order to control the size of their families. He could have also tried to get a legislation passed enforcing family planning and barring jobs in the government sector to all those with more than two children. But why should politicians like Singh want to push family planning, when the greater the number of children born to the poor, the bigger the politicians’ vote banks?

The three other former prime ministers have joined hands with Singh out of frustration at not being able to regain power. They are exploiting the poor and illiterate electorate who have no idea of the vast assets they possess and the public money wasted on them. The government may not be able to do much to rein them in, but the Delhi high court should enforce the implementation of the eviction order in the interest of the public.

Yours faithfully,
Subhash Chandra Agrawal, Dariba

Sir — After five years of political hibernation, the raja of Manda has re-emerged in the political scene to fight for slum-dwellers in Delhi and exhort them to protest against their eviction from land they had encroached upon (“VP hope for rag-tag army”, April 24). As a former prime minister, V.P. Singh’s action seems particularly wrong. During his term in power, the nation had witnessed violence and caste tensions because of his Mandalite politics.

Now, the man on whom crores are being spent from the public exchequer for medical treatment in London, accommodation and security, is trying to pose as the messiah of the poor with his “Jana jagaran” programme. Perhaps he thinks this is the best way to grab the limelight again. Singh can hardly hope to fool Indians with his latest caper.

Yours faithfully,
Sasanka Sekhar Adhikary, Hooghly

Stick out the tongue

Sir —Bengali has been introduced recently as the official language in state government offices. Before embarking on such a major decision we need to question whether this move will change anything. There also appears to be some ambiguity in transcribing the English names of a few heritage buildings in the city like Writers’ Building and the Calcutta police headquarters to its literal Bengali form. On the main gate of Writers’ Building is prominently displayed the Bengali translation of its name, “Mahakaran”, while the Calcutta police headquarters bears the name “Lalbazar”. What is the need to change the names by which these buildings have been known since time immemorial? It is also a matter of tampering with the history.

Ironically, the word “ Mahakaran” is not a literal translation of Writers’ Building. Also the English to Bengali translation of Calcutta Police Headquarters should be “Kolkata Police Sadardaftar”, not Lalbazar. The Constitution lists 19 regional languages (including Bengali), and lays down Hindi as the national language and English as the link language. Thus the move to introduce Bengali for official purposes would alienate other linguistic groups in this state.

I wonder whether any minister in the state government would put his children in a Bengali-medium school. Rather they would insist on their learning English and provide them with the best of education abroad.

Yours truly,
Sankar Lal Singh, Calcutta.

Sir — The Left Front’s decision to use only Bengali for all official work, coupled with the sorry state of English teaching in state run schools, will only lead to a rush for the private English medium schools which have mushroomed in recent years. An English-knowing privileged elite will be created who will be preferred for jobs in different institutions.

The reality today is that one cannot avoid English if one wants access to the latest information on science and technology, international politics and economics. Rabindranath Tagore had advocated the mother tongue as medium of education as it would be easier for students to grasp and learn. However, I do not believe he asked anyone not to learn English. He knew the language very well. Bengali intellectuals, and through them Bengali literature, have gained from the study of English works. Given the advantages of interaction between languages and cultures, it is difficult to perceive what we stand to gain by cutting ourselves off from the rest of the world.

Yours faithfully,
Deboprokash Bhattacharjee, Calcutta
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