FOOD SECURITY IN INDIA; ARE WE UNDERNOURISHED?

SWAMINATHAN;HARBINGER OF GREEN REVOLUTION

One UN report on food security in India has said that about 40% of the children below age of years are undernourished. This report has been prepared after a comprehensive survey by World food programme and

M.S.Swaminathan research foundation.

Swaminathan, a noted Agricultural scientist and harbinger of green revolution is considered as an authority in agriculture and food programme, therefore this report has been taken very seriously in all quarters including the government. This report further reveals that about one third of the entire population i.e. about 40 billion men and women suffer from energy deficiency due to mal or under nutrition. Presenting a state wise data, the report says that Jhakhand is the worst state and has lagged Orissa behind in this field. Previously Orissa was at the last position vis-a-vis food security. States like Punjab, Haryana, Himachal, Tamil Nadu etc have performed well and improved the situation.

The report suggests certain measures like expansion of PDS system and recommends that in place of a Targeted PDS, it should be made universal PDS so that the vailablity of food to the rural areas is made universal and made much more convenient and institutionalised.

The report has praised the schemes like NREGS and other rural developmental wage oriented programmes and emphasised the need of their better and efficient implementation so that the fruits of these programmes are reached to the rural population which constitutes about 56-60% of the total population. The report further recommends to the governments that since the food production is expected to touch record 230 Million tons in this fiscal, it should be ensured that the public distribution system be made much more wide and universal. Malnutrition and undernourishment are the stigma on our society especially when we boasts of high growth rate and a robust economy. The report urges the government that the abhorrible malnutrition is erased from the society.

SWISS BANK TO DISCLOSE HIDDEN TREASURE

UBS, CITADEL OF PROSPERITY BUILT ON BRICKS OF POVERTY

The world economy is in deep crisis. It requires huge amount of liquidity to tide it over. It is amply clear now that the market has plummeted due to excessive financial leverage. According to one estimate, in 1980, the leverage was up to 108% of the global GDP. In fact the trend of twisting and extracting excessively from the economy even beyond its limit had started after 1990s itself. Initially, this trend paid handsomely to the money makers and finance mangers and they thought that it is the secrets of economic success. The so called boom in sectors like housing, IT, service, capital markets etc was perhaps due to this leverage also. The bottomless greed of money makers, MNCs and TNCs brought the leverage percentage up to sky soaring level of 600% of the global GDP in 2007. It is estimated that in 2007 global GDP was about 54 trillion USD, but the financial and banking sectors stretched this amount to six hundred times. Thus the growth of entire global economy was brought to stand on the foundation of sands, which was bound to sink and implode. 

Therefore, the World desperately needs huge liquidity and wealth in order to restructure, revamp and rebuilt its global financial architecture. The American GDP is about 13-15 trillion dollar. According to economic experts, the USA is in desperate need of liquidity in order to ensure that the TARP and second stimulus package get going and help US economy recover from recession. 

It is in this background the US administration is tightening its screws on the tax evaders. In a daring move, the US administration sought information from the United Bank of Switzerland (UBS) regarding the American clients who have evaded tax from the Internal Revenue Service (IRS) and deposited their money in this clandestine off shore Bank. Initially, the UBS vehemently opposed this move and declined to disclose the names of clients and their amounts in the bank account on the pretext of its age old policy of secrecy and confidentiality conferred on it under Swiss Banking Act,1934 

The US administration toughened its stand and made UBS bow down. Now the Bank’s Chairman Peter Kurer says that “We accept full responsibility for these improper activities, he added, suggesting that client confidentiality, to which UBS remains committed, was never designed to protect ‘fraudulent acts’. Now the Bank is ready to disclose the names and the turnover of 250 clients immediately and assured the US administration to divulge some more names in near future. The Bank is also ready to pay 780 million dollar as penalty to avoid possible launching of prosecution against it. 

This whole success story on part of US administration has set a good example for countries like India, the citizens of which have reportedly deposited 1456 billion dollar in UBS. According to the data of Swiss Banking Association (SBA), in 2006, Indian nationals reportedly held the largest quantity of illegally stashed money in Swiss Bank, if this data is to be believed, and there is no reason of disbelief, Russians have deposited 460 billion dollar followed by British 390 billion dollar, Ukrainians 100 billion dollar and Chinese 96 billion dollars. These figures speak much than what it appears to be. This is why it is said that India is rich country where poor citizens live. 

Ours is developing economy and we are proud of it. Even in this period of global meltdown, we have been making impressive growth, second to China only. But in terms of GDP, we are far behind than that of US, China, Japan etc. It is yet to cross 01 tn dollar at the current rate of convertibility. If the deposited huge amount of Indian Nationals is taken true, it is 1.8 times the GDP of our country. What a massive drain of wealth! Alas we could have brought it back. In fact this drain of wealth is much bigger than those of the British colonial period. Economic Historians have estimated that till Independence the Britishers had been able to drain our wealth from India equal to 5% of GDP, whereas; in post independence India it is 108% of the GDP. What a tragedy! 

Like Americans, we too desperately require huge liquidity. We have injected massive stimulus package into the economy for a ‘jerk start’, for which we require more and more money. The Indian Infrastructural Finance Company Limited (IIFCL), which provides fund to carry out infrastructural projects require money. The ambitious programne of National Rural Employement Guarantee Schemes (NREGS, which has helped our rural economy become stronger and helped increase the purchasing power of billions of people in India requires more and more money so that it can yeild much more better results. Thus, to see economy moving and rural developmental schemes get going, we require money. The million dollar question is, from where will the money come? We cannot increase the tax rate, because it is counterproductive. We have already planned to launch GST from April, the next fiscal which is expected to add 1.4% additional increase to the GDP. We have to have tax regime which provide relief to the honest tax payers.

We have, therefore, to take recourse to similar measures as Americans have taken. If we can notch hefty amounts from the UBS, it can be of immense help for our ailing economy; after all 1456 billion is an amount which can change the fate our nation. Some economists are of the opinion that the liberalisation has increased the pace of flight of capital and the size of drain of wealth kept growing with growth of economy. Time and again this issue has been raised but every time the power brokers have succeeded in thwarting the move. No serious effort has so far been made to see that the drained wealth of nation is brought back. There must be a political audacity to raise this issue and make meaningful effort in this regard. India must stand tall and extract information from UBS and other such offshore Banks with regard to clandestine bank deposits by Indian Nationals. We must talk to them in a peremptory tone and demand back the illegally drained wealth of the Nation. It is high time; India must stand firm with a determined body language so that UBS behaves with us at par with US. 

This issue can be raised on world forums including G-20 or G-7 summits. How can a Nation or a financial institution like UBS be allowed to eat up the vitals of ours in the name of century old obsolete and colonial legislation? Time has come for the international community also to exert pressure on Switzerland and see that the policy of secrecy and confidentiality of UBS and other such offshore Banks be scrapped. It does not go against the Laissez-Fairre or free market economy, after all unethical financial practises and bottom less greed have already done tremendous damage to the world financial order beyond repair. Economies are made for the welfare of citizens in particular and human kind in general. How can unethical trade and financial practises be allowed to swallow the destiny and right to live a descent life of billions of poor people who still starve, while the Banks are spilling over with money and gold?

ASSETS OF UBS AND OTHER SWISS BANKS- It is astonishing to know that the total assets of UBS, the largest of the Swiss Banks, is roughly 2 trillion dollar which four times the GDP of Switzerland and 9 times that of Iceland. If assets of all Banks in this country are taken into account, it is 6-7 times the GDP of Switzerland. Comparing with countries like America and Britain, the assets of all the Commercial Banks in these countries are hardly 70% the GDP of these countries.

THE EDIFICE IS CRUMBLING- The sources in the Banks reveal that the outflow of money from these Banks are increasing. The UBS has made certain changes in the top management also. Peter Kurer is reported not to contest the forth coming election for the top job, the Chairman, this year. It seems that the old edifice is crumbling and days are not far when the entire principle of 'privacy'or ' secrecy' on which these Banks are standing would be put to question.

IS LAISSEZ-FAIRE IN REVESE GEAR?

( BROWN AND SARKOZY,IS HONEYMOON OVER?)

THE world economic down turn has started showing its ugly and horrendous faces in social spectra also. The impact of this recession is gradually percolating down vertically and spreading horizontally across the global village. The economic depression, the product of U.S.A., is being exported throughout the length and breadth of globe and letting its jitters felt in all sections of the society.

In Europe , France is witnessing the worst ever street-protests against the alleged failure of the government in tackling the economic slowdown and mitigating the woes of its citizens. President Sarkozy is facing a grave challenge and the sweet memories of his honeymoon with Bruni are fading. This unrest has strained his relation with Gordon Brown also. Britain on the other hand, is also witnessing protests and anti-government demonstrations. “British company only for British employees” is being advocated for, very staunchly. In fact British companies have been hiring cheap paid employees from other European countries, are permissible in European Union Law, and are becoming bone of contention.

Similar social and political unrests are being witnessed in Russia and in many other erstwhile members of Warsaw Pact countries. Prime Minister Putin and President Dmitry Medevedev have been facing rough weathers in Russia. Putin, once hero of Russian people, whose popularity was said to be at a soaring level, when he quitted the presidency, is also under tremendous pressure.

Even in America, people are taking to streets and demanding tough, decisive and result oriented steps so that their lives are brought back to normalcy. In spite of Bush’s 700 billion dollar TARP (bailout package) more than 18000 jobs are being lost every month. According to America’s own labour department statistics, the un-employment rate is about to touch a double digit figure, a all time high in the post depression economic history of the country. Obama’s historic coronation to the Whitehouse seat has instilled a huge amount of hopes, which is both an asset as well as liability for this first African-American non-white president. His 836 billion dollar US Stimulus package will take few more months to make its impact felt in the socio-economic arena. Till then the American society’s patience will be put to test.

The Asian dragon, the republic of China, hitherto unscathed from the scratches of the down turn is also undergoing socio-economic as well as political upheavals. The massive 900 PLUS billion dollar stimulus package has been put on top gear of the economic vehicle. The thirst, the government says, will be on ways and employment oriented infrastructural developmental activities like Rail and roadways constructions. In spite of this the growth of this Asian Giant has shrinked to 7.5 percent. The toys industries, one of the biggest exporters of the world, have suffered very badly. It has butchered the employment to such an extent that the stimulus package’s after effects are also being neutralised.

India, one of the fastest growing economies of the world, too could not remain insulated from the viral infection of the global economic ailment. The massive pumping of liquidity into the financial systems through frequent rate cuts in CRR, SLR, REPO and REVERSE REPO RATES have applied some ointments on the bleeding wounds of economy but still a lot is required to be done. The stimulus package of Montek has a long way to go before it reaches to the tattered masses. The brunt of the slowdown has taken millions of jobs head here in India also but the social and political unrest at a magnitude similar to those in other parts of globe is not imminent here. Thanks to the accustomed Indian psyche and its endless power of tolerance. The institutionalised and bureaucratised network of social security system has done a commendable job here in this country. NATIONAL RURAL EMPLOYMENT GUARANTEE SCHEMES (NREGS), the brain child UPA government, has come as a huge relief for the people living below the poverty lines in the countryside. The massive allocation of more than 60 thousand crore rupees over a period of 3 years has done miracles in the rural economy of this country in the sense that it has provided pennies in the pockets of billions of people. It worked on KEYENESIAN theory which is based on the principle of government expenditure vis-a-vis the purchasing power of people.

THE TREND OF PROTECTIONISM -The WTO has released a report that says that about 16 countries have take protectionis measures since September the last. Many experts believe that these anti-free trade measures will provoke retaliation from other countries also and may led to reveral of the entire process of free trade capitalism across the globe.The trend of protectionism is set in USA also, ‘Buy American’clausein America’s 819 billion dollars stimulus package smack of protectionism. US administration's decision regarding H-1B visa restrictions are not in congruent with the policy of ‘lazes- fairre’, a policy which America do not get tired of boasting. One 'Patriot employer Act' is on anvil, which will give incentives to the employers taking some protectionists and social security measures with respect to providing employement in USA. Many Europeans are tightening their immigration regulations with a sole motive of saving their economy and providing employment to their own citizens. America has imposed an undeclared ban on Chinese goods. The Japanese economy has shrunk to almost negative growth due to shrink in exports, the main growth factor coming in Japanese economy, to almost Zero level. This is suggestive of the fact that the importing countries have stopped Japanese goods into their countries. 

Many Europeans nations have resorted to such similar moves which go against the basic tenets of capitalism. Germany for example have provided huge subsidies to its industries and sought to protect its economy from the onslaught of the recession. Chinese have restricted imports and is providing unprecedented protection. President Sarkozy has hinted that some protectionist steps would be taken to save the ‘French Detroit’, move opposed by many European nations themselves.

Canada, Mexico, Brazil, Argentina, Russia, Ukraine, Japan, South Korea, etc all are on similar move. The sentiment is running high across the world in favour of protectionism and the ideals of free economy are being abhorred now.

The excessive financial leverage and excessive greed have ruined the financial fabric beyond repair. According to an estimate, the financial leverage in 1980 was 108% which rose to 600% in 2007 and lending was done of worth 600 trillion dollar whereas; the total Global GDP was only about 55 trillion dollar. What an excessive leverage and what as mad race it was.

The champions of ‘European Unification’ ‘Under One Europe’, one currency and one parliament under ‘European Union Umbrella’ are sitting quiet now. The global economic forums like WTO and World Economic Forum at Davos seem to have postponed their ‘Unified world market and non-subsidised’ world economy plans. All the motions, it seems have been kept in abeyance, thanks to Xenophobia everywhere.

IMPACT ON INDIA DUE TO ‘BUY AMERICAN’ CLAUSE- the Indo-US trade has witnessed spectacular rise over a decade. According to the Ministry of Commerce, the export from India to USA has been of 160 Billion dollar in 2007-08 which rose to 200 billion dollar in 2008-09. The chart below gives the picture of more than a decade-

1993 1994 1995 1996 1997 1998 1999 2000 

India’s Exports 4,551 5,302 5,736 6,169 7,322 8,237 9,071 10,686 

India’s Imports 2,761 2,296 3,296 3,318 3,608 3,564 3,688 3,663 

Turnover 7,312 7,598 9,032 9,487 10,931 11,801 12,759 14,349 

Balance (+) 1,790 3,005 2,440 2,851 3,715 4,673 5,383 7,023 

(* Source: US Department of Commerce, Bureau of Census) ,

The above figures suggest the increasing trend of the bilateral trade over the years which have reached more than 200 billion dollars. As far as the composition of the trade is concerned, India's exports to the US have been rising mainly on account of significant increases in the exports of diamonds, textiles and ready-made garments, machinery, carpets, footwear and leather products, dyes, iron and steel products, chemicals, edible fruit and nuts and spices, coffee and tea. Items such as, cut and polished non-industrial diamonds, jewellery, textiles and clothing, carpets, shrimp and other marine products, footwear and leather goods, iron and steel, and cashew nuts constitute over 70% of total Indian exports to the USA. 

The volume of these exports is expected to witness a downward trend owing to the restrictions imposed in the stimulus package. 

As far as import of India from USA is concerned, there has been a change in the composition of India’s imports from the USA also. Due to increase in our food grains production especially wheat and edible oils, the imports of these items from the USA on a regular basis have stopped. Crude oil, which remained one of the highest imported items from USA in 1980s has been gradually phased out.

At present, we import from America, items like machinery including project items, fertilizers, aircraft and aeronautical equipment, medical equipment, and organic chemicals etc. undoubtedly, if our exports experiences contraction, we would resort to contraction of imports from USA also in order to see that the balance of trades in not slated excessively in favour of USA 

USA is the largest trading partner of India. Share of USA in India’s export is 17%, and its monetary value as we have seen is more than 200 billion USD. This economic meltdown had already adversely affected India’s export in general and export to USA in particular. According to Federation of Exporters Association (FOE), the exports from India are already showing signs of decline due to this slowdown syndrome. Figures suggest that it is experiencing a decline of more than 15%.

The bilateral trade has been galloping with unprecedented pace due to variety of reasons, thanks to the cementing of bilateral ties over a number of issues including strategic and nuclear matters.

Although, this protectionist clause will help improve the situation in the domestic demand in America on short term basis, but in the long term, this would affect adversely the American trade also. If exports from this country plummets, similar retaliatory measures are taken by host of countries. 

1. EFFECT ON IT-BPO AND SERVICE SECTORS- the service sector constitutes 50% in our GDP, meaning thereby that this sector has witnessed boom over a decade or so.

Over a period of time, the export of this sector increased by 33.5% amounting to 8.4 b USD in 2007-07, it is expected to reach 10-11 b USD by the end of 2007-08. According to National Association of Software and services Companies (NASSCOM), the number of employees working in BPO-IT sector in India is under-

Year Number of employees

2003-04

2,16,000

2004-05 3,16,000

2005-06 4,15,000

2006-07 5,53,000

The current figure is certainly much more and is increasing day by day. According to one estimate it has touched a figure of 1 million. They were getting salaries worth 1 b USD during the year before last year and naturally it has increase substantially in 2008-09. According to one estimate, about 82% of US software companies prefer Indian software professionals for obvious reasons. 

The buy American clause would be adversely affecting this outsourcing industry also and Obama has made it clear that the American companies which outsource would not get tax reliefs. Message is clear, they would be discouraged from outsourcing the job to the Indian software sector in particular and service sector in general.

GOVERNMENT GOES TOUGH ON CORRUPTION

HARBINGER OF HOPES IN THE TATTERED STATE

Government of Bihar is coming out with a comprehensive legislation to confiscate assets of the public servants against whom case (s) of ‘Disproportionate Assets’ have been filed and charge-sheets have been submitted in the court of law. A bill in this regard is likely to be tabled in the forthcoming budget session of the State Legislative assembly itself.

While speaking on a seminar organised by DFID, the CM reiterated his commitment to weed out corruption from governance and hinted at this move. He has geared up the vigilance sleuths in the state and the number of trap cases by the state vigilance bureau has increased many folds. As many as 60 trap case with 68 arrests in 2006, 29 trap cases with 37 arrests in 2007, more than 60 trap case with 70 arrests in 2008 and 7 trap cases with equal number of arrests have been made in 2009. Subsequently cases of Disproportionate Assets are launched but thanks to the slow pace of trial a very few could actually be convicted. Apart from this bureau, one Special Vigilance Unit (SVU) has been set up to take anti- corruption measures against high officials. This Unit has also made some headway with respect to recover huge amount of wealth from the possession of officials including several IAS and IPS officers. Their assets could not be confiscate due to non-availability of any specific law in this regard. To sort out this problem, special courts are to be set up and speedy trial would be started, hinted the sources at the state secretariat.

On the other hand, rules are also likely to be amended and the power of making appointments of Teachers would be snatched from the Panchayats and ULBs representatives very soon. The CM received innumerable complaints of corruption and nepotism during his Vikas Yatras against the Local representatives especially Mukhiyas of the Panchayats. Two years back, the CM had formulated the policy of appointment of Teachers (Bihar Panchayat and Nagar Nikaya shikshak niukti niyamabali’) by Panchayati Raj and ULBs representatives with a utopian idea of devolution of powers to lower level of functionaries as enshrined in the constitution. But this effort has failed miserably due to rampant corruption in the panchayati raj and ULBs institutions. Many academicians are of the opinion that the qualities of the ‘appointed teachers under this scheme’ are hopelessly poor because it is based on ‘counselling’ and not on ‘tests’, which has given ample opportunities to the representatives to play foul in this game. This has adversely affected the qualities of primary education, many people lament.

MY IMAGE WHILE WRITING ARTICLES

Om Prakash Yadav

GOODS AND SERVICE TAX;A SILENT ECONOMIC REVOLUTION

(VIJAY KELKAR, CHAIRMAN OF 13TH FINANCE COMMISSION)

1990s marked the beginning of new era in the Indian economy. The period was marked by deregulation, de-licensing and decontrol. This era of liberalization formally eschewed the Nehruvian socialistic pattern of economy and policy of liberalization, globalization and privatization (LPG) became new mantras of development. The formulation of new economic and industrial policy spurred the growth and India could shed its stereotype image of Hindu growth rate. 

We brought in reforms in almost all sectors of Economy; this led to rapid growth in sectors like service, manufacturing, capital market and finance. The late 1990s witnessed spectacular growth in IT-BPO sector and gradually the culture of corporate governance as well as finance capitalism ushered in our country’s economic arena also. But tax regime is one area where minimum amount of reform have been done and in fact it represents the grotesque of the erstwhile economy fettered with obstinate regulations. With the economic growth registering around 7-9%, over a decade, India needs to bring about a massive overhauling of existing tax regime. 

At present, this regime is marked by a plethora of taxes collected both by States and the Centre. This system of taxation is cumbersome, complicated and taxing as well as unfriendly to honest tax payers also. Sometimes, the amounts spent on collection of taxes are more than that of collected tax itself. The taxation across states is also, many a times, non-rational, impractical and unscientific. 

India is now all set to introduce a new tax regime from 2010 fiscal. The 13th Finance Commission under Vijay Kelkar has been working on this issue for quite some time. It has proposed a new taxation regime called goods and service tax (GST) and is being finalized by Empowered Committee of State Finance Ministers (ECSFM). If all goes well, this new system would subsume the older one. Kelkar is optimistic on the basis of his meticulous calculation about the encouraging outcome of this proposed tax regime in terms of amount of collection. He said that the values of GST reform will be about 500 billion Dollars i.e. half trillion dollar. If it proves true, it is going to bring about a silent revolution in the history of economic development of India. It is worth mentioning that India’s GDP in 2007-08 fiscal is about 57 lac crores, which is equivalent to about 1 trillion Dollars at current rupees value. It is being estimated that the GST will add 1.4% additional growth to the GDP. 

The present pattern of contribution of different sectors to the GDP in terms of percentage is vastly different from what it was in pre 1990s. for instance, the Service sector’s contribution has swelled up to 50% and that of manufacturing sector stands at about 25%, whereas ; the contribution of agriculture has been drastically reduced to 24-25% in the GDP. This changing pattern is suggestive of the fact that we ought to evolve a new and modern but unified tax regime which should be in commensurate with the changing times. It is in this perspective the tax regime is urgently required to be overhauled, simplified and unified. 

HOW WILL THE GST HELP IN SPUR IN GROWTH AND INCREASE THE VOLUME OF COLLECTION.

There is a saying in Kautilaya’s Arthshastra, the first book on Economics in the world, that the best taxation regime is that which is based on principle of “Liberal in assessment and ruthless in collection”. The proposed GST seems to be based on this very principle.

Firstly, at present, due to multiplicity of taxes being collected through an inefficient and non transparent system, many areas are either under-taxed or non-taxed or over-taxed. The introduction of GST is likely to rationalize it and thereby plug the loop holes in this system. It will help stop pilferage and at the same time will off load the over loaded tax burden from some organizations. 

Secondly, the multiple taxations due to existence of a number of taxes imposed by centre and states have led to birth of a somewhat repressive and lethargic system of tax collection and are doing more harm than good to the growth of the economy. The red tapism in this area is loathing and no progressive country can afford it. The GST would hopefully do away with many, if not all, such anomalies in the system and metamorphose it into an efficient agency based on scientific and rational system of assessment. The removal of multiple taxes on goods at different levels would in a long run help increase the overall amount of tax collection.

Thirdly, the present system of refunding of taxes is a horrible experience. It encourages corruption as well as creates unnecessary secretarial works. The un-refunded tax on capital goods is a bane for capital accumulation. This in a way hinders the savings also, which is a pre-requisite to the growth. If this over-taxation is done away with, it will come as a boon for the honest tax payers. It will also lessen the chances of corruption by minimizing the discretionary powers.

Fourthly, At present indirect taxes are collected at various points, right from manufacturing to retailer’s outlet. It involves cumbersome process of assessment and primitive ways of collection. Such systems ultimately encourage tax evasion and also increase cost of commodities. GST proposes that the indirect taxes would be levied at the destination point. It is supposed to be less distorting and non-complicated. It would help remove imposition of taxes at different levels. This would help enhancement in revenue and lessening of hardships. Experiences across the world suggest that a more friendly tax environment helps increase in the collection without imposition of newer taxes or increasing the rate of it.

Fifthly, - if we take into account the GDPs of countries like USA, China, Japan, they are significantly much more than that of ours. For instance GDP of G-20 Nations (chart below) suggest that India has miles to go to achieve the level of the developed nations. The ongoing economic down turn and slow down of economy across the world has given India a golden opportunity to stake claim and get a cushioned berth in the world order, but for this we are required to increase our volume of GDP at least twice the present level.

The direct taxation regime has been by and large undergoing annual fine tuning and as a result of it the revenue receipt in this account has considerably increased but reform on such scale in indirect taxes has not been done. Indirect taxes are therefore urgently required to be made rationale and unified. If the GST is introduced in ‘letters and spirit’ would certainly increase the volume of the tax collection, thereby provide a great stimulus to our gently moving economy which has arrived at a level playing field vis-a-vis many major economies of the world.

Country GDP IN TRILLION USD

USA 13.84 

JAPAN 4.30

GERMANY 2.81

BRITAIN 2.14

FRANCE 2.05

ITALY 1.79

CANADA 1.27

CHINA 6.99

India 1 trillion dollars

Finally, the time has come to say goodbye to the primitive type of tax structure which is obstructing the growth. The globe is moving towards economic unification. The very concept of European Union (EU) is based on a common European market based on unified and simplified taxation system. They have adopted ‘euro’, a single currency, so much so that even the concept of a European Parliament is being visualized. Steps are being taken to form this Parliament. If two or more nations come close and form economic unified entity (SAFTA,NAFTA,ASEAN etc are examples), why the federating units of India i.e. States do not eschew trivial interests and shun political differences to help establish a modern, unified and efficient tax regime. After all the very concept of distribution of taxes amongst the states were enshrined in the constitution to do away with such contradictions. We do practice this in case a number of direct taxes, this system can be introduced in other indirect taxes also. 

PROBLEMS AHEAD- It is politically naïve to think in terms of its success in totality. Ours is a federation and each state has a different type of tax structure. Many states levy octroi, entry tax, stamp duty and municipal tax and plethora of other taxes. It is happy to believe that the states would agree and not levy these taxes in addition to GST.

If the states levy these taxes above GST, it would mar the very purpose of the proposed new tax regime and the very concept of a common Indian market with unified and simplified tax structure would not be visualized and implemented.

A consensus has to be arrived at in the ECSFM so that all states agree to it and help evolve a tax regime which is in congruent with the new global financial order dominated by culture of corporate governance. 

Om Prakash Yadav

omjiyadav@gmail.com

CABINET IN VILLAGE;BIHAR CREATES HISTORY IN GOVERNANCE

GOVERNANCE AT THE DOOR STEP; WILL IT DELIVER?

Nitish Kumar, the CM of Bihar created history on10th February, 2009 when he chaired a full-fledged cabinet meeting in Barbighi village of Begusarai district. The entire ministers of his cabinet as well as important and concerned secretaries/Principal secretaries were also present in the village. This is the first cabinet meeting ever held in any village in India. Nitish Kumar is known for his innovative and self styled functioning. Few days back he had launched one “Vikash Yatra” in which he along with his ministers and officials stay at night in tents in village itself and take stock of feedbacks of the people vis-a-vis performance of his govt.

Raffled by his growing popularity, the opposition rebukes him of being extravagant and making futile expenditure of public money on what they call ‘political gimmicks’ and settling political agenda.

He is killing two birds with a single stone in the sense that on the one hand he is campaigning for the ensuing parliamentary election and on the other reviewing the on-going developmental projects and schemes across the state that too on govt expenditure.

Yesterday in the Cabinet meeting held at the village, he took several decisions like upgrading 1350 High Schools into intermediate college, approving 30.54 crore for panchyat building in naxal affected districts, purchasing vehicles for police and conferment of Nagar Parishad status to Hilsa Nagar panchyat.

A large number of people are turning to these Vikas yatras with litany of their complaints regarding various problems.

The people are levelling serious charges of corruption not only against Mukhiyas, Local officials, police but against the MLAs also. It is, however, not known that to what extent the CM would act against those against whom complaints are being levelled because many of them are allegedly said to be close to ruling parties. The CM, nevertheless say that the law would takes its own course. He seems, as per his unrelenting records,not ready to bow down before any one whosoever comes in his way of his much publisized ' susashan'.

DEDICATED FREIGHT CORRIDOR;HISTORY IN MAKING

BUILDING INDIA OF 21ST CENTURY

With the inauguration of construction work of Eastern Dedicated Freight Corridor (EDFC) by Sonia Gandhi and Lalu Prasad on 10th February, 2009 at Dehri-on-Sone in Bihar added a new chapter in the history of economic development of India. This ambitious project is said to be the biggest ever in the Post-Independent India which will cost about Rs/-24,000 Crore (in EDFC only) according to initial estimate. This estimate would go up and Railways have arranged funds from International agencies like Asian development Bank, world Bank and Japanese financial institutions. 

In this project a dedicate lane of rail track would be laid from Dhankuni in West Bengal to Ludhiana via Dehri-on-sone, a total length of 1850 Kms. Similarly, a Western Dedicated Freight Corridor (WDFC) would be constructed connecting from Ludhiana via Dadri to Jawaharlal Nehru Port Trust in Mahrastra. 

With the construction of this corridor, a dedicated rail track would be made available for the freight carriage. It is said that the freight trains would move at a 100 Kms/hr speed and the percentage of freight carriage by Railways vis-a-vis road would improve resulting in significant rise in the earnings of Railways which is soaring with a rocketing speed during Lalu’s regime. According to this fiscal year’s estimate, the gross profit of railways would go up to Rs/-70,000 crore with 76% operating ratio, the best in the world.

The construction of EDFC and WDFC were conceived years ago but due to one reason or the other it was not being implemented. According to the railways sources, the railways are incurring loss in passengers train but earning profits in freight trains, but due to political compulsions and welfare state concept no govt can afford to either hike the fare or diminish facilities. Therefore the concept of a dedicate freight corridor was visualised which would provide uninterrupted and dedicate track to the freight trains.

The story of Lalu’s magic and miracle with respect to railways turnaround is based on this concept in he provides succour to passengers and increase the share of freight in the transport sector.

SATYAM FRAUD; A FAILURE OF CORPORATE GOVERNANCE

(MONOLITH STATUE OF LORD BUDHA IN HYDERABAD, THE EPITOME OF TRUTH)

Satyam fraud is unfolding and so are the inherent weaknesses of Corporate Governance in India. Ramalinga Raju, once a posture boy of India’s growing software sector who could find a seat beside Bill Clinton on the dais, has become a villain in the corporate world for valid reasons.

His emotionally charged four and half page letter of startling revelations shook the entire corporate world when he admitted of cooking the account and inflating the figure by Rupees 5040 crores. He committed this fraud and tried to hush up it by an abortive bid to purchase Maytas infra, a company created by him and run by his son Teja Raju. The move was opposed by some of the directors and thus last attempt of Raju to cover up the scam was thwarted. This is the story in brief which all of us know.

This scam is being equated with Enron of USA because here also the scam was orchestrated by its Auditor, Arthur Anderson, in Satyam, Price Waterhouse cooper.

WHY DID RAJU UNFOLD THE SCAM HIMSELF-

There are two sets of serious questions which still desperately require answers. Why did Raju, the mastermind of the entire fraud, accept the guilt? Why did he choose to surrender before Police and not run away from India, which he could have easily done? Why was this fudging done and for what? Secondly, what were regulators and watch dogs like SEBI, ICAI, and independent directors doing?

The question remained unanswered that whether this fraud shook the conscience of Raju and he unravelled the truth out of sagacity, or he was simply unable to hush up the matter which was increasing day by day assuming insurmountable proportions? 

No, simply not. It was a well calculated, well strategized blended with legal opinion and well thought move to unfold the story and surrender before the police. 

Mahabharata, the Great War was caused due to Dhritarastra’s obsession for his son Duryodhana. The lust of kingdom and its geographical expansion had led many wars across the world. 

Like many fathers, Raju too wanted to create two separate empires for his sons, Teja Raju and Rama Raju jr. He subsequently formed Maytas infra and Maytas info for Teja and Rama respectively. By the end of the 20th century, Satyam computers had made a name for itself on the globe and had emerged as the 4th largest software in the country. The meteoric rise of the company can be substantiated by the fact that it was established in 1987 as private company and got listed by BSE in 1991. In 2001 its share was listed in NYSE and in 2004 it made its place in European stock market. According to company’s statement, its revenue exceeds to 2 bn USD in 2008.

Similarly Raju’s son’s companies also were moving with leaps and bound. Maytas infra got the ambitious Metro projects and bagged many tenders including one of construction of Technology Park.

It is in this perspective, the question that everyone is willing to ask is that when everything was fit and fine then why did Raju fudge the account of the company and commit countries biggest fraud.

The fudging of account had started when the Maytas were formed. Raju started diverting the cash from Satyam into Maytas and many other companies which he had formed either in his own name or benami like Godavari bio, Godavari agro etc. In fact such practices are very common and prevalent in many Indian companies and it would not be a matter of surprise it similar frauds are unravelled more in future. They do it for simple reasons, to help establish their kiths and kin. This ‘drain of wealth theory’ is substantiated by the fact that the share of Promoters in the company which was 25.6% in 2001, diminished to 3.6% in January, 2009. Similarly by 2008 Raju had pledged almost all his shares and had thus siphoned off most of his shares. In fact according to information retrieved from NSE, not only Raju but CFO V.Srinivas, A.S.Murthy, V. Murli etc has sold shares of 3,6500, 3,14,000, 1,83,000 respectively. Raju inflated the account for increasing the price of shares so that he and his accomplices get maximum profits, in which he succeeded also. The day this news broke, the Satyam’s share was soaring. He wanted to hush up the matter in December, 2008, when he made a desperate but unsuccessful bid to purchase his son’s Maytas. It was vehemently opposed by one of the independent directors Mangalam Srinivas, he subsequently resigned. Thus the entire game plan of Raju was shattered. He, by now had come to know that he is not going to succeed in his plan. He therefore, wrote an emotional letter and confessed him fraud.

How did he do it? - As per the accounting practise, the Bank accounts are presented before the Auditors of the company by the CFO after its verification. It seems that the fraud was initially connived by Raju and CFO vadalamani srinivas. Later this nexus might have widened after possible inclusion of auditors and the Bankers. The continuous inflating and cooking of accounts, that too on such a big scale was going unnoticed and unchecked by the auditors and the Bankers sounds absurd, therefore, the possibility of a connivance of bankers and the auditors cannot be ruled out. CID has claimed that Raju had inflated the numbers of the employees also, if it goes true, the involvement of Banks would be proved beyond a shadow of doubt.

WHY DID RAJU SURRENDER AND NOT ESCAPE?- a very pertinent question arises but surprisingly a very few is asking as to if Raju was aware of the magnitude of his crime as well as quantum of its punishment then why did he not escape and choose to surrender before the police.

Reasons are not far to search. The crime he has committed would attract sections 406,409,420,465,471, etc of IPC and section 628 of Company Act, 1956 and can undergo imprisonment up to more than 7 years. He was fully aware of it but at the same time he also knew that he would be sued in USA under provisions of Security and Exchange Commission Regulation rule 10-5 B. These suits are called Class law suits and the compensation awarded under this is huge. Raju knew it and thought that his entire earnings and his family would be taken away and would be left with naught. One the other hand, he fully understood the loopholes in the Indian Criminal Justice system which hardly punishes white collar criminals. Ketan Parikh scam still is sub-Judice and is expected to go years and years. It is this scam which ruined hundreds of Cooperative Banks across Nation and plummeted Unit-64 a popular mutual fund scheme of the UTI, India’s largest mutual fund company. Harshad Mehta died without being finally convicted. Global trust Bank scam is still under the labyrinth of law. Examples are many, results are same. He therefore preferred to surrender than to face class law suits in USA. 

IS CORPORATE GOVERNANCE IN INDIA NOT WORLD CLASS? - Interestingly Satyam has bagged Golden Peacock award for best corporate governance by World Council for Corporate Governance only a few years ago. The scam has raised many doubts about the class of corporate governance in India. While speaking at a seminar on corporate governance organised by CII, Ministry of Company affairs and National foundation of corporate governance, C.B.Bhave, the chairman of SEBI said on 6th February, 2009 that the corporate governance is an ongoing process. There is a retrospection everywhere that some concrete steps with respect to it should be done. 

There are few importance elements of corporate governance namely Auditing, Independent Directors, Regulators and Finally the Board including CEO itself. If we examine these constituents one by one, it would be crystal clear that all the constituents either failed or did not act as was required. 

The role of Price waterhouse Coopers(PwC), the Auditing firm of Satyam has been dealt. Institute of Chartered Accountants of India (ICAI) constituted under Charter Accountants Act, 1949 is the regulatory body of all the accounting and auditing firms across the countries. According to a report there is acute shortage of qualified chartered accountants and auditors in India and around the world also. The number of CAs passing every year is hopelessly small. It is apprehended therefore that the auditing firms out source unqualified or semi-qualified commerce graduates of Post graduates to do the auditing in the companies. The prestigious firms get the assignment by virtue of their name and fame which they recklessly sell in the market by out sourcing the auditors at a very low remuneration. In case of Satyam, the man who was supposed to do audit was incidentally executive member in ICAI.

In a startling revelation, the auditors say that they approved the accounts because of Raju’s ‘towering presence’ suggests how ridiculously the auditing was being done.

Thus if Scam occurred, the onus would undoubtedly go on the firm. The kind of attitude which is adopted here in India in doing auditing is certainly not in congruent with the standard of world class corporate governance. In fact if we look at the functioning of institutions like ICAI, we would come to know that they are in a way hijacked by a group of people. They have the vast statutory powers but without any responsibilities. 

Over a period of time so many extra constitutional authorities have come up in India and have taken up the State’s role and act as per their own framed regulations. This needs to be changed. This is the need of hour.

Secondly, the independent directors have also failed to discharge their duties properly. Section 49 of SEBI Act and section 229 A of Company Act, 1956 provides for appointment of Independent Directors in the Companies for protecting the rights of public at large in general and shareholders in particular. In the case of satyam T.R.Prasad, the retired Cabinet Secretary Govt of India was one of the directors. It speaks a lot about the procedure of appointment of independent directors. What kinds of people are being appointed in the company? Moreover, they are appointed by the Companies themselves and pay hefty salaries and perks for virtually doing nothing. Under this circumstance is it thinkable that these Independent directors would dare to peep into the affairs of the company against the wishes of the CEOs? 

There are only two possibilities in Satyam with respect to Independent directors. Either they connive with Raju and knew everything that was going on, or they did not know. In both the cases they failed miserably to discharge their duties. What is the need of such Independent Directors if they cannot do anything in this matter? One unpalatable justification is given that the Independent Directors participate in the meeting and are not concerned with autonomy of the company. It should be bone in mind the Enron scam was exposed by Sherron Watkins, a women independent director.

Thirdly, the SEBI and Ministry of Company Affairs too have failed in their assigned jobs. SEBI is the highest regulator and keeps eagle eye on the activities of the capital markets. When the profits of this company were registering abnormal growth, thereby the prices of the shares were soaring, what were these guys doing? There has been a lot of hue and cry with respect to insider trading; a howl SEBI failed to listen to and it inflicted heavily on Satyam. Raju had pledged almost all his shares so did many of the promoters. The newly appointed CEO Murthy is also said to have sold about 3.14 lakhs shares including 40,000 in December itself belonging to him and his family members. These are the insider trading. Although insider trading per se is not illegal but it is unethical, moreover when Company’s high official who were on share selling spree must had the idea of what was going in the company. All such transactions are needed to be probed.

As a matter of fact the tax holidays for the IT-BPO companies also needs to be said goodbye. Had Raju to pay the I.Tax according to the profits shown in the accounts, he would not have fudged it to this scale. The ministry of Finance must deliberate upon the entire gamut of issues related to tax heaven provisions. 

INVESTIGATIONS, THE TASK AHEAD- the breaking of news lead to reflexes in all the concerned, the SEBI, ROC, State government and above all MOC.

The Ministry of Company Affairs (MOC) came into action and asked ROC in Hyderabad to conduct preliminary inquiry. SEBI and state govt all jumped in the fray. The state govt ordered CB CID inquiry and filed an FIR against Raju and others by themselves as no one came to file a formal complaint against this fraud.

After receiving the inquiry report from ROC, MOC order inquiry by Serious Fraud Investigation Office (SFIO). Raju was remanded to judicial custody in Chachalguda Jail and formal inquiry set in. 

INQUIRY BY CID-CID made some commendable headway and arrested CFO and others. They made a startling revelation by saying that Raju had about 13000 ghost employees and had been drawing their salaries for years. If it is true, the involvement of Banks in the entire gamut of scam is beyond any doubt. It has also identified many Bank accounts of Raju as well as CFO and other accused. Large amount of wealth in terms of Bank account, real estates, false companies etc have been traced. The investigation is still going on. Well the investigation is limited to the provisions of IPC only. The CID must also look into the possible nexus of Raju and politicians and bureaucrats, because the kind of meteoric rise that Maytas made smacks of existence of such nexus. The bagging of Metro project by Maytas infra must be brought to the ambit of investigation because this project was awarded to Maytas in spite of Sreedharan’s opposition, a man of impeccable reputation and whose knowledge about Metro is simply unparallel.

SFIO AND SEBI- both of them have started the probe in their own style. The SFIO has later been asked to cover as many as 325 public and private sector companies and 25 individuals under its enquiry by the MOC. SFIO have seized some computers, documents and software of the company in order to find out the roots of the scam. But due to the widening of its inquiry, the result of this, probe is likely to be delayed by few more months. Till date SFIO has not been able to procure remand from the court to grill Raju.

SEBI on the other hand has come out with a series of new and so called stiffer guidelines for the listed companies. The promoters will have to inform to it and the share market within 7 days about its pledging of shares. Strict vigil is sought to be kept to check inside trading. But it seems that still it has not understood the symptom of the disease. Experts in this field enlist symptoms and prescribe prescriptions. There is, of course, no denying the fact that prescription in retrospection is easy, but at the same time ‘prevention is better than cure’. It is said that if a company suddenly changes the field and diversify in a completely different are; it is harbinger of tragedy, as it happened in Satyam. No one could foresee that why a premiere software company started diversification in real estate (Maytas infra is a real estate company). 

Similarly, when a company’s growth is meteoric in terms of profits, it should smell some rat. This is done in order to increase the value of share and once it is achieved, the inside trading takes place. SEBI has rightly formulated that peers accounting shall be done, it would minimise the chances of fudging the accounts. SEBI must concentrate on the modalities of this scam so that the offenders are brought to book and at the same time corrective measures are taken.

Many experts suggest that if there is a sudden spurt in insider trading in any company, the regulator should sound alarm bell. In this case the SEBI failed to discharge this job and could not trace when it was going in Satyam.

PROBLEMS IN INVESTIGATION AND COVICTION-

The inquiry and investigation are being conducted by a number of agencies; it therefore, is always a possibility of conflicting and intermingling of actions. To avoid this there is need to evolve a mechanism so that a more coordinated and concerted actions are taken and this investigation reaches to a logical conclusion. 

With respect to the preparation and submission of charge sheet against the culprits including Raju u/s 173 of CrPC, utmost caution is required to be taken. We should not forget that Raju has amassed huge wealth through this scam and the investigating agencies have so far been unable to unearth his treasures. He is capable of hiring the best legal brains available in the world that can tatter the prosecution’s case due to a slightest loop holes.

The simplest theory in the criminal justice system is that the crimes including white collar crimes are inherent part of the society, but the quantum of punishments and pace of dispensation of justice are very important and serves as deterrents. 

USA enacted SARBANES OXLEY ACT, 2002, one of the toughest penal laws with respect Corporate and Capital market crimes after Enron scam. 

Chapter IX and SECTION 901. of this Act SHORT TITLED ‘‘White-Collar Crime Penalty Enhancement Act of 2002’’ provides for the penalty for such crimes. In fact section 906 of this Act provides for 20 years of imprisonment, whereas in India, the Company’s Act, Section 628 provides for 2 years imprisonment only. It is perhaps due to this fact that sufficient deterrent is conspicuously absent in India and fraud after fraud are taking place. The govt will have to come up with a harsh legislation in this regard so that the culprits are severely punished.

TITANIC BOA, THE BIGGEST ANACONDA?

Python is no longer the largest serpentine on the earth. 

A fossil has been discovered in a place called cerrejon in north eastern region of Columbia suggests that Python was not the biggest serpentine on the earth. The discoverers have named this extinct snake as ‘titanoboa cerrejonensis’, which means titanic boa from cerrejon.

The scientists say that on the basis of the fossil, it is estimated that this titanic serpentine existed on the earth some 40 million years ago and was contemporary of dinosaurs. They further say that this mammoth animal might be of 42-45 (12-13 meter) feet long and more than one thousand kilogram in weight leaving python or Anaconda far behind in size as well as weight. The biggest python is reported 9 meter long only according to book of records.

It can swallow a cow or a bull very easily and can thrash a bus.The discovery of this fossil would unearh and unravel many myths about the snakes and would add interesting chapters in the study of nature and science.

ROW IN ELECTION COMMISSION OF INDIA TAKES POLITICAL TUNE

The row in Election Commission of India (ECI) has taken a political tune as all the major political parties are playing their own lyrics orchestrated by political music. The inside bickering in ECI is not new and has been occurring time and again. The first major controversy arose during T.N. Seshan’s regime when Seshan and Krishnamurti, one of the then EC locked their horns in order to establish their own hegemony and run their own writs. 

The present row originated owing to the letter which the CEC, has written to the President of India recommending the removal of Navin Chawala, the EC for his alleged acts of commission and omission under article 324 (5) of Indian Constitution. This letter sparked off a major political controversy because the BJP has come openly in rescue of N. Gopalswami, whereas; Congress and other UPA constituents have pledged their support to Navin Chawala. This controversy has incited a debate also in legal luminaries and judicial domain. The issue which has again come to fore is that whether or not the CEC can suo motto initiate inquiry and recommend the removal of the other ECs? The question has become vexed also because the provisions of the Constitution in this regard are somewhat translucent on this issue. Article 324 of the Indian constitution provides for the superintendence, direction and control of election to be vested in the Election commission. Clause 5 of this Article provides for ‘the Subject to the provisions of any law made by the Parliament, the conditions of service and tenure of office of the Election Commissioners and the Regional Commissioners shall be such as the President may by rule determine:

Provided that the Chief Election Commissioner shall not be removed from his office except in like manner and on the like grounds as a Judge of the Supreme Court and the conditions of service of the Chief Election Commissioner shall not be varied to his disadvantage after his appointment:

Provided further that any other Election Commissioner or a Regional Commissioner shall not be removed from office except on the recommendation of the Chief Election Commissioner. 

The above provision makes it amply clear that the ECs can be removed by the President, the appointing authority, but the CEC can only be removed by a process of impeachment similar to that of a Supreme Court Judge. The message is clear; the father of constitution has conferred on adequate amount of independence on the ECI and also has guaranteed protection to it against any undue political and executive interference. It is also a fact that the CEC and ECs are equal, CEC being the first among the equals, this however do not bring all the ECs at par with the CEC.It seems that the principle of check and balance as well as superiority and subordination blended with administrative hierarchical concept has been enshrined in the above provisions of the constitution. The Criminal Procedure Code (Cr.P.C.) of 1973 can be taken into account to explain above principle. Section 20 of this code provides for appointment of Executive Magistrates and the District Magistrates. It speaks of the principle that District Magistrate is also an executive magistrate and all executive magistrates are equal, but the district magistrate is first among the equals. Further section 21, 22 and 23 make it clear that the executive magistrates,including the SDM, who is also an executive magistrate are subordinate to the district magistrate. Some may take it as an absurd comparison, but the principle of the same administrative hierarchical concept has been applied in the Election Commission also. 

Now coming to the question which remained unanswered is that whether the CEC can recommend suo-motu to the President the removal of ECs without the Presidential Reference? The Constitutional bench of the Supreme Court has ruled in the famous T.N. Seshan Vs Union of India in 1995 {5 SC, 337;(1995)4 SCC 611} that if power were to be exercisable by the CEC as per his whim and caprice, the CEC himself would become an instrument of oppression and would destroy the independence of the ECs if they are required to function under the threat of the CEC recommending their removal. This judgment is said to be landmark vis-a-vis the functioning of the ECI. The Supreme Court was of the opinion that the in-dependence of ECI is more important than the supremacy of CEC. In fact the fathers of our Constitution had rightly infused a large amount of independence and sanctity in the ECI which is also a custodian of the Constitution. Dr Bhim Rao Ambedkar, the father of Indian Constitution, had said in the constituent assembly that the removal of CEC should be done only through a process of impeachment. The idea was the same, to confer independence to the Commission. But unfortunately over a period of time certain amount of aberration has crept into this constitutional body and has turned it into a hub of hobnobbing and bickering. 

So far as the grounds for inquiry against Navin Chawla and subsequent recommendation to his removal is concerned, the matter goes back to 2006 when L.K.Advani along with 204 other MPs submitted a petition to the President of India seeking removal of Navin Chawla for his alleged acts of commission and omission during emergency and his alleged proximity to the ruling Congress Party. The same petition was forwarded to the CEC for necessary action. It is in this context the CEC asked explanation from Navin Chawla and after being ‘unsatisfied’ from the Chawla’s answer, CEC made this recommendation to the President. The entire legal fraternity divided over this issue. One school of opinion says that the CEC can recommend removal of any EC suo-motu, whereas other opines that the CEC can only act when he is sought to do so by the president. Coming to the issue of taking action on the recommendation, some stalwarts say that the recommendation is binding on the government, whereas many other do not subscribe to this view and suggest that the government has every right to reject the recommendation.

But it seems that if the CEC is not empowered to make a suo-motu recommendation, and can act only on the presidential reference, then how can the independence of Election Commission and its insulation from government’s interference be kept intact? It appears that misreading in between the lines is being done by many of us. If the CEC is supposed to act only when he is asked to do so, then why is this provision made in the constitution stating therein that the ECs can be removed only the recommendation of the CEC? 

We are non-deliberately skipping the core issue that, why after all such bickering and quarrelling are taking place in this august institution of sublime importance? The very practice of appointing very senior bureaucrats to the post CEC and EC just after their retirement is the crux of all the problems. The senior most bubus sitting at the helm of affairs can hardly remain apolitical and in a bid to get some post retirement placement, they start lobbying in the power lobby. Many of them get reward and those who are left start criticising the government in hope of winning over the sympathy of parties in opposition so that they can be compensated when these parties return to power. N. Gopalswamy had served as home secretary under Advani, similarly Chawla had been secretary to Lt. Governor during emergency. Gopalswamy was made EC just after his retirement by the NDA government, whereas Chawla was handpicked and rewarded by the Congress. Naturally their loyalties shall be put to a litmus test.

M.S.Gill has been made Rajya Sabha MP after his retirement as CEC, he was subsequently made a state minister in the union cabinet. This step is going to have profound impact on the functioning of EC, as every outgoing EC or CEC would be lured by such rewards which they may get if they pursue the interest of parties in power. 

Remedies: - Mr. B.B. Tandon the then CEC had made certain recommendations with regard to the long overdue reforms in the EC. These recommendations are eating dust in the labyrinth of power and politics. Here are some suggestions which can be incorporated while taking steps in cleansing and reforming the commission. 

1. Rules can be framed that no bureaucrat shall be appointed, nominated or given any office within three years after their retirement. 

2. Bureaucrats and judges should not be allowed to join any political party or fight election within three years after th.eir retirement. 

3. The selection and appointment procedures for the high offices like EC, NHRC, CIC, other commissions etc. should be made transparent and institutionalised so that the possibility of hand picking is diminished to a zero level

4. A national panel may be prepared for such appointment so that principle of equality and openness is followed. 

5. Law can also be framed so that no one is appointed to any constitutional post twice. This would help minimise the chances of doing favour of disfavour by these persons

RIGHT TO INFORMATION;INDIA AND USA

RIGHT TO INFORMATION A COMPARISON BETWEEN INDIA AND USA

Chief Justice of India’s reluctance to disclose the details of assets to the petitioner under RTI Act, 2005 has incited a debate on transparency versus privacy and confidentiality in Indian Public domain. 

The Central Information Commission (CIC) passed an order on the petition of one Subhash Agarwal filed u/s 6 of the Act, and asked all the Judges including CJI of the Supreme Court to make available the required information relating to their assets and properties to the petitioner. The order was taken aback by the Judiciary, because hitherto it is only they who used to get their dictates obeyed. This time the matter was reverse.

Immediately after getting the order from the CIC, the Supreme Court filed an appeal before the Delhi High Court through its Registrar against the order of the CIC. It is worth mentioning here that the order of Information Commission is final and binding as provided in section 19 (7) of the RTI Act, 2005. The aggrieved persons or the parties may however approach the High courts or the Supreme Court under Article 226 and 32 of Indian Constitution respectively in form of Writs, if they feel that their fundamental rights as enshrined in the Constitution are violated. 

In this case, it is beyond the imagination of a common man as how this said order of CIC was infringing upon the fundamental rights of the Judges, which forced CJI to go to the Delhi High Court against the said order.

This is not the first instance when Judiciary has retaliated against imposition of law on them or tried to resist any move towards greater amount of transparency being brought into the judiciary. It is rightly said that it is easy preaching than done.

Few months back, while speaking in a seminar in Delhi, the CJI said that the provisions of RTI do not apply on them because they are the Constitutional Authorities. Did he mean that the provisions of RTI Act do not apply on PM, Ministers, CEC, Speakers of Legislatures and MPs and MLAs because they are also constitutional authorities? 

This statement was also rebuked in the media; he thereafter tried to pacify the people by giving effete arguments. The CJI said that since there is no provision of disclosure of properties by the Judges of Higher Judiciary in any law or conduct rules for them, the Judges are not obliged to disclose the same. It is true, that such provisions are laid down in Government servants conduct Rules which are not applicable on the Judges of the higher judiciary.

Nonetheless, it should be borne in mind that the provisions of the RTI are overriding in effect, meaning thereby that all other laws if contrary to the provisions of RTI would be overridden (Section 22 of RTI Act). It is true that there are no service conduct rules for the Judges in higher judiciary, but at the same time there is no law also which provides immunity to the judges against disclosing their properties, after all what and why to hide?

In the mean time similar attempts to thwart the People centric ethos of the Act are being made in none other than the PMO itself. The same Subhash Agarwal has filed petition before the Public Information Officer (PIO) of the Cabinet Secretariat seeking information about the assets of the Union Ministers. The petition was thereafter sent to the PIO of PMO as per Section 6(3) of the Act. Initially, the PMO was willing to make available the required information to the information seeker, but subsequently, it sought to withhold the information on the pretext of the provisions of exemptions enshrined in Section 8(1)(e) and (j). 

It sounds funny to learn that the aforesaid provisions are invoked to deny the petitioner disclosure of the sought information. The Section 8(1) (e) says ‘the information available to a person in his fiduciary relationship, unless the competent authority is satisfied that the larger public interest warrants the disclosure of such information’. Undoubtedly the disclosure of the assets of the ministers does not fall in this category.

Similarly, the section 8(1) (j) says that if the sought information is not related to public activity or public interest or which would cause unwarranted invasion of the privacy of the individual, the information can be denied.

The pertinent question here obviously rises that what kind of privacy is involved in the disclosure of the assets of Ministers? How can the property acquired by a Minister while serving the ministry be not related to public activity or public interest? Moreover, the Supreme Court has ruled in 1997 and made it mandatory on part of the MPs to disclose their assets. The Election Commission of India subsequently issued circulars and made it obligatory for the contesting candidates to file an affidavit declaring all the moveable and immoveable properties along with the nomination papers. Thus if the said information relating to the ministers are disclosed, it would be of great help to the India citizen because one could then easily find out by calculating the amount of wealth the minister has amassed during the tenure by just deducting the wealth declared by them at the time of filing nominations. 

It appears that higher Judiciary as well as higher executive both want to withhold the free flow of information and are against the transparency. They talk very tall from public platform but when it comes to their turn, they provide justification of exemptions thoroughly unpalatable to the public. People as higher echelon must set examples of high standard of public life and morality. They are the role models of the society and the democracy. The kind of public outcry which was witnessed after Mumbai attack was just a trailer, it was suggestive of the fact that what kind of public perception is there in the mind of the pubic at larger for the politicians. 

One can draw a distinction between India and USA with respect to transparency in public life. In America one Freedom of Information Act, 1966 is enacted and is in vogue since 1967. George Bush had issued an executive order enabling the Ex. Presidents and Vice Presidents to sit indefinitely on potentially embarrassing records that belong to public domain. Barrack Obama showing his uncompromising commitment to transparency and openness undid the order and issued a fresh executive order making it mandatory on the part of the US administration to make available to people at large, all the documents related to any decision taken by the administration which belong to public domain.

Obama’s decision to undo the executive order of his predecessor is an important decision because under Section 4(F) (1) gives the president such power to issue an executive order to be kept secret in the interest of the national defense or foreign policy etc. It means that had the President wanted to hide any document; he would have taken the help of this provision and denied the emanation of information in the name of national defense. He did not wish to withhold the free flow of information in the garb of law, rather preferred to undo it and set an example, conspicuously absent in Indian politicians. This is what is called transparency, openness and democracy. But here in our case, provisions of laws and rules are interpreted in one’s own interests and not in the wider interest of the public at large

BIHAR GETS GOLD IN E-GOVERNANCE ON ' JANKARI' CALL CENTRE

Bihar govt gets e-governance award for its noble initiative of setting up call centre on Right to Information ‘Jankari’

Bihar govt’s initiative for giving free access to citizens, the information through call centre ‘ jankari’ has started bearing fruits as it has been selected for being awarded as ‘National award’ in e-governance for the year 2008-09 by Union govt (DoPT). This award would be conferred on it in a function scheduled to be held in Goa on 12-13 February, 2009.

Giving this information in Patna, IT secretary, C.K.Misra said that the establishment of ‘Jankari’, the call centre for giving information to the information seeker under the provisions of RTI Act,2005 has been widely appreciated across the Nation. Giving details, he said that any Indian National can receive information just by dialling a toll free number in the call centre and after a brief formality, the information seeker would get the information just by paying Rs/-10 as the cost. In 2008, about 16,000 calls were received by this call centre Misra added.

But so far as computerisation of other departments is concerned, it is not moving at desired pace. The target of making Finance department a paperless one by the end of 31 March, 2008 could not be achieved. The introduction of Sec-LAN in the state’ secretariat is yet to come in practise and babus still rely on tiring hard copy file work.

It is pertinent to mention here that Sonia Gandhi, the chairperson of UPA had praised this move and had advised all the CMs of cong ruled states to take similar steps so that the ideals and ethos enshrined in the noble RTI Act,2005 are achieved.

TASKS AHEAD- The commission has miles to go before it could achieve the noble and lofty ideals enshrined in this people centric Act. The State Information Commission has to be debureaucratised, because it has become a post retirement placement bureau. The funcioning of this commission has to be made more people friendly, because if visits this commission, he gets a vestige of Courts room discipline, total undesirable and uncongenial. 

INFORMATION COMMISSION VS COURTS- One can draw a comparison between America and India. On the one hand Obama voluntarily signed an executive order making it mandatory for the US administration to make accessible all the documents pertaining policy decisons and any other decison to the public domain. Whereas in India, the Supreme court itself makes an appeal before its subordinate Delhi High court against the order of the CIC, what a paradox. It is easy preach than done. CJI says that the provisions of the RTI are not applicable to the Judges because they, what he said, are constitutional authority. The people sitting at the higher echelon should set examples in the public life. They should have the audacity to abide voluntarily to the provisions of the law of land.

OBAMA ON GLOBAL WARMING AND OIL POLICY

President Barrack Obama yesterday singed an important executive order in the East Room of White House, which marked the beginning of reversal of Bush administration’s environmental policy.

The President has directed the Transport department to frame rules in order to execute and implement the Law of 2007 which requires 40% improvement in the efficiency of gas driven cars, other small vehicles and light trucks by the end of 2020. More specifically, the 2007 Law requires the Cars and light trucks to be driven at an efficiency of 15 KM/Litre. In India, most of the small vehicles specially cars are very fuel efficient and are running even 20 KM/ Litre. Thus the enforcement of this law would help bring down the level of green house gases to a great extent, a pledge Obama had taken during his election campaign.

President has also categorically asked the US Environment Protection Agency (EPA) to reconsider the request of California to allow it to frame tougher Rules and Regulation to ensure reduction in emission of green house gases (GHGs), a request which was flatly turned down by the Bush administration. California wants a reduction of 30% in the emission of GHGs by the end of 2016. As many as 18 other states are also willing to frame similar rules of their own for reducing emission of GHGs.

Reiterating his commitment towards checking global warming, he has appointed Todd Stern as CLIMATE ENVOY of USA. Mr. Todd had served as chief negotiator under Clinton administration in Kyoto protocol talks during 1997-99 and is said to have very positive out look vis-à-vis climatic change and global warming. 

The America oil policy is also all set to under go a radical change. Obama hinted this at the First press conference held at White House after taking oath. He asked the department to take steps to ensure that more fuel efficient vehicles are manufactured by the end of 2011. This would decrease the dependence of US on the OPEC and cut our import bills, he said. Obama opined that this would help create more jobs in Detroit and thus accelerate the pace of recovery from the economic down turn in a big way.

It is not out of place to mention that US has a huge oil reserves but it is importing from Gulf so that it can use its own reserve when the ‘wells of Gulf get dry’. This has been the unpronounced oil policy of US over many decades. Government came and went, but this policy remained unchanged. Many experts in international politics are of the opinion that the first Gulf war of 1991 and the Iraq war were fought to establish American hegemony so that the supply of fuel to this country goes unabated and that too at a price fixed not by OPEC but in New York and London.

The process of reversal of the above mentioned policies and their implementation would not be smooth job for Obama as it is likely to break the age old mindset of the neo imperialists in the administration. It would at the same time not be easy for those who may oppose Obama in view of the land slide mandate that has been bestowed on him .

LESSON FOR INDIA- India is a signatory to ‘Kyoto Protocol’ and is thereby obliged to frame rules for reducing emission of GHGs. For achieving target of reducing the emissions set by the Kyoto, India needs to frame tougher laws related to fuel efficiency, because Co2 emission by vehicles is directly related to magnitude of this problem.

According to one estimate, India is the second largest Car market in the world and constitutes 14% of CAGR. India meets 78 % of its fuel demands by imports and is likely to go up to 94% by 2030. This means that the level of emission of GHGs especially Co2 would go up alarmingly over a period of time.

We have one ‘Bureau of Energy Efficiency’ which takes care of this problem. There is a ‘National Action Plan on Climate Change document (NAPCC)’ which postulates many other related topics including emissions of GHGs. Right now, we don’t have any emission specific law, therefore; we desperately require enacting an emission specific legislation for vehicles as the Americans have done in 2007.

Supreme Court of India has already laid down certain guidelines and many of which had been implemented in Delhi. All the Buses and Auto rickshaws in Delhi are now CNG driven. We need to take similar steps in other parts of the country also.

Many experts fix target of 80 gm/ Km by 2020 for India and say that if it is not achieved, we would be among the largest polluting nations in the world. 

Countries like Japan, China, S. Korea, Taiwan and almost all EU countries have emission regulators; therefore there is no reason why a fast developing country like India does not have a regulation in this regard.