Towards a Colombo reset
Raja Mohan | Director, Institute of South Asian Studies, National University of Singapore
The Indian Express
In light of Gotabaya Rajapaksa winning the Sri Lankan presidential elections, Mohan weighs in on the “complex power play involving Beijing, Delhi and Colombo”. He argues that “in coping with the fluid geopolitics around India, Delhi has no reason to be taken in by the media’s definition of the Rajapaksas” as “inherently pro-China”.
Mohan writes that the “stage” is “ready for a reset in the bilateral relations between the two strong governments in Delhi and Colombo”. This “reset involves addressing the structural factors”, one of them being China. Delhi and Colombo “need a clear understanding of mutual red lines relating to national security and a political comfort level to discuss cases that fall within the orange zone” argues Mohan. He calls on India to “invest some political capital in resolving problems such as long-standing dispute over fisheries”.
The second structural factor shaping India’s relations with Colombo is the “Tamil question”. Mohan writes that Delhi “has certainly learnt the dangers of being drawn too deep into the domestic conflicts of neighbouring countries”. Finally, he argues that if the Tamil question “continues to have a big impact on Sri Lanka’s foreign policy, Delhi needs to look beyond old formulae to try and encourage reconciliation within Lanka and across the Palk Strait with Tamil Nadu”.
Raise growth, reduce poverty
C. Rangarajan | Former Chairman of PM’s Economic Advisory Council
Mahendra Dev | Vice Chancellor, Indira Gandhi Institute of Development Research, Mumbai
The Times of India
Rangarajan and Dev argue that while it is important “to know how policies operate at grassroots level, we must not overlook the relevance of macroeconomic policies in ameliorating poverty”.
They write that “growth is important” as it “does affect all sections of society” but “the extent to which the bottom deciles of the population will benefit will depend upon how fast and inclusive growth is — thus composition of growth also matters”. Therefore, they argue, pattern of growth matters for the reduction of poverty.
The authors recommend turning basic income into a “supplemental income” and one alternative “to determine the required income supplement can be from the Rural Employment Guarantee Scheme”. Dev and Rangarajan write that there is a “ need to evolve a criterion, which can restrict the total cost” to this income amount.
The mother of non-issues
Jean Drèze | Visiting Professor, Department of Economics, Ranchi University
Drèze wonders what the “world would be like if men” had to bear and deliver babies. He believes that “paternity benefits would be given through flagship social programmes with hefty budgets”. Instead, he notes, “maternity benefits in India are a non-issue” and the central government stands “clueless about their legal, financial and political aspects”.
Drèze writes that maternity benefits are “reasonably generous for a small minority of Indian women employed in the formal sector and covered” under the Maternity Benefit Act. Under the “National Food Security Act, 2013, all pregnant women are entitled to maternity benefits of Rs. 6,000 per child” but the central government has “simply ignored its duty to act on this”.
A maternity benefit scheme “rolled out in 2017”, the Pradhan Mantri Matru Vandana Yojana (PMMVY) has been “ruined in three steps”— first, “the coverage and benefits were reduced”. Second, “the application process is tedious”. Third, “there are frequent technical glitches in the online application and payment process”.
He argues that it “would take very little to extend and consolidate” initiatives taken by state governments on a “national basis” but the Modi government is not “interested”.
Wrong to Jump The Gun
Rishikesha T. Krishnan | Professor of strategy, IIM, Bangalore
Krishnan begins with an anecdote of the first time he saw Infosys co-founder, N.R. Narayana Murthy at a software exports meet in Bangalore. Speaking at the meet, Murthy was “forthright about the policy constraints that… [hold] back companies from reaching their full potential.” Given this, it is a pity that a success story in the software industry like Infosys now finds itself under a “corporate governance cloud” following a whistleblower complaint alleging that executives were taking “unethical steps” to boost growth and revenue.
Krishnan backs Infosys and Chairman Nandan Nilekani as it is unlikely such practices could take place under the latter’s “watch”. Furthermore, “all evidence available in the public domain” of how the audit committee considered the complaint and undertook a preliminary investigation to check if it had substance, shows that the company acted “promptly”, writes Krishnan. Verifying any whistleblower complaint prior to making a disclosure and having discussions between management and auditors are just part of “good corporate governance”, he adds. Therefore, an objective investigation should be completed “before we pass judgement on the company”.
The job crisis worsens
Shankar Acharya | Former chief economic adviser to the Government of India
Acharya writes that India’s job crisis has worsened in the last 15 years. He argues that poor public education and skilling programmes, the “anti-job-creation maze of labour laws” and “policy shocks like demonetisation” show how bad policy has “squandered” away the potential for economic development among India’s growing working age population. Therefore, “tackling the policy and programme weaknesses” is the only solution, explains Acharya.
According to the Periodic Labour Force Survey (PLFS) for 2017-18, youth unemployment rate tripled to “an unprecedented 17.8 per cent” last year, which points to a “growing paucity of jobs” that could trigger serious “social and economic distress and discontent”. Furthermore, less than half of India’s working age demographic “have jobs or are seeking work” due to low labour force participation and more specifically the fall in the female labour force participation rate that is currently lower than in China, Indonesia and Bangladesh, he adds. “Disheartened labour force”, in which constant failure to get jobs forces people to drop out of the labour force, is another factor, writes Acharya.
Time to give up the bogey of a revenue neutral tax rate
Ajit Ranade | Economist
On the economic slowdown and the problem of income inequality, Ranade recommends replacing “all GST rates with a standard rate of 12%… and gamble on growth” that will usher in a progressive and stable indirect tax regime.
Unlike most countries with a single GST rate or maximum three, India has differential rates which “defeat[s] the very purpose of shifting to GST,” he writes. Before GST was first rolled out, rate discussions between the central government and states were hung on a “useless peg called the [revenue neutral rate] RNR” which was forced to take into account all central and state revenues, he explains. Also, the central government was responsible for reimbursing “any shortfall in states’ revenues after GST was rolled out”. For this, a central government cess was in place that also increased “India’s energy costs”, he adds.
Given this bad history, Ranade calls for a standard GST rate and also recommends that the tax net be “wider and more comprehensive” and “include petroleum and electricity” to boost cooperative federalism and perhaps growth.