The missing link in India’s governance
Yamini Aiyar | President and chief executive, Centre for Policy Research
Hindustan Times
Aiyar writes that despite Finance Minister Nirmala Sitharaman’s announcements to “rescue the economy”, the link between “ease of living” and “ease of doing business” is still missing from the government’s policy framework. While Prime Minister Narendra Modi has emphasised both goals in his speech in Houston last week, there is a “deafening policy silence” on how to bridge the two.
The labour market challenge explains this missing link — this is seen in the recent analysis by economist Radhicka Kapoor and, it revealed two things. First, a growing number of men from the working age group of 30+ are withdrawing from the workforce, possibly because of poor job prospects, and second, the percentage of those engaged in casual labour, where average earnings are much lower than the national minimum wage, is disproportionately high.
Labour is a domain where the government is “genuinely struggling”. The heart of the labour market challenge is education, but this too has not been addressed well in the ease of living agenda, says Aiyar.
The meaning of oneness in ‘one nation’
Sundar Sarukkai | Philosopher based in Bengaluru
The Hindu
Sarukkai writes that Home Minister Amit Shah’s call for ‘one language, one nation’ shows that philosophical reflection is needed in the political landscape.
When terms like “unity, unified, together, group, identity etc” are used they actually refer to the idea of ‘one’. Several great thinkers have spoken about this idea of one, from Narayana Guru’s imagination of a society with only “one caste” called the manusha jati, to Shankara’s belief that “the true reality is a oneness, and difference is only an illusion”.
When the government talks of ‘one nation, one language’, it clearly doesn’t refer to the mathematical number or a measure of quantity, but rather the quality of oneness. But the problem is that even if all Indians speak one language, it would not guarantee oneness. Conversely, even if no Indians shared the same language it could still be that they shared the quality of oneness. In the government’s view, writes Sarukkai, “one nation” refers to majority. But “majority does not create oneness, it only creates bigger numbers”. The quality of unity in “one nation” can only be realised by recognising the “common humanity in all of us, independent of our gender, caste, class and religion”, concludes Sarukkai.
House is sovereign
Upendra Baxi | Professor of law, University of Warwick, and former vice-chancellor of universities of South Gujarat and Delhi
The Indian Express
Baxi writes about the “slender but significant” judgment of the UK Supreme Court that declared the prorogation of Parliament unlawful on grounds of “parliamentary sovereignty and democratic accountability”. Even though the situation in court was “pregnant with the politics of power”, it focused on the constitutionality of the prime minister’s suspension of Parliament. It was the British court’s “Kesavananda Bharati moment”. But unlike Indian courts, there were no loud riots of dissent.
The “United Kingdom does not possess a single document like ‘The Constitution’, but its Constitution has been established over the course of history. These laws are not codified, but have developed over the years and include “numerous principles of law, which are enforceable by the courts”, writes Baxi. Thus, the courts have a responsibility to uphold values and principles of such a Constitution, and cannot shirk this responsibility when questions raised are “political in tone or context”. By virtue of this, it ascertained that the “power to prorogue cannot be unlimited” as no power in a democracy is unlimited.
“Neither the monarch, nor the prime minister, may insulate themselves from parliamentary sovereignty and democratic accountability,” writes Baxi. The British court upheld the principles of democratic accountability by finally asking the parliament to “decide the terms and conditions of Brexit”, concludes Baxi.
Economic shudders and revival
Jaimini Bhagwati | Former Ambassador, senior Finance Ministry official and World Bank Treasury specialist
Business Standard
Bhagwati argues that one of the primary reasons for the economic slowdown is overvaluation of the Indian rupee. A 2019 RBI report states that the rupee’s real effective exchange rate was overvalued by 24.6 per cent against six currencies.
A significant way of reviving domestic demand, in such a scenario, is higher lending by banks and Non-Banking Financial Companies (NBFCs). However, they are hesitant to do so since “defaulting borrowers are managing to retain assets pledged as collateral at the time of borrowing”. The SC quashed the February RBI circular, which attempted to tackle this and Bhagwati calls it a “monumental blunder”. “Limited liability legislation allows promoters to retain personal wealth and only what was pledged can be attached by lenders,” he writes.
Bhagwati also recommends that since the government seems to have reverted to public sector banks (PSBs), the board members of such banks “be chosen for their domain knowledge and unimpeachable integrity”. He suggests reducing the government equity holdings in Coal India and LIC to 60 per cent, and encouraging foreign investment in Air India, MTNL and BSNL, which continue to suck up resources.
According to Bhagwati, the government needs to let go of “attention grabbing headlines” and rather focus on “real GDP growth of 8 per cent and higher annually in rupee terms, which is a tried and tested way for India to raise employment and reduce poverty”.
Incentivising risk-takers, entrepreneurs
TV Mohandas Pai | Chairman, Aarin Capital Partners and S Krishnan | Tax Consultant
Financial Express
Pai and Krishnan welcome the slashing of the corporate investment tax (CIT) to an effective 25.17 per cent as it “will reduce the pressure on companies to generate higher returns, improve the risk-return trade-off for investors, and increase investment”. Before this move, India’s CIT, at 35 per cent, was the highest among the largest economies. The reduction brings the CIT closer to the global average of 23.03 per cent, they write.
Earlier in FY18, companies with a turnover above Rs 400 crore and dividend distribution tax of 20.56 per cent, had to earn a pre-tax income of 27 per cent “by investing, running a business and creating jobs to enable investors in that company to earn a post-tax dividend of 12%”. Now, a pre-tax income of 23.5 per cent has to be earned.
The high taxes on companies made them uncompetitive globally, reduced “money for reinvestment” and disincentivised investment. Thus, “when overseas companies with a lower cost of capital invest and operate in India, they dominate,” the authors write.
A booster shot for India Inc is nice. But how will this lead to greater consumption?
Omkar Goswami | Chairman, Corporate and Economic Research Group Advisory
Economic Times
Goswami doubts whether Finance Minister Nirmala Sitharaman’s decision last week to reduce the corporate tax rate will address the root of the current economic slowdown — poor demand.
The announcement created much cheer in the corporate world as it sought to revive animal spirits in Indian markets and make “gloom and doom a thing of the past”. Goswami finds “nothing troublesome” about these reforms or in the “much-quoted fiscal deficit impact”, which he finds overstated. However, to say they will result in higher consumer spending and lift the GDP through greater domestic demand “seems far-fetched”.
Instead of providing an “adrenaline shot” to corporations, he suggests that policymakers focus directly on creating greater purchasing power among the bottom 60 per cent of India’s population.
Why we should foster candour on sensitive issues in children
Anurag Behar | CEO, Azim Premji Foundation
Mint
Behar narrates in detail his experience of visiting a government upper primary school in a mountainous terrain. But he keeps the name and exact location of the school secret to arrive at the conclusion that the quality of education in India can be improved “if teachers take initiative” in opening up conversations on sensitive issues — be it caste, gender or class.
A discussion led by the children in which they debate discrimination based on gender, caste, religion or class in their own villages is one incident that impressed Behar. He identifies this as an attempt to foster “consciousness and candour” on issues that most schools would never talk about, “let alone confront”.