OPinionatED

or

VOX POPULI

by

 Aam Admi

Issue: 167                                                                       Date:  05.09.2016

Contents:

1. Social Security For Senior Citizens Below IT Exemption Limit

2. Twists & Turns In The Political Scenario Of Goa

3. The BJP Make in India Program

Social Security For Senior Citizens Below IT Exemption Limit

Finance Minister Jaitley has been talking about the transition of our country from a developing to a developed society for which one of the indices is a Social Security Net for its citizens. A start could be made by adding a scheme of giving a guaranteed rate of interest of 15% to Senior Citizens on their Fixed Deposits (FD) with banks not exceeding Rs. 20 Lakhs. This scheme can be given only to those senior citizens who have taxable income below the exemption limit of Rs. 3 Lakhs and live off their interest earned from the FD's. This is the segment who in the sunset phase of their lives are finding their income being eroded by rampant inflation particularly for food and are forced to encash their FD's making their future more uncertain. The difference of interest between the 15% on the scheme and what is payable by the banks on equivalent FD's can be transferred to the account of the senior citizen under the DBT (Direct Benefits Transfer) mechanism. These citizens in their own small way would have contributed in building this nation and doing this for them would mean recognising them for their contribution. At 15% p.a. on Rs. 20 Lakhs gives the Senior Citizen Rs. 25,000 p.m. interest income sufficient enough for 2 people to survive on in these times. This is the level of income being set now under the 7th Pay Commission for Class IV workers of the government which at least the Senior Citizens deserve. Postscript: Jaitley has been talking with a forked tongue as is the habit of the BJP Ministers and their functionaries, who rarely speak linking their past statements on any issue. For them each time they speak on the subject it is like they are speaking anew and disregarding whatever they have been saying on the same matter in the past irrespective of the fact that they may be contradicting themselves. In the context of the Social Security net that he was talking about, Jaitley referred to instruments of saving like life insurance, pension funds and health insurance schemes which the BJP government has announced keeping in mind the senior citizens. But all these schemes are contributory schemes and the citizens are expected to pay up first and then become beneficiaries depending on the maturity of the scheme and or in the event of premature death. Thus the government is not doing anything for the citizens be it senior or otherwise. In fact, quite the opposite.  Jaitley had also said in the recent past that banks should reduce interest rates on FD’s since it is a high cost instrument for them. This statement was made obviously without looking at who are the critical beneficiaries of the FD’s. These are in the majority those senior citizens who are not part of the pensionable sector and the interest income from FD’s is what they use for their expenses. Other than this Jaitley recently had put an embargo on employees taking loans against their PF contributions for which across the country there was an uproar and then the government had to hurriedly back-track on the issue. PF is considered to be employee’s funds and the practice has been that they take a loan for meeting urgent family expenses be it medical or otherwise. The government banning this was clearly unjustified and indicated that it was keen to appropriate employee funds. It is another matter that interest on PF deposits has been going down year by year with the government pleading that it is unable to afford it. This is rather sad since PF is a long-term saving instrument for employees. The high interest rate of PF was the excuse for the government to invest the PF corpus in securities, shares and foreign based pension funds under the plea that they would get better returns and therefore be able to pay higher interest to PF subscribers. But strangely the government was silent as to what happens if the returns are below the targeted rate of return. Thus the above scheme for senior citizens below the IT limit of Rs. 3 Lakh per annum was thought of considering that the government has so many schemes and sops for different sectors of our society but nothing for those who have actually served the country and are finding it difficult now towards the end of their lives.

Twists & Turns In The Political Scenario Of Goa

The political scene in Goa is hotting up with many twists and turns. First there was talk of a Mahagatbandhan a.k.a the Bihar style where the JD and the RJD had got together to get the better of the BJP. But this idea was shattered because the principal opposition parties like the Congress could not see eye to eye with the other parties on the number of seats that each would contest. It ended with a resolution that the number of MLA's in the Assembly should be increased from the present 40 to accommodate the demands for seats by all the parties! The bigger the premature idea, the harder the fall was the maxim that played out here. 

After that the MOI – Medium Of Instruction - agitation launched by the BBSM started to pick up steam. The background to this agitation is that the instruction to the children at the primary school level should be in the mother tongue – Konkani. But unfortunately there are not many Konkani schools in Goa and the Catholic Church in the framework of the Diocesan Society that had adopted Konkani as the MOI at the time of Liberation of Goa in 1961 has since changed over to English. Other than government schools which teach in Konkani, there are also Marathi schools which exceed the number of Konkani schools. The second demand of the MOI agitation is that giving government grants to schools that teach in English should be stopped while it can be continued for schools that teach in Marathi, even though the latter is not a mother tongue for Goans. This latter demand refuses to accept the reality that parents today for many economic reasons prefer that their children are taught in English. It also refuses to accept that the Church schools were originally teaching in Konkani and have lately switched to English for which reason the government grants cannot be taken away from such schools which has been availing grants for close to 50 years for some of the schools.

This agitation was what got the BJP royally riled up since where they took the RSS support for granted, they had to fend the State chief of the RSS leading the BBSM – Bharatiya Bhasha Suraksha Manch, not only campaigning publicly against them but also giving ultimatums to them. The BBSM plank of the mother tongue, Konkani being the only language as medium of instruction (MOI) in Goa's primary schools and the withdrawal of government grants to English-medium schools is fraught with political dynamite. The reason being it is just not a language issue but has polarised civil society along religious divides with FORCE in the majority a Christian dominated grouping which has been pitching for English as MOI and demanding that government grants to English-medium schools should be continued in the framework of a law. Thus in the upcoming elections the BJP cannot afford to have the MOI issue bubble up since it may mean losing a majority of the Christian vote. The BBSM issue has got further complicated with Subhash Velingkar, the head of the RSS in Goa, being summarily removed from his post. This has resulted in the en-masse resignation of the RSS members - karyakartas in the State. In arithmetical terms, there are just 400 of such RSS members which in election maths is not a very big number but the fact that the BBSM had promised that with this force they would canvass and get 2 lakh volunteers - matribhasha rakshaks, who would fight for defending the mother tongue, gives the matter a significant twist. These kind of numbers projecting a different view than the BJP's will dent their chances severely leading to a loss of at least a couple of seats making them go below the magic figure of 20 in the Assembly.

There is another googly in the equation. This is with the MGP publicly announcing that it supports the BBSM on the MOI issue and that it will make it an election plank. The BBSM clutching at straws has asked the MGP to declare its support to the BBSM on the political platform by Sept 30, 2016. Further the BBSM has said that it will form a political party and intends to field some candidates for the upcoming Assembly polls. Even with a person like Uday Bhembre in charge of the BBSM's political aspirations these moves seem to be premature and too much and too quick. They will only end up falling flat on their face and with the race lost will stand to further lose whatever support they have up till now. Sudin Dhavlikar of the MGP has tried to dissuade the BBSM by saying that it is not easy to form a political party. The BBSM should also realise that theirs currently is a single point agenda with the MOI issue and their position is not known on many of the woes that are affecting Goa as also their political agenda. Without thinking through the matter the BBSM is better advised to stay away from the electoral fray at least for 2017. The MGP is playing the BBSM along since it fits into their game plan of getting a larger vote share thus ensuring that whatever candidates they put up will win.

We now come to the Congress which is a divided house as usual and forever looking up to the High Command at Delhi for advice. They have been bickering about old faces and new faces to be put up for the elections. The old faces do not want to let go while the new faces are a risk considering the winnability factor. Some of the new faces seeing this and recognising that their future is none too bright in the Congress decided to jump ship and join the new Goa Forward party a few months ago. The Congress risks becoming just a South Goa party and even there they may have to contend with rebellion in Quepem. Calling Congress  a South Goa party is because the younger Rane, true to the aspirations linked to his name of Vishwajeet, wants to anoint himself the King of Sattari with his Yuva Morcha and has sought autonomy in decision making for this area from the local Congress leadership. Thus the Congress will end up getting even lesser seats than in the present Assembly and if that happens it will be the end of the Congress in Goa for some time to come. This is being stated because in all this the role of the Churchill brothers and Mickey Pacheco's GVP has not been factored in which will further take away key seats or reduce the vote share across South Goa for the Congress.

There are the small players like the GVP, UGDP, GSRP which may not figure in opening their account in the new Assembly. Among the new players both the Goa Forward and the AAP are new entities which will cut into the traditional vote share of the Congress. Essentially both parties are devoid of any agenda and are only reacting to the present government's failures. Where the Goa Forward has no mass base and is looking towards Vijai Sardesai to helm them through this first election, he will look for support from other Independents in the present Assembly like Rohan Khaunte and Naresh Sawal to make the party appeal to the people across Goa.

The AAP is better off being in Delhi and up north and should not needlessly dream of achieving anything in Goa. Their problem is that they have no roots in Goa and will suffer from the fact that in their parent charter of governance in Delhi, they have miserably failed. Blaming the Centre for anything and everything does not give them any credit. Moreover day by day their ministers and officials have been caught in one or the other embarrassing situations which gives the party a negative image. The advice to AAP would be, put your house in order and deliver on existing responsibilities before venturing out further across India. Interestingly match-fixing as we know it involves fixing the outcome of matches, but the AAP has come out with a new twist to that and they have fixed a poll on the likely outcome of the Assembly elections and given themselves a vote share in excess of 30% and seats in excess of 20.  This is an amateurish attempt to turn people's mind which will not work. There is still more than 6 months left for the elections and the AAP fail to realise that anything could happen in this period.

Summing up one is reminded that it is popularly said that if 3 Keralites get together, there will be 5 political parties formed. This was and is the situation in Kerala where the multiplicity of parties has fragmented the votes so much that they finally had to make the Congress-led UDF and the CPM-led LDF, which essentially became a 2-party political model which has been alternately winning elections in the State. Goa is going the same way with so many parties whose agendas are none too different confusing the voters. Thus in the upcoming 2017 Assembly elections in Goa it is predicted that you will have a hung Assembly with even the BJP and its allies not able to get a majority. This will lead to horse-trading and those parties and/or individuals with the 2 or 1 seat that will tip the majority scales will sit pretty with their loaves of office well buttered. But as we go towards election time we will continue to have dramatic announcements, resignations, maybe even formation of even newer parties to keep the gossip mills grinding but nothing would change the above predicted outcome.

The BJP Make in India Program

This BJP-led NDA government has been strongly promoting its Make in India program. Essentially this is nothing but the indigenisation program that India has had for five decades or more. When it started the emphasis of the indigenisation program was to build self-sufficiency and replace imports considering that we always had a foreign exchange problem. Overseas manufacturers were earlier invited to manufacture in technical collaboration with local partners and different sectors were allowed with varying degrees of foreign holding in the locally established facility. It was rare that overseas manufacturers were allowed to hold more than 51% equity and never 100%. In the present context where times have changed the Make in India program is getting overseas manufacturers to build products locally. The basic objective of the program is the same and that is to come to India and produce here. Thus there is nothing new in the Make in India program.

Another related issue to FDI is that India up to the 1990's never had sufficient foreign exchange to fund our essential imports and extended our palms to the world mostly the developed countries seeking foreign aid and also food. After economic reforms were introduced progressively through the 90's our foreign exchange position from a point where we were compelled to pledge our reserves of gold with the Bank of England in 1991 to fund immediate imports, has reached a level of some US$ 300 billion or more but we continue to still seek foreign direct investment (FDI) and even lately foreign aid. This anomaly needs to be checked and corrected since in spite of comfortable foreign exchange reserves and falling oil prices considering oil is a major component in our imports, we still beg! Earlier the foreign investments were for critical and essential sectors mostly high technology so that we build local competence and reduce imports. The motive word was import substitution. Now imports are allowed across the board and that is why we see cheap imported products from China flooding our markets.

As for FDI we need it bring in technology in desired sectors, for expansion and where we have gaps in investment funding. But it seems we are allowing it indiscriminately. We are allowing it in aviation to the extent of 100% now which could be acceptable since it is a high investment sector. But we have to ponder if it is really desirable since our problems are related to expansion of airline services to second and third level cities and also to remote sectors like the North East. For this the airports are needed to be made ready or revamped and from existing available infrastructure. Though plans had been drawn up for this airport network not many investors have come forward and put in their money. In the same way flight connectivity is being hampered because of lack of infrastructure at existing airports even the major ones (Mumbai airport is unable to grant any additional slots for local flights because of lack of parking bays!) and that flights to some destinations is unprofitable because of poor load factor. Thus where existing airlines are chary to expand services and where local investors have hesitated to put in money to build airports, do you think that foreign investors will jump in and take up the challenge. This belief is somewhat far-fetched. Even if the foreign investors come in they will put a host of conditions by which they would like to protect their investments. This may extend to making the airports in the far flung areas as enclaves in which they will ask for long term ownership of land and options for alternate investments in these areas and also maybe prohibit local people to venture inside on grounds of privacy and/or security except in transit for availing air services. We will thus build foreign enclaves which will dot the country like sometime back the Japanese wanted to build golf courses in some Asian countries to serve only their people. Do we want such a thing to happen in our country?  Further at these times of terror and security concerns, we will have the aviation sector with foreign ownership creating additional turf wars to allow access for our law enforcement authorities to pursue investigations and/or intercept and restrain people. We could also have 9/11 style incidents with planes flying into our high density population centres in hara-kiri mode. Just a couple of years back there were questions raised of some Gulf foreign holdings in Jet Airways and for which there was a big hullabaloo related to national interest and security concerns but now we are freely allowing 100% FDI in the airline and airport infrastructure sector. Has anything changed from then to now except for the mindset of our policy planners? The general impression among foreigners is that the domestic air fares in India are relatively cheap when they consider their own countries. Thus with the airlines becoming of foreign ownership, you may find the domestic air fares being hiked indiscriminately and maybe indexed to the US$.

Organised retail has also been opened up with 100% FDI which just a few years back had been pushed back with the likes of Walmart and other retail chains from the UK and France pulling out because of uncomfortable conditions. What has happened in the interim for a change of decision is not known but the domestic chains among others like Big Bazaar, Reliance Fresh and Godrej have been doing a commendable job in bringing products ranging from fresh vegetables to household goods and necessities to fashion items across India. Some of these chains have been buying directly from the farmers and giving the grower more return than even the APMC and entrenched middlemen offer. The government should have supported these local retail initiatives since they are more familiar with local availability, conditions and customer preferences than the foreign chains. The support among others could have been in terms of helping them to set up cold chains for handling fresh produce, seafood and meats. With the foreign retail chains coming in they will not be sensitive to our farmers needs and progressively all products will like airfares, as mentioned earlier, be indexed to the US$. The day may come and not too far into the future that at the cash counters of such departmental stores you may be told by the cashier that onions are just 99 cents i.e. 1 cent below the US Dollar when you were buying it regularly at around Rs. 20 per Kg., a factor of increase by almost three times. 

In areas like pharma where we know that research is oriented towards finding that molecule that will get the MNC Cos. a billion Dollars maybe allowing a larger level of equity is acceptable and there could also be a condoning factor here since this area is related to the health of our people.  At the same time we know that these Cos. overprice their products as has been seen in the AIDS cocktail of medicines that the UN was trying to promote in Africa where Cos. from India like Lupin were found to be much cheaper. Again as said earlier the condoning factor is that the MNC's who produce drugs locally here sell these at prices much below what they sell the same in countries like the US or elsewhere. So on the pharma sector one cannot castigate the government much for opening up the FDI/equity holding. Though one would have preferred that the government like South Korea did after the war in the 1950's chose some select Cos.'s like Lupin and other locally proficient Cos. to become MNC's in their own right. Though one must say that some of these Cos. have done exactly that without any governmental support.

Defence is a sector that should not have been opened up to foreign investment since issues of national security are involved. The earlier method of licensed manufacture by local Cos. like HAL or BEL or Bharat Dynamics with foreign defense equipment manufacturers should have been followed. The idea of allowing FDI in this sector may be to reduce pricing of both equipment as well as spares and consumables like ammunition etc. by getting the foreign defense equipment manufacturers having an interest in the local Co. But this is essentially a naïve approach since these manufacturers after having dealt with banana republics in Africa and elsewhere as well as mercenaries, have become bloodsucking leeches themselves. Thus what they would do is factor in their investment while working out the technology transfers for the proprietary items in the package and reap profits hand over fist. While going to war our boys in the defence forces will be constantly thinking whether any of their equipment would actually work since it was partially made by the country they are opposing. The FDI in the defence sector is therefore an ill-conceived premise and needs to be dropped at the first instance. However, what is commendable is that in the defence sector, we have the likes of industrial groups like our Tatas, Mahindras, Larsen & Toubro and the Reliances take up production of different items that are required by our armed forces sometimes in technical collaboration with foreign Cos. It is this initiative which should be promoted and fostered to early fruition rather than any direct Make in India initiative by any foreign Co. through a dummy local partner. The lack of wisdom in opening up the defence sector is highlighted by our own experience with Chinese manufacturers who were supplying in association with their local counterparts the entire plant and equipment requirements of our thermal power plants considering that they were much cheaper than the equivalent foreign vendors and also local Cos. like BHEL but then it was found that these equipment were prone to regular failure and availability of regular and timely supply of spare parts was an issue from the Chinese vendors. Thus the Chinese vendors for plant and equipment for thermal power plants are not so much favoured now. In another case, though not directly related to defence but a similar critical area of telecommunications a few years the Chinese Co., Hua Wei with a software development centre at Bangalore was found to be involved in spying and some of the engineers had been arrested. At around the same time there was a case in US courts where the same Chinese Co., Hua Wei was pulled up by US regulators for not fully sharing the source code of the software that runs the Co.’s electronic exchanges. The point being that the US regulators feared that the Chinese Co. could use the secrecy to peep into the US telecommunication networks including that of the defence services and be open to sabotage. Thus we cannot have obviously a situation where our thermal power plants stop generating electricity because of faulty equipment and our telecommunications network is controlled by Chinese software engineers. That precisely is where we will end up if we open India’s defence sector to foreign Co.’s

Lastly one does not understand why we should open up our dairy industry to US Co.’s which Modi on one of his visits to the US made a strong plea. The strong dairy industry is in New Zealand or in Europe among the Scandinavian countries where we should have gone, if at all, it was required. In fact in the FDI announcement the dairy industry figured. Are our co-operatives like Amul not good enough for our government? Or the fact that prized bulls from Andhra and Orissa fetch a high price and are taken to Brazil to perform as stud bulls since their bloodline is strong and they help in producing cows that give milk in large volume? Brazil is in this process making money from Indian stud bulls, while we sit around sucking our thumbs. Is our government aware of this and if so, what are they doing about it? Why do we not support our own home-grown possibilities before we jump to conclusions that foreign things are better for us?

Concluding, the Make in India is a good initiative, but it is nothing new, and any developing country aspiring to become a developed society will aspire to localize a large part of goods and services that it needs within its country. But we need to be selective and see where our local strengths lie and only after assessing them move towards foreign sources. Such an approach generates a strategic balance of resources and capability and is more sustainable in the long run.

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