A flawed approach to food security

Within months of assuming office, the BJP-led National Democratic Alliance government set up a High Level Committee (HLC) in August 2014 to restructure, reorient and reform the Food Corporation of India (FCI). The eight-member HLC was chaired by senior BJP leader, Shanta Kumar, and included prominent economist Ashok Gulati. On January 22, 2015, the HLC submitted its report to the government and made its recommendations public.

In the short run, the committee recommends that the National Food Security Act (NFSA) 2013 be curtailed. In particular, the NFSA entails providing subsidised food to about 67 per cent of the population, and the committee recommends that the coverage be brought down to 40 per cent. In the medium run, the committee recommends that the current public distribution system (PDS) be replaced by a cash transfer system. This will mean that the state will no longer have to be responsible for distributing food to vulnerable sections of the population. Hence, the state will no longer need to procure food from farmers, and store it. Since the current system of procurement, storage and transportation is primarily managed by the FCI, the medium term vision of the HLC implies that the FCI can, in due course, be folded up.

The overall thrust of the HLC’s recommendations, if implemented, would whittle down the operation of the FCI in the short run and completely dismantle it in the medium run. The HLC has advanced two broad set of arguments as justifications for its recommendations. Critical scrutiny shows that both are fallacious.

Changed situation

The first set of arguments of the HLC relates to changes in the situation in the country as regards food production and consumption since the crisis period of the mid-1960s. Today, India produces more food grains than it consumes, even exporting substantial amounts to the world market. It has a large public stockholding of food grains and is comfortably placed as regards foreign exchange reserves. All this is in stark contrast to the situation in the mid-1960s. Moreover, consumption patterns of households have displayed a shift away from cereals. This changed situation, in the opinion of the HLC, calls for a change in the role of the FCI.

The HLC, however, has ignored the fact that India continues to be plagued by large scale hunger and malnutrition. Data from the National Sample Survey (NSS) shows that in 2009-10 the vast majority of the population was consuming less than the 2010 Indian Council of Medical Research calorie norms. If we look at trends over time, the same data also shows that average calorie and protein intake have declined over the past few decades. Evidence on more direct measures of under-nutrition – like the proportion of underweight and stunted children – are equally grim.

Fulfilling its objectives

Given these well known facts and trends on hunger and malnutrition, it seems foolhardy to use the fact of a changed production situation in the domestic economy to argue for the dismantling the FCI. A more sensible route would be to use increased domestic production to directly address the problems of hunger and malnutrition. In this strategy, the FCI is bound to play a more rather than less important role.

The second set of arguments given by the HLC as justification relate to the claim that the FCI has not been fulfilling its three key objectives in recent years: providing price support to farmers, delivering food through the PDS, and reducing volatility of food prices (and addressing food security) through public stockholding. According to the HLC, failure to meet the objective of providing price support is shown by the fact that in 2012-13 only six per cent of agricultural households sold any food grains to procurement agencies. Failure on the PDS front is attested by massive leakages from the system. Food grains rotting in FCI warehouses highlight the failure of the system of public stockholding.

The fact that only six per cent of agricultural households sold paddy or rice to any procurement agency in 2012-13 is really striking. The Situation Assessment Survey of Agricultural Households conducted by the National Sample Survey Organisation during the 70th Round (2013) of the NSS – the data source that allowed the HLC to compute the figure of six per cent – shows why. The NSS data reveals that the vast majority of agricultural households were not aware of the existence of minimum support price (MSP), and an even larger proportion were not aware of procurement agencies (about 80 per cent for paddy and 70 per cent for wheat). Of the households that were aware of MSP but did not sell to procurement agencies, a large proportion did so for lack of procurement infrastructure at the local level. Moreover, if we go back 10 years and look at data from the previous (and first) Situation Assessment Survey of Farmers in 2003, we see a large variation across States in awareness of MSP, with Haryana, Kerala, Punjab and Tamil Nadu showing high awareness.

One can see that the reason for low use of procurement is lack of information. The other reason is lack of enabling infrastructure at the local level. States which have managed to put such infrastructure in place and disseminate information about procurement saw greater participation. Thus, the HLC’s conclusion that the procurement system is not working is misleading.

The second claim of the HLC is that the PDS is a failure because of massive leakage. But, what do we know about the extent of leakage, its spatial and temporal patterns?

The existing literature on PDS in India has highlighted three important patterns. First, there is a secular decline in leakage over the past decade. Second, there is a large variation in the extent of leakage across states with some States like Andhra Pradesh, Himachal Pradesh, Karnataka, Kerala and Tamil Nadu consistently reporting low leakage. Third, and more interestingly, many States like Bihar, Assam, Chhattisgarh, Jharkhand and Uttarakhand, have improved considerably over time with respect to leakage from the PDS. The conclusion that would be consistent with the findings of this literature is not that the system needs to be dismantled but that the strategies adopted by successful states are replicated in the other States.

The third claim of the HLC is that the FCI has ended up with excess stocks of food grains. Since storage of food grains is costly, it represents a waste of resources that could have been used elsewhere and in more productive ways. We agree with this and would go further to argue that excessive stocks of food grains on the one hand, and prevalence of widespread hunger and malnutrition on the other immediately call for an expansion of the PDS operations.

To sum up, neither the changed situation with respect to domestic food production nor the functioning of the FCI with respect to meeting its key objectives lends credence to the argument that the FCI, and with it the whole food management system, needs to be curtailed.

(Deepankar Basu is assistant professor in the Department of Economics, University of Massachusetts Amherst, U.S., and Debarshi Das is associate professor in the Department of Humanities & Social Sciences, Indian Institute of Technology, Guwahati.)

http://www.thehindu.com/todays-paper/tp-opinion/a-flawed-approach-to-food-security/article6903192.ece

A social role for NITI Aayog

NITI Aayog has had its first meeting with the economic experts. This was crucial since the government is trying to revive economic growth. The economy has experienced slow growth in spite of the revised national income data that has indicated faster growth. Industry, exports and so on, have shown tepid growth in recent years. The National Democratic Alliance’s electoral promise of an economic turnaround seems elusive in spite of its accelerating “reforms” by liberalising foreign direct investment (FDI) flows and land acquisition policies to signal its pro-corporate sector and big business inclinations.

Contradictory views

The budget is first a macroeconomic exercise and then a micro one catering to sectors of the economy. Two contradictory macroeconomic views are emerging from the government and its policy advisers. This is similar to the policy dilemma that the United Progressive Alliance faced earlier. The first view is to have a larger fiscal deficit so as to boost demand. The other view is to cut the fiscal deficit to keep the credit rating agencies (proxy for financial interests) happy so as to prevent a downgrade of the economy.

The Finance Minister favours the latter view and argues that a fiscal deficit imposes a burden on future generations who will have to repay the debt. This conservative view assumes that resources are constrained, so if the government spends more, the private sector has less to spend. But that cannot be true when the economy has spare capacity and can produce more. Increased government expenditures then boost the economy and lead to more investments via the accelerator. If increased spending is financed by increased direct taxation, that is even better. This is feasible in India since direct taxes are around 7 per cent of GDP which is low when compared to most other countries. But a government trying to signal its pro-business inclination would not wish to raise direct taxes like income, corporation and wealth taxes.

Actually, tax rates need not be raised but only the concessions given in taxes (these are called tax expenditures and amount to 4.5 per cent of GDP) need to be curtailed to get more resources. But this may also be seen as anti-business. The other possibility is to tap the black economy (more than 50 per cent of GDP, according to me.) This requires political will which is not yet visible. The business community, the largest generator of black incomes, would see this also as anti business — it has been opposing introduction of general anti avoidance rules (GAAR). Even if the economy grows faster due to the reduction of the size of the black economy and businessmen gain, they fear it since a bird in the hand is worth two in the bush.

The NITI Aayog meeting does not seem to have considered these deeper issues. Advice was sought from former bureaucrats, journalists, industry lobbyists and academics. Media reports suggest a lack of coherence in the discussion or in the advice given. Some of the invitees had been present in the Finance Ministry pre-budget meeting last month. So, what was the point of the meeting now when it did not lead to clarity on long-term issues? Further, the time for incorporation of policies in the budget is over since most of it would have been formulated by now. It may have been better to circulate for comments a discussion paper on the Indian economy’s slowdown and its global interlinkages.

Dilemma with global echoes

India’s current economic dilemma has global roots. The eurozone, Japan and Russia are in trouble, the Chinese economy has slowed down and the U.S. economy is the only big one that has improved. In such a scenario, increasing exports in a big way would be difficult. Declining commodity prices (like that of petroleum goods) signal a weakening global economy. Uncertainty is deepened by the arc of instability due to failing states, from Afghanistan, Syria, Iraq, Libya, Nigeria to East Africa. The war in Ukraine and the rise of IS are compounding the problem.

Greece threatens the economic stability of the eurozone. The new government there is defying the dictates from the world of finance and has promised to end the austerity regime hoisted on the people of Greece. The Greek Prime Minister is telling the European powers that the economic rules of integration of the weaker economies of Europe into the eurozone need change. He is arguing that a substantial portion of the debt resulting from the earlier wrong policies needs to be written off. The other troubled economies of Europe — Portugal, Spain and Italy — are under increasing political pressure to follow Greece’s example.

U.S. President Barack Obama has proposed increasing taxation of the rich while giving more to the middle classes to reverse the growing inequity there. This move not only has a political strategy underlying it but also economic reasons that favour it. Given the Republican domination in the legislature and their conservative inclinations, it is unlikely that this proposal would be accepted any time soon. But, other countries would be forced to think about the idea, especially in the context of the developments in Greece.

In 2011, Mr. Warren Buffett gave a call to tax the rich more not only for the sake of equity but also to tackle the global economic crisis. This call was picked up in Europe with 16 of the wealthiest French urging their government to tax them more. Fifty wealthy Germans backed this petition. In Italy, the chief of Ferrari also lent support.

Inequity has grown in most countries since the mid-1970s following the domination of global financial capital over policies — spearheaded by the World Bank and the International Monetary Fund (IMF). These policies have not only marginalised other sectors of the economy but also promoted bubble economies that are prone to periodic collapse as it happened beginning 2007 and from which the world economy has yet to fully recover.

These policies promoted shadow banking and all manner of opaque financial instruments that created economic instability. A casino economy emerged with speculation leading to a fictitious boost in paper wealth, promoting a false sense of well-being among individuals and increased consumption by them. As inequality increased dramatically, and there was the marginalisation of the vast majority, there followed the “Occupy Wall Street movement”, termed as the “99% v the 1%” and which also popularised the term, “Main street versus Wall street”.

For people policies

Events in Greece and Mr. Obama’s suggestion suggest that the time has come to end the domination of finance capital over the rest of society. Policy space has to be recaptured from the world of finance by the democratic forces so that policies favouring the people can be initiated.

The dilemma currently facing Indian policymakers reflects these global trends. India’s rightward drift started with the Emergency in 1975 when Sanjay Gandhi marginalised the left of Centre thinking in the Indira Gandhi government. The trend continued during the Janata regime and thereafter under the Indira Gandhi government which had to approach the IMF for adjustment in 1980. Rajiv Gandhi, under considerable influence of the liberalisers, pushed this tendency faster. With the New Economic Policies in 1991 and the emergence of the World Trade Organization (WTO) in 1995, there was a paradigm change, with the policies of finance capital becoming entrenched.

For India, which remains very poor and very unequal, policies based on the interest of finance capital and a narrow section of society can only spell disaster. These policies push markets and technology-based solutions which marginalise the individual. The underlying idea is that if making democracy work is difficult, substitute it with technology. Those lacking faith in democracy and social institutions are (in the name of the poor) pushing an autocratic agenda based on greater use of technology. The hard work of creating and nurturing institutions that can deliver to the people and strengthen democracy is sought to be circumvented. So, one of the key proposals today is to push Goods and Services Tax (GST) even if it does not suit the needs of the vast unorganised sectors of our economy and benefits the MNCs and big business. The hard work of making taxation simple and effective and shifting to direct taxes is hardly on the agenda. Creating a large number of jobs is secondary to cash transfers, bullet trains for the elite and smart cities for the upwardly mobile.

The flyovers of Delhi were built to ensure smooth traffic flow but now have speed bumps to slow down vehicles and which leads to jams. The technological solution failed because the institutional design of management of urban traffic is flawed and that is because policymakers did not go deeper into the problem in their urge to provide quick fix technological solutions. The NITI Aayog could throw light on such long-term issues (with solutions that are not just economic or technological but also social and political) of strengthening democracy, building institutions, regaining policy space and so on.

(Arun Kumar is the author of Indian Economy since Independence: Persisting Colonial Disruption. )

http://www.thehindu.com/todays-paper/tp-opinion/a-social-role-for-niti-aayog/article6903189.ece

The menace of plastic waste

If there is one type of municipal solid waste that has become ubiquitous in India and most developing countries, and largely seen along the shores and waterways of many developed countries, it is plastic waste. Much of it is not recycled, and ends up in landfills or as litter on land, in waterways and the ocean. For the first time, researchers have estimated the amount of plastic that makes its way into the oceans. While the estimate of eight million tonnes of plastic being dumped into the oceans by 192 coastal countries in 2010 may appear staggeringly high, in reality the quantity would be many times more. Besides estimating the total quantity, a paper published recently in the journal Science has identified the top 20 countries that have dumped the most plastic waste into the oceans. At twelfth position, India is one of the worst performers. It has dumped up to 0.24 million tonnes of plastic into the ocean every year; the amount of mismanaged plastic waste per year is 0.6 million tonnes. In the case of China, the No. 1 polluter, the coastal population sends up to 3.53 million tonnes of plastic waste into the oceans each year. Besides the 11 Asian and South East Asian countries, the U.S. figures in the list.

A study published in December 2014 estimated the quantity of plastic floating in the ocean at nearly 270,000 tonnes. This is but a fraction of the total that finds its way into the oceans. Other studies suggest that the surface of the water is not its final resting place. Alarmingly, an unknown quantity of degraded plastic in the form of particles enters the food chain. Besides affecting marine life, plastic that gets into the food chain has serious health implications for humans. With the latest study estimating that the annual input into the oceans is set to double by 2025, there is an urgent need to tackle the problem. A two-pronged approach has to be adopted by the worst polluters to reduce per capita plastic waste generation and cut the amount of mismanaged waste by employing better waste management practices. Recycling is the best available way to tackle the waste, though it is not the ideal solution. India, which hardly recycles plastic waste, has its task cut out. It dumps a huge quantity into the ocean although it generates a relatively small amount of this waste per person — 3 per cent of 0.34 kg per person a day of all solid waste generated. The huge population offsets the advantage of low plastic consumption in the country. Cutting down on the use of plastic should also begin in earnest, and the first item that has to be targeted is the single-use plastic bag. The Union government recently refused to ban the manufacture of single-use plastic bags; the least it could do to reduce consumption is to make such bags expensive, employing the same rationale that has been applied for tobacco products that are taxed heavily to reduce consumption.

Source: http://www.thehindu.com/todays-paper/tp-opinion/the-menace-of-plastic-waste/article6903188.ece

जो अन्न उगाता है उसे कहो / बर्तोल ब्रेख्त

जो अन्न उगाता है उसे कहो
वह जल्द ही मर जायेगा
उसे कहो कौन जिन्दा रहेगा
वो जो अन्न खाता है

हल में जुत जाओ,
जुतते-जोतते, मिटते-मरते
ये दिन भी गुजर जाएगा.

( बर्तोल ब्रेख्त को मरोड़कर )

---
Original (German) :

Sag ihm, wer den Wagen zieht

Sag ihm, wer den Wagen zieht
er wird bald sterben
sag ihm wer leben wird?
der im Wagen sitzt
der Abend kommt
jetzt eine Hand voll Reis
und ein guter Tag
ginge zu Ende

English Translation : 

Tell him who pulls the car
he will die soon
tell him who shall live ?
sitting in the car
comes the evening
now a handful of rice
and a better day
was going to end.

प्रेमिका का गीत / बर्तोल ब्रेख्त

1. मैं जानता हूँ, मेरी जान, मेरी बीहड़ ज़िन्दगी की वज़ह से मेरे बाल
झड़ रहे हैं और मुझे पत्थरों पर सोना पड़ता है। तुम मुझे ठर्रा पीते देखती
हो और मैं हवा में उघाड़े बदन घूमता-फिरता हूँ ।

2. लेकिन एक समय था, मेरी जान, जब मैं निष्पाप था ।

3. मेरी एक औरत थी जो मुझसे ज़्यादा ताक़तवर थी, जैसे घास बैल से
ज़्यादा ताक़तवर होती है - वह फिर सीधी तन जाती है ।

4. वह जानती थी कि मैं दुष्ट हूँ और मुझसे प्यार करती थी ।

5. उसने कभी नहीं पूछा वह रास्ता वहाँ जाता था और उसका रास्ता था
और शायद वह नीचे को उतरता था। जब वह मुझे अपनी देह
सौंपती तो कहती-बस। और उसकी देह मेरी देह बन जाती।

6. अब वह कहीं नहीं है। वर्षा के बाद बादल सरीखी वह ग़ायब हो गई ।
मैंने उसे छोड़ दिया और वह नीचे गिरती चली गई क्योंकि वही
उसका रास्ता था ।

7. लेकिन कभी-कभार रात को जब तुम मुझे शराब पीते देखती हो,
मुझे उसका चेहरा नज़र आता है - हवा में विवर्ण, मज़बूत और मेरी तरफ़ मुख़ातिब
और मैं हवा में झुक कर उसे सलाम करता हूँ ।

अँग्रेज़ी से अनुवाद : नीलाभ

Subsidised Kerosene

The finance minister plans to scrap the supply of subsidised kerosene through the public distribution system (PDS) and high time, too. To begin with, why has the kerosene subsidy needed reform for decades and yet reform never materialised?

Kerosene obtained through the PDS, being cheaper, is used to adulterate diesel and petrol. Kerosene leakages in the PDS are estimated to be 40 per cent of total allocations. The diversion is lucrative for distributors, who bribe government officials to get licences to distribute the fuel. Kerosene and petrol station dealerships are much in demand as they fetch huge returns through fuel diversion. The government has quotas for awarding such dealerships. In 2004, when corruption was discovered in the awarding of service-station concessions, the Supreme Court cancelled all contracts and ordered the government to distribute them more transparently.

Ending the subsidy would put an end to the adulteration that causes a loss to the government treasury. Second, kerosene blended with petrol and diesel causes engine damage, affecting vehicle life. A third benefit of ending the subsidy would be that air pollution from the inefficient combustion of adulterated fuel would be reduced. Fourth, the substitution of kerosene with solar lamps could help reduce the oil import bill. Fifth, fuel diversion has meant that, sometimes, India’s poor have to go without lights or are unable to cook, because they cannot access their quota of kerosene even though the fuel is abundant at higher prices on the parallel market.

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The B.K. Chaturvedi Committee of 2008, using NSS data from 2005, noted that rural households use kerosene primarily for lighting and only 1 per cent use it for cooking, a fact confirmed by Census 2011. With the increase in electrification, the rural use of kerosene for lighting has fallen. The committee recommended that rural households below the poverty line should be given one solar lantern, which would only cost roughly two-thirds of the total annual subsidy on PDS kerosene. This policy was not implemented.

Reform has been tried before. In 2005, global positioning systems were fitted to kerosene distributor trucks, aimed at preventing the diversion of fuel, but the programme was wound up in 2008. In 2006, the government introduced the marking of subsidised kerosene with a dye — once again, the programme closed in 2008. Those who benefit from the corruption proved too powerful to allow reform. In 2007, the petroleum ministry wanted to implement a foolproof smartcard system as an experiment in three states, Bihar, Maharashtra and Uttarakhand. However, all three declined the offer and the plans fell through.

Over the last decade, if PDS kerosene had been distributed in two-litre polypacks, packaged before they reached the refinery gates, the “consumption” of kerosene would have declined sharply. It could not have been diverted as easily as it can be from the current cylinders. Savings from confining the kerosene subsidy to BPL households would release more resources than needed to supply all BPL households with solar lamps (at Rs 1,800 per piece ). The cost of solar lamps for the entire BPL population would be only Rs 7,350 crore. But solar lamps will only be given out slowly. Until then, access to kerosene would need to continue. We can easily estimate the kerosene needs of the BPL population .

As for LPG, we suggest that only BPL households be eligible for kerosene. We estimate, based on NSS 2011-12, that 94.5 per cent of rural BPL households (or nearly 41 million households) use kerosene mostly for lighting. In urban areas, 77 per cent of BPL households (or nearly 8 million households) use kerosene, presumably mostly for cooking, and for lighting only during power outages. In other words, a total of 49 million BPL households use kerosene in India. Presumably, many households above the poverty line continue to use kerosene too, for back-up lighting and cooking needs, but we are assuming that they would not be eligible for the subsidy in any case.

Assuming 10 litres of kerosene is used by each BPL household monthly, and the PDS retail selling price is Rs 14.96 (as in 2014), the annual out-of-pocket expenditure for all BPL households is Rs 8,817 crore. The subsidy cost to the government was Rs 28,215 crore in 2011-12. By confining the kerosene subsidy to BPL households, Rs 19,397 crore could be saved annually by the government.

Thankfully, in 2015, the Centre plans to ask states to provide subsidised kerosene only to unelectrified households. States with near 100 per cent electrification will be incentivised to become kerosene-free. In the remaining states, unelectrified households can choose between a cash subsidy in lieu of kerosene allocation and an upfront subsidy for greener solar lighting systems. For budget 2015-16, cuts in the Centre’s social sector spending allocation is aimed at aligning plan expenditure with subdued revenue collections. Hopefully, kerosene subsidy reform will not be sabotaged this time around.

source: http://indianexpress.com/article/opinion/columns/a-fuels-errand/99/

The writer is professor of economics, Jawaharlal Nehru University,Delhi, and author of ‘Policies to Achieve Inclusive Growth in India’ 

The resilience of briefcase politics

In 2014, India commemorated several important anniversaries — the 125th anniversary of Jawaharlal Nehru’s birth and the 30th anniversary of Indira Gandhi’s assassination and of the horrific anti-Sikh riots that followed, to name just two. But 2014 also marked the anniversary of another milestone in Indian politics, one that was completely forgotten but continues to affect Indian democracy in ways that the nation is still struggling to grapple with.

Forty-five years ago, in 1969, Prime Minister Indira Gandhi convinced Parliament to amend the Companies Act and impose a total ban on corporate giving to political parties. The ban signified a critical juncture in the evolution of India’s electoral regime, eliminating the most important legal source of election funds. Without providing an alternative financing mechanism (such as state funding), Gandhi’s decision — far from abolishing the link between business and politics — effectively pushed campaign finance underground, an affliction that exists to the present day. Today, it’s an open secret that the opaque funding of elections represents the single-biggest driver of political corruption and criminality in India.

To be fair, the ban was enacted amid genuine consternation over political corruption. As early as 1964, the government-appointed Santhanam Committee warned of the corrosive effects of collusion between businessmen and politicians. Indeed, Gandhi herself sought to justify the ban as a monumental effort to curb cronyism.

In reality, however, she was more likely motivated by proximate political concerns. The aim of the ban, as Prem Shankar Jha put it, was not to ensure the Congress a “secure above-board source of funds in the future, but to cut off the flow of funds to its rivals”. Gandhi, alarmed by the swell of corporate support for right-wing opposition parties like the Swatantra Party and the Jana Sangh, as well as the threat the business-friendly Syndicate posed to her leadership within the Congress, yearned to cut them down to size.

However, unlike what transpired in many European democracies during this period, the government did not substitute private sources of party funds with state-funding of elections or party expenses. As a result, the ban created a financial vacuum that was filled by black money, institutionalising a corrupt equilibrium in which politicians allocated licences necessary to operate in an increasingly dirigiste economy in exchange for under-the-table “donations”.

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This was part and parcel of a larger attempt to put business in its place and reassert the primacy of the state. In quick succession, Gandhi nationalised India’s banks and its domestic coal industry and imposed sweeping new restrictions on business. In spite of these acts, Gandhi cynically calculated that big business would still donate to the Congress, albeit covertly, fearing its ability to use its political and regulatory power as a cudgel to discipline businesses who refused to play ball.

On this score, Gandhi was on target. The ban ushered in an era of “briefcase politics”, in the words of Stanley Kochanek. Inflation, coupled with intensifying political competition, led to an arms race in election expenditures and the consolidation of a corrupt political finance regime in which ruling parties that controlled the regulatory levers of power maintained an advantage in fund-raising.

Moreover, the ban spurred the rise of individuals and organisations, especially those with criminal backgrounds, who had access to unaccounted money and were thus sought after by parties for their ability to discreetly aggregate and distribute cash. In the initial decades of the republic, the Congress had contracted with all manner of lawbreakers and mercenaries to quietly manage elections. Now, such characters were openly embraced by Congress leaders — and soon, by all other parties — as political candidates in their own right, thanks to their financial resources.

Many years later, in 1985, recognising the folly of the ban, the Congress government of Rajiv Gandhi once again legalised corporate giving, but corporate contributions remained under the table. By this stage, the exchange of political favours for illicit cash had become so deeply entrenched that re-legalisation garnered little support. Companies had little incentive to be transparent as it could prompt retribution from politicians or parties that had not received funds. Parties remained opposed because the prevailing system minimised accountability to funders or party members.

Fast forward to the present day and the Association for Democratic Reforms (ADR) reports that 75 per cent of the income of India’s six major parties comes from undocumented sources. Around half of these funds came in a period of four months around elections, largely in cash (for the Congress, this figure stood around 90 per cent). But party resources are a drop in the bucket because candidates are expected to foot the vast majority of their campaign expenditures. Ironically, while politicians of all stripes complain about unrealistically low campaign spending limits, candidates also routinely report spending just over half what they are legally entitled to (in reality, campaign spending exceeds the prescribed limit by several orders of magnitude).

Furthermore, despite claims that 2014 marked India’s “good governance” election, a record number of MPs with criminal records (34 per cent) now grace the halls of the Lok Sabha. Twenty-one per cent of these lawmakers face serious charges like murder, attempted murder, and kidnapping. The historical and empirical evidence is clear that the electoral success of “muscle” is due, at least in part, to the advantages of money.

Finding an exit from this morass is not easy, but India has options. The Narendra Modi government can begin by introducing rules and transparency to limit discretion in heavily state-regulated domains (such as land, natural resources, real estate, mining, and defence acquisitions). Absent this, no amount of political finance regulation is likely to have much impact. Beyond the economy, Parliament must close large regulatory loopholes that enable dishonest reporting, such as the provision for unlimited and undisclosed third-party spending on candidates. Furthermore, the Election Commission requires new statutory authorities, such as the power to mandate complete transparency for political contributions. Right now, parties need not declare the source of any donation less than Rs 20,000, ceding a party like the BSP the ability to not disclose the identity of a single donor in the past eight years.

Finally, there is the oft-discussed issue of public funding of elections. Until parties adopt strict rules on transparency and intra-party democracy, public subsidies are likely to do more harm than good. This is the grand bargain many European democracies have struck, and is a deal worth exploring.

But unless a farsighted Central government can champion such reforms, the after-effects of the ill-fated 1969 ban on company donations are likely to be felt long after its 45th anniversary.

Sridharan is academic director of the University of Pennsylvania Institute for the Advanced Study of India (UPIASI) in New Delhi. 
Vaishnav is an associate with the Carnegie Endowment for International Peace in Washington, DC.

Source: http://indianexpress.com/article/opinion/columns/the-resilience-of-briefcase-politics/99/

Commons to vote on mitochondrial therapy

A radical new approach developed in the United Kingdom for the treatment of a potentially wide spectrum of inherited — and hitherto incurable — diseases has run into controversial waters. The future of the technique known as ‘mitochondrial replacement therapy’ or MRT will be decided by a parliamentary vote on Tuesday, February 3.

Professor of Neurology and Director of the Wellcome Trust Centre of Mitochondrial Disease Doug Turnbull and his team at the University of Newcastle upon Tyne have pioneered the method. It treats women with mitochondrial disease (a range of inherited diseases caused by defective mitochondria, the elements in the cell that generate energy), by replacing the dysfunctional mitochondria carried by a woman who wishes to conceive with the healthy mitochondria of a donor. The egg is then fertilised with the partner’s sperm through IVF. The embryo thus created is one technically cleansed of the mutated mitochondrial DNA that the mother originally carried.

Tuesday’s vote in the House of Commons will decide whether the United Kingdom’s Human Fertilisation and Embryology Authority can grant licences to allow the replacement therapy to be conducted in U.K. clinics.

Researchers are concerned that the vociferous opposition to the technique led by the Church of England may carry weight with Members of Parliament and public opinion at large. The Church opposes the technique on the grounds that the manipulation of the nuclear DNA of two women and a man would create three-parent babies, leading to what they warn is a “Frankenstein future”.

“We have been working on this for 15 years,” Professor Turnbull was quoted by The Observer on Sunday as saying. Calling the review process as an “exemplary example of proper consultation and evidence-based policy”, he argues that the denial of the procedure by Parliament would affect the chances of women affected by the condition to have healthy children.

Human mitochondrial disorders are among the most common genetic diseases, affecting around one in 6500 people. They are believed to be the reason behind 150 known conditions.

Source: http://www.thehindu.com/todays-paper/tp-international/commons-to-vote-on-mitochondrial-therapy/article6846340.ece

Financial inclusion by done Payment Banks

Ways in which Financial inclusion will be done Payment banks:
1) They are providing small savings accounts and payments / remittance services to migrant labor workforce, low income households, small businesses, other unorganized sector entities by enabling transactions in a technology driven environment.
2) Use of mobile phone is extensive and which will help in tapping the rural areas.
3)Payments banks will create the infrastructure which will provide access points to send and take out cash
4) As payment banks would be able to invest in government bonds, this would enable the providers to offer higher interest rates on deposits that might attract inactive money parked in savings bank accounts.
5) Payment banks need to have at least 25 per cent of physical access points, including BCs, in rural centres.
So one fully operational they will definitely increase the financial inclusion and will be helpful in bring prosperity to lower income groups.

The Commercial Courts Bill 2015

India has been ranked 142nd in ease of doing business and has slipped from the previous 140th rank,which is a matter of concern. Trade has been the lynch-pin of development since ancient times. Looking at the sluggishness of the world economy and to have a positive BoP,we need to boost the manufacturing sector in the country towards the “make in India” campaign

In this regard,the formulation of the Commercial courts bill,2015 has been a progressive step. The salirnt features of this bill include:
1. setting a time limit of 90 days for delivery of judgment after conclusion of arguments
2. setting up appellate division benches in high courts which will hear the appeals from commercial courts.
3. provides for 'training and continuous education of judges' by the national and state judicial academies.
4. These courts will have judges with expertise and experience in commercial disputes and fixed tenure of two years so that continuity is maintained
5. the commercial court will be empowered to conduct a case management hearing by amending the CPC.
6. Will have powers to fix dates for hearing, decide which issues are to be tried and witnesses to be summoned.
7. the court will be empowered to impose costs and other penalties on parties for failure to follow the directions set out in a case management hearing,

Although speed and efficiency are all but guaranteed in the Commercial Court some pitfalls are-
1. efficiency is derived primarily from strictly enforced deadlines has consequent demands and pressures on both solicitors and their clients.
2. the cost of bringing claims is significant
3. litigating before the Commercial Court can often attract far greater publicity, which is not always welcomed.

However many countries like the USA have had commercial courts from 1990s itself. Also germany,england,france,austria,new zealand,ireland etc. hence this could be seen as a welcome step in the right direction