The Rise of Goliath
Page 44
India’s political class is already reconciled to the idea of providing income support for at least farmers, which in many ways is a variant of a UBI scheme. The impact of a UBI on the state exchequer would be much bigger. But the disruptive element in the launch of the UBI will be the degree to which the government would withdraw various existing financial incentives and subsidies being given to all Indians at present. As is clear, the launch of a UBI can be financially prudent only if it is accompanied by the phase-out of existing subsidies to make it a fiscally sound and sustainable model. This will require huge financial adjustments to be made by various stakeholders. It seems that the idea of a UBI is growing roots in the Indian government system. In spite of the many disruptive consequences, UBI is one idea that may see the light of the day soon.
Dismantling the IAS
India’s premier civil service, the ICS during the British rule and the Indian Administrative Service after Independence, is often described as the steel frame that keeps the country intact and running. Even now, lakhs of young Indians sit for the IAS entrance examinations to gain entry into the coveted service. An IAS officer can hope to climb the administrative ladder pretty fast and can retire as the country’s top civil servant—the cabinet secretary—or be selected to head the many regulatory bodies in different fields after retirement. An IAS officer is reputed to have deep knowledge of the way India’s political system functions and has the ability and tact to overcome any policy challenge.
When the government is in a bind on any tight economic or even political situation, it relies on the skills of an IAS officer. The latest example was when the government relied on a retired IAS officer, Shaktikanta Das, to be the governor of the central bank, the RBI. Das was a competent bureaucrat and spent many years of his service in the Union finance ministry. But when the government’s relationship with RBI Governor Urjit Patel, soured a bit and the latter decided to quit, the only option the government had was to hire a retired IAS officer, who was expected to heal the wounds in the government–RBI relations and prevent any further instability at the top of the country’s central bank, which is also the monetary policy authority and the regulator for banks. It is a cosy relationship—the politicians ruling the government need the IAS officers and the IAS officers need the government to administer the system to ensure governance.
Should the IAS be continued as an all-India service or should it be simply scrapped? This idea has often been mooted to address the weaknesses in policy governance, particularly in many departments where domain expertise in the area can be of critical importance. Economic policymaking in the ministries of finance, commerce, industry, power and coal can qualitatively get better if instead of IAS officers the government had the option of choosing experts in specific areas to man these departments. Similar issues crop up with regard to ministries of environment and science and technology, where scientists or climate experts should do a better job than IAS officers, who are generalists, having spent many years in different departments dealing with a diverse set of subjects and issues, before taking charge of these ministries. In the end, policy outcomes are not always as good as they could have been had the policy formulation exercise been steered by experts.
The case for doing away with the IAS is strong. But if the government were to take such a decision, the challenge of policymaking and ensuring governance would become more formidable at least in the short run. An alternative cadre of expert officers from industry and academia would have to be quickly created and nurtured. In the past, the government did try to build such expert cadres to oversee economic policymaking. However, the strong IAS network did not allow such alternative cadres to grow and expand their footprint beyond a point.
Even if the IAS cannot be scrapped for practical reasons, it seems the government can certainly go ahead experimenting with a new set of officers who have expertise in specific subjects and skills. The Modi government has already begun experimenting with the idea of appointing experts in the government. Nine professionals were hired in April 2019 from the private sector to join different central ministries. Can the government go in for a big change like phasing out the IAS? The political class perhaps would, in theory, be in favour of such a shift in the government’s hiring policy, but it is also hugely dependent on the continuation of the IAS system. The resistance to a change would also come from the existing IAS officers, who certainly will have a vested interest in furthering the growth and expansion of the IAS. Phasing out the IAS seems to be a difficult change for any government to introduce.
Change in the Financial Year
In 2016, the Narendra Modi government had mooted the idea of shifting the financial year of the government from April–March to January–December. In July that year, it set up a committee under the chairmanship of Shankar N. Acharya, a former chief economic adviser in the finance ministry who played a crucial role in the economic reforms programme launched in 1991, to examine the feasibility of such a switchover.
Acharya submitted the committee’s report in the last week of December 2016. The government kept quiet about the contents of the report even as a few media reports had initially suggested that the Acharya Committee had indeed recommended a switch from an April–March financial year to the calendar year as the financial year. However, as clarity emerged on the contents of the report, it became clear that no such recommendations for switching over to a new financial year were actually made in the report.
The government has continued to maintain complete silence over the contents of the Acharya Committee report. Indeed, the report was not even made public. That the government continued to maintain status quo on the question of the financial year was an indication that the arguments put forward by the Acharya Committee against the switchover to a January–December financial year cycle might have been strong and irrefutable. The government, however, advanced the date of presenting the Union Budget by four weeks to 1 February. This seemed to have been done in preparation for the change of the financial year from April–March to January–December. But the government is yet to take the plunge.
Will the idea of changing the financial year gain momentum in the coming years? It is very likely. The Narendra Modi government is not the first to have examined the need for changing the current financial year format. Even the Indira Gandhi government had mooted the idea in the 1970s but did not go beyond just setting up a committee of experts to look into this question. The idea of changing the financial year sounds appealing to any government that wants to leave its own imprint on the governance style. Already, the Modi government has advanced the presentation of the annual Budget by a month. The previous BJP-led government under Atal Bihari Vajpayee had changed the time for presenting the Budget—in 1999, then finance minister Yashwant Sinha chose to present the Budget in the forenoon of 27 February, discarding the ‘long-standing tradition of British Raj of presenting the Budget at 5 p.m.’.1
Comparatively, changing the financial year is an easy decision to take, even though its disruptive impact on the government system, and indeed on the rest of the economy, will be huge. There were media reports in April 2019 suggesting that changing the government’s financial year from April–March to January–December was under serious considerations at the highest level of the government. There were media reports in April 2019 that the revenue department in the finance ministry was keen on switching over to a calendar year, instead of the existing system of an April–March financial year, at least for tax purposes. How this would pan out is difficult to gauge. But an early action on this front cannot be ruled out.
Appendix
Twenty-one Steps That Narendra Modi Announced on the Day of Demonetization
‘Persons holding old notes of five hundred or one thousand rupees can deposit these notes in their bank or post office accounts from 10th November till close of banking hours on 30th December 2016 without any limit.
Thus you will have 50 days to deposit your notes and there is no need for panic.
&
nbsp; Your money will remain yours. You need have no worry on this point.
After depositing your money in your account, you can draw it when you need it.
Keeping in mind the supply of new notes, in the first few days, there will be a limit of ten thousand rupees per day and twenty thousand rupees per week. This limit will be increased in the coming days.
Apart from depositing your notes in your bank account, another facility will also be there.
For your immediate needs, you can go to any bank, head post office or sub post office, show your identity proof like Aadhaar card, voter card, ration card, passport, PAN card or other approved proofs, and exchange your old five hundred or thousand rupee notes for new notes.
From 10th November till 24th November the limit for such exchange will be four thousand rupees. From 25th November till 30th December, the limit will be increased.
There may be some who, for some reason, are not able to deposit their old five hundred or thousand rupee notes by 30th December 2016.
They can go to specified offices of the Reserve Bank of India up to 31st March 2017 and deposit the notes after submitting a declaration form.
On 9th November and in some places on 10th November also, ATMs will not work. In the first few days, there will be a limit of two thousand rupees per day per card.
This will be raised to four thousand rupees later.
Five hundred and thousand rupee notes will not be legal tender from midnight. However for humanitarian reasons, to reduce hardship to citizens, some special arrangements have been made for the first 72 hours, that is till midnight on 11th November.
During this period, government hospitals will continue to accept five hundred and thousand rupee notes for payment.
This is for the benefit of those families whose members may be unwell.
Pharmacies in government hospitals will also accept these notes for buying medicines with doctors’ prescription.
For 72 hours, till midnight on 11th November, railway ticket booking counters, ticket counters of government buses and airline ticket counters at airports will accept the old notes for purchase of tickets. This is for the benefit of those who may be travelling at this time.
For 72 hours, five hundred and thousand rupee notes will be accepted also at Petrol, diesel and CNG gas stations authorised by public sector oil companies.
Consumer co-operative stores authorised by State or Central Government.
Milk booths authorised by State governments.
Crematoria and burial grounds.
These outlets will have to keep proper records of stock and collections.
Arrangements will be made at international airports for arriving and departing passengers who have five hundred or thousand rupee notes of not more than five thousand rupees, to exchange them for new notes or other legal tender.
Foreign tourists will be able to exchange foreign currency or old notes of not more than Rs 5000 into legal tender.
One more thing I would like to mention, I want to stress that in this entire exercise, there is no restriction of any kind on non-cash payments by cheques, demand drafts, debit or credit cards and electronic fund transfer.’
Notes
Section 2: Partition of India
Chapter 2: A Tryst with Destiny
1. https://www.indiaofthepast.org/contribute-memories/read-contributions/major-events-pre-1950/263-acceptance-of-indias-partition-by-indian-leaders-june-3-1947
2. Ibid.
3. Ibid.
4. Ibid.
5. Ibid.
6. William Dalrymple, ‘The Great Divide’, The New Yorker, 29 June 2015, https://www.newyorker.com/magazine/2015/06/29/the-great-divide-books-dalrymple
7. Ibid.
8. Tai Yong Tan and Gyanesh Kudaisya, The Aftermath of Partition in South Asia (London: Routledge, 2000).
9. Vazira Fazila-Yacoobali Zamindar, The Long Partition and the Making of Modern South Asia: Refugees, Boundaries, Histories (New Delhi: Penguin Books India, 2008).
10. https://www.indiaofthepast.org/contribute-memories/read-contributions/major-events-pre-1950/263-acceptance-of-indias-partition-by-indian-leaders-june-3-1947
11. http://theconversation.com/how-the-partition-of-india-happened-and-why-its-effects-are-still-felt-today-81766
12. https://www.britannica.com/biography/Mohammed-Ali-Jinnah
13. https://www.britannica.com/event/Lucknow-Pact
14. Khursheed Kamal Aziz, Rahmat Ali: A Biography (Wiesbaden: Steiner Verlag, 1987).
15. https://www.indiaofthepast.org/contribute-memories/read-contributions/major-events-pre-1950/263-acceptance-of-indias-partition-by-indian-leaders-june-3-1947
Chapter 3: Making the Best of an Inevitability
1. Ramachandra Guha, India after Gandhi: The History of the World’s Largest Democracy (New Delhi: Picador, 2007).
2. https://www.britannica.com/place/India/The-transfer-of-power-and-the-birth-of-two-countries#ref486443
3. Nitish Sengupta, Bengal Divided: The Unmaking of a Nation 1905–1971 (New Delhi: Penguin, 2007).
4. Ibid.
5. Raghabendra Chattopadhyay, ‘Liaquat Ali Khan’s Budget of 1947–48: The Tryst with Destiny’, Social Scientist 16 (June–July 1988).
6. Ibid.
7. Ibid.
8. http://www.asianage.com/india/all-india/141118/the-greatest-indian-after-the-mahatma-why-gandhi-chose-nehru-to-lead-india.html; Rajmohan Gandhi, Patel: A Life (Ahmedabad: Navajivan, 1991).
9. Guha, India after Gandhi, https://www.indiaofthepast.org/contribute-memories/read-contributions/major-events-pre-1950/263-acceptance-of-indias-partition-by-indian-leaders-june-3-1947
10. http://www.worldstatesmen.org/India_princes_A-J.html
11. Guha, India after Gandhi.
12. http://www.worldstatesmen.org/India_princes_A-J.html
13. https://data.worldbank.org/indicator/MS.MIL.XPND.GD.ZS?locations=IN
14. https://www.indiaofthepast.org/contribute-memories/read-contributions/major-events-pre-1950/263-acceptance-of-indias-partition-by-indian-leaders-june-3-1947
15. Rudranghsu Mukherjee, ed., Great Speeches of Modern India (New Delhi: Random House India, 2007).
16. Ibid.
17. Medha M. Kudaisya, The Life and Times of G.D. Birla (New Delhi: Oxford University Press, 2003).
18. Ibid.
Section 3: Turn towards Statism
Chapter 4: A New Economic Vision
1. https://bbmb.gov.in/bhakra-project.htm
2. Rudrangshu Mukherjee, ed., Great Speeches of Modern India (New Delhi: Random House India, 2007).
3. http://planningcommission.gov.in/aboutus/history/PCresolution1950.pdf
4. http://indiafacts.org/complete-truth-jawaharlal-nehru-forced-john-mathai-resign/
Chapter 5: Nationalization as the New Mantra
1. https://www.epw.in/system/files/pdf/1957_9/3-4-5/socialistic_pattern_of_society_and_the_second_five_year_plan.pdf
2. Rudrangshu Mukherjee, ed., Great Speeches of Modern India (New Delhi: Random House India, 2007).
3. Rudrangshu Mukherjee, Jawaharlal Nehru (New Delhi: Oxford University Press, 2019).
4. Mukherjee, ed., Great Speeches of Modern India.
5. Medha M. Kudaisya, The Life and Times of G.D. Birla (New Delhi: Oxford University Press, 2003).
6. https://dipp.gov.in/sites/default/files/chap001_0_0.pdf
7. https://rbidocs.rbi.org.in/rdocs/content/PDFs/90028.pdf
8. https://rbidocs.rbi.org.in/rdocs/content/PDFs/90028.pdf
Section 4: The Food Crisis
Chapter 6: From Ship to Mouth
1. Jairam Ramesh, Intertwined Lives: P.N. Haksar and Indira Gandhi (New Delhi: Simon & Schuster India, 2018).
2. https://dbie.rbi.org.in/DBIE/dbie.rbi?site=publications
3. http://www.asianage.com/india/all-india/250517/naxalbari-1967-the-uprising-that-changed-our-politics.html
4. http://www.asianage.com/india/all-india/250517/naxalbari-1967-the-uprising-that-changed-our-politics.html
5. Ramesh, Intertwined Lives.
6. https://www.globalsecurity.org/military/world/india/famine-bengal-1943.htm
7. https://www.thehindu.com/todays-paper/tp-opinion/food-as-peoples-right/article2769860.ece
8. https://indianexpress.com/article/opinion/columns/swallowing-the-humiliation/
9. https://www.econ.ucla.edu/lal/Palgrave%20Dictionary%202008.pdf
Chapter 7: A New Experiment by Indira Gandhi
1. Pranay Gupte, Mother India: A Political Biography of Indira Gandhi (New Delhi: Penguin Books India, 2009).
2. https://www.thehindu.com/todays-paper/tp-opinion/food-as-peoples-right/article2769860.ece
3. https://dbie.rbi.org.in/DBIE/dbie.rbi?site=publications
4. Ashok Mitra, A Prattler’s Tale Bengal, Marxism, Governance (Kolkata: Samya, 2007).
5. https://www.downtoearth.org.in/news/agriculture/only-15-landholders-earn-91-of-total-national-income-59505
6. https://indianexpress.com/article/research/five-instance-why-lal-bahadur-shastri-is-the-most-modest-prime-minister-india-has-ever-seen-4870695/