National Interest Is Best Served When Things Look Better
Just before starting this column, I was reading a chapter titled “Stop It If You Can” from a book by the former Mumbai commissioner of police, Rakesh Maria. He takes us back through some of the most sensational crimes and terror attacks we have faced over the past two decades, with an inside account of the investigation. This chapter lists the wave of serial bomb blasts that ripped across India from 2004 to 2008 -- Ahmedabad, Delhi, Mumbai, Pune, Varanasi, Uttar Pradesh, Karnataka, Assam, Manipur, Tripura, temples, mosques, trains, malls, bus stops, educational institutions, police stations and, most diabolically, hospitals where victims of serial blasts were being rushed. Hundreds of people lost their lives, while thousands of others are still struggling to put their lives together.
 
This column is not about Mr Maria’s page-turner of a book, Let Me Say It Now, that takes us through some of the most sensational jihadi violence that Mumbai has suffered during his tenure and how he handled it and also the ‘Hindu terror’ angle. Such dastardly attacks had reduced drastically until recent instances of deliberately fomented communal violence. But it got me thinking about how the human mind tends to move on and forget bad times. The same thing happens in all spheres, including economic areas.
 
We had the global economic crisis in 2008. Although India was less affected, the crisis was an excuse for a hugely corrupt United Progressive Alliance (UPA) to nudge public sector banks (PSBs) to embark on a massive lending spree to crony capitalists, while our national assets—from telecom spectrum to coal mines—and apportioning inflated infrastructure projects. This eventually caused bad loans of PSBs to escalate to Rs10 lakh crore—a cost borne by the exchequer. At the same time, tax terrorism was on the rise. The government dreamt up new ways of transferring the burden of tax collection on to companies and taxpayers through a slew of punitive actions, while at the same time criminalising various statutes. Atrocities against women were also on the rise; the gruesome Nirbhaya rape, finally, broke through public apathy and brought people on the streets and also triggered a movement against corruption, eventually leading to a regime change. 
 
Sense of Déjà Vu 
The situation today has no real parallels to that period. But there is a sense of déjà vu in how the ruling coalition seems bent on roiling the country with fear and unrest at a time when it should be fixing a flagging economy and addressing looming unemployment. Hasty new statutes and shoddy implementation of policies with far-reaching impact have added to our economic woes (think of coercive Aadhaar, goods and services tax and, now, the Citizenship Amendment Act or threat to link a flawed Aadhaar with voter cards). The coronavirus threat has further exposed India’s already weak economy to external impact.
 
The finance minister’s (FM’s) reaction to dire economic news is to rush from one city to another, holding public meetings; but is she listening? A slew of Bills have been cleared or passed by the government in the past two days, to alleviate the pain and friction of doing business; but it come across as band-aid instead of addressing core issues. 
 
Vivad Se Vishwas Bill 2020: This direct tax amnesty statute was rammed through the Lok Sabha on 4th March in the middle of a din over the Delhi riots. The scheme allows a taxpayer to get complete waiver of interest and penalty by paying up the full tax demand by 31 March 2020. Payments are possible until 30 June 2020 with an additional charge. The FM has said there are “4,83,000 direct tax cases pending in various appellate forums” such as commissioner (appeals), income-tax appellate tribunal (ITAT), high courts and the Supreme Court (SC). 
 
A tax dispute arises only when the original demand is so hugely unconscionable that the taxpayer entity finds it worthwhile to incur the cost of litigation. Often, disputes arise because the tax department makes fanciful demands or disallows genuine expenditure to meet collection targets. There is already an element of coercion in implementing the Bill since the tax department has reportedly sent notices 5,627 entities asking them to avail the amnesty. Of these, 1,730 have agreed to pay up.
 
The Bill may offer true amnesty to those who stuffed bank accounts with demonetised currency in 2016 and are fighting the tax notices or those in disputes over penny stock manipulation. But large public sector undertakings (PSUs) have disputes that often involve questions of law. Will they be allowed to make independent decisions? Remember, the amnesty has been introduced at a time when corporate and income-tax collections are likely to fall for the first time in two decades, according to a Reuters report. 
 
Decriminalising Company Law: On 4th March, the Cabinet cleared the Companies (Second Amendment) Bill, 2019, to remove several instances where technical lapses were criminalised, leading to injustice and friction in doing business. This is a positive development. The amendment removed criminality in case of defaults, when there is no element of fraud or larger public interest.  Some of the relaxations pertain to spending of 2% of the net profit on corporate social responsibility (CSR) initiatives. This is a shady UPA legacy that was mindlessly criminalised by this government by tying up the process of giving into enormous red-tape reporting requirements, while prescribing jail terms for failing to spend money in a given year. 
 
Importantly, the Bill does really let off fraudsters. The serious frauds investigation office (SFIO) has already been given more teeth, including the power of arrest. It has used its new powers effectively in the Infrastructure Leasing and Financial Services as well as some big cases of wilful default such as promoters of Bhushan Steel. All this is positive, but offsets only some of the red-tape that is smothering those trying to do business honestly in India, while the crooks still get away.
 
Cooperative Banks: The massive failure of Punjab and Maharashtra Cooperative Bank (PMC Bank) has led to three actions, none of which helps PMC Bank’s depositors. Deposit insurance has been raised from Rs1 lakh to Rs5 lakh (but there is now shift to risk-based premium on their deposits); cooperative banks have been allowed to convert to small finance banks and a new law is proposed to increase the Reserve Bank of India’s (RBI) ambit over the regulation and governance of cooperative banks. It remains to be seen whether this will make a difference, since administrative control of cooperative banks is to remain under the registrar of cooperatives. Meanwhile, it is five months since PMC Bank has been put under an RBI administrator with no sign of revival or resolution. Keeping it in a zombie state, with 120 branches running only for loan recovery and administration, is gobbling up Rs1 crore a day of depositors’ money, in addition to the Rs6,700 crore fraud perpetrated by the Wadhawans of Housing Development and Infrastructure Ltd (HDIL).
 
Hasty Bank Mergers: The FM’s announcement that the merger of 10 PSBs to form four new ones will go ahead as proposed from 1 April 2020, seems yet another case of hasty action without adequate preparation. It will not address the key question of management accountability and independence from political interference. What is the need to push the merger? And in what way do they drive economic growth which ought to be the government’s top priority? One can only hope that another ill-conceived legislation—the Financial Sector Development and Regulation (Resolution) Bill, 2019 is not pushed through Parliament in the coming days. 
 
A silver lining of sorts is visible in news reports that State Bank of India (SBI) has, finally, been asked to put together a consortium of banks to rescue Yes Bank, if it is unable to find buyers. I had written about such a move a couple of weeks ago; if all goes according to plan and SBI does not foolishly end up holding the baby, this could be one of the most dramatic moves by the government, provided the finance ministry and the regulators understand the need to facilitate the bailout at a price that investors are willing to pay. 
 
Let us wait and watch which way it goes. The flip side is that inaction will unleash massive chaos once again in the financial sector; there will be a run on India’s fourth largest private bank and wide spectrum of institutional investors, insurance companies and funds will lose money. 
 
Economic revival is not merely about tinkering with policies or interest rates—business needs a sense of peace and stability and confidence that the government is capable of anticipating issues and acting in time, instead of the denial, delay and hasty fixes. 
 
  • Like this story? Get our top stories by email.

    User 

    COMMENTS

    samyukta.babu

    4 months ago

    I really don't know what is happening now in India and across the globe. The banking sector is at its worst phase, digital invasion in everyday lives has had serious ramifications on an individual's privacy, some of the new citizenship act reforms have sparked widespread protest and the economy has already plunged into a new low after the Coronavirus scare. The clampdown has led to large scale fear and massive business interruption losses. We needn't fear nuclear wars - Corona has had an overriding impact - my dear friends. To consider that, the Chinese haven't tendered any apology for inflicting this on all unsuspecting denizens of the globe. To add insult to injury, we have a fragile opposition that is suffering from the absence of able leadership at the top!

    After this present government's second stint, there seems to be chaos all around. Knee jerk decisions, impulsive proclamations, an alarming level of judicial activism, proxy wars, tax terrorism, delayed verdicts for rape accused, an economy that is on the brink of collapse and an FM who seems to be blissfully unaware of what to do.

    Sudhir Mankodi

    4 months ago

    The crying need of the hour is de-criminalisation of politics, reforms in judiciary, police and primary & secondary education and perhaps priorities set in that order. If our legislators are not rogue, obviously they will not allow any non-sense in any of the governance matter. Sometimes, some judicial officials have the tendency to practice judicial overreach causing road blocks in the matters of governance which are within the domain of legislature. self-restraint is the best course of action if we don\'t want our democracy in jeopardy.

    aditya28

    4 months ago

    sensible. The central issue is political governance in India. I dont think we as a society are fit for Wesminister style of governance. Policing and Judicial reforms are key. Unless bad behaviour is immediately punished, it will keep coming back in different shapes and forms. In a country like India courts should run 24x7 just like a hospital. Its shocking that ex CMs who are in jail on corruption their families continue to run the parties without any embarassment and people still vote for them! Economic problems are simply an offshoot of overall governance issues

    REPLY

    ilaventhan.gunalan

    In Reply to aditya28 4 months ago

    Electoral reforms are also needed, especially doing away with "First past the post" system to proportional representation. If there is a peoples movement regarding this key aspect, this may lead to other changes in Police and Judiciary.

    pskrishnan

    4 months ago

    Sucheta, very valid points and very well articulated. As s fallout of Yes Bank fiasco any guesses which Bank or NBFC's are next in line to fold up? RBI is a total disaster. It's high time Banking regulatory management is delinked from RBI.

    yerramr

    4 months ago

    Earlier only LIC used to invest on the command of the Government. Now, SBI seems to have joined. May be the new merged Banks will be asked to nurse such babies. Your article unfolds many economic offences that defy resolution. There must be a law that prescribes timelines for resolution of economic offences. They can't run for decades and in the meantime, offenders get comfort and luxury.

    hamungel

    4 months ago

    You have hit the nail [or several nails], as usual.

    Ramesh Popat

    4 months ago

    present govt is not responsible for many issues. think tank is not foolish as it appears.

    mahesh.kalkar

    4 months ago

    Madam, you deserve special praise for writing relevant articles. Do the powers be read them? Read, they might, but do they implement one good suggestion, out of the 1000s you keep writing about?

    With good people like Sanjeev Sanyal as Economic advisor, if Finance Ministry still works the way it does, one understands the iron like grip the unaccountable bureaucracy continues to excercise over the functioning of government.

    Census 2021: 31 Questions govt will ask include Internet facility and smartphones
    The Centre has issued a gazette notification regarding a list of 31 questions which will be asked by enumerators for collecting information through the house listing and housing census schedule in connection with the 2021 Census ranging from Internet facility to smartphone being used may be asked.
     
    This exercise will be conducted between April 1, 2020 and September 30, 2020.
     
    Questions like the residence number, the purpose of the residence, number of family members, whether the head of the family belongs to Scheduled Caste or Tribe community and whether Internet facility is available will be asked. 
     
    The nature of vehicle owned -- whether regular car or Jeep or a van will also be asked during the exercise. 
     
    Even questions on phones and mobile phones and in case of mobile phones whether they are smartphones may also be asked, say the notification.
     
    The notification read: "In exercise of the powers conferred by section 3 and section 17A of the Census Act, 1948 (37 of 1948 ) read with rule 6A of the Census Rules, 1990, the Central Government hereby declares that the houselisting operations of the Census of India 2021 shall take place from the 1st April, 2020 to the 30th September, 2020 in India."
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  • Like this story? Get our top stories by email.

    User 

    Wheat worth Rs 607 crore damaged in Punjab: CAG
    Inadequate and improper wheat storage and stocking fresh one with the infested in Punjab resulted in loss of wheat of Rs 607.57 crore in four years, the Comptroller and Auditor General (CAG) has said.
     
    This fact came to light in a CAG report that was tabled in the Congress-ruled state assembly last week.
     
    Between 2014-15 and 2017-18, a total of 2.83 lakh tonnes of wheat pertaining to previous crop years was declared as damaged, said the CAG.
     
    The Committee on Public Undertakings of the state legislature had recommended in March 2016 that proper wheat storage spaces and its fumigation be undertaken to prevent its damage.
     
    The audit observed that these lapses are still persisting in state procurement agencies -- Punjab Agro Foodgrains Corporation Ltd and Punjab State Warehousing Corporation.
     
    They procure wheat on behalf of the Food Corporation of India (FCI).
     
    The proportion of damaged wheat to the total quantity stocked in the Punjab Agro Foodgrains Corporation Ltd was as high as 76.85 per cent at the end of 2016-17.
     
    However, performance of Punjab State Warehousing Corporation was better as damaged wheat as proportion of the total quantity in stock was below five per cent from 2014-15 to 2016-17.
     
    Its better performance was due to the fact that major portion (up to 79 per cent) of their wheat stock was kept in covered storage, availability of qualified staff and better quality control mechanism.
     
    The reasons for damage of wheat were inadequate and improper storage conditions, employment of poor preservation techniques, slow up-gradation of infested wheat and storage of fresh wheat with the infested stock.
     
    The CAG observed that both state procurement agencies do not have adequate covered storage for its wheat stocks.
     
    The percentage of covered storage capacity to the total capacity ranged between 6.09 per cent and 19.03 per cent in Punjab Agro Foodgrains Corporation Ltd and 45.05 per cent and 78.78 per cent in Punjab State Warehousing Corporation from 2012-13 to 2017-18.
     
    In Tarn Taran district, the entire wheat stock was stored in the open despite having availability of covered storage in 2016-17, thereby exposing the foodgrain to high risk of damage.
     
    Also, the delay in disposal of damaged wheat resulted in an expenditure of Rs 8.57 crore on rent and security of storage spaces where the damaged wheat was kept.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  • Like this story? Get our top stories by email.

    User 

    COMMENTS

    Newme

    4 months ago

    Improper storage and write off helps pilferage.

    shadikatyal

    4 months ago

    What storage facilities we have if any? Travel around the towns and you will find wheat stored outside covered with blue water repellent covers but rodent is busy spoiling and destroying it from the bottom through such storage is above ground. Even in big storage godowns, it is the rodent who roam freely. Food is a necessity but over the years we have yet to learn how to store safely.
    The political parties and food department have no idea how to store but then it is India where Sub Chalta Hai Bhai

    rajoluramam

    4 months ago

    This is not the first time that the food grains specially wheat was damaged in the past. Though we talk so many things about the preservation of food grains, damage of food grains is a common feature in our country. In the present case the damage is collosal. Farmers toil very hard in the hot sun and give us food.
    Who is responsible for the loss?
    Accountability should be fixed and the culprits should be punished.
    Government should pass a law to punish severally the persons responsible for food grains damage.

    We are listening!

    Solve the equation and enter in the Captcha field.
      Loading...
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email

    BUY NOW

    online financial advisory
    Pathbreakers
    Pathbreakers 1 & Pathbreakers 2 contain deep insights, unknown facts and captivating events in the life of 51 top achievers, in their own words.
    online financia advisory
    The Scam
    24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
    Moneylife Online Magazine
    Fiercely independent and pro-consumer information on personal finance
    financial magazines online
    Stockletters in 3 Flavours
    Outstanding research that beats mutual funds year after year
    financial magazines in india
    MAS: Complete Online Financial Advisory
    (Includes Moneylife Online Magazine)
    FREE: Your Complete Family Record Book
    Keep all the Personal and Financial Details of You & Your Family. In One Place So That`s Its Easy for Anyone to Find Anytime
    We promise not to share your email id with anyone