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Saturday, February 27, 2010

EDITORIAL 27.02.10

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Editorial

month  february 27, edition 000441, collected & managed by durgesh kumar mishra, published by – manish manjul

 

Editorial is syndication of all daily- published newspaper's Editorial at one place.

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THE PIONEER

  1. GOOD ARITHMETIC
  2. FLOATING BALLOONS
  3. TAKING US FOR A RIDE - HIRANMAY KARLEKAR
  4. ETERNAL LAW OF THE UNIVERSE - AJIT BISHNOI
  5. AN EXERCISE IN DECEPTION
  6. CRUEL ON GENNEXT - UDAYAN NAMBOODIRI
  7. RURAL INFRASTRUCTURE BOOST WELCOME - JAYSHREE SENGUPTA

MAIL TODAY

  1. STEPS ON REFORMS AND R&D IN BUDGET WELCOME - BY MOON B SHIN
  2. PETROL BURDEN BACK

THE TIMES OF INDIA

  1. GOING FOR FEELGOOD
  2. FUELLING THE GROWTH STORY
  3. SUDIPTO MUNDLE
  4. A STEP IN THE RIGHT DIRECTION
  5. GET OUT OF THE QUOTA MINDSET - KAUTILYA KUMAR
  6. THE SPIRIT OF THE MATTER - GAUTAM ADHIKARI

HINDUSTAN TIMES

  1. BEGINNING A NEW CHAPTER
  2. THE FAT IS IN THE FIRE - PRATIK KANJILAL
  3. A HUM, HINDUSTANI - GOPALKRISHNA GANDHI

INDIAN EXPRESS

  1. UNPARLIAMENTARY
  2. THE REFORMER'S BALANCESHEET
  3. UNPARLIAMENTARY
  4. THE FOUR-FOLD PROMISE - ILA PATNAIK
  5. REMEMBER HIM RIGHT - TAHIR MAHMOOD
  6. IT'S A BIRD...
  7. BHAIRAV ACHARYA
  8. TALK ABOUT TALKS - RUCHIKA TALWAR

FINANCIAL EXPRESS

  1. FOCUS ON THE FISC
  2. OIL PRICES AND FINANCIAL SECTOR
  3. PRANAB SENDS OUT A 'CAN DO' MESSAGE - MK VENU
  4. BUDGET FOR AAM AADMI AND DOUBLE DIGIT GROWTH - MUKESH AMBANI
  5. AN OILY WALKOUT - RENUKA BISHT

THE HINDU

  1. A DELICATE BALANCE
  2. THE WRONG WAY FOR RURAL DOCTORS - ANBUMANI RAMADOSS
  3. HOW THE EXPERTS HAVE BEEN FOOLED - S. GURUMURTHY
  4. BUDGET 2010-11: THE TRUE PICTURE - C.P. CHANDRASEKHAR
  5. GEORGIA CONTINUES TO POSE "DIRECT AND IMMEDIATE THREAT" - VLADIMIR RADYUHIN
  6. CLIMATE CHANGE: WETLANDS PLAY AN IMPORTANT ROLE

THE TRIBUNE

  1. TREADING CAUTIOUSLY
  2. HOPE ON THE HORIZON
  3. NUCLEAR TRACK RECORD - BY K. SUBRAHMANYAM
  4. NANI'S ENDURANCE TEST - BY S.S. BHATTI
  5. INDIA NEEDS POLICY FOR SPACE SECURITY - BY ANIL LAL VATS
  6. OBAMA LIKED BUT NOT FEARED - BY RUPERT CORNWELL
  7. INSIDE PAKISTAN - BY SYED NOORUZZAMAN

BUSINESS STANDARD

  1. IN THE SAME OLD STYLE OF THE EARLY 1980S
  2. SUKUMAR MUKHOPADHYAYA
  3. GOOD HOUSEKEEPING
  4. SOME WELL-TIMED CHOICES - MUKESH BUTANI
  5. BATTING ABOVE AVERAGE - AJIT RANADE
  6. A REASONABLE EFFORT - AKASH PRAKASH
  7. LIVING ON A PRAYER - JEHANGIR AZIZ
  8. AN EMERGING COHERENCE ON FISCAL DISCIPLINE - INDIRA RAJARAMAN
  9. NOW FOR THE HARD PART

THE ECONOMIC TIMES

  1. NEITHER GOOD ECONOMICS, NOR POLITICS - YASHWANT SINHA
  2. FISCAL HEALTH GETS A BOOSTER SHOT - SWAMINATHAN S ANKLESARIA AIYAR
  3. NOT QUITE AS GOOD AS IT LOOKS, PRANABDA - MYTHILI BHUSNURMATH
  4. 'I NEED RESOURCES TO CONTROL FISCAL DEFICIT'
  5. DON'T SEE ANY PROFOUND CHANGES IN THE BUDGET: JIM ROGERS

DECCAN CHRONICAL

  1. FEEL-GOOD BUDGET FOR GROWING INDIA
  2. GOODIES FOR ALL - BY S. CHANDRASEKHAR
  3. SEEN UNSEEN
  4. FM HAS IGNORED 95% INDIANS - BY JAYATI GHOSH
  5. CORPORATES WILL SAVE, RICH WILL SPLURGE - BY D.R. DOGRA
  6. LITTLE LESS TAX - BY DHIRENDRA KUMAR

THE STATESMAN

  1. HAPPY HOLI 
  2. RHETORIC SPEWED
  3. BEHEADING THE SIKHS - RAJINDER PURI
  4. 'FEELING OF ALIENATION IS WORRYING'
  5. PERVADED BY DARKNESS, PEOPLED BY OUTSIDERS

THE TELEGRAPH

  1. NOT RADICAL, BUT SOUND
  2. RETURN TO RESPONSIBILITY - ASHOK V. DESAI

DECCAN HERALD

  1. GROWTH GAMBLE
  2. CYNICAL APPROACH
  3. A TRANSPARENT EXERCISE - BY S L RAO
  4. THE IRONY OF IT ALL - BY KAUSALYA RAMASESHAN
  5. BE MY VALENTINE - BY KHUSHWANT SINGH

THE NEW YORK TIMES

  1. GOV. PATERSON'S NEXT STEPS
  2. INDIA AND PAKISTAN (BARELY) TALK
  3. CLUELESS IN KENTUCKY
  4. THE MAN IN WHITE - BY LAWRENCE DOWNES
  5. TYLER PERRY'S CRACK MOTHERS - BY CHARLES M. BLOW
  6. PATERSON ON THE BRINK - BY BOB HERBERT
  7. PUTTING THE COAST GUARD OUT TO SEA - BY LAWRENCE J. KORB AND SEAN E. DUGGAN
  8. LET THE S.E.C. HELP ITSELF - BY JOEL SELIGMAN

I.THE NEWS

  1. WIDENING CHASM
  2. FAMILIAR WORDS
  3. WHAT A WASTE
  4. CONSENSUS ON THE COD - ARIF NIZAMI
  5. A SHIFT IN POLICY? - ASAD MUNIR
  6. CIVIL SERVICE REFORM REVISITED - SANIA NISHTAR
  7. TRUST DEFICIT - TAYYAB SIDDIQUI
  8. OUR SENSE OF 'ENTITLEMENT' - BABAR SATTAR
  9. JOBBERY! - ANJUM NIAZ

PAKISTAN OBSERVER

  1. INDIA NOT READY EVEN FOR DIALOGUE
  2. INTRUSIVE INSPECTION BY IAEA
  3. EXPORT TARGET CAN BE EVEN MORE THAN $20 BILLION
  4. JINNAH'S DREAM UNREALIZED! - NOSHEEN SAEED
  5. SOLIDARITY WITH PALESTINIANS - MOHAMMAD JAMIL
  6. EID-MILAD-UN-NABI: UN CHARTER - PARVEZ JAMIL
  7. RUSSIA & WAR IN AFGHANISTAN - DMITRY SHLAPENTOKH
  8. RIGI'S ARREST: LET'S TRUST EACH OTHER - DR RAJA M KHAN

THE INDEPENDENT

  1. EID-E-MILADUNNABI
  2. PENDING CASES
  3. OUR LIVING ROOMS..! - ROBERT CLEMENTS
  4. THE GREATEST CHAMPION OF WOMEN'S RIGHTS - SYED ASHRAF ALI

THE AUSTRALIAN

  1. STRETCHING THE FRIENDSHIP
  2. NEVER MIND THE POLITICS, LET'S TEST THE POLICIES
  3. TECHNOLOGY OUTSTRIPS THE LAW

THE SYDNEY MORNING HERALD

  1. OPPOSITION IS MORE THAN JUST OPPOSING
  2. SCIENCE VS HOLLYWOOD: THIS TIME IT'S PERSONAL
  3. FRIENDS DON'T FAKE EACH OTHERS' PASSPORTS

THE GUARDIAN

  1. UNTHINKABLE? USEFUL GODPARENTS
  2. THE ECONOMY: DON'T GET YOUR HOPES UP
  3. CITIZEN ETHICS: THE ART OF LIVING

THE KOREA HERALD

  1. CAPITAL PUNISHMENT
  2. OLYMPIC LESSON
  3. PHONY ATTACK ON CLIMATE SCIENCE - JEFFREY D. SACHS
  4. RADICAL IDEA LIVES ON FOR FREEDOM

THE JAPAN TIMES

  1. SHIFTING PLANS FOR JAPAN POST
  2. TOYOTA PROMISES REFORM
  3. FALKLANDS WAR, ROUND TWO? - BY GWYNNE DYER 

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THE PIONEER

EDIT DESK

GOOD ARITHMETIC

BUT BAD FOR MIDDLE-CLASSES


Every Union Finance Minister faces the unenviable task of preparing and presenting a Budget whose proposals, no matter how well-meaning they may be, invariably end up upsetting one or the other section of the people, leave industry demanding for more, and make States looking for heavily-funded Central welfare schemes complain of being neglected. Most important, the Opposition is never impressed by the Government's efforts, no matter how sincere, to bolster the economy. So, it is not surprising that Mr Pranab Mukherjee's second Budget in as many years should have riled so many people who clearly had higher expectations. Yet, in all fairness it must be said that Mr Mukherjee has sought to restrict fiscal deficit to 5.5 per cent of the GDP while basing his proposals on the hope that the national economy will perform better and the global economy will move out of the dumps by the time he re-checks his sums in early-2011. At the same time, he has hedged his bets by planning to mop up nearly Rs 70,000 crore more in revenues by way of higher taxes on goods and services. With expenditure projected to increase by Rs 50,000 crore (it will go up from Rs 10.5 lakh crore to a little over Rs 11 lakh crore), he has ensured that even if there is no spectacular growth and the global economy continues to remain in the doldrums, the Government will have sufficient revenue to fulfil its commitments.


The concessions Mr Mukherjee has offered on personal income tax may appear substantial, but the intended beneficiaries have little or no cause to celebrate. The higher imposts on petroleum products and the so-called 'clean energy' cess on coal are bound to have a cascading effect on the prices of essential commodities and manufactured goods while services will cost more. Add to this the increase in prices of consumer durables and the anticipated gains from income tax relief will get more or less wiped out — in fact, the salaried class is more likely than not to be left with a deficit home budget; those dependent on the unorganised sector will be adversely impacted, too; and, farmers have not necessarily gained, nor have investors or any other segment of the economy. The promised benefits will prove to be illusory. Irrespective of whether or not the Budget makes good economic sense — Mr Mukherjee is far too experienced to falter on details — it does fly in the face of the Congress's claim of working for the benefit of the aam admi. The galloping price of food and the relentless pressure of inflation that has caused the RBI to pump money out of the economy and raise interest rates on loans have made life more than difficult for the middle-classes. The poor have little to celebrate as the increase in funds for NREGA is notional. Corporates are saddled with an unfriendly twist to MAT. If market sentiment is any indication, investors are not overly enthused.


It would, however, be in order to underscore the fact that Mr Mukherjee has allocated more funds for physical and social infrastructure development. He has also done well to increase allocation for defence, with more money earmarked for acquisition of urgently required military hardware. But there's a catch. Allocating funds for building highways and roads means nothing unless they are actually built. The UPA's record on this front has been abysmally poor and there's no reason to believe it will improve in the near future. As for social infrastructure development, the State Governments will have to exert themselves for successful delivery on the ground. Urban poverty alleviation, however, will remain neglected due to inadequate funds. And unless Defence Minister AK Antony undergoes a radical change, military hardware will remain un-purchased. Mr Mukherjee, of course, cannot be blamed for not trying!


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THE PIONEER

EDIT DESK

FLOATING BALLOONS

IT'S NOT A LOT OF HOT AIR!


There are balloons and then there are tax-free balloons. This interesting bit of trivia came through Union Finance Minister Pranab Mukherjee's Budget speech on Friday. In a move that according to Mr Mukherjee will bring smiles to the faces of lakhs of mothers across the country, he has decided to completely do away with the Central excise duty that was hitherto applicable on toy balloons. Now before anyone jumps the gun and sniggers at the proposal, let us remind all that Mr Mukherjee's proposal is a carefully crafted one that seeks to address several concerns at once. Apart from the fact that it will have a positive psychological impact on the development of our future generation — happy mothers and their balloon-loving toddlers are sure to make for a healthy growing-up atmosphere — the proposal cleverly caters to a consolidated constituency that till date has remained politically untapped. Apparently, around 10,000 people in the country make a living from the toy balloon manufacturing industry, and about 75 per cent of the country's balloon requirement is sourced from 50 units located in Dahanu in Maharashtra. Last year's economic slowdown had hit the industry hard as supply constraints and spiralling global prices of natural rubber latex — the primary ingredient used in manufacturing balloons — had severely cut into the wafer-thin profits of balloon manufacturers. Besides, the fading popularity of traditional toys in the face of modern electronic gizmos among children has not helped matters either. It is only an astute politician such as Mr Mukherjee who could have recognised the potential in giving balloon manufacturers a helping hand.


If there are still some people who are not convinced about the greatness of Mr Mukherjee's proposal, this last argument is bound to change their minds: The Chinese have been trying to take over the Indian balloon market with their cheap variants. Despite the fact that Chinese balloons are subject to import duty, their retail price is extremely competitive. Thus, in effect, Mr Mukherjee's proposal actually serves to protect Indian interests in the face of predatory Chinese commercial tendencies. There is no doubt that at this moment the Chinese leadership in Beijing is furious with Mr Mukherjee for having thwarted its plans. Come to think of it, he better watch out. The Chinese might retaliate by taking over the domestic market for spectacles. Then Pranabbabu would have to live with cheap Chinese glasses. And that might really obscure his vision.

 

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            THE PIONEER

COLUMN

TAKING US FOR A RIDE

HIRANMAY KARLEKAR


One is overwhelmed by a weary feeling of déjà vu as one watches the United States bending over backwards to please Pakistan in the hope of getting it to do more to help America's war efforts in Afghanistan. The history of US-Pakistan relations is one of Pakistan's well-honed ability to exploit America's concerns to achieve its own ends at Washington's expense.


The process began in earliest stage of the Cold War. Visiting the US in 1950, Pakistan's Prime Minister Liaquat Ali Khan proclaimed his country's alignment with America. Pakistan's priority, however, was fighting India and not communism. Mr Husain Haqqani, currently its Ambassador to the US, writes in Pakistan: Between Mosque and Military, "The United States was Pakistan's great-power patron of choice, crucial as a source of weapons and economic aid." Mr Haqqani further states, "In one of its first overtly political initiatives, Pakistan's intelligence community fabricated evidence of a Communist threat to Pakistan to get US attention." It was, however, not the only one of its kind. Ms Ayesha Jalal writes in The State of Martial Rule, "Since the ceasefire in Kashmir, the Joint Services Intelligence had been fabricating increasingly bizarre reports about the fledgling Communist Party and its purported plans to destabilise Pakistan."


Under President Dwight D Eisenhower, the US sought to contain the Soviet Union and China by establishing a string of military bases in the adjoining countries. According to Mr Haqqani, Pakistan's military pushed for establishing a formal treaty relationship with the US and became a member of the Baghdad Pact (later Central Treaty Organisation) and the South Asia Treaty Organisation. While Washington pumped economic and military aid into Pakistan, its expectation "of a centrally-positioned landing site for possible operations against the Soviet Union and China was not met". According to Ms Shirin Tahir Kheli in The United States and Pakistan: The Evolution of an Influence Relationship, Gen Ayub Khan, then Commander-in-Chief of the Pakistani Army, kept tantalising Washington "with possible offers of such facilities and manpower only if the price was 'right'." Mr Haqqani writes, "The United States had to be content with looking upon its investment in Pakistan as one that would bear fruit only over time. Ayub Khan's bargaining for greater military and economic assistance became a norm for its successors."


Gen Zia-ul-Haq, who became President, proved to be a master in the game. In the wake of the Soviet invasion of Afghanistan in December 1979, he sought to persuade the US to support a war of resistance there. Brig Mohammad Youssaf says in The Bear Trap: Afghanistan's Untold Story, which he wrote with Mark Adkin, that apart from his strategic, religious and political consideration, Zia, "by supporting a jihad, albeit unofficially, against a Communist superpower" sought "to regain sympathy in the West" which he had lost by executing Zulfiqar Ali Bhutto earlier in 1979.


That he should even think of making such an effort after the attack on the US Embassy in Islamabad on November 21, 1979, reflects an amazing level of confidence in Pakistan's ability to manipulate the US. Mr Steve Coll, in his perceptive and informative work Ghost Wars: The Secret History of the CIA, Afghanistan and bin Laden, from the Soviet Invasion to September 10, 2001, gives an absorbing account of the incident. The attacking Islamist students, who believed in the rumour that Americans and Israelis were behind the capture on November 20 of Mecca's Grand Mosque, the holiest of all Muslim religious places, by armed followers of a Saudi Arabian, whose supporters had accepted him as the Mahdi, or the saviour, stormed into the embassy's compound, burnt down 60 embassy vehicles, attacked residential premises and took hostages, who were saved because a Pakistani police officer, who had not surrendered his weapon to the demonstrators, took to safety a truck in which they had been loaded for being taken for trial at the university. Meanwhile, the rioters had set the embassy building on fire and shot and wounded an US marine who subsequently died.


The Pakistani authorities knew all this but did not act despite, in Mr Coll's words, "dozens of pleas from Arthur Hummel, the Ambassador, and John Reagan, the CIA station chief". The US response was amazing. Mr Coll informs that State Department spokesman Hodding Carter told newspersons in Washington later in the day, "All reports indicate all of the people in the compound have been removed and taken to safety thanks to the Pakistani troops." President Jimmy Carter thanked Zia-ul-Haq over the telephone for his assistance. After this, one could hardly blame Zia for believing that Americans slaughtered by Pakistani mobs would die thanking him and the Pakistani Army!


Americans, who were wary under Mr Carter, bit the bait after President Ronald Reagan came to power with an agenda that included confrontation with the Soviet Union everywhere. Military and economic aid poured in while Pakistan played its usual double game. As Mr Yossef Bodansky, a former director of the US Congressional Task Force on Terrorism and Unconventional Warfare, shows in his exhaustive book Bin Laden: The Man Who Declared War on America, Pakistan funnelled the massive US economic and military aid to pathologically anti-American and fundamentalist jihadi groups, starving the moderate and pro-American ones, and used the camps for Afghan mujahideen to train Punjab and Kashmir terrorists.


The process continued after 9/11, with Pakistan joining the US-led war in Afghanistan to milk Washington and further its agenda of having a puppet regime in Afghanistan and destroying India. The outcome of the London Conference of January 28 indicates that it is succeeding. By seeking an accommodation with the "good Taliban", the US is making as huge a mistake as the one it made in 1994 when the CIA helped the ISI to create the Taliban. The "good Taliban" will soon become "bad" again and continue their jihad against the US in their quest for bringing the entire world under an Islamic caliphate according to their warped interpretation of the great religion of Islam. Having given up the effort to squelch terrorism's nurseries abroad, the US will have to fight terrorism at home, which will involve progressively severe restrictions on the liberties of its citizens and ubiquitous surveillance, which in turn will destroy the spirit of its free-wheeling libertarian civilisation.


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THE PIONEER

COLUMN

ETERNAL LAW OF THE UNIVERSE

AJIT BISHNOI


What is it that makes us fearful? To understand this, let us trace the origin of our bodies. We, as souls, get our bodies in the wombs of our mothers. Once our bodies take shape, we are free to make use of them as we please. But how is it that we commonly use our bodies? Before we answer this question, let us understand what a soul is and what should be its goal. A soul is essentially a tiny part of god (Bhagvat Gita, 15.7), and by its inherent nature is sat, cit, anand — that is eternal, conscious and blissful. Why is this so? It is because the soul is a part of god who is omniscient, omnipotent and omnipresent. However, there is a catch in being a part of god — we enjoy limited freedom or independence of action.


This is where there is a potential for getting into trouble and, consequently suffering. Any soul which misuses its independence suffers reactions. God has made certain rules by which the material nature functions in an impartial manner. Otherwise, how else does god manage this vast universe?


So how does one misuse this independence? We do so by assuming that we are the owners of our material bodies and that the fruits of our actions obtained through our bodies are for our enjoyment.


What happens due to such behaviour? There are adverse reactions in the form of suffering. Prominent ones are fears, losses, punishments, etc.


Can one escape such suffering? Yes, if one does the following: One should always identify oneself to be a part of god and not an independent entity in the shape of one's body. One should offer all fruits of action obtained through one's body and the opulences one is blessed with to god and give all credit for any success or achievement to the almighty without whose help no act would have reached fruition (Bhagvad Gita, 18.14).


If one does so, one minimises suffering, and is able to revert back to one's original sat-cit-anand state. However, there are traps which one must avoid in order to continue in this blissful state. Going against the laws of nature is a sure way of bringing misery upon oneself. The idea should be to hormonise one's actions according to this principle.

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THE PIONEER

OPED

AN EXERCISE IN DECEPTION

 

The Pranab Mukherjee way is to grandstand in the speech while tucking away uncomfortable truths in the Budget papers. He banks on media experts' known disregard for the devil in the detail and short-changes Mr & Mrs Aam Admi

S Gurumurthy


The finance minister has done a fantastic job". "Very good Budget"; "See the takeaways"; "See the positives"; "Fiscal deficit controlled to 5.5 percent"; "Government borrowings reduced to just Rs 3.45 lakh crore"; "Roadmap laid for oil sector reform"; "Infrastructure boosted"; "Consumer demand to raise on tax cuts"; "Bonanza for the middle class"; "Yet an inclusive Budget"; "I would give 10 on 10."

 

Thus went on the comments on the Budget as this column was being written after a strenuous effort to browse through the hundreds of pages on the Internet to see what the FM has left unsaid in his speech. But those who eulogised the Budget and the FM had nothing else on their hands other than what he had claimed in his speech and none of them would have had even a cursory glance at the Budget papers which were put on the NIC website almost an hour after the speech.


Thanks to the euphoria of the experts, the BSE Sensex rose to a high of 400. But as the facts contained in the Budget documents slowly became known, the Sensex moderated to a rise of 175 at close of trading. But the Budget and the FM had won approval with his well-structured speech which was long on words (including quotes from Kautilya) and hugely short on numbers. By now, taking the FM's words as the Gospel, the opinion of 'elite India' has been sealed in favour of the Budget.


Of course, the 'other India' has no instant opinion to express; already reeling under high inflation, against which there is no measure in the Finance Minister's speech, it has only to experience in the days to come what the Budget actually does. Now let us look at what the facts and numbers which lay buried deep in the Budget documents disclose.


The additional provision for rural development is just Rs 3,936 crore — a rise from Rs 62,201 crore in the current year to Rs 66,137 crore for the coming year. This translates to a rise of 6.3 per cent for the coming year over the current year. The estimated rise in the GDP for the coming year over the current is estimated at 12.5 per cent. This implies that the rural sector does not even get half of the rise in the
country's prosperity. The increase in the outlay for the NREGS in the coming year is just 2.5 per cent.

Contrast this with the rise of — believe it or not — 146 per cent in NREGS for 2009-10 over 2008-9. The tax cut for the middle class is some five times the extra rural- development provision. Still, the Budget is claimed as intended for the aam admi! Move on. The additional provision for agriculture is a pittance — just Rs 900 crore. So much for 'inclusive' growth. So, what was an inclusive agenda from 2004 to 2009 seems to have degenerated into a mere slogan now. The FM famously said last year that he couldn't care less for what the stock markets felt about his Budget.


Now, the FM's sleight of hand for infrastructure. See the provision for the road sector. It is just an additional Rs 2,374 crore — a mere 13 per cent more compared to the current year's 23 per cent rise over 2008-09. The additional provision for the Railways is Rs 950 crore — a mere rise of 6 per cent growth compared to the 46.3 per cent hike in 2009-10 over the previous year. In 2009-10, the additional provision in the urban infrastructure was 87 per cent.

The FM had claimed in his Budget speech for 2009-10 that IIFCL, the infrastructure finance set-up, along with the banks, was in a position to support infrastructure projects of — hold your breath — Rs 1,00,000 crore! Against that claim, he admits in his speech now, the disbursement and refinance by IIFCL, so far, has been just Rs 12,000 cr. It would rise to Rs 25,000 crore in the next three years! How did he dare to say one thing in his previous speech and another thing now? He was confident that the experts who would give instant opinion on his product would hardly have the time to check on what he claimed just eight months earlier. The claim that the infrastructure provision of Rs 1,72,552 crore is 40 per cent of the plan allocation is definitely less than honest.

Acting cleverly here, the FM does not give the comparative figures for the current year. Indeed, there was no appreciable improvement, but this does not distract the experts who eulogise the 'infrastructure boost' in the Budget.

What then is the secret of the reduction in deficit? The FM simply refuses to spend. And that is perhaps correct. But he has concealed that and said something to the contrary. Income would increase in 2010-11, but expenditure would not. The increase in Non-Plan expenditure in 2009-10 over 2008-9 was 37 per cent; in 2010-11 over 2009-10 it is proposed to be restricted to just 6 per cent. Non-Plan expenditure was Rs 6,42,000 crore in 2009-10, and in the coming year just Rs 6,44,000 crore — in other words, no increase at all. If the FM had increased Non-Plan expenditure for 2010-11 in proportion to the estimated GDP rise of 12.5 per cent, the deficit would have risen by Rs 1,99,000 crore to over Rs 5,80,000 crore, implying that the deficit would have been up by — believe it — almost 2.9 per cent to some 8.4 per cent! If this had happened, would the experts have gone gaga over the Budget? Would the stock market gone crazy? Obviously not. See how flawed is the premise that the Budget puts extra money in the hands of consumers. Non-Plan expenditure is straight injection of money into the system. If that does not grow, how will the consumer get extra money? The FM's claim that he had cut taxes to put extra cash into the consumer's pocket is less than honest as the amount would be actually less by Rs 1,80,000 crore than that of the last year!


It is not a bad thing that the FM has cut non-development expenditure. But his claim that he was putting money into the hands of the people through tax cuts is only one side of the story. The other, which is the biggest concealment in this Budget, is the cut in Non-Plan expenditure. See more. The biggest component of the rise in Non-Plan expenditure in the current year was the Pay Commission dues, which was extra money into the pockets of the people to spend. That was the reason why, despite the downturn in the economy in 2009-10, private consumption, which was expected to fall according to the Economic Survey 2008-09, did not fall. Private consumption powered by the Pay Commission dues sustained GDP growth in 2009-10, and that was the secret of the growth in 2009-10. This factor is absent in 2010-11. How will the aggregate demand rise more than last year when the amount of additional money in the hands of the people is far less in the coming year than in the year that is closing?


The finance minister's speech intends to conceal more than it reveals — in fact it cheats. He has trusted the propensity of the instant commentators to spin ornamental words in praise of the Budget speech — and won the day against the experts and the market!


-The writer is a corporate adviser and columnist

 

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THE PIONEER

OPED

CRUEL ON GENNEXT

UPA-2 BETRAYED TODAY ITS PITIFULLY INADEQUATE UNDERSTANDING OF THE ASPIRATIONS OF INDIA'S PREDOMINANTLY YOUTHFUL POPULATION

UDAYAN NAMBOODIRI


This was UPA-2's first true Budget but Finance Minister Pranab Mukherjee failed to reassure the people that the rousing mandate for Manmohan Singh in the 2009 hustings was justified. It comes at a time when the ground is shifting from under the regime's feet. A government headed by an economics professional has failed to curb rising prices, which is the touchstone by which the aam admi judges its performance. The bitterness in every heart is exacerbated by daily proof of how it pampers the rich and powerful.


The Opposition is only too glad to make capital on the announcement to hike duty levels on petrol and diesel. On Friday afternoon, we saw something which reminded us 40-somethings of the Bofors era — Communists, caste-formations, BJP, everybody united on a single issue. But they are allowing the government to get away with a far bigger lapse: the betrayal of our common tomorrow.


Mukherjee's plans for 2010-11, or FY-11, reminded many of the bureaucratic assembly line affairs that typified Budgets back in the 1970s and 80s. That's but natural considering the man's rich past in those decades, but surely the new India deserves better than extensions of the 20th century into the 21st. The senior citizens at the helm of affairs in UPA-2 scarcely realise that India is a young nation. It is projected that the average Indian in 2020 will be 26. The 2011 Census is expected to state the obvious — that we are the 'youngest nation' in the world. But sobering that would be the sub-text: our leaders are not.


Very few nations are blessed with the phenomenon of having a predominantly youthful population. China, in the 1980s, had it and used the advantage to its logical conclusion by investing heavily on education, skills development, sports schools, health, etc. In 2020, the average Chinese will be 37 and the west European, 47. It could be India's hour, but provided the UPA gets serious about reaping the 'demographic dividend.'


Tragically, a look at the Budget papers on social sector expenditure shows that there is little by way of human resource planning. There is a proposal to hike gross expenditure on literacy and school education from Rs 39,553 crore to Rs 47,773 crore and on higher education from Rs 14,376 crore to Rs 16,690 crore. The central Plan outlay on Health and Family Welfare is projected to go up from Rs 18,283 crore to Rs 22,300 crore. But, all this is partly the result of a reallocation of expenditures — an accountant's trick. Non-Plan expenditures on all social services are slated to fall from Rs 35,146 crore to Rs 29,483 crore — more than Rs 5,500 crore. That's less money in the hands of the state governments, the real implementers.


One no longer tunes in on the Budget speech to hear officialese. Pronouncement of a hike for this sector of government or that one pleases only the babu who waits eagerly to tear into enhanced outlays to improving his working conditions and perquisites. Recall Sir Humphrey Appelby in the Yes Prime Minister episode 'National Education Service (1988)?' "Education improvement means improvement of service conditions of teachers". This is fait accompli in India where state governments eye central budgetary supported projects as milch cows to underwrite political appointment of teachers and the costly lifestyles of bureaucrats.


What is singularly missing in this Budget is a GenNext vision. The Finance Minister has announced the use of information technology-based revamping of the indirect tax administrations of the Centre and the States, computerisation of commercial tax collection and all that. But for the youth he has reserved rare fiscal conservatism. A quantum leap in terms of bridging the shameful digital divide, on which the Prime Minister commented as recently as December 4, would have fired up the economy and had the effect of applying balm on the IT sector on which he served a body blow by raising the Minimum Alternate Tax (MAT). Could it happen that the Finance Minister was not briefed that more than 100,000 jobs were lost in Indian IT over the past year alone because multinational companies were discovering cheaper investment destinations?


One of the historic turns taken by the planners of the Indian economy was the conscious decision to prefer Services-led growth in the late 1990s over manufacturing. The share of Services in the GDP grew from 38.3 per cent in 1979 to 46 per cent in 1999 to 58 per cent in 2009. The IT sector alone has a 6 per cent share, employing about 2.3 million mostly young people. Yet, we still don't' have a single Indian hardware brand; nor are there too many off-the-shelve software products. The Finance Minister has announced the formation of a Technology Advisory Group for Unique Projects — tax information network, pensions, national treasury management, etc. But for how long would India continue to clone others? The urgent need of the hour is to promote a vibrant SME sector for IT, which would translate into payroll jobs in computer and peripherals manufactories. More moneys than present must be spent on research into software development to popularise e-Governance.

A lot of the experts who turn up in tuxedoes on Budget nights wax eloquent on schemes that the central government has no role in the first place. A paltry Rs 1,000 crore to be shared among 28 states and four union territories would amount to no great shakes for the hundreds of millions of workers in the unorganised sector. What would have served this mass of discriminated-against people better is a central legislation protecting their rights to livelihood and guaranteed services. For instance, the Rashtriya Swashya Bima Yojana began rolling in October 2007, but its only touchstone is the number of smart cards issued. This is a politician's way of achieving "health for all", ridiculed by United Nations organisations. For leaders like Pranab babu, health is a low priority. Government expenditure on health has never crossed the 0.9 per cent of GDP mark. India's commitment to the UN's Millennium Development Goals is known to be slipping. This is criminal indifference for a country with a youth majority population.


The argument for 'inclusive governance' goes beyond Budget-day rhetoric. In the five-and-a-half years of Manmohan Singh's prime ministership, India's poverty has deepened and broadened. Last year, the Indian Statistical Institute came out with a report which revealed that the number of rural poor in India has gone up 20 per cent since 2004-05. No state of India is free of this contrast. Maharashtra, the most industrialised, has 29.58 per cent of its rural population in poverty. This has belied the UPA's aam admi focus claims.

Meanwhile, the government's growing indebtedness is darkening the future of GenNext. The fiscal deficit's pegging at a lower level than the current year is nothing but deception — it is bound to be revised when media attention passes. FY-10, which began with the highest fiscal deficit in India's post-Independence history, has already seen two upward revisions (6.9% at present), and so expecting it to fall to 5.5 per cent in FY-11 is a flight of fancy, particularly when no plan of institutionalising government austerity has been announced.


Pranab Mukherjee has led down India's future today. How history will forgive him is a question with which I go to bed tonight.


-The writer is Senior Editor, The Pioneer


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THE PIONEER

OPED

RURAL INFRASTRUCTURE BOOST WELCOME

THE HIKE IN PETROLEUM PRICES MAY LEAVE A SOUR TASTE IN THE MOUTH, BUT AT THE END OF THE DAY THE FINANCE MINISTER HAS SHOWED HIS HEART IS IN THE RIGHT PLACE FOR THE URBAN MIDDLE CLASS AND RURAL POOR

JAYSHREE SENGUPTA


The finance minister has been very smart in not trying to hide the major problems of the Indian economy, which includes inflation. Yet, he manages to introduce a petrol/diesel price hike which would surely add to the problems of the aam admi.



While taking credit for the rather quick recovery from the effects of the global financial crisis that hit India in 2008, he has clearly identified the areas needing attention in the next one year. Problem areas like education, health, slums, farming and infrastructure all have been addressed and substantial boosts have been given to each.

School education has got Rs 31,036 crore, which may be utilised for better quality of primary education. Similarly, the National Rural Health Mission has got Rs 22,300 crore, which may be used to step up the quality of health care in villages and towns so that public hospitals in the cities are less crowded and people from lower income groups coming from distant villages do not have to struggle for getting treatment in metropolitan public hospitals.

The importance of property rights for slum dwellers has been addressed and a 700 per cent increase in the allocation for slum development programme — Rs 1,270 crore — is on the cards. Even for low income urban housing, a 1 per cent interest subvention loan for houses, costing Rs 20 lakh, has been extended to March 31, 2011, and Rs 700 crore have been provided.


Since 2008, the impact of the global crisis, especially in villages, had been softened by the NREGS and the grant of subvention on interest on crop loans. These have been extended and allocation for the NREGS has been stepped up by Rs 40,100 crore. Repayment of loans by farmers has been extended till June 30, 2010 in view of drought and floods in some parts of the country. There is no doubt that agriculture is the weakest area today and thus all aids for agriculture is welcome, otherwise the country will face a harsher food inflation.



To Pranab Mukherjee's credit goes the earmarking of 25 per cent of the Plan outlay for rural infrastructure. Though there has been much debate about the phasing out of the fertiliser subsidy, it has been continued with, but will be given directly to the farmers.


Simplification of the FDI regime is also welcome, especially when we realise that inflows continued despite the financial crisis, touching $20.9 billion in December 2009. More FDI would prepare India's manufacturing sector for competition from China.


It is now well known that banks have not been able to lend more as they have not reduced interest rates and instead have parked their extra funds with the RBI, gathering high interests. Rightly, private sector players and non-banking financial companies are being allowed banking licenses. This could solve the liquidity problem faced by many small and medium enterprises.


The unorganised sector has received its due recognition as being the most important employment provider in the economy where millions of workers (92 per cent of the workforce) are without any form of safety net. The government has decided to set up the National Social Security Fund with initial allocation of Rs 1,000 crore to provide social security to workers of the unorganised sector.


On the aam admi front, the income tax slabs have been changed to give exemption from tax for incomes up to Rs 1.6 lakh and 10 per cent tax for incomes between Rs 1.6 and Rs 5 lakh. This would give relief to 60 per cent of the tax payers. But on the price front, though the Food Security Bill is waiting in the wings and the current food inflation is at 17.5 per cent, no immediate relief measures were announced. The fuel price hike would push up the WPI further.


Perhaps this item of the Budget has been the most controversial but it is clearly aimed at cutting subsidies in the face of higher international oil prices.


There are encouraging signs for economists who have been pushing for the withdrawal of the fiscal stimulus in order to reduce the public debt. Disinvestment has been targeted to bring in Rs 25,000 crore. The news of a lower fiscal deficit at 5.5 per cent for 2010-2011 and even lower next year at 4.8 per cent should cheer those wary of the ballooning government debt, currently at 82 per cent of the GDP. The finance minister's promise of bringing this to 68 per cent by 2014-15 (in accordance with the recommendations of the 13th Finance Commission) should bring back the confidence of the market as it had feared a higher rate of interest and crowding out of private investment due to increased government borrowing.


Also heartening to note is that Non-Plan expenditure, which includes defence, subsidies and government salaries, is slated to rise by just 6 per cent. Of course, every year's Budget exercise comes packed with drama involving government's revenue and expenditure and we cheer when the minister announces an increase in expenditure in key areas. But then, how much of it gets utilised and how much just lies in the coffers unused? It is the duty of the government to ensure that the moneys allocated against projects are properly put to use so that the expected dividends accrue to the aam admi.


-The writer is an Author and columnist

 

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MAIL TODAY

EDITORIAL

STEPS ON REFORMS AND R&D IN BUDGET WELCOME

BY MOON B SHIN

 

THE UNION Budget 2010-2011 is a progressive one with a special focus on infrastructure and rural growth. With an impetus on high gross domestic product (GDP) growth, and laying down a roadmap for fiscal consolidation, the government is putting down things in perspective when it comes to allocation of funds.

 

However, as it is essentially a growth-driven budget, price hike is imminent in near future. We are thankful to the policy makers of the country for introducing reforms and measures. Such measures have helped the consumer durable industry in achieving high growth rate. The breeze of reforms has continued to be as impressive as in the past.

 

With two per cent increase in excise duty, prices will increase. The five per cent deduction from the existing 10 per cent excise duty on the metal component is a welcome move. For instance, excise duty on magnetron used in manufacturing of microwave ovens would help companies promote the concept of healthy cooking in India and adding value to Indian kitchens.

 

However, an increase in excise duty on petrol by one per cent and crude oil by five per cent will have an impact on the costs involved in freight and logistics. This will further put pressure on the prices of the products.

 

Special additional duty on mobile phones has been rolled back. This will benefit the mobile companies who import packaged mobile phones as it will now eliminate the long fund blockage. Abolishment of two per cent excise duty on mobile phone accessories is also encouraging for consumers.

 

I welcome the finance minister's announcement increasing the personal tax limit at individual level. Tax exemption will strengthen consumers' pocket. This would empower them to spend more on lifestyle products such under the home appliances category.

 

I also welcome minister's proposal to promote the in-house research and development (R&D). He has announced an increase in the deduction of tax limit from150 to 200 per cent for R&D. This will lead to better and innovative products. However, industry will eagerly wait for the implementation of GST (Goods & services tax) within the stipulated timeframe.

 

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MAIL TODAY

PETROL BURDEN BACK

 

It's a double whammy of sorts for consumers as the budget has pushed up fuel and car prices

 

THE UNION Budget, tabled in the Lok Sabha on Friday, has slapped levies on petrol and diesel but also left national oil companies in the lurch. These corporations continue to be saddled with losses even as the government is raking in Rs 25,000 crore in additional duties on petrol and diesel.

 

In a double whammy of sorts for consumers, car prices are also set to head northwards apart from the hole costlier fuel will burn in their pockets. Car manufacturers, including Maruti Suzuki, Tata Motors, Hyundai and Honda, on Friday said they were hiking prices to pass on to customers the 2 per cent increase in excise duty announced in the Budget.

 

Petrol prices in Delhi will go up from Rs 44.72 to Rs 47.43 a litre and diesel to Rs 35.47 a litre, since indirect tax proposals moved in the Budget come into effect immediately.

 

The customs duty on petrol and diesel has been raised to 7.5 per cent from 2.5 per cent. The excise duty has gone up by Re 1 per litre to Rs 14.35 and Rs 4.60 per litre on petrol and diesel, respectively.

 

Senior oil company officials lament that they are back to square one because finance minister Pranab Mukherjee has left the decision on implementing the Parikh committee report on the petroleum ministry. The report cannot be implemented in its present form owing to political considerations. "If a mere Rs 2 increase in the price of petrol can trigger such a storm in Parliament, where is the question of going for a Rs 100 hike in the price of an LPG (liquefied petroleum gas) cylinder?" an official wondered.

 

Petroleum and natural gas minister Murli Deora, for his part, said his ministry would give its view on implementing the Parikh report in a week to 10 days. "I am not the only one who has to decide (on this). We have to consult a lot of other people,'' he said.

 

Deora indicated that he would seek to build a consensus on the issue within the ruling UPA before deciding on any further increase in prices. WHILE the finance minister claimed that international crude oil prices had eased to $ 70 a barrel, the truth is that the oil companies are bleeding because the prices of petrol, diesel, LPG and kerosene are much lower than the cost of production. During the current year, Indian Oil Corporation, Hindustan Petroleum and Bharat Petroleum suffered revenue losses to the tune of Rs 31,574 crore on selling LPG and kerosene.

 

The finance minister has provided an additional Rs 11,845 crore in the Budget to partly offset them. This still leaves a Rs 19,729-crore deficit in their books. While Mukherjee advocated the allocation of cash directly from the Budget instead of issuing bonds to subsidise food, fertiliser and fuel, he has made no additional provision for cooking fuel. At Rs 3,108 crore, the allocation for LPG and kerosene subsidy for 2010-11 is almost unchanged from the previous fiscal.

 

Deora said he would continue to seek about Rs 19,800 crore compensation for state-owned oil to cover the remaining part of the LPG and kerosene losses. The Budget proposal of raising customs duty on other specified petroleum products from five to 10 per cent would lead to an increase in aviation turbine fuel prices by Rs 1,000 to Rs 1,500 per kilolitre. So, flyers too will have to shell out more.

 

For motorists, purchasing a car will be a much dearer deal. Maruti Suzuki India (MSI) said its models would cost between Rs 3,000 and Rs 13,000 more (ex-showroom, Delhi) from Friday midnight.

 

Hyundai Motor India Limited also said it will increase prices between Rs 6,500 and Rs 25,000. Honda Siel India too said it would jack up prices by Rs 13,000 to Rs 41,000 from Saturday. Maruti chairman R.C.

 

Bhargava said the hike in the prices was essentially meant to offset the increase in central excise duty. He, however, added that the auto industry would be able to sustain its growth because other measures taken in the Budget would help fuel demand.

 

Tata Motors managing director P.M. Telang said in Mumbai that prices may be hiked by up to Rs 60,000- 70,000 for heavy vehicles and Rs 5,000-6,000 for smaller vehicles. Other vehicle manufacturers, including General Motors and Mahindra & Mahindra (M&M), are also considering similar hikes.

 

General Motors said the prices of its models will go up by Rs 6,200-22,000. Ford India president and managing director Michael Boneham said the hike in excise duty was a major disappointment for the automobile industry. "It is sure to affect consumer sentiment," he added. Bajaj Auto managing director Rajiv Bajaj said the increase in excise rate will have to be eventually passed on to the consumers. In the two-wheeler segment, largest player Hero Honda said it will hike prices by Rs 500-1,500 across all models.

 

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THE TIMES OF INDIA

COMMENT

GOING FOR FEELGOOD

 

Going by market cheer, Budget 2010-11 scores on feelgood. Its revised middle-class friendly tax slabs are a major mood-enhancer that'll promote consumption and savings. For the aam aadmi, expected price rise due to the finance minister's partial rollback of crisis-time excise duty cuts will be offset by larger disposable incomes. And since tax concessions usually mean better tax compliance, the government may rake in greater revenue here than accounted for. For the private sector, several pluses include a pledged FDI-friendly environment and the no-change on service tax. Vulnerable export sectors will continue to see soft financing. On the minus side, India Inc could have done without the minimum alternative tax hike.


There's good news in that the 5.5 per cent fiscal deficit target remains unaltered and anticipated 8-9 per cent growth is no longer a pipedream. With fiscal consolidation back on the radar, the FM is optimistic about higher growth, healthier tax receipts and disinvestment proceeds hiking revenue. Moreover, the excise rewind going along with a status quo on service tax is in tune with GST's goal of aligning goods and services rates. But while reaffirmed commitment to the direct tax code and GST is welcome, greater urgency was surely warranted on implementation.

As expected, social sector spending has been enhanced. However, expenditure from now on must be geared to outcomes, be it in relation to delivering roads, healthcare or rural jobs. Official data shows that over a third of funds earmarked to eight of UPA's 15 flagship schemes remained unspent at the close of 2009-10's first three quarters. Moreover, NREGS is still to see the financial inclusion and biometric identification of beneficiaries that'll help stanch leaks and show the door to middlemen. On this count, good Budget announcements include a bank in every large village and UID cards' confirmed rollout this year. On agriculture, there's an appropriate focus on boosting agro-processing. But it won't do to reduce retail reform to policy innuendoes given the worrying dip in private investment in the farm sector, in crying need of improved infrastructure. And while giving fertiliser subsidies directly to farmers is spot-on, India could do with pilot projects on alternative mechanisms such as, say, direct cash transfers or coupon systems for delivering social services.


Several innovative ideas are tucked away in the Budget, such as the proposal to auction mining licences that'll help make the sector less of a political playground. A national social security fund for unorganised sector workers is also well-intended, though such palliatives can't substitute for labour reform. The Nilekani-headed commission to upgrade IT systems for tax administration is a reform-oriented idea, as is the proposed financial sector legislative reforms panel.


Finally, the FM makes two key political statements. He admits public delivery bottlenecks. And he describes government as an enabler whose job is to aid individuals and enterprises. It's good to hear policymakers acknowledge that economic well-being is ultimately an issue of governance and reform.

 

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THE TIMES OF INDIA

TOP ARTICLE

FUELLING THE GROWTH STORY

SUDIPTO MUNDLE

 

Barring the histrionics of a strident opposition increasingly lost in the wilderness, virtually all sections have welcomed the budget. All sections, that is, of the visible and vocal minority. As for the silent majority, they are well silent, but more on that later. The BSE stock price index went up 300 points even before the finance minister finished his speech. Pranab babu has done all the expected things the market had factored in plus some, hence the gain. With the economy growing at 7.2 per cent, he has started winding down the fiscal stimulus in a calibrated manner. How is this to be accomplished?


Tax revenues are to go up to Rs 5,34,000 crore and non-tax revenues are to go up from Rs 1,12,000 crore to Rs 1,48,000 crore, mainly on account of 3G spectrum sales. This will raise total revenues to 9.8 per cent of a projected GDP of Rs 69,35,000 crore in 2010-11, up from 9.3 per cent of GDP in the revised estimates for 2009-10. Capital receipts other than loan recoveries (mainly sale of public sector equity) will yield Rs 40,000 crore or 0.58 per cent of GDP as compared to 0.42 per cent last year. Thus additional revenue and non-debt capital receipts will reduce the fiscal deficit by 0.7 per cent of GDP. On the expenditure side, capital expenditure will rise to Rs 1,50,000 crore or 2.16 per cent of GDP, an extra 0.3 per cent of GDP compared to 1.86 per cent last year. However, revenue expenditure will be compressed to Rs 9,59,000 crore or 13.83 per cent of GDP compared to 14.66 per cent last year, yielding an additional reduction in the fiscal deficit of 0.5 per cent, i.e., a total compression of the fiscal deficit by 1.2 per cent from 6.7 per cent last year to the targeted 5.5 per cent this year.


Tax revenues will rise despite significant relief in income tax rates for personal incomes below Rs 8 lakh and a reduction in the surcharge on corporate income taxes. On balance the reliefs will entail a revenue loss of Rs 26,000 crore on the direct taxes side. This will be more than offset by a revenue gain of Rs 46,500 crore in indirect taxes. The indirect tax take will go up mainly on account of the expected partial rollback of excise duty reductions, a one per cent clean energy cess on domestic and imported coal, etc. The excise duty rate, the peak customs duty rate and the service tax rate have all been set at 10 per cent, preparing the ground for introduction of a unified Goods and Services Tax next year. This, along with the Direct Taxes Code, will usher in a new phase of thorough tax reform. However, an opportunity has been lost in not significantly extending the coverage of the services tax. Also, the indirect tax proposals are still full of discretionary exemptions, concessions and specific rates for individual items, which are reminiscent of the pre-reform days.


Tax reforms will be combined with a new commission to oversee significant reforms in the financial sector, licensing of new banks and another commission to monitor large corporations that could pose systemic risk as seen in the advanced countries during the financial crisis of 2008-09. Announcement of a substantial reform programme, along with fiscal consolidation, and the protection of capital expenditure on infrastructure while compressing revenue expenditure, makes the current budget a very sound budget for growth.


However, the budget has been quite conservative on the inclusion agenda and social programmes, which are mostly items of revenue expenditure. Thus, total spending on the flagship inclusion programme NREGA, now renamed Mahatma Gandhi National Rural Employment Guarantee Scheme, has remained essentially constant at Rs 40,100 crore in nominal terms compared to Rs 39,100 crore last year, which means a decline in real terms. It's the same story if you take the total spending programme on rural development, or agriculture, or school education and literacy, or women and child development, or health. In all these social inclusion programmes, the expenditure levels have been maintained at more or less the same nominal levels as last year, meaning a decline in real terms.

This is not surprising coming from an experienced finance minister. This being the first year of the UPA II political cycle, he knows he has only this year and the next to push through all the hard-nosed reforms and fiscal discipline that are important for sustaining high growth. After that, inclusive spending will start galloping in response to political compulsions as elections loom large on the horizon, and fiscal discipline will fall by the wayside.

It also has to be mentioned that there is a whole different approach to inclusive growth outlined in this year's Economic Survey, which proposes revolutionising the delivery of social services and anti-poverty programmes, making them more effective and leakage-proof through a coupon based system instead of just throwing more money at them. The finance minister has hinted that he is buying into this approach. We will hopefully see far-reaching reforms not only on the growth front but also in the approach to inclusiveness over the next two years. So all is not lost for the silent majority after all.


The writer is Emeritus Professor at the National Institute of Public Finance and Policy, New Delhi

 

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THE TIMES OF INDIA

TOP ARTICLE

A STEP IN THE RIGHT DIRECTION

 

Fourteen years after it was tabled, the Women's reservation Bill - which seeks to reserve 33 per cent seats in state legislatures and in Parliament for women - might finally see the light of day. The Union cabinet had formally approved the Bill and it will be taken up in this session of Parliament. Hopefully, the Parliament will see the Bill through this time.


Political consensus on this important issue has been elusive and the Bill has been strongly resisted by parties like the Samajwadi Party and the JD (U), which have staged walkouts and even resorted to physical intimidation in the past to register their protest. They continue to insist that quotas for SCs, STs, OBCs and Muslims be carved out of the overall quota, a move that is both undesirable and untenable.


The idea behind reserving seats for women is that women are a disadvantaged group and must be given adequate political representation through special measures. Critics of the quota argue that reservation is a regressive move and that political parties should instead voluntarily field more women candidates. Well, after more than 60 years since independence, we are yet to see any political party giving women adequate representation. If we wait for them to take corrective measures on their own, we may well have to wait till kingdom come. Sometimes affirmative actions are called for to set right historical wrongs. The Women's reservation Bill is one such necessary measure.


Some women have held high political office in our country but there aren't as many women legislators or ministers as there should be. Denying adequate political representation for one half of our population does not sit well on our claim to be a thriving demo-cracy. When women are politically empowered, it significantly enhances their prospects, giving them the voice and space to reverse the several disadvantages they face on different fronts. It is therefore crucial that we have more women in our political system. All measures to improve the lives of women, economically, socially and politically, must be welcomed. Only then can we lay claim to being an egalitarian and inclusive society.

 

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THE TIMES OF INDIA

GET OUT OF THE QUOTA MINDSET

KAUTILYA KUMAR

 

The move to reserve seats for women in Parliament is flawed. Of course, the intention behind the decision that we need to have more women participation in legislating is laudable. But the way to achieve it is not through reservations. Quotas will create another area of patronage, which in the long run will defeat the purpose of achieving gender parity in legislatures.


Our policymakers seem to view reservations as the magic bullet that will wipe out all forms of discrimination. It may have succeeded in some sectors but is not necessarily the solution for all our deficiencies. Ours is essentially a patriarchal society. Men control the levers of power. There are historical factors as well as economic reasons for women being pushed to the background. Power relations shape social perceptions. Political representation is an outcome of these factors.


What do we mean by women empowerment in politics? It is not merely about having more women legislators, but about forcing a paradigm shift in the way public policies are decided. The real issue is to ensure that public policies become more women-friendly. That calls for a change in social mindset. Can more women MLAs and MPs ensure that? Not necessarily. The additional women legislators could well share the patriarchal mindset and legitimise policies that are unfriendly to women. We have seen in our own country and the neighbourhood that mere presence of women in powerful places needn't necessarily make things easier for other women. Special quotas are unlikely to change the political agenda of parties. What is most likely to happen is that parties will pick pliable women to fill the quota and ask them to further the party agenda in legislative bodies.

A qualitative change is possible only if the basic needs of women are addressed. India's record in women's health and education are abysmal. Low priority is given to their needs even when public infrastructure is built. So few women get the time or opportunity to acquire skills that are necessary for a successful career in public life or economic activity. Quota politics is unlikely to address these issues. If these biases are not changed we may get more women legislators, but few of them are likely to be agents of change.

 

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THE TIMES OF INDIA

THE SPIRIT OF THE MATTER

GAUTAM ADHIKARI

 

WASHINGTON DC: India is shy of advertising its democracy. But, as a democracy, it has done good things in the past, which still help it collect brownie points. Half a century ago, India gave shelter to the Dalai Lama and thousands of Tibetans escaping from China's tyranny. Today, the Dalai Lama speaks glowingly of his India experience.

He had a busy schedule in this town last week, much to the annoyance of the Chinese. He called on President Barack Obama at the White House, showed up in the Library of Congress to collect a Democracy Service Medal awarded by the National Endowment for Democracy, and gave interviews to Larry King on CNN and to the National Public Radio. The Chinese put out surly statements criticising his visit; but with a smile on his face he spoke gentle truths that stung some and soothed others.


He praised India wherever he spoke. He contrasted his experience in the mid-1950s of the Chinese parliament, where the orderly proceedings had a soporific effect on members and visitors alike, to his later visit to the Lok Sabha, where he watched a cauldron of cacophony to imbibe his first lesson in the joys of democratic pluralism.

When Larry King brought up the subject of discipline, the wise lama separated 'totalitarian discipline', which damaged individuals, from 'self-discipline', which elevated individuals. In the teachings of Gautam Buddha, the acquisition of self-discipline was a key to self-realisation. Since Buddhism had come out of India, he said, "I always describe myself as a messenger of India, because i am a Buddhist."


Speaking of the Buddha, he said something that took me back to a conversation in Delhi with a friend who had wondered how an agnostic, like myself, could hope to comprehend the reality of the cosmos without any spiritual training. The Dalai Lama said, in his speech at the Library of Congress, that the Buddha implored his disciples not to accept any statement or assertion of truth on faith alone. All assertions or claims to truth, even those coming from the Buddha, must be investigated. Every position on the nature of reality should be adopted on the basis of reasoning inquiry.


The problem is that such rational inquiry requires in any curious individual a basic level of acquired information. I, for instance, can't graduate myself from 'agnostic', that is someone who thinks any ultimate truth may be unknowable for us humans, to 'atheist', that is someone who asserts there is no god or prime mover. I am unable to do that because my knowledge of mathematical astrophysics is far too limited to understand a concept like a 'singularity', for instance, that makes superfluous the need for a prime mover, or to comprehensively grasp the idea of a causeless cosmos.


There are thinkers, however, who can do that and have written essays and books explaining their take on reality. You can say, in a sense, they are at one with the Buddha and the Dalai Lama in that they don't accept any faith-based assertion about the nature or origin of life. They and, for that matter, we agnostics don't allow inquiry to cease or curiosity to die as long as our thinking faculty is intact.


That is not to suggest that a god-believing person cannot also be an inquiring soul. Einstein, who had a profound understanding of the nature of reality, seemed to be a believer in a divine being up there with a plan for the universe. But there may be no compelling need to be spiritual, or to belong to one religious group or the other, to carry on a fulfilling life of rational inquiry or raise questions about existence. You just have to be ceaselessly curious and ready to change positions when facts evolve.

That was what was pleasing about the Dalai Lama's spirit. As a Buddhist monk, he did not think there was a need for devotional belief; as a leader of an exiled people, he did not believe any authority, be it divine or political, should be unquestioningly accepted, including his own. In Buddhism, agnostics and atheists can feel at home.

 

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******************************************************************************************HINDUSTAN TIMES

EDITORIAL

BEGINNING A NEW CHAPTER

 

This is probably the last budget as we know it. If things work to plan, India's finance minister will have ceded a significant part of his discretionary power over tax rates when Pranab Mukherjee rises to present the budget for 2011-12. A single tax on goods and services across the land will be set by a collegium of ministers from the states and a code on taxing incomes will dictate rates and slabs. This year's budget paves the way for a turning point in the republic's history. By widening income tax slabs on the one hand, and raising the indirect tax rate on the other, Mr Mukherjee is ushering in a new era that will become official once the necessary legislation is in place, hopefully in the next 12 months.

 

The regime change also envelops a calibrated rollback of the economic stimulus. Shifting the incidence of tax from income to consumption should nurse the recovery along while improving the fiscal balance. The risk in this gambit is to the price line as producers, notably oil companies, pass on the higher tax and neutralise the gains of larger disposable incomes. With inflation the foremost concern, the cost of fiscal consolidation could be pretty high.

 

Mr Mukherjee has dipped into non-tax receipts like divestment and spectrum auction proceeds to shave a percentage point off the fiscal deficit, but the government must realise these revenue streams are not in perpetuity and cannot be a substitute for expenditure control.

 

A beginning has been made in explicitly accounting for subsidised fuel and fertilisers. Yet overall, subsidies are stubbornly stuck at 10 per cent of total government expenditure while capacity building in infrastructure needs another 15 per cent and interest payments an additional 22 per cent. As welfare entitlements become legally enforceable, the onus will be on cutting back revenue expenditure. Yet the finance ministry's zeal is directed more towards pruning the fiscal deficit in the medium term than the more worrisome one in revenue. One in three rupees Mr Mukherjee spends this year will be borrowed, a prospect the bond market has greeted with trepidation. The stock markets, though, find cheer in a lower corporate tax surcharge and a conditional withdrawal of the excise giveaway.

 

Surprising, because the bourses had dipped after last year's budget despite it having a bigger reforms agenda than this one. Disinvestment, oil and fertiliser price decontrol, greater access to foreign investment, easier infrastructure finance and tax reforms are all works in progress. This year Mr Mukherjee has, understandably, turned his attention to farm productivity and food management. Banks will be recapitalised and a super financial watchdog created, coal blocks auctioned under scrutiny of a regulator, and a fund set up to foster clean energy. A bigger reforms push in a year when state elections do not cast much of a shadow seems to have yielded to the more pressing demands of reviving growth and making it more inclusive.

 

After employment and education, the UPA is moving to make food security an entitlement. Spending on social security, including flagship programmes like the unemployment dole and Bharat Nirman, is now up to 12 per cent of total expenditure. A quarter of plan spending is on rural infrastructure. Given the sums involved, Mr Mukherjee's third guiding principle in making this budget assumes salience. "If there is one factor that can hold us back in realising our potential as a modern nation, it is the bottleneck of our public delivery mechanisms… we have a long way to go before we can rest on this count." India cannot tarry its tryst with destiny.

 

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HINDUSTAN TIMES

EDITORIAL

THE FAT IS IN THE FIRE

PRATIK KANJILAL

 

As a thin man with a bad lifestyle, I am deeply concerned. I have just learned that fats don't spare the thin. Apparently, macrophages go into hunter-killer mode when we gorge on fats, aggravating heart disease, diabetes and cancer in the thin and the obese alike. George Bernard Shaw was way off the beam when he urged us to "stimulate the phagocytes" (The Doctor's Dilemma). Like the 2010 economy, a stimulus is just what they don't need.

 

In fact, prosperity and consumer choice are stimulating the death rate. Pranab-da believes that India will finally become a market growth leader in 2011-12, but unfortunately it's already leading the world in the incidence of chronic diseases typical of prosperous nations. This is affecting everyone, not just fries-fed city folk and mall rats. In 2006, a study based on Andhra Pradesh Rural Health Initiative data found that rural epidemiological patterns are changing rapidly. Infectious and parasitic diseases are no longer the leading causes of morbidity and mortality. They have been overtaken by vascular disorders, ischaemic heart disease and strokes.

 

Not surprisingly, self-harm is a major problem, accounting for one-third of all deaths attributable to injury. The whole world has been nattering on about change ever since Obama's campaign, but rapid economic and social change can be a wild ride. Some people just throw up their hands and say, "No, I can't," and drown their sorrows in rat poison.

 

The medical fraternity and policy-makers in preventive and social medicine will have to recalibrate their response to disease in India, taking into account the rapidity with which lifestyles and the incidence of serious diseases are changing. Leaving the specialists to ponder that problem, I wandered afield on the Internet like a tourist of death's domain, seeking the great slayers of the 21st century. And I found that in believing that malnutrition and HIV are the biggest challenges we face, we are living in a mass hallucination.

 

HIV/Aids is only the tenth biggest killer worldwide, well behind cardiovascular problems, infectious and parasitic diseases and cancers. It is slightly ahead of gastrointestinal disorders and diarrhoea, which are slightly ahead of suicide, war and fatal muggings and such. Disturbingly, death due to violence is ahead of death due to lung cancer, though we have come to regard smoking as the biggest preventable cause of mortality. Maybe it's because more people die of smoking than of violence in the district of Columbia, an area that does more than its fair share in shaping world opinion. Maybe there are too many smokers in Washington and not enough homicidal maniacs. And its Beltway bandits fight their wars elsewhere, raising the rate of violent death on other continents.

 

Indeed, local flavour causes huge variations. Malaria trails behind heart disease in rural India. But in cities, the anti-malaria drive is in retreat and mosquitoes are a menace. I'm told that last week, a mosquito landed at IGI Airport and the ground crew tried to refuel it, taking it for an Airbus. So, to each his own. Speaking for myself, the thin man who has just learned that he is doomed to be felled by growth-led fats, I'm off to take a hard look at Pranab-da's growth budget.

 

Pratik Kanjilal is publisher of The Little Magazine

 

The views expressed by the author are personal

 

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HINDUSTAN TIMES

EDITORIAL

A HUM, HINDUSTANI

GOPALKRISHNA GANDHI

 

When President K.R. Narayanan started a spoken sentence with 'Incidentally...' his staff knew what was coming. Instructions of moment entered through that one-word gate, as did tickings-off for omissions, errors or even plain thoughtlessness.

 

Careful paper work had preceded President Bill Clinton's State visit in March 2000. But Narayanan handed back one of the 'less important' papers I had given to him. 'Less important'? This was the seating plan for the banquet he was hosting for his American counterpart. The President had spent at least a half-hour on the plan, changing it around  in spidery snakes-and-ladders loops that brought many tail-enders to the centre. "Incidentally," he said to me, "you do not seem to have applied your mind to this plan."

 

"Incidentally," he asked me in a moment of brooding earlier the same year, "have you kept any jottings or notes or suchlike about our conversations?" As I shook my head, he added, "Nor have I. They could be very useful later for references." I followed up on his suggestion almost immediately.

 

One of the first conversations I recorded was about himself. "I was working with The Times of India in Bombay in 1945," he reminisced, "when I got a Tata scholarship to the London School of Economics. Gandhiji happened to be in Bombay  and I thought I should call on him and ask him some questions that were agitating me."

 

The 25-year-old Narayanan posed two questions to Gandhi at Birla House, Bombay, on April 10, 1945. The first began with a comment: "All great men have a passion for simplification." Narayanan went on: "You have simplified the nature of human conflict as between violence and non-violence, truth and untruth, right and wrong..." And then he put the question: "But in life is not the conflict between one right and another right or between one truth and another truth?"

 

The existential question received an indirect answer. But the practical one that followed solved a hard, personal dilemma for the young man on the eve of his departure for London. The question was: "How can a Harijan who goes abroad best serve his country and community from abroad?" "He cannot serve the one without serving the other," Gandhi replied, adding "Abroad you will say it is a domestic question which you are determined to solve for yourselves."

 

Gandhi could not have known that the young  Keralan was to become, in time, the tenth president of India and would confront these two questions, both as Head of State and as Kocheril Raman Narayanan.

 

During his State visit to France in 2000, before he could engage President Jacques Chirac in bilateral discussions, President Narayanan had a momentary preoccupation with an issue that connected him directly to the second question he had posed to Gandhi. As I went to brief Narayanan on some routine matters, his Aide-de-Camp (AdC) met me at the doorstep, holding that morning's issue of a Paris newspaper. "We have not shown this to the President yet," he said. The paper had chosen, in a bold headline, to describe our President's community origins in terms India has long ceased to use.

 

Neither the expression on the President's face nor the timbre of his voice showed any reaction. "The West," he said a few moments of reflection later, "continues to be fascinated by tales of grimness from India but..." and then, after another pause "...our own social evolution being what it is, there are enough sensationalisers among us who provide grist to the mill."

 

The discussions at the Elysee went exceptionally well, with Chirac at his most artful, Narayanan at his most articulate and that morning's story figuring nowhere in the proceedings. I felt an immense pride in the Head of our State overcoming a personal inner turmoil within minutes and serving India's representation abroad with rare sophistication. Gandhi's advice to him 55 years earlier had not been wasted.

 

An individual can resolve the conflict between one right path and another through his or her instincts. But what about a State? Does the State have instincts that help it choose one of the two, or does it rely on objective reasoning alone?

 

In a totalitarian regime, the supremo's instinct decides everything. But to the extent that a democracy elects thinking, feeling individuals to office, its leadership cannot but use both intelligence and instinct, intellection and intuition. When a Nelson Mandela says he is against racism and adds "both white racism and black racism," his individual instinct for justice is revealed. When, as President of South Africa, he sets up the Truth and Reconciliation Commission, his instinct, his 'inner voice', acquires the colours of the State, the new rainbow nation.

 

What of a nation? Is there such a thing as an 'Indian instinct'? Is calm our basic instinct? Or is it rage? We witness both.

 

In India's integrated acoustics three major forms of utterance can be segregated: the grammar of authority (sarkar/siyasat), the prose of faith-systems (dharma/mazhab) and the free verse of human instincts of the finer kind (svabhav/jazba). The first two, the grammar and the prose, are strong baritones. The 'free verse' of human instincts illustrated powerfully in Sufi compositions and in the writings of Kabir and Surdas, is soft. This is not just because it is un-pedestalled and unamplified but because it is plural, like a choir's.  The framers of our Constitution were aware of the importance, as well as the fragility, of this voice, the 'inner voice' of India. The preamble to our Constitution, beautifully rendered in Hindi as 'Uddeshika', is the seat of that voice.

 

There is a small bidi-making village in West Bengal's Murshidabad district called Pachalgram. I asked a little girl standing outside her hut in that village if she went to school. And on her saying yes, I asked if she would please show me her school textbooks. She brought out a slim English publication and opened it on a page that carried the preamble to our Constitution. "Have you read this?" I asked incredulously. "Yes," she replied in Bengali, and proceeded to read it aloud softly but clearly, in English. "We the people..."

 

This was Pachalgram, not Paris. It was a hut, not the Elysee. But I felt the same pride in this girl poised between childhood and youth, school and either its fruition or its possible abandoning, as I felt in President Narayanan as he led the discussions with President Chirac. To me the little girl's was the voice of India's instinct not under trauma, tragedy or even tension. It was the voice, the instinct, the intuition of anticipation waiting, in Longfellow's words "with uncertain feet, where the brook and river meet".

 

And I fantasised telling President Narayanan, "Incidentally, sir, this girl should get a scholarship to the LSE."

 

Gopalkrishna Gandhi was the Governor of West Bengal from 2004 to 2009

 

The views expressed by the author are personal

 

***************************************


******************************************************************************************

INDIAN EXPRESS

EDITORIAL

UNPARLIAMENTARY

 

The Union Budget is an occasion of great ceremony. It begins with the arrival of the finance minister carrying, conspicuously for the cameras, a briefcase of documents — after all, the word "budget" derives from an old French word for a little bag. The stage is entirely his as a customarily packed Lok Sabha keeps itself roused to boo or welcome even arcane tax proposals. And with the minister having had his say, they all tumble out with instant critiques. There is almost a festive air through this contentiousness because, of course, the real business of debating the Budget in the House and consideration of the demands by standing committees of Parliament will truly begin on the morrow. On Budget day, Parliament affirms its primacy in authorising the government's expenditure and its proposals for tax levies by hearing out the finance minister.

 

Not this time. On Friday, the opposition undermined Parliament by choosing to walk out almost to the last MP — there was the quaint picture cut by Jaswant Singh remaining seated through the ruckus — even as Finance Minister Pranab Mukherjee read on. They gathered themselves out of the House in a big huff over the hike in petroleum product duties, and we had the oddest sight of Lok Sabha MPs feeding the waiting camera crews outside with denunciations of the proposal without obtaining the full text of the Budget. From the BJP, this was conspicuous incoherence: had the NDA not taken great strides to reform petroleum prices, to the then-too present din of complaints that this would have an inflationary effect? However, incoherence apart, the walkout was another step in the gradual erosion of the House as a site for meaningful and responsive engagement.

 

It is yet another low for this Lok Sabha, not even a year into its term. And more than previous disruptions, it marks the flight of responsible engagement from the House. It is not just that a show of opposition unity by walkout displays a lack of imagination and stamina to use the instruments of legislature to hold a government to account. It is also that it confirms a suspicion that MPs see the legislature as little more than a site to numerically test a government's majority.

 

***************************************

 


INDIAN EXPRESS

EDITORIAL

THE REFORMER'S BALANCESHEET

 

Finance Minister Pranab Mukherjee had many objectives to juggle in this Budget. On the one hand, the government's expansion of spending that followed on from the global financial crisis had put pressure on its bottomline, and across India and the world stakeholders hoped that the Budget would mark a return to fiscal prudence. On the other hand, the momentum that India has managed to sustain through the global downturn needed to be given fresh energy, to propel India back towards a higher growth path. Mukherjee, handed this tough slate, has pulled together the political experience of two decades, and presented a package that manages to accomplish a great deal. More, that he began the Budget speech with a public reminder that government cannot do everything, that it must play an enabling role, that the animal spirits of India's investors are crucial to growth, should be seen as a major reformist signal.

 

The macro picture first. This Budget scores on fiscal consolidation and tax reform. The Finance Commission's recommendations on reducing the debt/ GDP ratio by 2014 have been accepted — and there will be a roadmap available in six months. (An emphasis on time-bound targets is visible throughout this Budget, which might help towards creating a culture of accountability.) The fiscal deficit/ GDP ratio is to be decreased to 5.5 per cent in the base estimates — not that hard, since there are no Pay Commission arrears or debt relief for farmers this year. More important are the rolling targets that have been set: 4.8 per cent in 2011-12 and 4.1 per cent in 2012-13. The crucial takeaway: these are in fact add-ons to the Finance Commission's recommendations.

 

Add to this the decision (long argued for by those who want a clean balancesheet from the government) to include off-Budget items explicitly in deficit calculations. Another sign of conservativism: the disinvestment target is Rs 25,000 crore. But this should in fact be exceeded, if markets behave as most expect. When 3G auction receipts are added in, the finance minister should have no problems in attaining the deficit targets. Subsequent fiscal consolidation, however, will remain contingent on reforming subsidies. The Direct Tax Code and GST targets remain April 1, 2011 and it was important to keep proceeding towards it; this was done by hiking excise to 10 per cent and/ or service tax to 12 per cent. (The GST will be 12 per cent, with 7 per cent the Centre's share and 5 per cent the states'.) That excise has been hiked, despite industry protestations, is welcome, though there is a little too much tinkering across sectors. The FM has made urban segments happy by realigning slabs (though not rates) on personal income taxation. On the flip side, there is the hike in the minimum alternative tax to 18 per cent, though this is offset by a reduction in surcharge. Overall: the tax proposals are revenue-neutral, with the shortfall in direct taxes paid up through indirect taxes. Given the constraints, the FM was expected to be evaluated on tax reform and fiscal consolidation. On that, he has certainly passed the test.

 

But correcting the macro picture couldn't be allowed to happen at the cost of slowing India's recovery. So what have we got? Let's start with the financial sector. It would have been very easy for Mukherjee to continue to use the global financial crisis as an excuse to not even think about financial sector reform. Instead we have a commitment to create a financial sector legislative reforms commission, which will review our interlocking and confused financial regulation. And, in an idea imported from the latest post-crisis policy thinking elsewhere, a "super-regulator" charged with systemic stability will be set up. Then there's a commitment on financial inclusion — again, with a date: March 2012. The opening up of accounts, and the spread of insurance services, is a crucial step towards revolutionising India's use of its citizens' savings. Additional licences for private sector banks also help move that forward. On the knotty issue of petroleum subsidies, there is little doubt that a wholesale reform of the administered price mechanism would have been a great addition to the Budget. While the Kirit Parekh Committee's report was specially mentioned, and recommended to the petroleum ministry, for now there is a first step towards addressing the petrol bill — the reaction to which shows how politically fraught the road ahead will be.

 

Overall, Mukherjee, by setting the government targets and dates — and, not least, announcing a new agency that will independently evaluate the UPA's pet social sector programmes — has embedded challenges for his ministry and his government.

***************************************

 


INDIAN EXPRESS

COLUMN

THE REFORMER'S BALANCESHEET

 

Finance Minister Pranab Mukherjee had many objectives to juggle in this Budget. On the one hand, the government's expansion of spending that followed on from the global financial crisis had put pressure on its bottomline, and across India and the world stakeholders hoped that the Budget would mark a return to fiscal prudence. On the other hand, the momentum that India has managed to sustain through the global downturn needed to be given fresh energy, to propel India back towards a higher growth path. Mukherjee, handed this tough slate, has pulled together the political experience of two decades, and presented a package that manages to accomplish a great deal. More, that he began the Budget speech with a public reminder that government cannot do everything, that it must play an enabling role, that the animal spirits of India's investors are crucial to growth, should be seen as a major reformist signal.

 

The macro picture first. This Budget scores on fiscal consolidation and tax reform. The Finance Commission's recommendations on reducing the debt/ GDP ratio by 2014 have been accepted — and there will be a roadmap available in six months. (An emphasis on time-bound targets is visible throughout this Budget, which might help towards creating a culture of accountability.) The fiscal deficit/ GDP ratio is to be decreased to 5.5 per cent in the base estimates — not that hard, since there are no Pay Commission arrears or debt relief for farmers this year. More important are the rolling targets that have been set: 4.8 per cent in 2011-12 and 4.1 per cent in 2012-13. The crucial takeaway: these are in fact add-ons to the Finance Commission's recommendations.

 

Add to this the decision (long argued for by those who want a clean balancesheet from the government) to include off-Budget items explicitly in deficit calculations. Another sign of conservativism: the disinvestment target is Rs 25,000 crore. But this should in fact be exceeded, if markets behave as most expect. When 3G auction receipts are added in, the finance minister should have no problems in attaining the deficit targets. Subsequent fiscal consolidation, however, will remain contingent on reforming subsidies. The Direct Tax Code and GST targets remain April 1, 2011 and it was important to keep proceeding towards it; this was done by hiking excise to 10 per cent and/ or service tax to 12 per cent. (The GST will be 12 per cent, with 7 per cent the Centre's share and 5 per cent the states'.) That excise has been hiked, despite industry protestations, is welcome, though there is a little too much tinkering across sectors. The FM has made urban segments happy by realigning slabs (though not rates) on personal income taxation. On the flip side, there is the hike in the minimum alternative tax to 18 per cent, though this is offset by a reduction in surcharge. Overall: the tax proposals are revenue-neutral, with the shortfall in direct taxes paid up through indirect taxes. Given the constraints, the FM was expected to be evaluated on tax reform and fiscal consolidation. On that, he has certainly passed the test.

 

But correcting the macro picture couldn't be allowed to happen at the cost of slowing India's recovery. So what have we got? Let's start with the financial sector. It would have been very easy for Mukherjee to continue to use the global financial crisis as an excuse to not even think about financial sector reform. Instead we have a commitment to create a financial sector legislative reforms commission, which will review our interlocking and confused financial regulation. And, in an idea imported from the latest post-crisis policy thinking elsewhere, a "super-regulator" charged with systemic stability will be set up. Then there's a commitment on financial inclusion — again, with a date: March 2012. The opening up of accounts, and the spread of insurance services, is a crucial step towards revolutionising India's use of its citizens' savings. Additional licences for private sector banks also help move that forward. On the knotty issue of petroleum subsidies, there is little doubt that a wholesale reform of the administered price mechanism would have been a great addition to the Budget. While the Kirit Parekh Committee's report was specially mentioned, and recommended to the petroleum ministry, for now there is a first step towards addressing the petrol bill — the reaction to which shows how politically fraught the road ahead will be.

 

Overall, Mukherjee, by setting the government targets and dates — and, not least, announcing a new agency that will independently evaluate the UPA's pet social sector programmes — has embedded challenges for his ministry and his government.

 

***************************************


INDIAN EXPRESS

COLUMN

UNPARLIAMENTARY

 

The Union Budget is an occasion of great ceremony. It begins with the arrival of the finance minister carrying, conspicuously for the cameras, a briefcase of documents — after all, the word "budget" derives from an old French word for a little bag. The stage is entirely his as a customarily packed Lok Sabha keeps itself roused to boo or welcome even arcane tax proposals. And with the minister having had his say, they all tumble out with instant critiques. There is almost a festive air through this contentiousness because, of course, the real business of debating the Budget in the House and consideration of the demands by standing committees of Parliament will truly begin on the morrow. On Budget day, Parliament affirms its primacy in authorising the government's expenditure and its proposals for tax levies by hearing out the finance minister.

 

Not this time. On Friday, the opposition undermined Parliament by choosing to walk out almost to the last MP — there was the quaint picture cut by Jaswant Singh remaining seated through the ruckus — even as Finance Minister Pranab Mukherjee read on. They gathered themselves out of the House in a big huff over the hike in petroleum product duties, and we had the oddest sight of Lok Sabha MPs feeding the waiting camera crews outside with denunciations of the proposal without obtaining the full text of the Budget. From the BJP, this was conspicuous incoherence: had the NDA not taken great strides to reform petroleum prices, to the then-too present din of complaints that this would have an inflationary effect? However, incoherence apart, the walkout was another step in the gradual erosion of the House as a site for meaningful and responsive engagement.

 

It is yet another low for this Lok Sabha, not even a year into its term. And more than previous disruptions, it marks the flight of responsible engagement from the House. It is not just that a show of opposition unity by walkout displays a lack of imagination and stamina to use the instruments of legislature to hold a government to account. It is also that it confirms a suspicion that MPs see the legislature as little more than a site to numerically test a government's majority.

 

 ***************************************


INDIAN EXPRESS

OPED

THE FOUR-FOLD PROMISE

ILA PATNAIK

 

Finance Minister Pranab Mukherjee delivered more in Budget 2010 than was expected. It was a challenging job to roll back the stimulus in a small and calibrated manner, as well as lower the fiscal deficit significantly. But, the FM delivered more than this tight-rope balancing act. He laid out the big picture on fiscal consolidation by reducing government debt, as recommended by the Thirteenth Finance Commission. He promised that the Direct Tax Code and the Goods and Services Tax will be implemented from April 1, 2011. These would be vital ingredients in allowing the government to meet its fiscal consolidation targets.

 

However, some of these announcements were expected, and perhaps not fulfilling these expectations would have created negative sentiment. What came as a pleasant surprise were some new initiatives in the budget speech.

 

First, the FM announced the setting up of an apex-level Financial Stability and Development Council to strengthen, institutionalise and maintain financial stability. The need for such a body has been acutely felt after the global financial crisis. In the nascent field of financial stability there is an understanding that taking steps to address issues of risks to the financial system as a whole can require giving directions to all regulators. On his own a regulator, such as the equity markets regulator, or the banking regulator, may not be able to see risks building up and may not tighten norms when required. This means a body over and above the existing regulators is required. Also, in the Indian context, this may involve taking decisions about unregulated entities, as it did in the case of the investment banks in the US. Today we may not know where trouble may arise but if it does, these trouble spots should not fall between the cracks in regulation.

 

Further, the public anger seen in the US and UK public on the use of taxpayer money to help out big banks has shown how politically sensitive this issue can become. Tomorrow, if in India, taxpayer money has to be used for bailing out a private financial institution that can create a risk to the system as a whole, the government could find itself facing all kinds of allegations. It is thus a sensible and forward-looking idea to protect itself in such a situation by creating an institutional framework though which the FM does not put himself into the unenviable position of Hank Paulson or Alistair Darling. When faced with the decision to bail out a private financial institution, and be blamed for the decision, or to let it fail and be responsible for a crisis, the government should be able to take bold decisions.

 

The Financial Stability and Development Council has to be over and above all other regulators — who may have failed in their jobs. In the UK this job has been located in the Bank of England which is not a financial regulator, and in the US in a Council of Regulators. In India, the proposed Financial Stability and Development Council is along similar lines.

 

Second, the Finance Minister has taken into account the needs of India as a fast modernising and globalising economy. The laws that govern the financial sector are outdated, and after many amendments over the years, they are now non-transparent and often ambiguous. The existing structure of financial regulation has worked to a large extent by banning one financial product or the other. As the Economic Survey points out, India needs to move away from a model of an intrusive government to one of an enabling government which works through creating policies which are incentive-compatible. This sentiment was supported by the FM in the early part of his budget speech when he says, "An enabling government... creates an enabling ethos so that individual enterprise and creativity can flourish." If this idea is taken forward, it will require a whole new way of thinking about financial regulation. The FM has proposed setting up of a Financial Sector Legislative Reforms Commission to rewrite and clean up financial sector laws to bring them in line with the requirements of the sector.

 

The third pleasant surprise in the budget is the announced intention of the banking regulator, the Reserve Bank of India, to give new private bank licenses. This decision is welcome especially because after the global crisis, many commentators seemed to forget that India was still to satisfy basic needs for financial services of its people, and that half the population of the country still did not have access to banks. Instead, the crisis had become a reason to argue that India had done right not to allow more private banks to operate. The FM's speech has brought a sense of balance back into the discourse by indicating that India will make progress on providing financial services to its population. This is in line with the proposals for financial inclusion recommended by the Raghuram Rajan committee report.

 

The fourth forward-looking decision in the budget is the creation of a Technology Advisory Group for Unique Projects which proposes to look at various technological and systemic issues for newly created projects that have a strong IT requirement. These include the Tax Information Network, New Pension Scheme, National Treasury Management Agency, Expenditure Information Network and the Goods and Services Tax. These projects require rising above the normal government style of functioning — i.e. within the given structure and existing department. They will need to be treated as projects that require a new way of thinking and the creation of the Technical Advisory group indicates that the government is aware of this challenge and will devote resources to meet it.

 

The disappointment in the budget speech was that there was no vision of a system that could operate without an "industrial policy" — in which the government knows what is best for industry and promotes some sectors or products versus others through the use of tax exemptions, lower rates or subsidies. The last part of the budget speech was reminiscent of the old India of the 1970s with the FM proposing a reduction in duty on items such as rhodium, magnetrons and toy balloons. Once the Direct Tax Code and GST kick in, these relics of the past will hopefully disappear forever.

 

The writer is a professor at the National Institute of Public Finance and Policy, New Delhi

 

***************************************


INDIAN EXPRESS

OPED

REMEMBER HIM RIGHT

TAHIR MAHMOOD

 

If the mountain won't come to Mohammed, Mohammed must go to the mountain" was the great man's answer to his detractors demanding from him, as a condition for obedience, the miracle of summoning to his audience the mountain-hill on top of which he used to preach. The message was that instead of waiting for miracles to happen we must make concerted efforts to lead a happy and meaningful life. The Prophet in fact never claimed any supernatural powers and kept asserting "innama ana basharun" (verily I am a human being). But today he is seen as an embodiment of spirituality: those swearing by him and fighting for his honour, blissfully forgetting his teachings on character-building, excellence in education, human rights, gender justice and peaceful coexistence. Year after year Eid-e-Milad-un-Nabi is celebrated with great fervour — powerful orators sermonising on his theology and poets eulogising his imaginary superhuman powers without caring least about how recklessly his temporal teachings are going to the dogs.

 

Deeply concerned about social degeneration, the Prophet ventured on the hazardous mission of reforming the society around him, known for its tribal infighting and brutality. Convinced that education was the first answer to all social evils, he began his mission by gracefully impressing upon his people that God wished them to learn the use of the pen and get educated. "A person reading is handsome in the eyes of God," he said once, and declared on another occasion "the ink of the learner is holier than a martyr's blood." Certainly these were not injunctions for learning Islamic theology, else he would not have ordered non-Muslim prisoners of war to teach Muslim children in lieu of ransom, nor commanded "utlub-ul-ilma wa lau kana bis-Sin" (acquire knowledge even if you find it in China). Determined to leave no room for gender-based discrimination in any walk of life, he more often than not mentioned women along with men — "al-muminin wal-muminat" (believing men and believing women) — so that never in future could his people put in his mouth "men only" in respect of any of his general teachings.

 

It is indeed a misfortune of modern Indian society that the Prophet's followers here have mercilessly thrown into oblivion all his teachings on secular education and gender justice. The word "ilm" (learning), used in the Quran and the Prophet's sayings in its most extensive sense, has been confined to religious education and theology. Thousands of Muslim boys end up learning religion and theology at the lower levels of madrasa education, and thousands of Muslim girls do not go beyond pre-primary education or even remain illiterate. The word ulema, the plural form of "alim" — which simply means "scholar" — is reserved for those who have studied nothing but religion and theology.

 

In respect of women's status and rights we insist on remaining the most backward people on earth. The holy book had begun gradually reforming the pre-Islamic custom of polygamy by first subjecting it to a strict discipline and later saying that a total adherence to this discipline was not even possible, but we take pride in claiming that plurality of wives remains till this day an inseparable part of our religion. The Prophet had declared divorce to be "abghad-ul-mubahat indallah" (most detestable among permitted things in the sight of God), but we insist that our men are free to turn out their wives at whim by simply uttering the word "talaq." Insisting that these and some other anti-women practices are "bad in our theology but good in law," we keep warning that any legislative or judicial interference with this "sacrosanct law" would not be "tolerated."

 

Unfortunately, but not unreasonably, some people look at the Prophet's teachings in the mirror of our practices of the day. If we keep shouting from rooftops that our faith encourages temporal learning of all sorts and is exceptionally women-friendly, while our people keep behaving exactly the other way round, can we succeed in commanding the world to unreservedly admire our Prophet? His birth anniversary merits a sincere retrospection to answer this question.

 

The writer is a senior professor of law and former chair of the National Minorities Commission

 

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INDIAN EXPRESS

OPED

IT'S A BIRD...

BHAIRAV ACHARYA

 

On the face of it, Stephen Hampton and Steven Ayres — the two Britons arrested last week from Delhi's Radisson Hotel for listening to air traffic control (ATC) communications — were simply unlucky. In the UK, as in India, listening to ATC communications is an offence. But this has not deterred aviation enthusiasts across the world from standing alongside runways for hours photographing and documenting airplanes and monitoring their radio frequencies. For most, this is an incomprehensible hobby and the Radisson's staff cannot be accused of overreacting to a situation that lends itself to suspicion rather easily.

 

A few decades ago, when airlines and pilots and stewardesses epitomised glamour, plane-spotting was an understandable hobby. Each country's national airline did more than ferry people overseas; they represented that country abroad. In the late '80s, for instance, when Ethiopia was in the midst of famine and conflict, their national airline was remarkably successful. In major airports around the world, Ethiopian Airlines aircraft jostled for space with the big European and American carriers. I remember a group of Ethiopian women break into proud applause in a waiting room in Dubai when their airline touched down in front of them.

 

I often used to travel to Tanzania, and from the windows of African airports I watched planes from little known cities land and depart, each one a colourful embodiment of their countries. I was fairly young when I learned to identify aircraft. There is something unforgettable about sitting in the rear of a Boeing 727, with the third engine screeching overhead, as the pilot makes the last broad turn over the Red Sea before landing in Aden. Or the steady whine of the Boeing 757's two engines barely 30 feet above the water, where Entebbe airport's runway juts out like a promontory into Lake Victoria.

 

For many of us, planes are just a quicker way of going on holiday or commuting to work. But for me, they have never been so banal. Before terrorism came to India's cities, Bangalore's old airport had a narrow road running alongside its single runway. At some points, this road was less than 30 feet from where the planes touched down, separated from the airport by a wooden fence. Only one plane used to come in at night, an Air India Boeing 747 that landed at half past midnight a few times a week. On one rainy night, it landed in a howling spray of jetwash that nearly uprooted the fence and sent me reeling backwards. A landing plane is an overwhelming display of scarcely controlled power; it is only understood at close quarters when the scale of the aircraft, the roar of its engines, the force of air and the shuddering ground together engulf the human senses.

 

It is this fascination that drives plane-spotters across the world, to foreign airports and alien hotel rooms, in search of planes. You do not need much to be a planespotter, just patience and a keen eye. Some spotters photograph their planes: this is not an easy thing to do, even with good cameras and equipment you need a steady hand and an exact understanding of the plane's next move. One of the best places in India to plane spot is at the southern edge of Mumbai's airport, standing atop the rocky outcrop that overlooks the planes queuing up to take-off from Runway 27. Delhi, too, is quite sublime, especially on late winter nights when the fog muffles the sound of engines and leaves you startled when an Uzbekistan Airlines, with one of the most colourful liveries I have seen and a regular in Delhi, thunders into view overhead.

 

But photography does not give you a feel of how a plane is flown. Short of sitting with the pilots, the best way to track a plane's journey is to listen to its communication with ATC. In the USA, and in many other countries, monitoring ATC frequencies is permitted as long as you do not transmit and jam the frequency. There are websites dedicated to broadcasting live ATC feeds. When there is time, I listen to the progress of any one plane from Ireland across several trans-Atlantic controllers until it is finally handed to a Tower controller in New York who issues landing clearance. Air traffic controllers perform a complex and thankless job. From a single screen with several moving blips, a controller must construct a three-dimensional awareness of her airspace that is constantly moving and in which thousands of lives are always in play.

 

A few months ago, I stumbled across a recording of a lengthy exchange between a Delhi radar controller and the pilots of at least 35 different aircraft. It was rush hour in the sky and the stress was palpable. In a calm voice, the controller issued back-to-back instructions to about 20 planes, asking them to descend, climb, turn, increase or reduce speed and intercept the ILS. The last instruction went to the pilot of a landing Lufthansa flight. In line with safety protocols, the pilot acknowledged the controller by repeating her instructions. "Thank you, Madame", he said quietly at the end. The controller issued instructions to ten other aircraft before coming back to Lufthansa: "It is my pleasure, Sir. Welcome to Delhi."

 

The writer, a plane-spotter, is based in Bangalore

 

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INDIAN EXPRESS

OPED

TALK ABOUT TALKS

RUCHIKA TALWAR

 

The story which developed over the week was the meeting between the foreign secretaries of India and Pakistan. Daily Times reported on February 22: "Foreign Minister Makhdoom Shah Mahmood Qureshi said he was personally 'optimistic' about foreign secretary-level talks between Pakistan and India, but the outcome of talks entirely 'depends on the response from the Indian side'." Dawn added: "The Pakistani side would approach the talks 'positively and constructively to make the most out of the renewed engagement', a senior official said." However, the news item cautioned: " Islamabad and New Delhi might have been nudged back to the negotiating table by an international community anxious to defuse tension in a conflict-prone region. But differences have widened, particularly in the aftermath of the 26/11 Mumbai incident, to an extent that the gulf looks unbridgeable. Hence, the lowering of expectations in diplomatic circles about a breakthrough at the Delhi meeting is nothing but natural."

 

The American view on the talks favoured Pakistan as Dawn reported from Washington on February 23: "As Pakistan goes to New Delhi — for crucial talks with its larger neighbour — there's a realisation in the US capital that India alone cannot bring stability to South Asia. The change in Washington 's attitude happened slowly but by the time India signalled its willingness to resume talks with Pakistan, it had become obvious that the Americans had once again developed a new respect for Islamabad." Patting Pakistan's back, it also stated: "The change in US tone has not gone unnoticed in India. A report published on Monday quoted former Indian Foreign Secretary Salman Haider as saying that "Pakistan is riding the luck of the devil. In fact, Afghanistan has helped Pakistan time and again to become relevant to the international community".

 

The News reported on February 24: "Indian 'posturing' sees the Pakistan foreign office relaxed and refusing to take the 'bait' from New Delhi and respond to the 'dictatorial' language of South Block. Knowing it is today the 'flavour of the region', top Pakistani diplomats and bureaucrats appear relaxed, puffing smoke from their Chinese cigarettes, as India once again binds itself in knots on the eve of the talks." However, Daily Times maintained a contrarian view in a report on February 25: "India enjoyed a diplomatic triumph before the start of the talks when it forced Islamabad to change the composition of its proposed delegation. Diplomatic sources said Islamabad had planned to include one official from the ministry of water and power and interior ministry each, but was asked by India to drop the two officials."

 

Replying to questions from the Senate Standing Committee on Defence Pakistan 's army chief General Ashfaq Kayani was reported by Dawn on February 24 as saying: "the army is prepared to give a befitting response to any misadventure from the eastern border and there is no possibility of the adversary catching Pakistan unawares... India 's cold start doctrine based on hegemonic designs had not been taken."

The outcome of the talks were commented upon only by Dawn . Their editorial on February 26 held: "The key from here forward is devising a workable framework for the two sides to resolve their disputes."

 

Swat turnaround

Apropos of the Swat military operation, the Pakistani army appears self-congratulatory. Daily Times quoted a senior officer on February 25: " 'From US National Security Adviser James Jones to Joint Chiefs of Staff Chairman Admiral Mike Mullen, no senior American military dignitary's visit to Pakistan is complete without a trip to the former Taliban stronghold of Swat... These visits help the Americans understand how the Taliban were defeated and how the same model will work in Afghanistan,'...Swat has taken a 180-degree turn."

 

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FINANCIAL EXPRESS

EDITORIAL

FOCUS ON THE FISC


Pranab Mukherjee's 2010 Budget speech was always going to be very closely watched for the government's policy direction on a) fiscal stimulus and b) fiscal consolidation. In the end, he lent much-needed clarity on both these fronts and many more. On stimulus, the issue of greatest relevance and impact in the immediate short run, the finance minister treaded a cautious but sensible line with a partial roll back of the excise concession granted in the course of three stimulus packages in December 2008 and January 2009. The recent index of industrial production numbers and indeed sector-specific numbers from industries like automobiles suggested in no uncertain terms that recovery has taken strong enough root for it to be weaned off at least some tax concessions. But given the continuing uncertainty in the global economy, the finance minister took the right decision by not rolling excise concessions all the way back to pre-crisis levels. This makes sense when we consider Mukherjee's insistence on the importance of high growth as one of his key vision points, the other two being inclusive growth and fiscal consolidation.

 

Of course, the rollback of a portion of stimulus will help that other great source of anxiety for both the government and market participants—the bloated fiscal deficit which ended up quite close to 7% in 2009-10. However, the finance minister's clear roadmap on reducing the fiscal deficit to 5.5% in 2010-11, then further lower to 4.8% in 2011-12 and then down to 4.1% in 2012-13, did much to boost general confidence—the stock markets gave this signal of fiscal restraint an enthusiastic thumbs up, an enthusiasm that wasn't even slightly dampened by the finance minister's subsequent announcement hiking MAT from 15% to 18%—that shows just how much reducing the pressure of government borrowing meant to the rest of the economy. Needless to say the revenue from the 3G auctions, now due to accrue in 2010-11, will play a crucial role in bringing the deficit down to 5.5% as will continued divestment of stakes in prominent PSUs. But over the medium term, what will perhaps make the big difference in bringing the deficit down to 4% and below will be the complete overhaul of the tax system. On this front, the finance minister reiterated his government's commitment to roll out GST and the direct taxes code by April 2010. Both sets of tax reform will do away with all exemptions, broaden the tax base and lower the burden on individuals, all while helping the government mop up revenue more efficiently. Interestingly, the hike in MAT to 18% may be one step towards harmonising the current corporate tax structure with a future DTC. Just as the move to adjust tax slabs on income tax—a stimulus measure in its own right, since it put more money into people's pockets—is a move to harmonise the current income tax structure with a future DTC—after this Budget individuals earning up to Rs 5 lakh, a majority of taxpayers in India, will only pay tax of 10%; under DTC this threshold will rise to Rs 10 lakh, again benefiting a majority of taxpayers and likely to increase compliance.

 

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FINANCIAL EXPRESS

EDITORIAL

OIL PRICES AND FINANCIAL SECTOR

 

Perhaps the only really controversial proposal in the Budget was the one hiking customs duty and excise duty on petroleum products, both of which will lead to a rise in retail prices of petrol and diesel. The entire opposition staged a walkout on this single issue, an unprecedented act and clearly not the most appropriate form of expressing dissent during a Budget speech. The minister's move was, of course, primarily aimed at shoring up revenues in the short term. But, if the FM had his eyes on the long term, he ought to have addressed the fundamental issue of deregulation of oil prices. Mukherjee did mention the Kirit Parikh Committee Report on decontrolling oil prices but then tossed the final decision on the recommendations of that report into the petroleum minister's court. As we have argued on many occasions in these columns, oil subsidy reform is crucial to rein in unproductive spending by the government. So, while hiking duties may help the government deficit, oil-marketing companies will still make losses that will need to be shored up by government subsidy in the end. Even though the minister has now said that these losses will be transparently subsidised by cash, and not bonds, it doesn't solve the problem of oil subsidies being a burden on the fisc as long as global oil prices hover above $65 per barrel. That deregulation, when it happens, will likely raise fuel prices, more than even imposing duties has done, is a given. But it is sensible, reformist economics, the kind that at least the BJP (the party that actually first toyed with the idea of oil price deregulation) should support instead of staging a populist walkout.

 

Incredibly, the Budget even made some positive noises on reforming the financial sector, a subject that has been largely on the backburner in UPA's time in office. The finance minister said that RBI would be giving more licences to private sector banks to expand their presence. That's good for competition in Indian banking. The minister also promised to set up a commission, in the mould of the Administrative Reforms Commission, to rewrite and bring clarity to financial sector legislation. That is welcome. He even mentioned the plan to have a super-regulator for the financial sector that would coordinate across the various sectoral regulators like RBI (banks), Sebi (markets) and Irda (insurance). Obviously, we need a robust debate on whether such a regulator is indeed the way to proceed with financial sector reform, but at least the UPA is showing some intent on initiating financial sector reform. Needless to say, the finance minister will have to press the ever-conservative RBI to toe his vision on financial reform. Overall, the Budget may disappoint those who expected big bang reform announcements. But the days when Budgets were used to make big reform announcements may now be over. That isn't necessarily a bad thing though, as long as policy is consistently tilted in the right direction. In that context it was heartening to hear the finance minister talk about the importance of big retail in cutting out intermediation between the farmer and final consumer—that intermediation is a known source of high food prices. Again, the Budget didn't get into any announcement on FDI in retail, but at least the thinking, even on the problem of food inflation, is getting clearer. That augurs well for the remainder of UPA's term in office as long as they jump to the implementation stage of their best ideas sooner rather than later.

 

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FINANCIAL EXPRESS

COLUMN

PRANAB SENDS OUT A 'CAN DO' MESSAGE

MK VENU


The most heartening aspect of the 2010-11 Budget is that it adheres to the broad conceptual framework of the two most critical pieces of tax reforms initiated under the UPA regime—goods and services tax (GST) and the draft direct taxes code (DTC). A closer reading of the Budget shows that the finance minister has already started moving towards implementing both GST and DTC, which are formally slated to kick in next year. For instance, he has already gone halfway to accept a bold proposal in the draft DTC, that is, to bring all annual taxable incomes up to Rs 10 lakh in the 10% tax bracket. The finance minister has made the first move by extending the 10% tax slab for incomes up to Rs 5 lakh annually. Thus, nearly 75% of all individual taxpayers will now pay no more than 10% tax. This will encourage more compliance.

 

Similarly his attempt to pare the corporate surcharge from 10% to 7.5% and instead increase the minimum alternate tax (MAT) is also in line with the philosophy underlined in the DTC. Under the DTC, MAT, as a principle, is more closely aligned with the actual proposed corporate tax rate of 25%.

 

On the GST front the finance minister made it clear that it was important to align the central excise duty and service tax if the government was to move towards a unified GST by April next year. Thus going by the philosophy underlying the Budget proposals, finance minister Pranab Mukherjee appears convinced that India is at an inflexion point where the tax base could widen exponentially if a transparent tax system is put in place, which creates an incentive for individuals and businesses to come into the tax net on reasonable terms.

 

When I asked the finance minister in a television interview whether he was confident about building a political and constitutional consensus with all the states to work out a reasonable GST architecture, he was indeed very upbeat about it. Therefore, in some sense, the 2010 Budget is a mere precursor to something much bigger that Pranab Mukherjee is attempting, which will unfold before us in the months ahead. The stock market's initial positive response is largely due to the consistency and stability of the big-ticket tax reforms, which the UPA is seen as attempting over time.

 

Besides this, the markets also seemed to appreciate the fact that Pranab Mukherjee has bitten the bullet on the fiscal deficit front. By budgeting for a much lower fiscal deficit at 5.5% of GDP, he has made his intention clear that he will not do reckless spending. By reducing the budgeted gross borrowing considerably from the level seen in 2009-10, he has sent positive signals to the bond markets. Reserve Bank of India, which conducts the government's borrowing programme, should be somewhat relieved as lower government borrowing will give greater room for its monetary policy conduct.

 

But there are some imponderables in the Budget that need to be studied. His stated objective to reduce fiscal deficit to 5.5% of GDP is based on certain assumptions. One assumption is that he will not encourage any below-the-line subsidies and resort to direct transfer of cash from the Budget, whether it is for oil or fertiliser. He categorically told me, "I don't believe in postponing a liability to a future date through an issue of bonds." This is sensible accounting. But when I asked him how he would contain the fiscal deficit if oil prices shoot up to much higher levels, he said, "The government may have to partially adjust it within the books of oil companies." This may not be sustainable for the oil companies whose minority shareholders will become unhappy if higher international prices are absorbed in their books.

 

In the future, passing on higher international oil prices to consumers may become difficult because the finance minister has already taken the tough decision of imposing a 5% customs duty on crude import and a Rs 1 per litre excise duty on oil. This issue could potentially disturb the deficit calculations.

 

The finance minister has projected increased revenue of Rs 60,000 crore through excise and customs. Besides, he has projected fairly large non-tax receipts on the revenue and capital account. Divestment of PSUs could fetch up to Rs 40,000 crore and under another head titled, "other non-tax revenues", the finance minister has projected a receipt of Rs 74,000 crore. One presumes the revenues of auctioning 3G spectrum will be part of this revenue stream.

 

The stock markets will also pat Pranab Mukherjee for committing that he would present a white paper on how to bring down the government's debt-to-GDP ratio by 12% by 2014.

 

An important commitment contained in the Budget proposals is to take banking access to an additional 120 million people in rural India. This is an ambitious programme and Pranab Mukherjee is serious about getting banks and telecom companies to collaborate to reach out to 60,000 rural habitations with a minimum population of 2,000 each. The finance minister has committed to do this by next year through the banking correspondent model. The finance minister told me he would seek help from banks, like State Bank of India, which have introduced cutting edge technology recently to assist in meeting the budgeted target of taking bank access to over 100 million new customers in the hinterland.

 

The Budget, overall, displays a "can do" attitude. That is quite heartening.

 

mk.venu@expressindia.com

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FINANCIAL EXPRESS

EDITORIAL

BUDGET FOR AAM AADMI AND DOUBLE DIGIT GROWTH

MUKESH AMBANI


It is a daunting task to present a Budget that meets the expectations of a country of the size and complexity of India. The finance minister should be commended on the exemplary Budget that he has presented, managing the conflicting demands with a dexterity that comes with his long experience in public life.

 

This Budget takes the inclusive high-growth agenda of the government forward while recognising and addressing the immediate challenges of inflation and fiscal deficit. The finance minister, through this Budget, has amply demonstrated the keenness and the intent of the government to quickly get back to the inclusive high economic growth. This Budget reflects the government's vision of building a path to sustainable double-digit economic growth in an inclusive framework. This Budget clearly builds on the three challenges laid out by the finance minister in the previous Budget—high growth, inclusive growth and addressing the weaknesses in the public delivery systems. Specific initiatives in addressing each of the challenges presented in this Budget will make the country realise its true and full potential.

 

This Budget, presented in the backdrop of India's coming out of the global economic crisis, had large expectations from virtually every sector of the Indian economy. The finance minister has managed to meet these expectations and at the same time, charted a pragmatic course in steering forward the inclusive high-growth agenda of the country. India has come out of the global economic crisis relatively unscathed and quickly, thus highlighting the inherent strengths of the Indian economy. This Budget attempts to reinforce these strengths and address the weaknesses so that the fruits of the growth can positively impact larger sections of our population.

 

An interesting feature of the Budget is the importance provided to clean energy and environmental initiatives, through budgetary allocations and with indirect tax incentives. This reflects India's sensitivity to a global challenge while stimulating domestic investment in alternative forms of energy.

 

The emphasis on agriculture production, credit support to farmers, and incentives for food storage and processing will improve productivity and enhance efficiency in linking the farmer to the consumer and thereby improving the country's food security. Increased allocation for the social sectors such as education, healthcare, financial inclusion and rural development is a clear sign of the focus on the inclusive growth agenda. The increased plan outlays for the social welfare schemes are laudable. All of these are creditable and will make the India growth story broad-based.

 

The finance minister should be applauded for the stress that this Budget places on expansion of financial services to the rural hinterlands through banking and insurance services. This takes the financial inclusion agenda forward as an integral element of socio-economic development. The setting up of the National Social Security Fund for the unorganised sector workers is another welcome step.

 

The finance minister has rightly observed that the focus of development and economic activity has shifted to non-governmental actors, bringing into sharper focus the role of the government as an enabler. This enabling role of the government is clearly established in the Budget by the emphasis and focus on areas such as infrastructure, education, healthcare, food security and agriculture—key areas for an inclusive high-growth framework. This Budget has attempted to focus public spending towards improving the productivity of the economy. The huge plan allocation towards infrastructure—both rural and urban—clearly shows the intent of the government to address the infirmities in this domain quickly, thus spurring the productivity of the Indian economy.

The implementation of the direct taxes code and goods and services tax from April 1, 2011, will give a huge fillip to tax reforms and simplifying the process of taxation. There is plenty to cheer in this Budget for the individual taxpayers by the broad-basing of the tax slabs. This single measure will put additional money in the hands of millions of Indians and spur additional demand in a range of sectors.

 

As the finance minister concluded, this is indeed a budget for the aam aadmi. The finance minister has set his expectations and directions clearly and it is now up to all of us to rise to the occasion to deliver double-digit inclusive growth on a sustained basis.

 

The author is the chairman and managing director of Reliance Industries Ltd

 

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FINANCIAL EXPRESS

EDITORIAL

AN OILY WALKOUT

RENUKA BISHT


The best thing that elections do for India is keeping the ruling bloc on its toes. A strong Opposition is important, because a bloc that rules without a serious Opposition is one that is more likely to make mistakes. On the other hand, the worst thing that elections seem to do in India is to make parties turn away from their own best ideas when they switch from one side of the Parliament aisle to the other.

 

It was actually the BJP-led NDA government that dismantled the administered pricing mechanism for the oil sector. Yesterday, when UPA-2 decided to hike the central excise duty on petrol and diesel, BJP joined hands with the Left parties and the rest of the Opposition to walk out of the FM's Budget presentation over a hike in fuel prices.

 

The BJP had plenty of ways for reasonably challenging the FM's Budget announcement—such as cut motions claiming that the amount of a Budget demand be reduced. That it chose the walkout option instead reflects a larger governance malaise in India. More and more Bills are now passed with lesser and lesser discussion. Walkouts and adjournments mean Parliament works fewer actual hours. With the exception of select members leaving the chambers, at least the Budget presentation used to be sacrosanct—rightfully so, since the government gives an accounting of how it will spend citizens' money in the Budget. Not only have yesterday's happenings broken with precedence, they haven't even done this in a progressive cause—over time, India will have no option but to deregulate oil. When in the Opposition, it's the easiest thing for parties to demand that farmers should get more prices and urban consumers cheaper produce. In government, however, the very same parties realise the difficulty of reconciling these demands. Those who have worked on both sides of the aisle, couldn't they act a little bit more responsibly?

 

renuka.bisht@expressindia.com

 

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THE HINDU

EDITORIAL

A DELICATE BALANCE

 

Union Finance Minister Pranab Mukherjee's strategy of a partial rollback of the fiscal stimulus package in his Budget is not without its risks, given particularly the uncertainty over the external environment. Yet it is a measure of the government's confidence that the move to a higher growth path of 7.2 per cent this year and to a projected 8.2 per cent next year is sustainable even in the absence of the stimulus that it has reversed course and sought to raise Rs.46,500 crore through indirect taxes. Though this is offset partially by the direct tax concessions totalling Rs.26,000 crore, the net revenue raised, together with the expected buoyancy in a year of robust growth, has enabled the Finance Minister to keep the fiscal deficit down to 5.5 per cent next year. The real story of this budget then is not of any big idea or innovative strategy, but one of fiscal consolidation. There is the recognition that a sound and prudent fiscal management — with the deficits under control, and subject to gradual and targeted reduction over the medium term — has provided an enabling environment for the move on to a high growth trajectory. In a milieu where fiscal consolidation would be impossible while simultaneously increasing social sector spending and holding taxes down, the tax area had inevitably to yield. Overall, while an additional tax burden of Rs.20,500 crore is not too much for the economy to absorb, the impact of specific increases as, for instance, on diesel and petrol — the main target of protest by the opposition — is bound to be reflected in the price level.

 

Structural reform of the income tax system has been delayed with the new income tax code still in its formative stage. Meanwhile, income tax payers have gained significant relief from the broadening of the income slabs and from tax deductions for investing in infrastructure bonds and contributing to the Central Government Health Scheme. The cut in the surcharge on corporate tax from 10 per cent to 7.5 per cent is balanced with the raising of the minimum alternate tax to 18 per cent. Among the specific sectors, real estate that has been hit the most by the slowdown has been provided some concession. So have the medical equipment and mobile phone manufacturers, and the cinema industry. The restoration of the general excise duty to its original level of 10 per cent and of the duty on large cars and multi-utility vehicles from 20 per cent to 22 per cent would not be much of a burden. More significant from the point of view of impact are the revival of the customs duty of 5 per cent on crude and of 10 per cent on petroleum products and the hike in the excise duty on petrol and diesel by Re. one a litre. Even while it is reluctant to decide on raising the prices of petroleum products as recommended by the Kirit Parikh Committee, it has collected more in taxes and may well let the oil companies live with under-recoveries of the product prices.

 

As in the earlier budgets, much of the focus on the expenditure side is on social sector spending that now accounts for 37 per cent of the total plan outlay for 2010-11, while another 25 per cent is to be spent on rural infrastructure. The United Progressive Alliance's flagship Mahatma Gandhi National Rural Employment Guarantee Scheme has been allotted Rs.40,100 crore and the Bharat Nirman programme of building rural infrastructure Rs. 48,000 crore. In addition, the allocations for health and housing — rural and urban — have been increased. Higher allocations are no doubt needed in all these sectors, but what is missing is the effort to strengthen the delivery mechanism at the ground level though the institutional weaknesses in the government structure have been identified over and over again. The suggestion made in the Economic Survey for moving away from subsidising the foodgrain prices in the public distribution system and instead providing coupons directly to the families below the poverty line so that they can buy food from the open market is no doubt too radical for the budget. Yet, in the case of fertilizers, the government has adopted the nutrient-based subsidy scheme and it even talks of moving towards a system of direct payment of subsidies to the farmers. This is an area in which it has to move with caution lest the inevitable increase in fertilizer prices should prompt the farmers to use less of the nutrients, thereby affecting farm production. The right to education bill passed last year is still to make its impact felt and the Finance Minister has increased the allocation for upgrading the quality of school education, to which every child in the 6-14 age group would be entitled. The right to food, the big idea that emerged from the last budget, is still in its formative stage, with the draft bill almost ready for circulation and debate. The government's dilemma on how inclusive that right should be — whether to adopt the conventional poverty line with its lower figure of poverty or the higher estimates that expert committees have come up with more recently — and the attendant cost seem to be holding back its roll out.

 

Notable in this budget are the moves on reforming the financial sector. New banking licences are to be issued by the Reserve Bank and eligible non-bank finance companies are to be allowed to convert themselves into banks. The global financial crisis has shown up the systemic weaknesses of financial regulatory institutions the world over. Drawing a lesson from this experience of the advanced financial markets, the Finance Minister has proposed a Financial Stability and Development Council to exercise macro prudential supervision over the economy including over large financial conglomerates, and to coordinate the functioning of multiple regulatory agencies. Overall, the budget has had a positive impact on business sentiment and the animal spirits of the market.

 

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THE HINDU

EDITORIAL

THE WRONG WAY FOR RURAL DOCTORS

THE PROPOSAL TO INTRODUCE A SHORTENED MEDICAL COURSE IS A FOLLY: IT WILL AGGRAVATE THE RURAL-URBAN DIVIDE AND GIVE A RAW DEAL TO VILLAGES.

ANBUMANI RAMADOSS

 

The proposal put forward by the Central government to introduce a shortened medical course at the graduate level to serve the rural areas will only widen the rural-urban divide and impede India's role as an emerging global power. In seeking to virtually revive the Licentiate Medical Practitioners (LMP) scheme that was available before Independence, the government has taken a regressive step. And in the process it is resorting to discrimination against rural folk, who are taken for second-grade citizens deserving medical care by a brigade of 'qualified quacks'.

 

The scheme involves a three-and-a-half year course that leads to a bachelor's degree in medicine and surgery. Doctors trained under this scheme will work in rural areas. They will be trained in district hospitals.

 

In the erstwhile LMP scheme, students were trained for around three years, awarded a diploma and asked to meet rural health care needs. It was considered a way to bridge the gap between demand and supply outside metropolitan India. The LMPs outnumbered the MBBS graduates and largely served in the rural areas. Following the Bhore Committee report of 1946, medical courses were unified into the standard five-and-a-half-year MBBS degree.

 

The issue is the impact of this scheme on the status of the rural Indian. In what way are rural Indians different from their urban counterparts? Do they deserve health care from medical personnel who are less qualified than those who attend to the health needs of their urban brothers? Are their well-being and lives less important than those in urban areas? This discrimination could sow the seeds of disunity and discrimination. The scheme is against the spirit of the Constitution and human rights.

 

The proposal is superfluous, too. Any State can introduce a short-term medical course. We do not need a centralised concept of rural service, governed by the likes of the Medical Council of India (MCI).

 

The need is to utilise existing personnel prudently. Today even medical colleges recognised by the MCI, numbering about 300, face faculty shortage. How is the government planning to equip the so-called rural-based institutions that will eventually churn out semi-qualified medical personnel, with faculty and infrastructure?

 

India has a wealth of alternative medical systems such as Ayurveda, Siddha, Unani, Homeopathy and so on, that brings in hundreds of thousands of qualified medical professionals into the health care industry. They qualify after more than four years of training. It would be easier to use this huge corps of medical manpower according to the needs of the local regions rather than create a new cadre.

 

Today a nurse undergoes four years of training during her or his course, whereas the proposed BRMS course is for three and a half years. The rural folk would be better off being catered to by nurse-practitioners who are more qualified than the 'qualified quacks.'

 

The doctor-patient ratio in India is 1:1,700. Add to this the doctors under the traditional medical systems and the ratio comes down to about 1:700. The World Health Organisation's recommended criterion is 1:300. To reach that target, we cannot go for short-sighted and short-term measures to create a cadre of semi-qualified professionals.

 

We have the schemes and tools to enhance the health of our rural fellow-beings. With an exemplary scheme like the National Rural Health Mission, all that is needed is to revive and give new momentum to such schemes.

 

There are more than a million fully trained nurses and more than 3,00,000 Auxiliary Nurse Midwives in India. There are also more than 7,00,000 Accredited Social Health Activists (ASHAs). Then there are Village Health Nurses, Male Health Workers, Male Nurses, Anganwadi workers and so on. There is no dearth of paramedical professionals and qualified medical personnel to serve the districts and villages.

 

Adding one more cadre of workers who are neither here nor there will lead to state- acknowledged quackery. Already, nearly 75 per cent of India's population is treated by quacks. The proposal will only help strengthen the cause of the quacks, bestowing upon them respectability.

 

Already the urban-rural disparity in health infrastructure is huge. If the rural areas are catered to by BRMS personnel, it will deter qualified and experienced doctors from taking up rural assignments. It was after much thinking and cajoling that we put forward a compulsory scheme for rural service for those who desire to pursue higher medical courses. With one imprudent and rash gesture, we will do away with a good practice that was initiated with astute planning.

 

Ghulam Nabi Azad, my successor Union Minister of Health and Family Welfare, says BRMS personnel can be posted in Sub-Health Centres and Primary Health Centres. These already have more than enough qualified nurses who have completed four-year courses and done their practical training. So where is the need for a BRMS course that will produce medical personnel dismally equipped with only three and a half years of training?

 

The website of the Union Health Ministry provides details about the NRHM. Thousands of crores of rupees are being invested in the rural health sector under the NRHM to strengthen rural infrastructure. As Health Minister, in order to supplement the NRHM, I initiated a proposal for a one-year compulsory rural posting for each MBBS doctor after the internship. This faced stiff resistance from medical students. A committee under Dr. Sambasiva Rao was formed to deliberate on this issue around the country and give their recommendations. Finally, the recommendation was that anybody who aspired for a post-graduate degree should undergo a one-year compulsory rural posting. Unfortunately this recommendation came at the fag end of my tenure. Had this been implemented, every year we would get nearly 30,000 fully qualified doctors working in Rural Health Centres.

 

The need is to start more medical colleges in areas such as the northeast, Bihar, Uttar Pradesh, Madhya Pradesh and Jharkhand. The country has nearly 300 colleges, of which 190 are in Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Maharashtra and Gujarat. Uttar Pradesh, with a population of 19 crores, has only about 16 colleges. Bihar, with a population of nine crores, has eight. Rajasthan with an eight-crore population has eight and Madhya Pradesh, with a population of eight crores, has 12. If the State governments open medical colleges in all the districts, we can have nearly 600 medical colleges, rolling out nearly 75,000 MBBS graduates a year.

 

We have another huge health resource pool to tap from: doctors trained in Russia and China. Their services can be utilised in the rural areas.

 

Many doctors settle abroad. The government should take steps to prevent this drain by offering them attractive

remuneration, avenues to train and upgrade knowledge and due recognition.

 

One school of thought favours admitting two batches of medical students in each institution every year – in the morning and in the afternoon. Clinical sessions could be alternated. By resorting to the double shift, we can double the number of medical graduates using the same infrastructure and faculty. This can be followed for medical, dental and nursing courses. This was accepted by the MCI for post-graduate courses when I put forward the suggestion that accommodates one more student per professor within the existing system, given the infrastructure available. Earlier one professor could take in only one postgraduate student; now one professor can take in two students without compromising on the quality of medical education, thereby doubling the intake of students to postgraduate courses, leading to optimum use of the existing resources and infrastructure.

 

My suggestions in a nutshell are here. Make one-year rural posting compulsory for all MBBS doctors after internship. State governments should start medical colleges in every district to create more medical graduates. Increase the number of medical graduates and post-graduates using the existing infrastructure and faculty. Focus more on the northern and northeastern States. Expand and invest more in the National Rural Health Mission. Start government-run nursing colleges in all districts. Public-Private partnership ventures can be initiated, using the district and sub-district government hospitals for the purpose. Preference should be given to students from rural areas for admission to the MBBS courses, and it should be stipulated that the graduates work for five to 10 years in rural areas. The harmonisation and utilisation of doctors who have been trained in Russia and China, who have undergone seven-year MBBS courses, to fit into the rural programmes could help. The utilisation of doctors from traditional systems for specific needs and programmes could be planned. Anyone who wants to join a post-graduate course in a government college should have done a minimum of three years in a rural posting.

 

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THE HINDU

LEADER PAGE ARTICLES

HOW THE EXPERTS HAVE BEEN FOOLED

THE FINANCE MINISTER'S BUDGET SPEECH INTENDS TO CONCEAL MORE THAN IT REVEALS.

S. GURUMURTHY

 

"The Finance Minister has done a fantastic job." "Very good budget." "See the takeaways." "See the positives." "Fiscal deficit controlled to 5.5 per cent." "Government borrowings reduced to just Rs. 3.45 lakh crores." "Road map laid for oil sector reform." "Infrastructure boosted." "Consumer demand to rise on tax cuts." "Bonanza for the middle class." "Yet an inclusive budget." " I would give 10 on 10 for the Budget" …

 

Thus went the comments even as this writer was browsing through the Budget papers running to hundreds of pages to see what the Finance Minister had left unsaid in his speech. Those who eulogised the Budget and the Finance Minister seemed to have nothing in their hands other than what he claimed in his speech, and most of them would not have had even a cursory glance at the Budget papers which were put on the website almost an hour after the speech concluded.

 

Thanks to the euphoria of the experts, the Sensex rose by 400 points by the time the speech ended. But as the facts contained in the Budget documents were slowly becoming known, the Sensex was moderated, with the rise being confined to 175 points by the close of the day. But the Budget and the Finance Minister had won approval thanks to the well-structured speech that was long on words — including quotes from Kautilya — and hugely short on numbers. By now, taking the Finance Minister's words as gospel truth, the opinion of 'elite India' has been sealed in favour of the Budget. Of course, the 'other India' has no instant opinion to express; already reeling under high inflation, to counter which there is no measure in the Finance Minister's speech, it has only to experience in the days to come what the Budget will actually do to them. Look at the facts and numbers that lie buried in the documents.

 

Examine the claim that it is an inclusive Budget. The additional provision for rural development is just Rs. 3,936 crore — a rise from Rs. 62,201 crore in the current year to Rs. 66,137 crore for the coming year. This translates to a rise of 6.3 per cent for the coming year over the current year. The estimated rise in GDP for the coming year over the current year is estimated at 12.5 per cent. It means the rural sector does not even get half the rise in the country's prosperity in the coming year. The rise in the allocation for the MGNREGS in the coming year is just 2.5 per cent. Contrast this with the rise by – believe it – 146 per cent in the MGNREGS for 2009-10 over 2008-9. The tax cut for the middle class amounts to some five times the extra provision for rural development. Still the Budget is claimed as being an aam aadmi effort.

 

Move on. The additional provision for agriculture is a pittance — Rs. 900 crore. So much for the Finance Minister's claim of inclusive growth. So, what was an inclusive agenda in budgets from 2004 onwards and until the last Budget seems to have become a mere slogan. The Finance Minister was unconcerned about how the stock markets reacted to his Budget last time. And he was the only Finance Minister who said he could not care less for what the stock markets felt about his Budget.

 

Now look at the sleight of hand involved in the Finance Minister's claims on infrastructure. See the provision for the road sector. It is an additional Rs. 2,374 crore — just a 13 per cent rise in the coming year over the current year, against a 23 per cent rise in the current year over the previous one. The additional provision for the Railways is Rs. 950 crore — the rise of a mere 6 per cent for the coming year over the current year against the rise of — believe it, 46.3 per cent — in the current year over the previous year. In 2009-10 the additional provision for urban infrastructure was 87 per cent.

 

There is more. The Finance Minister had claimed in his Budget speech for 2009-10 that India Infrastructure Finance Company Limited (IIFCL), along with the banks, was in a position to support infrastructure projects of — again believe it — Rs. 100,000 crore. Against that claim, he admits in his speech now that the disbursement and refinance by IIFCL so far has been to the extent of just Rs. 12,000 crore. It will rise to Rs. 25,000 crore in the next three years. How did the Finance Minister dare say one thing in his previous speech and another thing now? He was confident that the experts who would give instant opinions on his product would hardly have the time to check what he had claimed some eight months ago. The claim by the Finance Minister that the infrastructure provision of Rs. 172,552 crore is 40 per cent of the Plan allocation is definitely less than honest. Acting cleverly, here he does not give the comparative figures for the current year.

 

Indeed, there was no appreciable improvement in the coming year over the current year, and yet the experts continued to eulogise the infrastructure boost in the Budget.

 

Deficit reduction

 

What, then, is the secret of the reduction in deficit? The Finance Minister simply refused to spend this year. And that is perhaps correct. But he has concealed that fact and said something to the contrary. The income will increase in 2010-11, but the expenditure will not. The increase in non-Plan expenditure in 2009-10 over 2008-09 was 37 per cent; in 2010-11 over 2010-11 is just 6 per cent. The non-Plan expenditure was Rs. 6,42,000 crore in 2009-10, and in the coming year it will be just Rs. 6,44,000 crore. That is, there will be just no increase at all. If the Finance Minister had increased non-Plan expenditure for 2010-11 in proportion to the estimated GDP rise of 12.5 per cent, the deficit would have risen by Rs. 199,000 crore to Rs. 580,000 crore-plus. It would have meant that the deficit would have been up by — believe it — almost 2.9 per cent to some 8.4 per cent.

 

If this had happened, would the experts have gone gaga over the Budget? Would the stock market have risen? Obviously not.

 

See how faulty the comment that the Budget puts extra money in the hands of the consumers is. Non-Plan expenditure is a straight injection of money into the system. If that does not grow next year as it did in the previous year, how will the consumer get extra money over the last year? The Finance Minister's claim that he had cut taxes to put extra cash into the consumer's pocket is less than honest as the amount in the consumer's hands will be actually less by Rs. 180,000 crore as compared to the last year. It is not a bad thing that the Finance Minister has cut the non-development expenditure. But his claim that he was putting money into the hands of the people through tax cuts is only one side of the story.

 

The other side of the story, which is the biggest fact concealed in this budget, is the cut in non-Plan expenditure. See more. The biggest component of the rise in non-Plan expenditure in the current year was the Pay Commission dues, which was extra money straight into the pockets of the people to spend. That was the reason why, despite the downturn in the economy in 2009-10, private consumption, which was expected to fall according to the Economic Survey 2008-09, did not fall. Private consumption powered by the Pay Commission dues sustained the GDP growth in 2009-10, and that was the secret of the growth in 2009-10. This factor is absent in 2010-11. How will the aggregate demand rise more than last year when the amount of additional money in the hands of the people is far less in the coming year than in the year that is closing? So the claim that the tax cut will put huge money in consumers' hands and activate the domestic demand is less than honest.

 

In sum, the Finance Minister's speech intends to conceal more than it reveals – in fact it cheats. The Finance Minister has trusted of the propensity of the instant commentators of the TV channels to rely on ornamented words in the budget speech and won the day against the experts and the market.

 

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THE HINDU

BUDGET 2010-11: THE TRUE PICTURE

A COMBINATION OF INFLATIONARY TAXATION, SIGNIFICANT REVENUE OPTIMISM AND A MODICUM OF WINDOW DRESSING.

C.P. CHANDRASEKHAR

 

In a budget speech which was tiresome in parts and often filled with trivia that was almost meant to distract, Finance Minister Pranab Mukherjee claimed that he was delivering a growth-oriented but inclusive budget that was within the bounds of fiscal prudence. If true this does signal the emergence of a new form of economic governance. The Economic Survey had earlier argued that the time had come for a shift to an "enabling" rather than an interventionist state. That shift was supposed to deliver non-intrusive governance that only seeks to help those who cannot manage to do well for themselves. In the process it was supposed to ensure fiscal consolidation through a reduction in the fiscal deficit.

 

The difficulty of course is that in a country where as much as 40-50 per cent of the population is poor, properly financing even this "minimalist" role for the state needs a substantial sum of money. If in addition the government, given its fiscal conservatism, wants to exit its fiscal stimulus and reduce its fiscal deficit, a substantial increase in revenues is necessary. There are, therefore, two questions that arise. To start with, how far has the Finance Minister gone in sustaining expenditures and pushing his objective of being more inclusive? And, to the extent he has, how has he mobilised the requisite resources and what are the resulting implications?

 

If we examine total expenditure in the budget, it has risen by just 8.5 per cent in nominal terms. Adjusting for inflation at current rates this amounts to a stagnation of real expenditures. But given the fact that financial year 2009-10 was one in which expenditures did rise noticeably because of the implementation of the Pay Commission's recommendations and because of the fiscal stimulus in response to the slowdown in growth, this stagnation in real expenditures cannot be dismissed as wholly inadequate. Moreover, if we examine the central plan outlay and aggregate expenditures in two social sector areas — education and health — which the Finance Minister has chosen to draw attention to in his speech, we find that they are indeed projected to rise significantly. Gross expenditure on Literacy and School Education is slated to rise from Rs. 39,553 crore to Rs. 47,773 crore and on Higher Education from Rs. 14,376 crore to Rs. 16,690 crore. In addition, the Central plan outlay on Health and Family Welfare is projected to rise from Rs. 18,283 crore to Rs. 22,300 crore. But, all this is partly the result of a reallocation of expenditures. Thus, non-plan expenditures on all social services are slated to fall from Rs. 35,146 crore to Rs. 29,483 crore or more than Rs. 5,500 crore. To boot, a planned cut in subsidies on food and fertilizer, which would impact on the poor and sectors like agriculture that house a majority of the poor, is reflected in the budgetary figures.

 

These trends aside, it is true that the budget provides for an increase in aggregate expenditures in nominal terms. This rise is accompanied by some direct tax concessions in the form of substantially "broadened" income slabs for different levels of income taxation and a reduction in the surcharge on corporate taxes. Yet, the budget expects a reduction in the revenue deficit from 5.3 to 4 per cent of GDP and the fiscal deficit from 6.7 to 5.5 per cent of GDP. How has the Finance Minister ensured this transition? To start with, even though direct tax concessions are expected to result in a decline in Income Tax receipts of around Rs. 4,400 crore between the revised estimates for 2009-10 and the budget estimates for 2010-11, Corporation taxes are projected to rise by as much as Rs. 46,255 crore. The latter occurs despite the fact that the surcharge on corporate taxes is to be reduced from 10 to 7.5 per cent. There are only two ways in which the substantial increase in Corporation taxes can be explained. One is an assumption that the increase in the Minimum Alternate Tax to be paid by corporations from 15 to 18 per cent would substantially increase revenues. The other is that corporate profits would display strong buoyancy in the aftermath of the recovery.

 

But even this Corporation tax bonanza is inadequate to explain the Finance Minister's "achievements." There are three other features of the budget that are of relevance. First, through an "across-the-board" hike in non-oil excise duties, adjustments in customs duties, higher duties on oil and petroleum products and expanded taxes on services, the Finance Minister expects to garner an additional Rs. 70,000 crore of indirect tax revenue. This is a reversal of the practice of relying less on indirect and more on direct taxes in recent years. Indirect taxes are known to be inflationary in nature, hurting the poor in the process. So this trend goes contrary to the claim that the budget aims to be more inclusive. In fact, in the run up to the budget, with the evidence pointing to a recovery in GDP growth, the close to 20 per cent inflation in food prices had emerged as the principal problem to be addressed. The decision to rely on inflationary indirect taxes (including on universal intermediates like oil products that would raise costs and prices across the board), which would push up prices further, points to the fact that inclusiveness is less of an objective than the Economic Survey and the Budget proclaim. This perception is supported by the fact that in a context of food price inflation the budget seeks to curtail food and fertilizer subsidies.

 

A second noteworthy feature of the budget is the unusual fact that an item called "Other Non-tax Revenue" is slated to rise from Rs. 36,845 crore to Rs. 74,571 crore between the revised estimates for 2009-10 and the budget estimates for 2010-11. This huge revenue windfall is to come largely from receipts from 'Other Communication Services', which consist of licence fees from telecom operators and receipts on account of spectrum usage charges. Receipts under this head were budgeted for Rs. 48,335 crore in 2009-10, but yielded only Rs. 13,795 crore. The budget for 2010-11 again provides for Rs. 49,780 crore from this head of "revenue", suggesting that what is being calculated is the receipts from the auction of spectrum. If this is the case, it would be wrong to treat this as a revenue receipt. If it is not, the revenue and fiscal deficits would go up substantially.

 

Finally, the budget provides for "Miscellaneous capital receipts" of Rs. 40,000 crore in 2010-11, which refer to receipts from disinvestment and privatization. This head is reported to have yielded Rs. 26,000 crore in 2009-10. If not for this sale of public wealth, the borrowing required to finance the government's expenditures would have been much more, necessitating higher commitments for interest and amortization payments in future. That would have made it difficult for the Finance Minister to claim that he was not merely delivering inclusive growth, but doing so while remaining fiscally "prudent".

 

In sum, it does appear that a combination of inflationary taxation, significant revenue optimism and a modicum of window dressing have helped craft a budget that appears growth oriented, partially inclusive and fiscally prudent. We need not wait till the revised estimates come next year to conclude that this is by no means the true picture.

 

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THE HINDU


GEORGIA CONTINUES TO POSE "DIRECT AND IMMEDIATE THREAT"

VLADIMIR RADYUHIN

 

In August 2008, Russia had its own Kargil. On the night of August 7-8 the former Soviet state of Georgia launched an assault on its breakaway region of South Ossetia killing dozens of Russian peacekeepers stationed in the region. Russia responded with a devastating counter-strike that routed the Georgian military.

 

For all their differences, above all duration, the wars in Kargil and in South Ossetia had certain similarities. In both conflicts the attackers sought to occupy territory. Both Pakistan and Georgia tried to mislead international public opinion about the nature of the conflict. While Islamabad denied the involvement of its regulars in the attack, Tbilisi claimed it was only responding to a Russian attack. Both assailants attempted to internationalise the conflict but miscalculated.

 

Like India, Russia drew its lessons from the war in South Ossetia, and these may be of interest to the Indian defence community.

 

The first strictly military analysis of the war was recently brought out by the Moscow-based Centre for Analysis of Strategies and Technologies (CAST), a premier Russian defence think tank. "The Tanks of August" is a 144-page collection of essays on the background, conduct, and fallout of the five-day Russian-Georgian war of August 2008.

 

In contrast to Kargil, the attack on South Ossetia did not take Russia by surprise. Its intelligence agencies had gathered enough information about Georgia's designs, short of the exact date of attack, in order to prepare contingency plans. According to CAST experts, Russia had assembled substantial forces in the region that began pouring into South Ossetia through the Roki Tunnel within an hour after the Georgian attack. A minute-by-minute account of the hostilities gleaned by poring through Russian, Georgian and international sources convincingly debunks Georgia's myth that it only responded to a Russian attack. The speed and power of the Russian counter-attack, apparently unexpected by Georgia, foiled its plan to seal off the only lifeline road linking Russia and South Ossetia across the North Caucasus mountains. This was the key to defeating the Georgian blitzkrieg.

 

In South Ossetia the Russian armed forces for the first time faced a western-style army, trained by U.S. and Turkish instructors and armed by many NATO countries and Israel. Even though the Georgian army failed to stand up to the Russian military because of organisational, training and command deficiencies, the CAST study warns against complacency. Within a year of the conflict Georgia not only rebuilt its armed forces, but "substantially enhanced" its combat power .

 

The conflict — Russia's biggest combat engagement outside its borders since the Soviet intervention in Afghanistan — showed that its army is a formidable force, but has important weaknesses. The main among these are outdated communications and poor coordination among different branches of the armed forces. According to CAST analysts, out of six aircraft Russia lost in the conflict, four succumbed to "friendly fire."

 

The conflict prompted Moscow to speed up a radical overhaul of the armed forces to prepare them better for local conflicts. In the opinion of CAST experts, the reform is creating certain risks for Russia as it leads to a temporary weakening of its military might while Georgia may be gearing for a new attack.

 

"Georgia remains a flashpoint of instability and a source of potential aggression and war in the Caucasus," the study says. "Georgia's military build-up has a patently revanchist character and… a growing anti-Russian thrust, and is oriented, not so much at retaking Abkhazia and South Ossetia, as militarily challenging Russia itself." The "Tanks of August" study comes to the conclusion that Georgia continues to pose a "direct and immediate threat" to Russia.

 

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THE HINDU

CLIMATE CHANGE: WETLANDS PLAY AN IMPORTANT ROLE

 

Experts said here on Friday that wetlands can greatly help Vietnam cope with the impacts of climate change. The remarks were made at a conference on wetland conservation held here by the Vietnamese General Department of Environment under the Ministry of Natural Resources and Environment, with the participation of many Vietnamese and foreign experts. At the conference, the experts said mangrove forests growing in wetlands are able to accumulate carbon dioxide which can reduce green house effect, the main factor of climate change.

 

Being one of the worst affected countries by climate change in the world, Vietnam needs international assistance in establishing the programme for the conservation and sustainable development of wetlands to reduce the climate change impacts, said the experts. — Xinhua

 

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THE TRIBUNE

EDITORIAL

TREADING CAUTIOUSLY

UNDERTONE OF BUDGET IS POSITIVE

 

Mr Pranab Mukherjee is one of those finance ministers who give with one hand and take away with the other. If he has reduced the income-tax burden on the salaried class by raising the slab limits for various tax brackets, he has hiked the excise duty on petrol and diesel by Re 1 per litre. He has maintained the balance between rural and urban India. Perhaps, lack of consensus within the Congress has stopped him from breaking new ground in reforms. Mr Mukherjee is a middle-of-road- finance minister — neither too bold nor altogether hesitant. He has missed the chance to undertake the next-generation reforms as this was the ideal time with no major elections in the near future and no communist shackles to hold him.

 

The oil price hike, though not unwarranted altogether, will contribute to the over-all price rise, an issue which the opposition parties are exploiting to the hilt. They chose to walk out of Parliament on this issue on the Budget day, which is something unheard of. Some experts expect inflation to move up from 8.6 per cent last month to 10 per cent shortly, driven by a relentless hike in food prices, the hardening of the oil prices and an excise duty hike.

 

The Finance Minister, however, has been sensitive to the volatile issue of high food inflation. He has tried to accelerate agricultural production to ensure food security. A sum of Rs 300 crore has been set apart for creating 60,000 pulse and oilseed villages. The government has decided to take the Green Revolution to eastern India to spread it to the states of Bihar, Jharkhand, Orissa and West Bengal. A sum of Rs 400 crore has been earmarked for this expansion. Punjab and Haryana, it is believed, have reached a saturation point. The political leadership in Punjab and Haryana had demanded special compensation for farmers for keeping up paddy production despite a deficient monsoon last year. They have not got any relief. However, Mr Mukherjee has given farmers six months more to repay their loans. Otherwise they would have been classified as defaulters and the bad loans would have impaired the state-owned banks' performance.

 

Some judge the popularity of a finance minister by the reaction of stock markets to a budget. From that angle it is a positive signal though the BSE Sensex retreated after the initial euphoria to close with a gain of 175 points only. Major benefits to the infrastructure, realty and banking sectors enthused the markets initially. Infrastructure has been given 46 per cent of the total plan. The allocation for power has been doubled and for roads it has been raised by 13 per cent.

 

Foreign investors appreciated the Finance Minister's efforts to cut the government debt-to-GDP ratio and consolidate the finances. He has promised to bring out a status paper within six months to curtail debt. The 13th Finance Commission report had suggested capping the combined Central and state debt at 68 per cent of the GDP instead of the present 82 per cent. But, perhaps, they felt let down by the Finance Minister's lack of boldness in opening up health insurance, rural banking and higher education for foreign direct investment as was suggested by the latest Economic Survey.

 

The Budget is a big success in terms of efforts to control fiscal deficit. The target of keeping fiscal deficit within 5.5 per cent is commendable. The government expects cash flows from surging economic growth, sales of government company stakes and 3G mobile licences. On the reforms front, a clear message has gone out that the goods and services tax (GST) and the Direct Tax Code will be introduced from April, 2010. The Unique ID Authority of India will get Rs 1,900 crore. Those who feel the defence budget should be hiked in view of the sensitive security environment will be disappointed as Mr Mukherjee has made just a 4 per cent increase in the defence outlay against a 34 per cent raise last year.

 

It is also a green budget. Raising the cost of owning cars, sports utility vehicles, TV sets and ACs apart from a hike in the oil prices are environment-friendly measures. But public transport still has not got the attention it deserves. A clean energy cess has been levied on coal and the money thus collected will go to the National Clean Energy Fund. Goa has been given Rs 200 crore for preserving its beaches and green cover. This is welcome though other coastal and hill states may also demand such help in future. The rivers, canals and other water bodies too need funds and an operation cleanup. 

 

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THE TRIBUNE

EDITORIAL

HOPE ON THE HORIZON

DELHI TALKS A FILLIP TO PEACE PROCESS

 

It would be reasonable to surmise that there is an undercurrent of positivity to the first official talks between India and Pakistan in 14 months held on Thursday in New Delhi. Given the acrimony and trust deficit that persists, it was unrealistic to expect anything dramatic from the talks between Indian Foreign Secretary Nirupama Rao and her Pakistani counterpart Salman Bashir. In fact a 'breakthrough' was never on the cards. But in so far as the way has been cleared for future contacts between the two countries and contentious issues have been discussed threadbare across the table, it is a step in the right direction. There can be little doubt that terror outfits across the border have a stake in keeping alive a high level of tension between the two neighbours. Consequently, it is important that the dialogue process, which was stopped understandably due to public anger over Pakistan's role in the terror attacks in Mumbai on November 26, 2008, be now resumed.

 

Clearly, a lot of ground needs to be covered for putting the peace process visibly on track. It was amply clear that the Pakistan government was not ready for a material change in its position on bringing to book perpetrators of the Mumbai terror attacks. The contemptuous manner in which Mr Bashir dismissed India's dossiers on Lashkar-e-Toiba founder Hafiz Saeed as "literature, not evidence" reflected the hard reality that India cannot expect Pakistan's cooperation in curbing terror especially when the Pakistan army is breathing down the government's neck. When India asked for 33 terrorists — Pakistani nationals and Indian fugitives — Mr Bashir's response was that India should stop sermonizing to his country on terrorism.

 

Yet, all said and done, there is an air of hope that while agreeing to disagree on contentious issues, the two countries would, in due course, find common ground especially on economic issues. External Affairs Minister S.M. Krishna's statement in Parliament on Friday that the just-concluded talks represented an "encouraging step" towards restoring dialogue and better communication is proof of India's earnestness to move forward.

 

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THE TRIBUNE

COLUMN

NUCLEAR TRACK RECORD

PAKISTAN CAN'T BE TREATED ON A PAR WITH INDIA

BY K. SUBRAHMANYAM

 

Last week in the Committee on Disarmament (CD) in Geneva, the Pakistani delegate made an elaborate statement on Pakistan's objections for the CD taking up for consideration of the issue of Fissile Materials Cut-off Treaty (FMCT). He opposed the move and argued that the treaty, as it is formulated will affect Pakistan's security.

 

In his view, the issue cannot be considered in isolation independent of other developments in South Asia. He launched a vitriolic attack on India for triggering an arms race in South Asia. But his main focus was on the waiver of the Nuclear Suppliers Group's guidelines in favour of India in respect of civil nuclear cooperation.

 

He cited some US experts to support his view that it will enable India to save its own uranium for weapon purposes and that the Indo-US nuclear deal was damaging the Non-Proliferation Treaty (NPT). According to him, the Indian nuclear submarine programmed, ballistic missile programme and anti-ballistic missile programme were all making an arms race in South Asia inevitable.

 

Though the Pakistani delegate made his speech an attack on India, it was a criticism of the major powers of the world who took the initiative to get India the NSG waiver and a criticism of the 45-member NSG for having extended to India this waiver. Though he denied that Pakistan was isolated on the issue the fact that the 45-member NSG group gave India the waiver and not to Pakistan speaks for itself. In March 2006, when President George Bush stopped at Islamabad on his way back from New Delhi, General Musharraf raised the issue of Pakistan getting a civil-nuclear cooperation agreement analogous to India's in public before the TV cameras. President Bush replied that Pakistan was different, its needs were different and its history was different. The last sentence that Pakistan's history was different explained the whole issue and provided the effective answer to all US critics of Indo-US nuclear deal.

 

India has been recognised as a responsible nuclear state with advanced nuclear technology while Pakistan has not been so recognised by the international community. This is the crux of the issue and no amount of propagandist attacks on India can alter this fact. There are only three non-signatories to the NPT — Israel, India and Pakistan.

 

Israel is not in need of civil nuclear energy. Therefore, when it is argued that the NSG waiver for India will

damage the NPT, the critics are only advocating the cause of Pakistan even while professing to make out a

general case to save the NPT.

 

The Pakistani delegate evidently thinks that South Asia is an island continent like Australia and there are no countries in it other than India and Pakistan. India has a longer border with China than with Pakistan. While the Indo-Pakistan ratios in terms of population, GDP, industrial and agricultural productions are seven to one, the two neighbours, China and India are more approximately balanced in terms of population and resources.

 

While Pakistan argues that its security considerations should have overriding priority, it does not appear to extend that logic to its neighbour. Since President Bush cited the different history of Pakistan as the justification for not extending to Pakistan the civil-nuclear cooperation, it is necessary to focus on that history.

 

Pakistran is the unique case where nuclear weapon development and deployment have been exclusively in the hands of the military. Even in North Korea, the Communist Party commands the weapon. Whenever Pakistan had civilian governments, the nuclear weapon development and deployment were outside the jurisdiction of the head of the civilian government.

 

The Pakistani Army has not only a history of repeatedly seizing power from elected democratic governments, it has also a history of one of the largest genocides committed after World War II in Bangladesh. This has been recorded in the report of Justice Hamidur Rahman Commission set up by the Pakistan government itself.

 

Pakistan set up the infamous Taliban regime in Afghanistan which had to be removed as it supported the terrorist organisation Al Qaeda which plotted and executed the 9/11 terrorist attack on the US. On February 3, 2010, US Director of National Intelligence Dennis Blair told the Senate, "Pakistan's conviction that militant groups are strategically useful to counter India are not only hampering the fight against terrorism but also helping Al Qaeda sustain its safe haven…Islamabad's strategic approach risks helping Al Qaeda sustain its safe haven because some groups supported by Pakistan provide assistance to Al Qaeda…Islamabad's conviction that militant groups are an important part of its strategic arsenal to counter India's military and economic advantages will continue to limit Pakistan's incentive to pursue an across-the-board effort against extremism." He added, "despite robust Pakistani military operations against extremists that directly challenge Pakistani government authority, Afghan Taliban, Al Qaeda, and Pakistani militant groups continue to use Pakistan as a safe haven for organising, training and planning attacks against the United States and our allies in Afghanistan, India and Europe…However, it still judges it does not need to confront groups that do not threaten it directly and maintains historical support to the Taliban," providing the assessment reflecting the views of 16 intelligence agencies, including the Central Intelligence Agency and the Federal Bureau of Investigation (FBI).

 

He went on to elaborate, "Simultaneously, Islamabad has maintained relationships with other Taliban-associated groups that support and conduct operations against US and ISAF (International Security Assistance Force) forces in Afghanistan...It has continued to provide support to its militant proxies such as Haqqani Taliban, Gul Bahadur group, and Commander Nazir group…The Al Qaeda, Afghan Taliban, and Pakistani militant safe haven in Quetta will continue to enable the Afghan insurgents and Al Qaeda to plan operations, direct propaganda, recruiting and training activities and fund-raising activities with relative impunity."

 

Does the Pakistani delegate believe that his country which has been accused of helping and abetting the Taliban fighting the forces of the European Union countries in Afghanistan has any credibility to persuade the international community that it is not a state supporting terrorism but a responsible state?

 

The Pakistani Army under General Musharraf charged the Metallurgist Dr A.Q. Khan of having proliferated nuclear weapon technology to Iran, North Korea and Libya and he confessed to it in public on national TV. Now he has been exonerated by the Pakistani judiciary and he accuses that the confession was obtained by coercion and the proliferation took place with the knowledge and approval of the Generals and one of them even made money out of it.

 

Pakistan refuses to allow access to A.Q.Khan by the International Atomic Energy Agency. With this unique record of nuclear irresponsibility, Pakistan expects that it should be treated on a par with India and its fairytales will be credible to the international community.

 

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THE TRIBUNE

COLUMN

NANI'S ENDURANCE TEST

BY S.S. BHATTI

 

Prabhtej is barely two years and three months. By American standards of height and weight for babies, he is at zero per cent. But, in terms of ebullient energy and destructive power, he is a mini-nuclear reactor. He is free from gender biases and distinguishes me from his Nani by adding the honorific suffix "jee" to the epithet for granny or mother's mother.

 

Driven by a monstrous instinct for independence, he brooks no interference in whatever he does. When hungry, he eats on the dining-table all by himself as neatly as a grownup. But the moment his tummy is full, he starts using roti, cheese, mashed potatoes, and other cuisine like an art maestro using clay or paint. His tiny hands become a giant's tools, and he applies his materials to the table-top in gay abandon. When so fed up he litters the kitchen-cum-dining floor no vacuum-cleaner can easily clean up.

 

The other day he emerged as a real monster and an alien from a Hollywood movie, and put his Nani's endurance and prudence to a near-fatal test right in the guest toilet. While supervising his ablutionary activities, his mother suddenly received a call on her mobile. Excited that it was the caterer she wanted to contact in preparation for the birthday party of her elder son, she coolly said: "Mummy! You take care of Prabhtej", and walked out to discuss the menu, the charges, delivery time, bargaining—-all in one go, which included persuasion for a bonus dessert. During her five-minute conversation, the toilet became a battlefield for the Hollywood monster-alien. The urge for potty got transformed into irrepressible ardency for maverick marauding. He flushed the w.c. [water closet] four times in quick succession [American cisterns fill up in 20 seconds!].

 

When his Nani said "No", he rose from his precarious position and hurled the baby-seat-adapter like a discus. Challenged by a double "No", he unrolled the tissue-paper and spread it like spaghetti on the floor. Undaunted by further restraints, he thumped the full-height glass door that separated the bath from the dry area.

 

The catch-me-if-you-can sport progressively got more violent, and he squeezed the toothpaste out of the tube to make a lavish use of the "economy size".

 

Nani tried everything, but it worked in the direction of exhausting her endurance and dwindling energy. Her commanding voice provoked the little devil to brandish the w.c.-cleaner like the legendary Bheema's mace. This was followed by a magician's trick of pulling out of the basket dirty laundry piece by piece. Then the trash bin was emptied as if he were looking for something precious he had misplaced.

 

Her conversation over, my daughter moved towards the toilet and mercifully asked: "Are you OK, Mummy?" Collecting her attenuated breath in one giant gasp the poor Nani said: "Another minute and I would have collapsed!" The word 'collapsed' alarmed me, and I promptly enquired after her grandson-gruelled health. "God has been unfair to you. He has granted me a new lease of life. Otherwise you would presently have been the fortunate beneficiary of my foreign health insurance!"

 

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THE TRIBUNE

OPED

INDIA NEEDS POLICY FOR SPACE SECURITY

BY ANIL LAL VATS

 

India's recent successful test of a 22-metre long heavy motor can be graded as number three in the world. In fact, India has gone ahead of China in this particular aspect. This achievement will give a phillip to India's space programme and build capacity of placing heavier version of satellites weighing four tonnes or more in the orbit projected through a 200-tonne solid propellent.

 

Two S-200 will hug the core liquid stage of the GSLV Mark-111 rocket, which will itself be propelled by a cryogenic engine (which is a great achievement for India as the US-led technological denial regime had denied India this capability for more than two decades). The other country with these capabilities of two heavy motors is NASA's booster rocket of its heavy space shuttle Ariane-5 space launch vehicles.

 

Heavier payloads of the category of four tonnes will give multi-role capabilities to the satellite and make their operations more versatile. This will enable more efficient utilisation for civil application (and even military option). Although, India's space programmes are strictly based on civilian application on the Eisenhower Model of the 1950s.

 

However, with the recent Chinese test of ASAT Weapons, India may have to revise its policy to build defensive systems in space. Over and above this, in a future scenario where solar energy can be tapped through space, such heavy platforms can become very useful.

 

Further,thinking on the other end of the spectrum, can India in combination with China create an Asian alliance and form the Asian Space Station like the ISS? Can this big Idea become feasible, to prove that the 21st century is Asia's century?

 

Militarily speaking, these heavy satellites in combination with nano or microsatellites can become a deadly military configuration. These duel use satellites will usher space power groupings akin to the existing global nuclear order. In other words, if India has to stay as an influencing power in future, then it will have to showcase its space-based capabilities, which in a way is bound to become the power index.

 

Yesterday's nuclear P-5 s are bound to transcend to similar space power groupings like S-6 or 8. Latest reports of an EMP threat from space are yet another area of worry and that too from non-state actors. There are other many weapon system, which may take shape. All these will require bigger payloads satellite and India can build on these technological successes. But this mandates a space security blue print of growth and India is already late in formulating one so as to enable cost-effective duel-use application.

 

Here one can quote the pioneering work done by the IDSA-Pugwash Committee Report ,which was published about a year back and which has laid out some concrete recommendations, which need urgent attention by the government. The recommendations state that there is an urgent need for India to formulate a space security policy with elements of creating an institutional structure for its implementation.

 

The space policy should include the requirements of the defence services and civil agencies like broadcasting services, meteorology etc. The aspect of R&D, space laws and commercial business development needs to be factored in. The government may consider setting up a "national space security command" to meet operational needs of various agencies. India needs to identify critical duel-use technologies and become self-reliant in them (technologies like sensors, satellite hardening, counter-space nano and micro-satellite, sub-orbital flights etc.) Human resources (10,000 scientists) have to be trained and thus the same be facilitated by the government.

 

In addition the government's international negotiating strategy must be proactive and flexible. International cooperation on space issues should be given high priority as it builds the soft power of a nation. For instance, India should consider international cooperation with SAARC and other developing countries and give them benefits in space.

 

The end result of an assertive India in space will add to India's comprehensive growth and power in the comity of nations as a responsible nation. The government and the media should take note of this urgent requirement.

 

The writer is a former fellow at the IDSA and has done a PhD in defence studies.

 

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THE TRIBUNE

OPED

OBAMA LIKED BUT NOT FEARED

BY RUPERT CORNWELL

 

What went wrong? In January 2009, Barack Obama took power in a nation that overwhelmingly yearned for him to succeed. He was a fresh face, eloquent, thoughtful, plainly intelligent. On Capitol Hill, his party had massive majorities. All of that remains true. Yet, just 13 months later, America is in about as foul a mood as when George W. Bush reached his nadir.

 

Most parties that win the White House lose seats at the next mid-term elections. This November though, Democrats are bracing for a wipe-out that could conceivably see them lose control of both House and Senate, as the independent voters who, in November 2008, bought Obama's message of change and renewal abandon him in disillusioned droves.

 

The man they thought was an outsider has behaved like the quintessential insider. He and his administration talk tough about Wall Street, but after their near-death experience the banks are paying bonuses as they did in the locust years. Instead of bringing a fresh broom to Washington, Obama has deferred to the crusty old barons of Congress. He promised a new era of unity. Instead, the system is so gridlocked by partisanship that some call the country ungovernable. And then there's the healthcare morass.

 

Today the president is bringing Democrats and Republicans together for a televised "summit" in a last bid to rescue his signature initiative that after nine months was about to cross the finish line – until the Democrats contrived to lose Ted Kennedy's former seat in Massachusetts, and with it the 60th Senate vote that would have enabled them to break a Republican filibuster.

 

The calculations underlying this event are far too complex to go into here. An ever more confused American public no longer knows what it wants. The Republicans will play nice to the national viewing audience to show they're not bloody-minded obstructionists. In reality, they have no incentive to compromise now. The Democrats will also be on their best behaviour, even as they plot to ram through a final version of the bill over Republican objections, using a procedural manoeuvre that requires just 51 Senate votes, not 60, for passage.

 

Whether they can pull it off is anyone's guess, but for Obama the gamble is huge. Having invested so much in healthcare reform, he cannot walk away now. Yet after a while persistence starts looking like a political obsession to match Captain Ahab's hunt for the great white whale. Moby Dick, of course, hauled Ahab to his death, and healthcare could easily drag Obama to disaster.

 

However the big lesson of the Obama presidency thus far is the opposite. Intelligence, eloquence and sweet reason alone are not enough in politics. Yes, it seemed that way to voters when they chose a successor to the dogmatic, tongue-tied and defiantly anti-intellectual Bush. Obama was the most politically inexperienced person to become president in a century, but in 2008, a majority of Americans either overlooked that fact or saw it as a positive virtue. Obama, they thought, would summon what Abraham Lincoln called "the better angels of our nature".

 

In fact another Illinois politician, the former governor Adlai Stevenson, hit the nail on the head, more than half a century ago. Like Obama, Stevenson ran for president (twice, both times unsuccessfully). Like Obama, he was highly intelligent and rather cerebral. He was also very witty. "You have the vote of every thinking person," a woman supporter called out during Stevenson's 1956 campaign. To which he replied, "that's not enough, madam, we need a majority."

 

Today Obama is on the verge of losing that majority, if he hasn't lost it already. When an administration is struggling, the pundits' advice machine moves into overdrive. The current wisdom is that Obama must broaden his circle of close advisers beyond a "Chicago mafia" at the White House, and maybe jettison Rahm Emanuel, his foul-mouthed White House Chief of Staff.

 

That the infighting is seriously under way was proved by a column in The Washington Post at the weekend, surely inspired, if not leaked, by Emanuel or his allies, arguing that Obama's mistake had been to ignore his top aide's advice on key issues, and that Emanuel was the one reason Obama's presidency hadn't already gone the way of Jimmy Carter's. When such pieces start appearing, you know a president's in trouble.

 

But the person who probably needs to change is the boss. Events have proved Stevenson right, that reason and intelligence take you only so far in politics. Obama cannot be accused of masking the truth about America's financial and economic situation. Nor does he fail to make the case for sacrifice.

 

But he rarely demands sacrifice directly. Take healthcare. To win agreement, Obama now proposes that a crucial revenue-raising provision, a tax on higher-end employer-sponsored schemes is now being deferred to 2018, long after he leaves office. Such moves only reinforce a feeling that this president is a soft touch.

 

Which in turn suggests a second truth. When times are tough, successful leaders must not only be liked. They must also be feared. No one fears Obama, in part because he hasn't faced anyone down, least of all the Congress that is now supreme emblem of everything the public thinks is wrong with the system.

 

It's not yet too late; Obama is far more popular than the Congress. There are parallels too with the early stages of Bill Clinton's presidency. Clinton also failed to push through sweeping healthcare reform. After a crushing mid-term defeat in 1994, he changed tack and went for smaller changes. These now add up to a decent legacy. But the 2010s are not the 1990s. Big things need to be done, and Americans instinctively knew that when they voted Obama into office. Thus far, he hasn't delivered.

 

— By arrangement with The Independent

 

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THE TRIBUNE

OPED

INSIDE PAKISTAN

LAHORE'S BASANT: POLITICS ENTERS THE FRAY

BY SYED NOORUZZAMAN

 

There was a time when Lahorites would wait for Basant more eagerly than even their Eid. But times have changed. Now it is not possible to celebrate Basant with kite-flying, which remains a banned activity. Yet every year Basant enthusiasts try to celebrate the occasion in the traditional manner – flying kites, wearing colourful dresses, holding dance and song parties, etc. In the process, the Basant controversy gets revived involving different sections of society.

 

The controversy has taken an interesting turn with Punjab Governor Salman Taseer declaring on a TV channel a few days back that he would defy the ban by celebrating Basant with kite-flying, etc. The Kite-Flying Association of Lahore, too, announced that Basant would be celebrated on March 6 and 7 (Saturday and Sunday) in the traditional manner. This led to the association's Secretary-General Sheikh Salim getting arrested and the provincial government threatening that the Governor would also meet the same fate if he went ahead with his Basant celebration plan.

 

Governor Taseer is a member of the ruling Pakistan People's Party, but Punjab province has a PML (N) government, headed by Mr Shahbaz Sharif, younger brother of Mr Nawaz Sharif. The two principal political parties are in different camps – one against the kite-flying ban and the other in favour of it.

 

As Nusrat Nasarullah says in an article in Business Recorder, referring to a TV programme on the subject, "Of course, there is a political side to the kite-flying context and the Basant picture … Those who are with the Pakistan People's Party on this kite-flying issue have opted to defy the ban, and those who are supporting it are standing behind the Pakistan Muslim League (Nawaz)."

 

According to a report in The News, the Supreme Court of Pakistan banned kite-flying in 2005 "in response to an outcry over injuries and deaths caused every year by the glass-coated string." The court order, however, has it that the ban can be lifted for a brief period if the court is approached for the purpose. Despite this, last month the Lahore High Court turned down a request for lifting the ban.

 

This has dampened the spirits of Basant enthusiasts. They wanted the provincial government to defend their case in the court at a time when democracy is back on the rails in Pakistan. The government, however, looks at the whole issue from the law and order and ethical angles, ignoring the business aspect and the sentiments of those who want to celebrate Basant to keep this popular cultural festival alive. Most people are of the view that culture should not be made to suffer if some people indulge in questionable activities.

 

On this occasion, women prefer yellow-colour dresses. The famous cultural festival heralds the arrival of spring. During the days when there was no ban on Basant celebrations, it provided an opportunity to make huge profits to businessmen. Many multinational companies would pitch their tents on rooftops. The owner of the highest building in Lahore would get the maximum rent. One could find everybody constituting the Who's Who of Pakistan in the country's cultural capital. However, all this has become a thing of the past because of the controversy associated with Lahore's Basant.  

 

Judicial appointments

 

The recent controversy over the appointment and promotion of judges ended soon after it was caused, but it highlighted the need for transparency in the consultation process involving the judiciary and the executive. It was also felt that there must be a clearly laid down procedure to avoid an confusion over whose opinion would be final.

 

According to Daily Times (Feb 25), the Constitutional Reforms Committee of parliament headed by Senator Raza Rabbani has recommended the formation of two commissions – a judicial commission and a bipartisan parliamentary commission – for the purpose. "In this scheme, the parliamentary commission has the final authority to approve or reject names proposed by the judicial commission, while the role of the Prime Minister and the President has been reduced to ceremonial approval", the daily pointed out.

When the controversy arose following the two notifications by President Asif Ali Zardari for certain judicial appointments contrary to the recommendations made by the Chief Justice of Pakistan, the two sides made different claims over the question of consultation. Those belonging to the Chief Justice's camp expressed the view that his recommendation could not be overruled. The appointment of the two commissions can eliminate the chances of such claims and counter claims.

 

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BUSINESS STANDARD

EDITORIAL

IN THE SAME OLD STYLE OF THE EARLY 1980S

NO REFORM DONE, NO MOVE TO FACILITATE GST FOR NEXT YEAR INTRODUCED, TOO MANY EXEMPTIONS GIVEN AND HARDLY A FEW WITHDRAWN

SUKUMAR MUKHOPADHYAYA

 

In the brouhaha over the rise in petrol duty, what has been lost sight of is that this Budget has done no reform, introduced no move to facilitate GST for the next year, has given too many exemptions and withdrawn hardly a few, not simplified the tariff or any important procedure, and not brought in the comprehensive service tax. The only two positive moves are the increase in the excise rate from 8 to 10 per cent to make it equal to the service tax rate and the increase in the customs and excise duties on petroleum products.

Just by making excise duty and service tax rates 10 per cent one cannot say that it is a move towards facilitating GST for the next year. For one doesn't know what the rate for Central GST will be next year. On the other hand, much more substantial changes could have been introduced this year to make the transition smoother for GST. So in general we can say that this Budget has followed the very old pattern of exempting goods even if not necessary, sometimes for imaginary and populist reasons without paying any heed to the lot of the importers and manufacturers who will be burdened with interpretation problems even more than before.

On the customs side, the major change is in the case of petroleum. The duty on crude petroleum has been increased from nil to 5 per cent. Duties on Motor Spirit (petrol) and HSD (diesel) have been increased from 2.5 to 7.5 per cent and duty on some other specified petroleum products have been increased from 5 to 10 per cent. The Central Excise duty on petroleum products, namely motor sprit and HSD, have also been increased by Re 1 per litre. Economically speaking, this is a correct move. The reduction in duties on petroleum products takes place at a time when the price of crude petroleum in the international market was exceptionally high. But, now that the international price has come down substantially, there is every reason to increase the duty to harness some more revenue to bridge the fiscal deficit. The policy is also in line the reduction in subsidy for the fertilizer. To this extent, it is a consistent and legitimate economic policy. However, there are certain negatives in the Budget on the customs side. Many exemptions have been given on several types of machinery, industrial, agricultural, transport, electronic etc. These are all exemptions mostly to the extent of 2.5 per cent and are not well deserved. Micro-oven parts do not deserve any exemption as they are not used by the Aam Aadmi to whom the Budget is dedicated. Several such minor exemptions have been given which are end-use based, such as special grade stainless steel for the manufacture of orthopaedic implants, parts of the battery chargers for hands free headphones etc. These are costly items and the duty foregone element will be extremely negligible. These exemptions will crowd the columns of tariff and burden the arrears of end- use bonds. Such exemptions are the breeding ground for unfair practices. Automation is no cure for this.

On the excise side two prominent changes are the increase in the standard rate of the excise duty from 8 per cent to 10 per cent and the increase in the ad valorem duty on large cars, multi-utility vehicles and sports utility vehicles from 20 to 22 per cent. There is no change in the specific component. This will not mean a great increase in the prices and in any case these vehicles are for the upper income groups. Small scale manufactures have been given a deserving benefit, namely the credit for duty paid on capital goods in a single instalment in the first year. However, this should have been given for all industries for boosting growth. The inputs for manufacture of rotor blades for wind energy have been exempted which is unnecessary because they get input duty credit in any case. Once again, a cess has been imposed on coal. Rather than abolishing the cesses on several items, particularly education cess, the proposal is to have one more cess. Exemptions with fine distinctions are being introduced. Goggles will attract 10 per cent duty but goggles which correct vision will attract nil duty. Balloons will pay 10 per cent duty but not toy balloons. Making these fine distinctions will keep the officers busy, the manufacturers hassled and readers of newspapers entertained when Supreme Court judgments come out on them. These exemptions remind us of earlier exemptions on bindi, vanity bag and writing ink.

In regard to service tax this Budget has been the biggest non-achiever. The Finance Minister says that he had the option to bring all services under service tax. Then he adds he is "not doing at this stage". I wish he had explained why. This is exactly the stage when a comprehensive service tax should have been introduced. The GST is one year away. Practically all services have come under the tax net. Only very marginal services taxes have been brought under the tax net. If the comprehensive service tax had been introduced now, the officers would have got one full year to settle the disputes and come to workable solutions. Now what will happen is in April, 2011, when GST is introduced is that waves and waves of new ideas and changes will practically overpower the tax payers and the tax collectors. One year of preparation period has been lost. On the other hand, small little exemptions have been given on the service tax side. One of the exemptions is from service tax on technical testing and inspection certificates provided by the government agencies for seeds. The certificates usually cost about Rs.500 to 1000 and the tax relief could amount to Rs.50 to 100. Is such populism necessary even now?

In conclusion, we can say that the Budget has shown signs of courage in increasing petrol duty in taking mature economic decisions in regard to partial rollback of excise duty relief and in giving relief to small scale. But by giving too many exemptions, including populist ones, it has created the impression that even after GST comes, the old habit of giving exemptions may die hard.

Sukumar Mukhopadhyaya, Former member, Central Board of Excise and Customs

smukher2000@yahoo.com

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BUSINESS STANDARD

EDITORIAL

GOOD HOUSEKEEPING

A VERY FINANCE MINISTRY TYPE OF BUDGET

One joke about Bollywood endings, one quote from Kautilya, but para after para of 1980s-style sector-specific duty exemptions made finance minister Pranab Mukherjee's budget speech a rather dull affair, but for the noisy interlude provided by a united Opposition that was determined to play spoilsport. The dullness was, however, understandable since Budget 2010-11 was almost along predictable lines. The fiscal deficit to GDP ratio was brought down to exactly the level the finance minister had promised: 5.5 percent, not a decimal point less or more; the excise duty rates were hiked by 2 percentage points, as we first reported they would be in the columns of this newspaper; not much tinkering with customs duties, despite the Economic Survey's suggestion that the peak rate be brought down to 7.5 per cent; and, a series of plans and schemes aimed at making the growth process more inclusive. While Mr Mukherjee has earned his brownie points on fiscal deficit reduction, his social sector spending plans have meant that the revenue deficit still remains at around 4 percent of GDP, a fact that he surprisingly did not mention in his speech. Indeed, this may well be the first budget speech to have omitted any reference to the revenue deficit number!

 If there was one surprise, and for many a welcome one, it was the hefty Rs 26,000-crore direct tax give-away to an inflation-stressed salary earning urban middle class. This unexpected concession would not only find favour with a vocal urban middle class, but could also contribute to higher household savings. It is a pity that the minister did not choose to introduce a comprehensive services tax this year and experiment with its rollout in time for the goods and services tax next year. Apart from the revenues he hopes to garner through higher excise duty and services tax, Mr Mukherhjee also hopes to bridge the deficit by selling public sector stock and auctioning 3G telecom licences. Fiscal purists may quarrel with this strategy but Mr Mukherjee will argue he is keeping faith by his promise to keep his date with the introduction of a new direct taxes code and the rollout of GST. He has also promised to simplify tax administration and widen the tax base through better compliance at reasonable rates. The only jarring aspect of the tax proposals is the multitude of tax exemptions. Why magnetrons used in microwave ovens and toy balloons should attract the specific generosity of the finance minister is not very clear!

The finance minister is right to regard fiscal consolidation, improving the policy environment for investment and turning the agricultural economy around as necessary elements of consolidating the growth process. Going beyond his tax and spending proposals, the budget speech also proposes some well considered and much needed reforms in the energy, agricultural and social sectors. The idea of setting up a Coal Regulatory Authority, with competitive bidding for coal block allocation, is a good reform step. The national social security fund for unorganised sector workers is also a welcome measure.

It is clear that few in government can resist the temptation of creating more committees, authority and funds. So the finance minister must be excused for announcing the creation of one council, one authority, one commission and two funds. Hopefully, though, his Financial Stability and Development Council will not devalue the institution of the central bank. In fact the governor of the Reserve Bank of India should chair this council, if at all such a council is really needed. The FSDC should not become an instrument to weaken central bank authority. The idea of cleaning up the legal infrastructure of the financial sector, a job that the proposed Financial Sector Legislative Reforms Commission will be asked to do, is a welcome proposal.

The paradox of Mr Mukherjee's budgetary strategy this year is that while it meets almost all expectations, of markets, businesses, households and investors, it falls short of what was, both politically and economically, warranted, desirable, and indeed, even feasible. After a long time a ruling coalition finds itself relatively secure, even if the opposition has become suddenly belligerent, and there are no elections around the corner. This was the year for some big picture stuff, some daring reform initiatives, and not just the kind of risk-averse incrementalism we saw. Mr Mukherjee has presented a good budget, perhaps even a very good one under the circumstances, but he has shied away from presenting a great budget. One that he would be remembered by in years to come, like Dr Manmohan Singh's 1991 'reforms budget' and Mr P Chidambaram's 1997 'dream budget'. Good housekeeping is very important, and that is what a good finance ministry does. But, as every housewife knows, good housekeeping doesn't get you into the history books.

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BUSINESS STANDARD

COLUMN

SOME WELL-TIMED CHOICES

PRANAB WALKS FISCAL CONSOLIDATION PATH WITH PRUDENCE

MUKESH BUTANI

 

Budget 2010 was expected to be more than just an exercise in annual fiscal management and first indications are that the Finance Minister managed a delicate act in balancing fiscal consolidation and economic prudence. Supplementing the data released in the Annual Survey, the FM pegged the GDP growth for the current fiscal at 7.2 percent and laid an ambitious path for double digit growth. Revised estimates shows fiscal deficit for the current year at 6.9 percent; only a marginal deviation from the original Budget Estimates though disappointing third quarter growth of 6 percent. Other important indicators of macro-economic health were encouraging with tax-to-GDP ratio at 10.3 percent, despite huge fiscal stimuli throw-in over last eighteen months to keep the economy afloat (tax stimulus alone totaling to 3.5 percent of GDP).

While the fiscal stimulus of $37-billion for the 15-month period offered much needed impetus, the Budget was expected to set the tone for strategic shift in the government spending pattern and a calibrated roll-back to tame deficits and ever-increasing debt-to-GDP ratio. The 'big bang' expectation in terms of a roadmap for key reforms in direct and indirect tax other than announcing date of April'11, did make the budget exercise appear a mere formality. Industry was pinning its hopes on major announcements that would have given the much-needed push to key strategic sectors such as infrastructure, renewable energy, education and healthcare. None of those materialised.

Fiscal prudence prevails

Though the Budget contained proposals for rationalisation of tax rates, the fundamentals for managing the fiscal deficit and achieving inclusive economic growth guided most of the announcements. The broader focus clearly was on revenue mobilisation rather than (non-plan) expenditure curtailment in line with the recommendations of the 13th Finance Commission. The key recommendations on which the FM acted include a calibrated exit strategy from the expansionary fiscal stance and capping the combined debt of the Centre and the States at a sustainable proportion of the GDP.

 

Additional revenue mop up of Rs 25,000 crores from disinvestment programme and even more ambitious deficit targets for next three fiscals (deficit pegged at 4.1 percent in 2012-13) would be a tall order.

 

Tax rates swing

Decent direct tax collections in a slowdown allowed the FM to rationalise Income tax rates for individual tax payers, which is expected to benefit at least 60 percent of individual taxpayers. A status quo in the corporate tax rate barring a marginal reduction in surcharge from 10 to 7.5 was no surprise, as there was little room to maneuver. Increase in the Minimum Alternate tax rate would, however disappoint India Inc, particularly Oil E&P and refining sector enjoying tax holidays.

 

No change in the service tax rate was indeed a pleasant surprise, as the FM targeted excise and custom duty rationalisation for mopping up targeted revenue collections. Much as expected, a full or partial excise duty exemptions available to several items has been proposed to be withdrawn and duty imposed at 4 percent or 10 percent. The peak custom duty rates however, remained unchanged at 10 percent.

 

Rejigging of petroleum taxes

The Kirit Parikh report announced early this month made its recommendations for petroleum sector reforms. Whilst the FM acknowledged the expert group recommendations and assured discussion of recommendations in due time, significant rejigging of taxes for petroleum products were proposed in the Budget. As the peak custom duty on crude oil was restored to 5 percent, duty on petrol and diesel was raised from 2.5 percent to 7.5 percent and for other specified petroleum products to 10 percent. Also, the standard excise duty on petrol and diesel has been increased by Re l per litre.

 

Restoration of custom and excise duty rates for petroleum products is likely to hurt the end consumers, as oil companies shall pass the burden in totality. These measures may not, however, give any relief or immediate respite to oil companies reeling under a de facto pricing regulated regime and one has to wait and see what the Ministry of Petroleum does for implementing Parikh committee recommendations.

 

From an Income tax standpoint, the Budget is a mixed bag for the petroleum sector, as the midstream sector saw relaxation in the threshold for common carrier pipeline capacity from 1/3 to 1/4; the upstream sector would be hit with narrowing scope for beneficial deemed profit regime for oil-field service operators.

 

R&D incentivized

In line with expectations, the Budget proposes to introduce renewed and more impactful tax incentives for R&D activities across all industries. The enhanced weighted deduction for in-house and outsourced R&D most certainly underlines the importance given to promoting state-of-the art technology.

 

Tax reforms top on agenda

Without taking his eyes off the reform agenda set out in his last budget, the FM has re-affirmed the government's commitment to pursue two most important tax reforms in the country: introduction of the Direct Tax Code and Goods and Service tax by April 1, 2011 though he seemed less upbeat about GST in his speech. Though, delayed by one year, GST if introduced by the revised deadline would be path-breaking and read with Finance Commissions recommendations to disincentivise states playing spoil sport, developments in this space would be most watched. Although I would have felt more reassured if GST rate was brought down from 2 percent to 1 percent, it seems the government is still seeking the consensus of all states for GST implementation.

 

Budget with sound fiscal vision

Given the difficult economic landscape with early signs of recovery just showing, I believe the FM has done a tremendous job of aligning medium-to-long term growth objectives with economic realities. As the FM himself said in the speech – "Managing a complex economy is a difficult task…and yet, choices have to be made and they have to be well-timed".

 

Well said, Pranabda!

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BUSINESS STANDARD

COLUMN

BATTING ABOVE AVERAGE

LOOK OUT FOR A HIGH-SCORING ECONOMY IN THE COMING YEARS

AJIT RANADE

Invariably a Finance Minister trying to navigate between growth and fiscal restraint invites comparisons to a cricket shot that has to score a boundary, but remain between mid-on and mid-off. Not much firepower in those straight shots although they are less risky than hooks and pull shots. So an effective budget is workmanlike, refrains from announcing big bang reforms, but scores runs nevertheless. That's what this budget has done admirably.

 But the cricket metaphor this time is appropriate for a wholly different reason. For, this budget comes after two decades of India's economic reforms, a period that also coincides with the reign of cricketing maestro Sachin Tendulkar. And just as Sachin's magic is still in the ascendant, so perhaps is the story of reforms. Indeed, the backdrop to this budget is not merely the very visible economic recovery, but major policy milestones, such as the 13th Finance Commission's recommendations, the once in 50 years revamp of direct taxes, a completely new company law and, of course, the rollout of GST. Beyond these major economic policy steps is something even more momentous, which the cacophony of the budget headlines may have drowned out. The Cabinet approved the women's reservation bill, a feat which has taken 20 years –as long as Sachin's career! When this bill is passed in Parliament, as is expected, it will be a remarkable milestone in India's democratic journey.

For his part, the Finance Minister did announce initiatives with far-reaching reform-like implications. The Right to Food legislation which he said will soon be drafted, will have a big impact on inclusive growth. Just as the NREGA sceptics have dwindled in numbers, so also the Right to Food naysayers will have to eventually eat crow. The UPA government in its two innings would have scored a hat trick of enshrining and giving teeth to laws such as the Right to Information, employment and now, food. And that's not counting the recently legislated right to education. That's an impressive record for a government committed to inclusive growth. This rights-based approach entails a huge fiscal burden which critics object to for two reasons: (a) that we cannot afford it; (b) that the bigger problem is in implementation. But in a democratic framework we simply cannot give up because of implementation failure. However inefficient the delivery system, it can only improve. And as Amartya Sen says, we cannot allow the best to be the enemy of the good.

Other equally important policy initiative is in financial sector reforms. The setting up of a Financial Sector Reforms Commission will hopefully give much needed coherence to the reforms journey. Incidentally, the announcement of allowing newer private sector players entry into banking is an acknowledgement that we need huge amount of banking capital. If India needs a consistent 9 percent GDP growth it will need large doses of bank capital. Moreover newer players can only enhance financial deepening and financial inclusion. The requirement on new entrants can be stringent, transparent and can also include compulsory dilution in a specified time. The marriage of technology (UID, mobile telephony) and financial services can indeed have big bang impact on the development of the financial sector.

Even though it offers an opportunity for presenting an economic policy vision, ultimately the budget is about numbers, an annual financial statement with projections for next year. Judged in this narrow sense, the budget stance is pro growth, with of course an inclusive agenda. Lower income taxes will increase disposable incomes, leading to more consumption spending. The mix of spending also has skewed toward more Plan (i.e., capital) spending, with a bigger share of infrastructure, which contributes to long term growth. On fiscal discipline there are several positives. Firstly there is greater fiscal transparency, as oil and fertilizer subsidies are no longer hidden elsewhere but show up in the budget, and are now paid in cash instead of illiquid bonds. Secondly there is noticeable expenditure control, as the total has risen only by 8 percent whereas GDP may rise by 15 percent in nominal terms. Thirdly the projected borrowing for next year is lower than market expectations, which perhaps explains the exuberant response of the markets. This may put less pressure on interest rates, although with inflation and the 5.5 percent projected deficit, interest rates have limited room to go down. Lastly the mention of explicit numerical targets for the next two years conveys a greater commitment. As such with GST and widening of the tax net, fiscal relief will come from growth and compliance much more than expenditure compression.

The reforms in the coal sector are also significant and overdue. A coal regulator and an auction mechanism to allocate coal blocks will greatly enhance efficiency. e need bigger steps to extract this energy source more efficiently. Hence the baby steps in coal sector reform are timely and welcome. Of course the budget speech also gave a nod to the environment angle, and has introduced a tax on all fossil fuels, a sort of carbon tax. This is a progressive long-term measure.

Overall, this is a budget with a pro growth stance with an attempt at fiscal restraint and some initiatives with major long term implications. It stays within mid-on and mid-off but does score boundaries. After twenty years of India's reforms, nay his debut, Sachin recently scored four test centuries and an awesome ODI double ton. His best is not over. Assuming his journey is mimicking India's economic journey, with GST and DTC round the corner, look for a high scoring economy in the coming years.

Ajit Ranade, Chief Economist, Aditya Birla Group

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BUSINESS STANDARD

EDITORIAL

A REASONABLE EFFORT

BUT MARKETS WILL NOT ACCEPT TARGETS WITHOUT CREDIBLE ACTION

AKASH PRAKASH

 

The budget presented by the finance minister yesterday was notable in that there were no nasty surprises, and a grateful market responded (largely through short covering) by rising upwards of 1.25 percent. Market expectations were obviously muted, and the FM managed to satisfy these low expectations.

First of all, on the positive side, the FM began his speech by talking about the need to concentrate on social sector spending and create an enabling environment for growth without getting involved in every sector. This is an usually clear and forthright statement from this government.

The FM also took on the issue of PSU disinvestment directly, budgeting for a revenue mop-up of Rs 40,000 crore from divestment and talking about the advantages of selling government stakes in these companies. This is again a far more direct approach and there no longer seems to be any need for apologies on this count.

The willingness of the government to accept the 13th Finance Commission recommendations on the targets and transparency of approach towards fiscal consolidation is another positive. The desire to move to a fiscal deficit target of 4.1 per cent by FY 2013, and hopefully 3 percent by 2014 are all good. The willingness to accept a public debt/GDP target is again a sea change. The clear statement that the government will not issue fertiliser or oil bonds and pay all subsidies in cash is positive for companies in these sectors and also ensures transparency in the fiscal calculations. The ability of the FM to hit the 5.5 percent fiscal target in 2011 has also cheered the market as has the lower net market borrowing target of Rs 345,000 crore (at least Rs 25-30,000 crore below market expectation).

The FM must also be commended for using quite credible macro targets. It looks as if the budget document is using nominal GDP growth estimates of about 13 percent and net tax revenue growth of 15 percent, both of which look quite believable. Expenditure is also moving in the right direction, with a strong 15 percent plus growth in plan expenditure and only 6 percent growth in non-plan, though one can question the government's ability to hold total spending at just 8.5 per cent.

The recasting of tax slabs so as to leave an additional Rs 25,000-30,000 crore in the hands of the middle class is another huge boost to urban consumer sentiment and helps consumption. The hike in MAT to 18 percent is, to my mind, a positive as it will force us closer to the DTC ideal of a low rate of tax which every company has to pay, with limited exemptions. The excise rollback of only 2 percent is also a positive surprise to the markets.

Other associated reforms like the move to auction coal blocks and have a coal regulator, the seeming willingness to open up new bank licences to the private sector, incentives for legal reform are major positives.

The problem I have with the budget is it is again a case of reforms pushed out. The FM has managed to bring the fiscal deficit down to 5.5 percent of GDP from 6.9 percent, despite only a net Rs 20,000 crore incremental incidence of taxation. The budget maths relies heavily on being able to keep expenditure growth under control at 8.6 percent, and being able to raise Rs 75,000 crores from disinvestment and 3G auctions, neither of which is fully under government control. The only real revenue-raising measure is the hike in duties on petro-products, which is invariably going to be inflationary. In fact, the bond markets, after initially gaining on the lower borrowing programme for 2011, gave back all the gains as the inflationary consequences of the fuel hikes sank in.

Real structural changes on the expenditure side are still not in sight. There was no movement on the Kirit Parikh report, no further details on the nutrient-based scheme for fertilisers and no movement on targeting food subsidies. The fiscal remains very vulnerable to any serious spike in crude prices. Can we really continue to keep total expenditure growth at sub 9 percent beyond 2011, with the Right to Food Bill and the Right to Education Bill costs still to enter the budget arithmetic?

Both the major revenue reforms, the GST and DTC will happen only in 2011-12. There was also no further clarity on what will actually go into the direct tax code, or the expected rates to be adopted for GST. One can only hope that the government manages to convince the states to accept the finance commission's view of a single rate with limited exemptions. The unfortunate tendency to micro manage on the tax side continues, with micro-level changes in sector specific tax rates and exemptions.

The budget has the big positive of being committed to the fiscal targets of the 13th Finance Commission and the FM deserves full marks for that. Investors both local and international will applaud the targets outlined, but the details of how we will get there are still not clear. In terms of key reforms still to be implemented like GST/DTC and subsidy rationalisation, the hard decisions are still ahead of us. Markets are for the moment happy with the fiscal targets outlined, but will eventually start focusing on how we reach these targets. If one is willing to give the government the benefit of the doubt, then one can say that the details on both the expenditure and revenue side will become clearer over the coming 12 months.

On the whole, not a bad effort as it has given the government a little more breathing time to implement some of the more difficult structural reforms. However the government has to realise that at some stage it will have to deliver on these big ticket items. The market will not accept mere targets without credible action forever.

Akash Prakash, Founder and CEO, Amansa Capital

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BUSINESS STANDARD

EDITORIAL

LIVING ON A PRAYER

RELYING ON A NARROW SET OF ADJUSTERS IS PLAIN RISKY

JEHANGIR AZIZ

 

The Finance Minister has presented a budget that appears to balance the need to consolidate without having to withdraw the stimulus provided in the last two years on the ground that the recovery is still fragile. No one can argue against this logic. Recent data flow has rudely reminded us that material economic and policy risks abound in the global economy. At the same time almost all demand indicators in India have turned hot and despite the deficient monsoon, FY2010 GDP growth will likely top 7 percent. And all this without India's biggest growth driver, corporate investment firing. If this happens, as one expects, FY2011 GDP growth could go well above 8 percent. This will inevitably stretch capacity and raise core inflation, which has already started to pick up. Thus, it was important for the government to join the RBI in moving policy stance from easy to neutral quickly, sacrificing near-term growth to extend the medium-term expansion and minimise any concerns of a hard landing in the second half of the year.

Two weeks back, I had written that the government would target a deficit of 5.5 percent of GDP. The budget did that that and more, targeting 4.8 percent in FY2012 on the way to meet the FY 2015 target of 3 percent as recommended by the 13th Finance Commission. This is a good thing as it once again frames the budget in a medium-term framework.

But then why do I get the feeling that things may not turn out the way they should? I was concerned that in trying to reach the 5.5 percent deficit target, the government would base the consolidation narrowly on a few adjusters, such as the cyclical upturn in the economy and divestment, and not reverse more of the cuts in indirect taxes. Sadly, that's what the budget does. It expects tax revenues to grow by 18 percent when nominal GDP is projected to grow at 12.5 percent. The buoyancy of taxes is high when an economy is coming out of a downturn and the budget expands the base of service tax, which is another positive since this is the largest sector of the economy. But if the government truly thinks that the recovery is fragile, wouldn't it have been wiser to be more conservative as it was last year?

The budget assumes Rs76, 000 crore in disinvestment and 3G license fees –a whopping 1.1 percent of GDP. This may well be realised, but it again it would depends on continued strong foreign inflows and benign risk-aversion among investors. Separately, in a bold move the FM promised to do away with off-budget bond issuance for oil and fertilizer companies and move all subsidies in the budget to a cash basis. What is surprising is the budget of just Rs 3,000 crore in oil subsidies. This may be sufficient if oil prices remain below $80/barrel or the government reforms the retail petroleum products pricing policy. We saw the entire opposition walk out during the budget speech for a Re 1 increase in excise duty. I wonder how they will react to the freeing of oil prices.

As we have seen recently, the global recovery can turn up nasty surprises and create enough anxiety to keep domestic financial markets volatile. Relying on a narrow set of adjusters is plain risky. If a few things go wrong, the budget will look shaky.

But beyond the numbers there were several positives. The budget reaffirmed that the direct tax code and the national GST would be rolled out by April 2011. The service tax base was expanded to include real estate, air and rail travel. This may be a negative for these sectors in the near-term, but for the economy expanding the base rather than the tax rate is always a better alternative. On the financial sector, increasing the number of private banks will improve competitiveness that is sorely needed to reduce the cost of domestic financial intermediation. Increasing the capital base of PSU banks will also help to provide greater stability to the system, but one hopes the government uses this as an opportunity to also consolidate public sector banks. The creation of the Financial Stability and Development Council to oversee systemic financial and corporate macroeconomic stability and provide a forum for more formal inter-regulatory coordination went almost unnoticed in the media and the market. This can turn out to be a critical step in ensuring financial market stability in the future.

The last budget disappointed the market because it was expecting a lot after the government had just won a decisive electoral victory. This time we had come to expect less. The stock market cheered up as the budget delivered a bit more than expected. The bond market hasn't really reacted because it is looking for the devil in the detail. So in the coming months we will be living on a prayer for continued high growth, high global liquidity, low global risk aversion and low oil prices.

Jehangir Aziz, India Chief Economist, JP Morgan Chase
These are the author's personal views

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BUSINESS STANDARD

EDITORIAL

AN EMERGING COHERENCE ON FISCAL DISCIPLINE

EXPENDITURE CONTROL, SPECIALLY OF NON-PLAN REVENUE EXPENDITURE, SHOULD BE THE FOCUS

INDIRA RAJARAMAN

 

The Union Budget 2010-11 was presented under favourable growth circumstances, notwithstanding the low growth figures just issued for the third quarter.  The nominal GDP growth in 2009-10 is likely to be much higher when the provisional estimates are issued because a real growth of 7.2 per cent with inflation at present rates is just not consistent with nominal growth of only 10.6 per cent.  The final deficit percentages for 2009-10 will, therefore, be a touch lower and those projected for next year will be lower, too.

That by itself is not great cause for comfort. The revenue deficit for next year at 4 per  cent is well above the 3 per cent promise in the medium-term fiscal plan (MTFP) presented with last year's Budget.  The fiscal deficit for FY 2011, however, is in keeping with last year's MTFP. This fiscal correction is to be achieved by a substantial measure of expenditure control, of non-plan revenue expenditure in particular. The nettle of subsidy control is beginning to be grasped. The fertiliser subsidy will be reconfigured to a nutrient basis, with advantages that are more than just fiscal. 

The petroleum subsidy has been deferred for further consideration, but in the interim there is a hike in the customs duties on crude and refined petroleum. The announcement of this hike precipitated an uproar so loud that a good bit of the subsequent speech of the Finance Minister became inaudible. The proposal to have competitive bidding for allocating coal blocks for captive mining is an example of the kind of institutional reforms recommended by the 13th Finance Commission as a supplement to what has hitherto been a purely target based approach to fiscal correction. Thus, the objective of fiscal discipline has been recognised directionally, if not in terms of the distance travelled towards it. 

There was coherence in other respects as well with the objectives as spelled out in the terms of reference of the 13th Finance Commission.  Growth is given a push with the attention to infrastructure, the Delhi-Mumbai dedicated corridor, and mega power plants.  The infrastructure package includes the additional tax deduction up to Rs 20,000 for taxpayers investing in infrastructure bonds. There is continued support for the Pradhan Mantri Gram Sadak Yojana whose extension of last-mile connectivity has been the single most productive factor behind the spatial dispersal of growth to the rural areas. The four-pronged approach to agriculture recognises the critical need for an integrated approach for raising productivity, especially in rain-fed pulses and oilseed cultivation for curbing the runaway inflation in these commodities.

The environment issue is frontally addressed with recognition of the 'polluter pays' principle and with the establishment of the Clean Energy Fund.  Convergence has been achieved between the newly enhanced excise on goods at 10 per cent and retention of the reduced tax on services at 10 per cent.  All of this augurs well for the future integration of goods and services in indirect taxation and moves the fiscal system towards greater coherence.

There were disappointments and a few negatives as well. The continued support for Special Ecoomic Zones needs justification in view of the tax expenditure involved and the impact of lower tax buoyancies at the Centre on states and, after the acceptance of the Finance Commission recommendations, on local bodies as well. 

The Clean Energy Fund is to be funded through an enhanced levy on coal.  This mode of financing is entirely sound environmentally but poses an additional burden on coal-based thermal generation, which accounts for 60 per cent of total electricity generated.  The poor financial health of the power sector is one of the major unsolved fiscal problems of states today. Here again is an example of a measure whose impact on states has not been sufficiently thought through.

Indira Rajaraman, Honorary professor, Indian Statistical Institute, New Delhi. Member, 13th Finance Commission

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BUSINESS STANDARD

EDITORIAL

NOW FOR THE HARD PART

CUTTING THE DEFICIT THIS YEAR WAS THE EASY PART; THE REAL FISCAL CHALLENGE LIES AHEAD

Pranab Mukherjee is like the kind of general that Napoleon wanted, a lucky man. He has come out smelling of roses because he has done the most important thing in the Budget, and fulfilled his promise made last July. He has reduced the fiscal deficit to 5.5 per cent of GDP—an announcement that immediately woke up the stock market from its stupor, at high noon on Budget day. But he has been able to deliver, and that too without breaking a sweat, only because he has had most unusual good fortune on his side—in the form of a series of one-time benefits that, cumulatively, make for what can only be considered a windfall. It is important to understand this if one is to anticipate what now lies ahead.

The finance minister has managed to slash the fiscal deficit for next year by 1.4 per cent of GDP (from 6.9 per cent to 5.5 per cent) because he has got benefits in as many as five different ways. First, he does not have to pay Rs 15,000 crore for the bank loan write-off, as he did this year. Second, he does not have to pay arrears of pay and pension, on account of the Pay Commission award, as he did this year—saving him another Rs 16,643 crore on civil sector pay alone. Civil sector pension arrears and defence sector pay and pension arrears would be over and above that. In sum, the windfall gain on the Pay Commission arrears account would be Rs 20,000 crore, probably more.

Then he has assumed Rs 15,000 crore extra on disinvestment, and perhaps Rs 35,000 from the one-time sale of telecom spectrum to 3G bidders. Finally, he has not had to provide for any extra subsidy on the oil account, saving him Rs 10,306 crore. Take all five together and the one-time benefit in this Budget is about Rs 95,000 crore. By a magical equivalence, that is almost exactly the reduction in the deficit, of 1.4 per cent of GDP (which is projected at Rs 69.35 lakh crore for next year).

Such heaven-sent gifts don't get handed to finance ministers every year, which is why Mr Mukherjee has grabbed the chance offered by the Finance Commission to lower expectations for the future. In his Budget speech in July last year, he had promised to reduce the deficit further to 4 per cent in 2011-12. He has now modified that, to 4.8 per cent, to be followed up with 4.1 per cent in 2012-13—which happens to be the same level as was there in 2005-06.

Even if he delivers on those targets, it would have taken us seven long years to undo the fiscal damage caused by the "stimulus" of the last couple of years. And even then, the debt-GDP ratio would be higher, and so (therefore) would the share of revenue eaten up by interest payments. If the situation had to return fully to what it was before the financial crisis, it might take us a full decade. All those in love with fiscal stimuli, please note that goodies from the government don't come cheap; at some point, we have to pay.

To understand the costs involved, the deterioration in government finances, and the long uphill climb that lies ahead, compare the numbers for next year with what prevailed in the year before the crisis, ie 2007-08. In the three years between then and 2010-11 (as budgeted, with a 5.5 per cent deficit), the central government's tax revenue would have gone up by 21.5 per cent. But expenditure would have gone up by 55.6 per cent. The difference is made up by an almost exact 200 per cent increase in borrowing—from Rs 1,26,912 crore to Rs 3,81,408 crore. The result is that an extra 4.8 per cent of revenue will be eaten up by interest payments on the additional debt, which amounts to Rs 32,750 crore in a year—enough perhaps to pay for 8,000 MW of additional power capacity. That, as it happens, may be the new capacity that we will add next year in the public sector.

Consider also the deficit numbers in the same three-year period. The fiscal deficit goes up from 2.7 per cent of GDP to 5.5 per cent, or an increase of 2.8 per cent of GDP between 2007-08 and 2010-11. But the entire increase and more (2.9 per cent, actually) is on account of the revenue deficit, which goes up from 1.1 per cent to 4 per cent.

That's because capital expenditure financed out of the Budget has increased by only 26.9 per cent, while revenue expenditure has gone up by 61.3 per cent. This is the fiscal cost of taking care of those at the bottom of the pyramid, through the rural employment guarantee programme, providing for the building up of human capital, and so on. In a poor country, the expenditure is unexceptionable, indeed necessary, provided the money is spent well—and there lies the rub. If the money is spent wastefully, or misdirected and the poor don't benefit, then the Budget has been ruined for no good reason.

Whether the money is spent well or badly, the fisc has to be brought back into balance. And there is only one way to square what looks like a circle—ensure revenue buoyancy. The fact is that, even next year, tax revenue as a share of GDP will be only 10.8 per cent, well short of the 12.5 per cent that prevailed before the crisis. Taking the number back up by 1.8 percentage points (or Rs 1,20,000 crore!) will take some doing, and need time. The only hope of achieving this quickly is through the proposed introduction of an integrated goods and services tax next year, along with the simultaneous spreading of the service tax net to include all services, which will bring more people into the tax net, and improve tax compliance. Mr Mukherjee will have to stay lucky if he is to climb the big mountain that lies ahead.

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THE ECONOMIC TIMES

EDITORIAL

NEITHER GOOD ECONOMICS, NOR POLITICS

YASHWANT SINHA


Unprecedented events have taken place in Parliament over the last two days. The first was a discussion on price rise even before a discussion on the motion of thanks for the President's address was taken up. The second was the finance minister intervening in that debate and putting forth his views on price rise a day before he was due to present his Budget. The third was the walkout by the entire Opposition midway through the finance minister's speech in protest against what he was proposing in the Budget. Clearly, we are passing through difficult times.


Every Budget is prepared in the context of the economic situation prevailing at that time. The most important challenge facing the finance minister this year was the unprecedented price rise of essential commodities including foodgrain and a wholesale price index threatening to go into double digits. The two other challenges before him were of reining in the ever-increasing fiscal deficit and stepping up the growth rate of the Indian economy. While these three challenges are no doubt interlinked, they are also in contradiction with each other

and the finance minister had to use all his skills to harmonise them. Unfortunately, Mr Pranab Mukherjee has failed to do so.


Everyone agrees, including the finance minister himself, that what drives the Indian economy is domestic demand and domestic savings. If the Indian economy has to prosper, we must ensure that prices are controlled so that consumers are attracted to spend money. Second, there must be money and cheap money in their pockets to buy. Only then will the consumer buy. Both have been adversely impacted by this Budget.


The agrarian economy is in a crisis. There is precious little for agriculture in this Budget. So, the agrarian crisis will continue. The impact of the loan-waiver scheme has already spent itself. The increased allocation for NREGS is limited to Rs 1,000 crore only in this Budget, less than what it will lose by way of inflation. Demand from the rural sector, therefore, is not likely to increase dramatically.


As far as the industrial economy is concerned, its recovery is still fragile. As the Economic Survey notes, there was strong growth in consumer durables and intermediate goods, moderate growth in basic and capital goods, and sharp deceleration in consumer non-durables. A double-digit inflation will threaten this fragile recovery.

Interest rates in the economy are already firming up. This will make money expensive and will act as a deterrent to consumption growth. According to the Economic Survey, the percentage growth in per-capita consumption, after touching a high of 8.3% in 2007-08, declined to 5.4% in 2008-09 and further to only 2.7% in the current year. Gross domestic savings have declined from 36.4% in 2007-08 to 32.5% in 2008-09, a massive drop of nearly 400 basis points in a year.


Public sector accounts for a decline of 360 basis points out of this total of 400. Growth in credit for industry and for personal loans and services has actually decelerated as compared to last year. The Indian consumer is still wary of consuming more. This Budget will be a further disincentive for him.


It is in this context the increase in central excise duties, coupled with the increase in petroleum product prices, has to be seen. Controlling fiscal deficit was no doubt a challenge. But, having taken the fiscal deficit to unprecedented levels, the finance minister could tackle it only gradually. Mr Mukherjee should have chosen one of the two options: partially rolling back the excise duty concessions extended in the past or raising petroleum product prices. It is a combination of these two that makes the prescription deadly.


It is not going to do any service to the economy. What the FM has done in this Budget, therefore, is neither good economics nor good politics.

 

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THE ECONOMIC TIMES

EDITORIAL

FISCAL HEALTH GETS A BOOSTER SHOT

SWAMINATHAN S ANKLESARIA AIYAR

 

It's a middle-of-the-road budget,neither harsh nor soft, neither left nor right. Finance minister Pranab Mukherjee is neither a populist nor radical reformer. Curbs on non-Plan spending rather than stiff taxation (net additional taxes are barely Rs 20,000 crore) will reduce fiscal deficit to 5.5% of GDP next year, with further reductions to 4.8% and 4.1% in the next two years.


This conforms to the targets of fiscal consolidation in last year's budget. Banks are relieved that they will be able to fund the reduced borrowing requirement of the government. Disinvestment of public sector shares will fetch Rs 40,000 crore, and the 3G spectrum auction another Rs 35,000 crore or so.


This exceeded the markets' low expectations, and the Sensex zoomed 175 points. Reliance Capital was a top gainer, after the finance minister's statement that more private sector banking licences would be given out.


Conditions today were good for a reformist budget. Only one state election (in Bihar) occurs this year, and the current coalition partners lack the muscle to topple the government unlike the Left Front in the 2004-09 coalition.

But Mr Mukherjee avoided any significant reforms. FDI could have been allowed into retail and the FDI limit hiked in insurance; foreign investors could have been given voting power in line with their bank shareholding.


The budget assumes 8-8.5% real growth and 4% inflation, giving 12.5% nominal GDP growth. This very optimistic scenario assumes that the global economy will not slow down. If it does, all bets on deficit reduction are off.


The surcharge on corporate tax has been cut from 10% to 7.5% while the minimum alternative tax (MAT) has been raised from 15% to 18%. This will raise the overall effective tax rate. The tax break for software parks has not been extended, so the likes of TCS will now be taxable, but for the refuge they get in SEZs.

 

The aam aadmi will get more rhetoric than cash: NREGA gets just a marginal boost to Rs 40,100 crore from Rs 39,100 crore last year. The fiscal stimulus was rolled back very partially. Cenvat went from 8% to 10%, well short of the pre-stimulus 14%. Cenvat and service tax now stand unified at 10%, preparing for the transition to a single-rate goods and services tax next year.


Import and excise duty on crude and petroleum products were cut in 2008 when crude hit $112/barrel, and these cuts have been reversed in the budget. Petrol and diesel will go up in price by Rs 2.67/litre and Rs 2.58/litre, respectively. But petrol and diesel prices remain to be decontrolled.


The Economic Advisory Council recently said the fiscal stimulus comprised accelerated spending much more than tax cuts, suggesting that the rollback should focus on spending. Mr Mukherjee has followed this advice—non-Plan spending is up only 6%, and non-Plan outlays are actually down for several sectors, including defence, subsidies, police, economic services, social services and other general services. Plan spending is up 15%, a desirable trend change.


The middle class will be angry with the rise in petrol and diesel prices, and Mr Mukherjee has sought to mollify it with a widening of income-tax slabs, which will provide some relief. But inflation remains a major concern, and the budget hope that inflation will fall to 4% over the next year is a triumph of hope over experience.

 

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THE ECONOMIC TIMES

EDITORIAL

NOT QUITE AS GOOD AS IT LOOKS, PRANABDA

MYTHILI BHUSNURMATH

 

On the face of it, Pranab Mukherjee's first full Budget in the UPA government is an improvement over his July 2009 Budget. The main macro number, fiscal deficit (FD)/GDP ratio, is a tad below the Budget estimate (BE) of 6.8%. Even better, it is slated to come down to 5.5% by March 2010.


Add to that the FM's apparent willingness to move away from the smoke-and-mirrors practice of the past, and present more transparent accounts, widen personal income-tax slabs, set a more ambitious target for disinvestment, hold out the prospect of additional banking licences to private players and make a beginning in the direction of legal reform, and it would appear that the stock market is not the only one with reason to cheer.

On the flip side, there is the small (2%) roll back of the reduction in central excise duties allowed last year as part of the stimulus package, expansion of the service tax net to cover more services, increase in central excise duty on petrol and diesel and on non-smoking tobacco, and some unwanted tinkering with tax rates on a host of items.

But none of this takes away from the general sense of Budget 2010 being a workman-like, no-nonsense Budget; one that will set the economy back on the track of growth along with fiscal consolidation. Or so it seems.

Until you look a little closer at the assumptions underlying the Budget, particularly fiscal consolidation. To begin with, the improvement in fiscal health reflected in the lower FD/GDP ratio conceals the worsening in the quality of the FD, not only in the revised estimates (RE) for 2009-10 but also in the BE for 2010-11 compared to 2008-09.


Thus, the revenue deficit/fiscal deficit ratio (RD/FD), which shows how much of the borrowing is going to finance current consumption (rather than investment), has increased from just 41% in 2007-08 to 79% in 2009-10 (RE), and is to go down only marginally to 73% in 2010-11. What this means is that every Rs 100 the government borrows will have to be serviced from whatever it earns by investing Rs 27. The balance Rs 73 would be spent on consumption and will not earn anything. This is a nigh impossible task that means the government will have to borrow more and more just to keep its head above water.


Second, the improvement in the FD/GDP ratio is premised on a sharper-than-warranted increase in net revenue and a lower-than-warranted increase in expenditure, especially non-Plan expenditure. Net tax revenue to the Centre grew only 5% in the current year, according to revised estimates for 2009-10. Yet, Budget 2010 projects a far more robust growth of 15%. On the expenditure side, though non-Plan expenditure grew 16% over actuals in 2008-09, it is expected to grow by a far more modest (unrealistic?) 4% in the next fiscal year. Last but not least, unless inflation comes to the government's rescue, the GDP number for 2010-11 is likely to be an over-estimate. The reason is third-quarter GDP numbers released by the CSO on Friday show third-quarter growth at just 6%, which means the economy must register growth of about 8.8% in the fourth quarter if we are to live up to the CSO's advance estimate of 7.2% for the year. This looks a trifle far fetched at the moment, so the final GDP number for 2011 may be somewhat lower; in which case we may end up with an FD/GDP ratio of more than 5.5%, and the much-celebrated improvement in fiscal health will turn out to be no more than wishful thinking. In course of time, markets will wake up to that realisation. But till then, it is party time.

 

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THE ECONOMIC TIMES

EDITORIAL

'I NEED RESOURCES TO CONTROL FISCAL DEFICIT'

 

Finance minister Pranab Mukherjee, who announced some definitive steps towards fiscal consolidation in the Union budget, is confident that the economy will soon move into a high-growth orbit. He said the withdrawal of subsidies would have a minimal impact on overall prices. Excerpts from an interview with ET NOW:


Fiscal consolidation clearly has been your priority in this budget. But are the revenue estimates realistic?


It is not over-ambitious. My direct tax projection (for this fiscal year) was Rs 3,70,000 crore, but in the revised estimates I have indicated that it would be Rs 3,87,000 crore, thanks to tax buoyancy. Tax-GDP ratio will touch 12% next fiscal from 10% at present. With the introduction of the direct tax code, which I hope would be possible from April 1, 2011, we can expect better tax compliance.


The opposition staged a walkout in the middle of your speech when you spoke about duties on petrol and diesel. Your thoughts?

 

The duties imposed were in effect until June 2008. Duties were eliminated when the oil prices rose to $127 per barrel in June 2008. Today the petrol prices have softened and I require resources if I want to bring the fiscal deficit within manageable limits. I have to mop up resources. So far as inflationary impact is concerned, I have calculated that there will be an increase of around 0.41% in the Wholesale Price Index.


You are sitting on huge resources. The 3G spectrum allocation will get some $7-8 billion. Rs 40,000 crore to Rs 50,000 crore is expected from disinvestment. You could have announced some populist measures...


My point is very clear. I must come back to the higher growth trajectory. I cannot indulge in the fiscal expansion which I did last year. It will cause harm in the long term. There is a concern over prices, but it is a short-term concern.

 

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THE ECONOMIC TIMES

EDITORIAL

DON'T SEE ANY PROFOUND CHANGES IN THE BUDGET: JIM ROGERS

JIM ROGERS, INVESTMENT GURU, IN A CHAT WITH ET NOW GIVES HIS PERSPECTIVE ON THE BUDGET.

 

You always have been sceptical about the Indian government's ability to deliver reforms. Are you a little less sceptical today?

I have been watching Indian government for too long. I hope that they are going to open up and allow foreigners to invest. I don't believe that you really willing to do that but they need to make the currency completely convertible because nobody is going to invest in the country with a blocked currency anymore.

I don't see any profound changes in this Budget. They talk about deregulating energy, I hope they do. They talk about helping farmers and I see some specific measures to help farmers but they haven't reformed Indian Agriculture. Indian Agriculture has got to be totally reformed. I mean forgiving a few bad debts helps but that's not the reform that the farmers in India need. (
Watch )


The Budget that I am seeing so far does not have many basic long-term needed reforms. If they come, I will be the first to invest in India.


What is your view on Indian equities, are you bullish?

Whenever a new Budget comes out what you need to do is sit down because some industries are going to benefit from whatever happens and obviously that's the area where one should be bullish. Some industries are going to suffer this happens every time there is a Budget.


Yes, I would be bullish on the things that are going to benefit I would not be bullish on the things that are going to suffer they talk about deregulating retail I hope he does it, I hope and he does it finely. He talk about deregulating oil, I hope they do it finely. They talk about helping banking I hope they do it.


They are building infrastructure in the rural areas. This is great for India if they do it straight for the agricultural sector, if they do it, this is the place where you make a lot of money in the Indian stock market or if there is a collapse, you lose less.


What is your sense on the global environment? What sense are you making of emerging market equities?


Well what worries me about this Budget is the fact that debt is already up something like 80% of gross national product and this going to continue to get higher which is not balancing the Budget. He (Finance Minister) says he is going to cut down the deficit but 7% is still a very high deficit once you get a 90% or so a 100% a debt your growth is impaired significantly. I don't see any attempts in India to do something about the huge accumulated deficit.


He says he is going to start divesting some or privatising some. I hope so. That is good for India but even then he still has big deficits and if you just cut down your deficits by selling off the family silver that is not good in the long run. If India continues to become a highly indebted nation look at Greece, look at America, look at the UK, look at other countries that have run under this kind of huge debt problem and I am afraid India is going down that path rather than a path of accumulating good budgets.

 

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                                                                                                               DECCAN CHRONICAL

EDITORIAL

FEEL-GOOD BUDGET FOR GROWING INDIA

 

The feel-good factor across India on Friday underscores the finance minister, Mr Pranab Mukherjee's, largesse to the country's burgeoning middle class, with whom he has been more than generous. Microwave ovens, prepackagd imported goods, mobile phones, toy balloons... all these will now be cheaper. It is also a big "thank you" all over again to voters who re-elected the United Progressive Alliance. With the tax concessions and change in slabs, Mr Mukherjee has forsaken Rs 26,000 crores in direct tax revenue, but he has also gained Rs 46,500 crores through increased indirect taxes. Unfortunately, though, these indirect taxes have a bigger impact on the aam aadmi and the poor. Mr Mukherjee did nothing to upset any section of society, but he did not do enough to push agricultural production or indicate what the Centre proposed to do to tackle food inflation. In the trillion-dollar-plus Indian economy, a few hundred thousand crores for agriculture and social welfare required for true inclusive growth is loose change. Today, for instance, there are 25 commodities which can be given a minimum support price, but only four or five get it. If there was procurement for pulses and oilseeds, which are in tremendous short supply, it would have been more meaningful. Or take the social sector: he said 37 per cent of the total Plan outlay was reserved for this, but refrained from saying how much of an increase it was. Mr Mukherjee must be congratulated for two important announcements. One was on bringing in administrative reforms, which he acknowledged had been pending for long, and which is a systemic structural and institutional weaknesses in government which causes bottlenecks in the public delivery mechanism. The Economic Survey released on Thursday mentioned very clearly that if there was improvement in infrastructure, both urban and rural, and reform in governance and administration, it was possible for India to move into double-digit growth and even become the fastest growing economy in the world in the next four years. But Mr Mukherjee has not spelt out how such reform will be brought in. The second major announcement was recognition of climate change, for which he provided some tax concessions.


Individual taxpayers will be a happy lot as there will be only two forms to fill. Even more exciting is the "Justice To All National Mission" which promises to reduce the backlog in the courts from 15 years to three. In the past too, particularly in the Rajiv Gandhi era, we have had several missions: some were successful, such as the one on telecom; while others, such as the one on pulses, were not. The finance minister has been specific about identifying 60,000 oilseed villages in rain-fed areas, but he will need to have a mechanism to conduct an audit of progress on all his announcements, and fix responsibility — rewarding those who do their job and achieve targets, and punishing those who do not. This will ensure his government's intentions get translated into reality. He quoted the great sage Kautilya to describe what he intended to do in his Budget. Perhaps Kautilya will not be disappointed, and like the stock market which gave him a 335-point salute, Kautilya too will give Pranab Babu a pat on his back.

 

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DECCAN CHRONICAL

EDITORIAL

GOODIES FOR ALL

BY S. CHANDRASEKHAR

 

Nothing substantial was really expected for the common man and the middle class in this year's Budget. After all, the implementation of the recommendations of the Sixth Pay Commission had increased the expenditure
of Central and state governments.


The Indian economy weathered the worldwide economic turbulence riding on the back of Pay Commission effect. Is it possible that the expansion in consumption on account of payment of arrears and higher disposable incomes is coming to an end?


It is probably with a view to sustain the consumption demand that the finance minister has continued with the practice of adjusting income-tax slabs for individuals. The tax rates on individuals have been left unchanged since 1997-98. The income-tax rates continue to be at 10 per cent, 20 per cent, 30 per cent for specific income slabs.


The three income slabs have been revised from the existing Rs 1.6-Rs 3 lakhs , Rs 3-Rs 5 lakhs and above Rs 5 lakhs to Rs 1.6-Rs 5 lakhs, Rs 5-Rs 8 lakhs and above Rs 8 lakhs. In addition, the Budget proposes to increase the income-tax exemption from the existing level of Rs 1 lakh by Rs 20,000 if an individual invests in infrastructure bonds.


Hence individuals with income of at least Rs 3 lakhs will benefit from this measure. An individual with an annual income of Rs 5-8 lakhs did not quite expect an increase in disposable income by Rs 50,000. This is really an unexpected bonanza. More importantly, this benefit undoubtedly benefits more individuals than measures that tinker with tax benefits on purchase of housing or any other specific investments.


Despite the upward revision of the tax slab, rural and urban consumers would, however, pay higher prices for petroleum products, automobiles, cigarettes, tobacco, consumer goods etc. It is not expected that this aspect of the roll back of the fiscal stimulus package would affect demand. However, it remains to be seen whether the higher disposable income will help sustain consumption demand in the next couple of years.


Since, less than 35 million Indians file tax returns, the benefits stemming from upward revision of the income-tax slabs will bypass an overwhelming majority of Indians.


Yet it is the taxpayers along with certain other segments of the rural population that have contributed to increase in consumption expenditure in recent years


The increase in minimum support prices for agricultural commodities and the nationwide rollout of National Rural Employment Guarantee Scheme (NREGS) have also contributed to the Indian growth story. In a welcome step, the government has extended the coverage of the Rashtriya Swasthya Bima Yojana to those who have worked under NREGS for more than 15 days during the preceding financial year. This would benefit a large proportion of the 450 million rural households who are eligible for benefits under the employment scheme. Note that the Employment Guarantee Scheme is not for the benefit of the below poverty line households only.
Both poor and non-poor households in rural India can take advantage of this scheme. In the context of old age security for those working in the unorganised sector, the finance minister announced that the government will contribute Rs 1,000 per year to each account opened under the New Pension Scheme in the year 2010-11. This will benefit those who are in a position to invest a minimum of Rs 1,000 and a maximum of Rs 12,000 in the financial year.


This facility is available for three years. This scheme is likely to benefit the lower middle class households rather than the poor households, although poor households that are able to save Rs 1,000 would benefit too.


An increase in the corpus managed under the New Pension Scheme will reduce the cost of operations. This reduction in cost can be passed on all those who invest in this scheme.


The Budget has little in terms of improving consumer confidence. At best one could point to the proposal to spend Rs 48,000 crores on  upgrading of rural infrastructure. The finance minister also reiterated the government's objective of adding 20 kilometres of national highways every day.


This would translate into 7,300 kilometres of new roads during this fiscal. The last time there was such a sizable increase in road construction was in 2003-04.


The length of the national highway increased from 58,112 kilometres in 2003 to 65,569 kilometres in 2004.

 

Construction of roads and upgradation of rural infrastructure in this fiscal year should translate in higher incomes and thereby help sustain a high growth rate.


As is evident, there is a little bit for every segment of the population in this Budget. Rising food prices is probably on the mind of one and all. The finance minister tried to assure that the government was working with the states to tackle rising food prices.


There is a perception that the increase in petrol prices will contribute to strengthening inflationary expectations. This coupled with the uncertainty on agricultural output will surely cause unease among the middle class.
He missed the opportunity to talk down the inflationary pressure the economy is experiencing. This could have been achieved by a statement on government's buffer stock policy and the options available with the government in releasing food stocks to moderate the price rise.

 

* The author is a faculty member at Indira Gandhi Institute of Development Research, Mumbai

 

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DECCAN CHRONICAL

EDITORIAL

SEEN UNSEEN

GEETA REDDY GETS ROSAIAH ROOM IN HOUSE


There was much talk in the Assembly lobbies when information minister and Leader of the House, Dr Geeta Reddy, was allotted a new room. Till a few months ago the room was occupied by Mr K. Rosaiah as the then finance minister. Mr Rosaiah occupied the room for six years and presented a record number of Budgets prepared in that very room. After he moved to the chief minister's chambers, Dr Reddy got his room. Scribes who were invited to her chambers the other day, rather sycophantically greeted her with the wish that she too would move on to be chief minister just as the previous occupant of the room Mr Rosaiah had done. And it may even happen. The senior Congress leader, Mr G. Venkataswamy, showed how. Later that evening, after receiving an award from Dr Reddy, Mr Venkataswamy blessed her as the first CM of Telangana state! Can she ask for anything more?

 

Trust in lathi

Police and lathi are inseparable. For an ordinary man, the image of a cop instantly rushes to the mind at the mere mention of government. The cops' association with those on the wrong side of the law, in a way, makes them incapable of differentiating between decency and indecency. Often they turn into diehard believers in the dictum 'Dandam Dasagunam Bhavate.' Over the years, their attitude and language becomes abusively creative. Manners and other courtesies are often Greek and Latin to many men in the kakhi. No wonder they are being pulled up by the judiciary frequently. Expecting a personality makeover among them is like asking for the moon.

 

Sweet revenge by two muscle flexers in council

Cycle' party Nannapaneni Rajakumari and 'Hastam' party Gangabhavani are known for expressions, unprintable at times. But the other day, people rubbed their eyes in disbelief seeing both of them exchanging sweets and guffawing in the Legislative Council. When a curious soul asked them how they turned bosom pals overnight, both of them nonchalantly said they have achieved what they wanted. Both of them have secured membership to the council, and there is no need for the histrionics now. Divested of power and sailing in the same boat, the two stormy petrels turned sadhvis minus ochre robes.

 

CORPORATORS MORE INTERESTED IN PERKS

A training programme conducted for newly elected GHMC corporators on their duties and responsibilities under the aegis of GHMC officials and the Administrative Staff College of India proved a sheer waste of public money.


About 120 corporators of the total 150 reportedly attended the first day's meeting and the number dropped to double digit the second and final day, showing the corporators' interest in knowing their duties.
The training is meant to enlighten them, mostly freshers, on the GHMC functioning, laws, and how they can address problems and improve civic conditions in their respective divisions. The corporators, who curiously asked about funds, foreign trips, perks and privileges within a month after their election, apparently have no interest in learning about their duties. Orientation and training for freshers is common in private organisations to equip staff to do better. Such finer points seem foreign to many corporators. Majority of our corporators, mostly with modest school level education, apparently are more interested in funds (vitta) than in duties (dharma). That explains why there are no smiles on the faces of event organisers. You can take a horse to a pond but can't make it drink water, says an adage.

 

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DECCAN CHRONICAL

EDITORIAL

FM HAS IGNORED 95% INDIANS

BY JAYATI GHOSH

 

Remember that this is the Central government that has projected itself as one that will focus not only on economic growth but on extending the public delivery of social services and on improving human development indicators. Remember that it is led by a party that is explicit about its focus on aam aadmi, and claims that its symbolic hand will always be with the ordinary people. And then consider the signals that this latest Budget sends out.


First of all, the revenue measures are not just heavily regressive but also suggest a lack of concern for 95 per cent of the population. Direct tax payers — the corporations and the less than five per cent of the population who even file income-tax returns, let alone pay such taxes — have been given a bonanza of tax reductions which will cost the exchequer an estimated Rs 26,000 crores (on top of benefits in the current year that are projected to have cost about Rs 80,000 crores). But indirect taxes have been raised across the board, including for items of mass consumption, so that the common people will now contribute disproportionately to the additional Rs 60,000 crores that is being raised.


The most controversial increases are in the customs rate and excise duty on petrol and diesel. Since these are universal intermediates, increasing these prices will cause direct and indirect increases in most other prices. In a context in which concerns about inflation are already becoming marked, this is a strange move to make, and certainly one that will negatively impact the ordinary citizen.


But while the revenue measures attack the aam aadmi in this manner, the expenditure proposals do little to allay the problems and insecurities that confront most people in the country today: rising food prices, poor employment prospects and uncertain livelihood, inadequate access to good health and education facilities, almost complete lack of social security. This Budget seems at best to trivialise, or ignore and best to reject, the current material concerns of the majority of the population.


On the question of food security and food prices, the immediate and pressing need to enhance the public distribution system to make it an effective alternative to private profiteering in food markets and ensure that the poor are able to access food at reasonable prices, has been completely bypassed. Instead, the finance minister's expressed concern was only with measures to improve agricultural productivity, although even here the budgetary allocations are rather minor in nature. These measures may even be neutralised in terms of agricultural costs by the proposed restructuring of fertiliser subsidy.


One obvious step would be to increase allocation for food subsidy to ensure a vibrant, effective system of procurement and distribution. The necessary institutional changes that would make the system more accountable, transparent and efficient all require an underlying willingness to provide resources for a universal system. But that seems to be the opposite of what is planned. In fact, crazy as it may seem in the midst of a general food crisis in the country, the allocation for the food subsidy has actually been cut by Rs 424 crores! This suggests that the government does not see public food distribution as an important means of curtailing food inflation. It also suggests that the government is not really serious about the food security legislation that it intends to enact.


On employment, the presumption seems to be that economic growth on its own will deliver more jobs, even though all the recent evidence suggests that without active labour market policies, this is not likely. Some concessions are to be granted to small and medium enterprises, especially in the export sector, but these may be more than counterbalanced by the rise in excise duties and indirect inflationary effects of the rise in petrol prices. Meanwhile, there is hardly any increase in the allocation to the National Rural Employment Guarantee Scheme (though it will be argued that since this is demand-led, the amount may still increase) and laughable amounts have been provided for various urban livelihood schemes.


The finance minister's speech made much of the substantial increase in plan allocation for social services, and indeed, at Rs 26,000 crores it does seem significant given the paltry nature of increases in this area in the past. But non-plan revenue expenditure on social sectors is actually slated to be cut by nearly Rs 6,000 crores, so the increase is not as much has been claimed. Since the Central government has allocated only Rs 8,000 crores more for both school education and literacy, it is clearly thrusting the financial burden of ensuring the right to education on to the state governments. But many of them are already facing fiscal crises and will find it difficult to raise the required resources.


In fact, since the state governments are largely responsible for social sector spending and still account for around 80 per cent of total social sector spending in the country, it matters critically what resources are made available to the states. Here, it turns out that the total increase in support from the Centre to state and UT plans is less than Rs 6,500 crores. This is obviously completely inadequate to meet even a small part of the growing need for spending on health, education, housing and other infrastructure. In fact, this increase of around 7.5 per cent over the previous year's spending will barely keep pace with inflation and is well below the projected increase in gross domestic product.


In his opening statement the finance minister spoke about creating an enabling state for inclusive growth. It is strange, then, to find so many fiscal measures that not only exclude the greater chunk of population, but actively work against their interests.

 

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DECCAN CHRONICAL

EDITORIAL

CORPORATES WILL SAVE, RICH WILL SPLURGE

BY D.R. DOGRA

 

This Budget analysis is marked with the United Progressive Alliance government's stated objective of keeping the aam aadmi in focus for its schemes, so it is interesting to see what is in store for the "amir aadmi".
Let us try to ascertain the impact of the Budget's proposals on the affluent segment — the so-called High Networth Individuals (HNI) and corporates. Although it is not clear what validates one of being an HNI, it is easier to consider anyone with an annual income of more than Rs 40 lakhs as an HNI. It is also important to understand that Union Budget 2010 is an exercise to address various sectors spread across the economic strata. It is widely perceived that the wealthy have to be ready for cuts so that the benefits are distributed among all sectors of the society. However, has that really happened?


Finance minister Pranab Mukherjee has laid an additional Rs 50,000 in the hands of individuals with income above Rs 8 lakhs per annum by revising the tax slabs. Further, an additional investment scope given via infrastructure bonds to be notified by the government could provide further tax relief of Rs 6,000. Thus, for them there could be more incentive to spend. Undoubtedly, this comes as a result of sincere taxpayers.
Typically, the HNIs tend to spend more on expensive items like gems and jewellery, leisure travel, top-end cars etc. Take a look at the Budget proposals for some such segments:


l Auto/cars: likely to be costlier due to increase in peak excise dutyl Gold and silver: likely to be costlier due to increase in indexed customs duty rates.


However, do such proposals really affect the HNI segment? Unlikely. This is largely because to a considerable extent, they are characterised by "price inelasticity". The spending power of HNIs is driven more by factors like status consciousness and discretionary purchases. With Mr Mukherjee facilitating more money into their deep pockets, the tendency to spend could only increase. Of course, health consciousness also prompted Mr Mukherjee to levy more duties on the tobacco segment. Thus, the message from the finance minister for HNIs with an affinity for tobacco can be inferred as: consume less tobacco! Would they heed to the message? Only time can tell, but going by "price inelasticity" concept, no prizes for the correct answer!
Conversely, driving non-fuel efficient luxury cars, the imminent hike in fuel prices consequent to Budget proposals, could pinch a bit. When we take another segment, the corporates, into account, reduction in surcharge to 7.5 per cent might be beneficial to most. However, for those falling under Minimum Alternate Tax, it is likely to be negative. One of the most recurring debates prior to the Budget is related to the likely roll back of the stimulus package. The dilemma on roll back of stimulus for Mr Mukherjee was quite apparent and it was only a partial one. The rate reduction in Central excise duties as a part of the stimulus package were partially rolled back and the standard rate on all non-petroleum products enhanced from eight per cent to 10 per cent ad valorem.


An important dimension to the finance minister's efforts was the pre-Budget expectation of new fiscal initiatives. Keeping in mind the future roll out of the Goods and Service Tax and new Direct Tax Code, there were no major things to offer, barring some of those listed above. Another indication on this was the fact that he refrained from tinkering with service tax rate.


There has been special focus, yet again, on the infrastructure sector and with a substantial chunk of the total plan allocation, the sector did get a boost. It has always been acknowledged that robust infrastructure is one aspect that shall provide impetus to the overall economic growth — including the corporate world. In that context, this is a laudable effort.

Rising inflation has bedevilled the government this time — especially food inflation. While there could be no immediate relief as brought out in the Economic Survey, Mr Mukherjee's efforts to address the supply side constraints from a long-term perspective by targeting the agriculture sector also need a special mention.
All in all, it appears as if the Budget has given a reason to smile to all segments, including the affluent segment of the country as well.

 

* D.R. Dogra is MD and CEO of CARE Ratings

 

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DECCAN CHRONICAL

EDITORIAL

LITTLE LESS TAX

BY DHIRENDRA KUMAR

 

There will always be naysayers and there will always be the optimists. Some people will love the Budget, some won't like much about it and there will be many who will sit on the fence. The fact is that no finance minister in this world can come out with a Budget that satisfies the entire citizenry. There are going to be positives as well as negatives. For me, what is important is that from an investment and savings perspective, the 2010-11 Union Budget 2010 has more positives.


You probably know by now what is going to be costlier and what will be cheaper. I won't dwell on that again. But I'll tell you why most salary earners — as well as the capital markets — are rejoicing right now. Theoretically, the biggest change that finance minister Pranab Mukherjee has brought about is the income-tax reduction. The existing tax slabs have been remodelled, which has effectively reduced the tax rate. A new Rs 20,000 tax slab has been added to the current Rs 1 lakh deduction that can be availed under Section 80C. However, the caveat is that this Rs 20,000 has to be invested in infrastructure bonds only. This is both good and bad.


I've never liked the idea of telling people where they should invest to get tax deductions. Earlier, the government had defined areas where the Rs 1 lakh could be invested. This changed in Budget 2005, and defining an area again is a step backwards. What Mr Mukherjee should have done is change the concept of fixed tax slabs. An increase in tax slabs should be linked to some cost inflation index. The government should find a way that automatically adjusts the Rs 1 lakh limit with inflation. Right now what they have tried to do is increase infrastructure financing with this move. Good or bad, we will now be able to pay a little less tax by investing a little more.


The other good move from an investment perspective in the Budget is the innovation in the New Pension System (NPS). The NPS is an excellent scheme for small savers to attain financial security in their old age. But without commission-earning agents to sell it, the NPS hasn't found many takers. To counter this, Mr Mukherjee has created an innovative concept, which I feel is truly a landmark one: The government will add Rs 1,000 for three years to the NPS accounts of those who deposit less than Rs 12,000 a year. This "gift" will be for those whose accounts start after 2010-11. This means that instead of trying to spend money on advertising and marketing the NPS, the government will give that money to the NPS account holders. I have no doubt that this initiative will bring many more people to the NPS.


Overall, the Budget seems to have been received strongly. The markets reacted positively to it, even though the enthusiasm dipped towards the end of the trading day. When the speech ended, the promise to control fiscal deficit to 5.5 per cent was what seemed to be the factor behind the burgeoning markets. However, we need to keep in mind that this is just a prediction from the government. We'll have to wait and see if this promise is fulfilled.

 

* Dhirendra Kumar is the CEO of Value Research Online

 

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THE STATESMAN

EDITORIAL

HAPPY HOLI 

BUT WHO WILL REFORM THE REFORMS?

 

THE growth-driven happy colours of Holi splashed across Mr Pranab Mukherjee's performance on Friday ~ preceded by an Economic Survey cheering the prospects of a near 10 per cent growth for 2011-12 ~ give rise to a simple question. How does one reconcile the forces of growth-driven policy with those of problem-ridden governance and a poverty-afflicted economy with a definite threat of food inflation (amidst crop falls) spilling over to non-food items? Mr Mukherjee believes that India has weathered the economic crisis thanks to his counter cyclical financial/fiscal package. Quite clearly the economic and business elite that set the budget agenda is happy with projections that the double-digit growth scenario will lead to a doubling of average incomes and, at this rate, will mean a $2,500 per capita income by 2020 at current exchange rates. The stock markets are happy; there was no real stimulus rollback never mind that genuine reforms were neatly circumvented. The more economically aware and legions of those who have very little income anyway or, for that matter, the farmer will have a different take on these projections and the status-quoism that they represent. Remember India has some 600 million farmers whose average monthly family income is around Rs 2,500, even with all the claimed technological improvements in agriculture. Not only is the farmer financially insecure; the country faces food insecurity and the minister did not release any details on how he intends to deal with it save to say that a draft food security bill was ready.


India lacks the infrastructure to make best use of the substantial budgetary allocations towards ensuring inclusivity, the mantra being chanted by the current administration. More relevant are suggestions of the 13th Finance Commission around deepening the institutions at the grassroots level for allocations to deliver commensurate results. Fortunately certain institutional reforms will be made mandatory from 2011-12. The take-out is that expenses on programmes such as NREGA (Rs 41,000-crore allocation) or Bharat Nirman, for instance, become good economics only when they become truly productive. Otherwise they remain entitlement programmes. The Rs 173,000-crore spend on infrastructure and other such significant allocations on the social sector (Rs 138,000 crores) or on rural development (Rs 661,000 crores) are to be assessed against this backdrop. Hopefully, the commitment of the government towards ushering in transparency and accountability in such spending will yield fruit.


There are other equally disturbing questions. How is a growth-driven economy to be rated when the growth is debt-ridden and deficit-spurred? The government's debt and liability figures have always been foggy, to say the least but to go by RBI figures India's domestic debt is 56.6 per cent of GDP (RBI Annual report 08-09); its external debt is 23.4 per cent of GDP, which means that its debt to GDP is 80 per cent (year 08-09). This does not include the external liability of the Central Government on account of FII and FDI. These figures tell their own story and the Finance Minister has only promised to present a paper on the correct situation later in the year. The government borrowing plan too has been deferred. The all-time poor showing on the fiscal deficit front for 2009-10 is another sorry reflection on an economic performance, even amidst praise that India has shown resilience at the time of a global meltdown and Mr. Mukherjee's bringing down the deficit to 5.5 per cent for 2010-11 is a welcome effort under trying circumstances. Nevertheless, the sharp deterioration on export performance is another area of concern. Global rating agencies have been taking note of India's ailing public finances and the budget of 2010-11 hardly alleviates their concerns.


This brings to question the roadmap being followed to implement the reform agenda of the government. The direct tax code has been postponed; the Parikh Committee recommendations have  been shelved as well; disinvestment that will give the coffers another Rs 25,000 crore this year has, over time, been proven to be one of the worst performing financial exercises of the government even though the stock markets love it. The enhanced funding for road construction, the funding of banks for capital adequacy, and the advent of new private sector banks should be particularly pleasing for them as will the sop to realtors despite the hike in cement prices. The three per cent increase in MAT should not be too worrisome. Hopefully some 60 per cent of India's taxpayers will be pleased with the reduction and relaxation on taxes especially with inflation already imposing a tax on them. The bottomline is that even though Mr Mukherjee did anger the Opposition, he did not upset big business and kept the middle class happy. In the final analysis, that is really what matters.

 

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THE STATESMAN

EDITORIAL

RHETORIC SPEWED

MATURITY DICTATES MOVING ON

 

TEMPTING, though an exaggeration, it would be to slap an "Agra-II" label on the interaction between the foreign secretaries of India and Pakistan. Yet there are commonalities, even if at much lower down the engagement-scale. Inadequate preparatory groundwork; the baggage of history; the importance of addressing domestic audiences as much as one another across the table; and the fact that there had been "no change in the running"; pre-determined the seeming stalemate. The belligerent posturing of the Pakistani dignitary at his press conference was so typical of the manner in which officials of that country exploit Indian microphones. Having been witness to (a contributing factor, her critics would say) Pakistan stealing the media thunder under the shadow of the Taj Mahal, Nirupama Rao should have anticipated nothing different. Particularly after the ratcheting up of the rhetoric immediately after the invitation to talk was issued ~ on what pragmatic basis that invitation was extended must remain one of the many mysteries entombed in South Block. And the sniping was not one-way, neither in the run-up, during and after the event.


Pakistan's wanting to reopen all aspects of the non-productive composite dialogue, and insisting that Kashmir was paramount, was as much of a stumbling block as India demanding the handing-over of terrorist suspects and that the deliberations remain uni-focal. To argue about the time spent on discussing one topic or another reeks of attempted puerile oneupmanship. Nor will many be impressed by the Indian claim that while its diplomatic effort is democratically-driven, Pakistan's is military-propelled: pampering electoral interests can prove more "colourful" than drab khaki. And is the powerful influence of GHQ Rawalpindi an overnight development?


In the ultimate, realistic, analysis nothing more should have been expected at New Delhi. But now that the rhetoric has been spewed, the contrasting positions vehemently re-stated, there is scope to hope that the promised "keeping in touch" might be followed up without the bombast fuelled by 14 months of severely curtailed contact. The next round of "talks about talks" must take place before delay generates additional animosity. Nirupama Rao must not back-off from an Islamabad visit. For having reopened the negotiation route, there must be no diversion. Lest that set both countries off in a diametrically opposite direction ~ for which some, on both sides of the frontier, could make a convincing case.

 

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THE STATESMAN

EDITORIAL

BEHEADING THE SIKHS

PAK TALIBAN'S HISTORIC BLUNDER

RAJINDER PURI


THE Pakistan Taliban operating in the tribal area bordering Afghanistan captured two Sikhs, compelled them to convert to Islam, and on their refusal, beheaded them. After that they added salt to wound by sending the severed heads to the Joga Singh Gurdwara in Peshawar . By doing this the Pakistan Taliban might just have made the costliest error in its bloodstained history. It might just have taken the one step that could pose greater danger to its existence than anything that might have been attempted thus far by the US or NATO.
The Pakistan Taliban consists of Pashtuns settled for generations in the Punjab. They were formerly led by the Mehsuds. There are other Afghan outfits that subscribe to the Al Qaida ideology, such as the Haqqani outfits, also based in Pakistan's FATA territory. The long-term aims of the Afghanistan Taliban led by Mullah Omar and the Pakistan Taliban do not necessarily coincide. The Pakistan Taliban's atrocity against the Sikhs might just recoil fatally against it. Here is why.


Dogged streak

Even a cursory acquaintance with Sikh history and character would reveal that the Sikhs have embedded deep within them a fanatical dogged streak that if aroused becomes almost impossible to extinguish. Sending the severed heads of two martyrs committed to their faith to the gurdwara is precisely the kind of action that could ignite that streak. The rage that will inevitably spread across the Sikh community in rural Punjab could alter dramatically the power alignments within the terrorist fold. To appreciate that a few facts not commonly recognized need to be recalled.


For decades it was commonly stated that fifty or so families in Punjab ruled Pakistan. What was not stated was that about 40 per cent of these ruling families of the rural Punjab province of Pakistan were Jat Sikhs who voluntarily converted to Islam in order to retain their land holdings. These converted Jat Sikhs had no trouble gaining acceptance from their Muslim Jat cousins, farmers all. The converts are Muslims in name. What their commitment to any religion might be only time will reveal. Their commitment to land, wealth and power has been confirmed beyond doubt. They could now constitute a potential fifth column in Pakistan. It would be not a fifth column that could serve the Indian government. It would be the fifth column serving the Sikh Diaspora that contains several terrorist outfits with a presence in Europe, Canada and the US .


Now recall the aborted Khalistan demand. Before Khalistan was formally announced by Jagjit Singh Chauhan he sought my opinion. I told him it was worthless because it made no sense. I further said that the demand for a united Punjab cutting across India and Pakistan made greater sense given the norms of nationhood. I said that would create 'United States of Asia'. A little after my interaction with him I recounted our dialogue and my views in the weekly column that I wrote then for the Sunday Observer published in Mumbai. Predictably, the Khalistan demand floundered. But the Sikhs continue to remain dissatisfied, though not disruptive.


Sikh grievances were heightened after the creation of Haryana state carved out of Punjab. The manner in which Indira Gandhi reneged on solemn assurances given to Punjab regarding the sharing of waters and the future status of Chandigarh not surprisingly was viewed by Sikhs as evidence of Hindu communalism. Added to the assurance given by Pandit Nehru at the time of Independence that the Sikhs would be made "to feel the glow of freedom", Sikh frustration inevitably grew. The partition of the Punjab during Independence left the Sikhs most orphaned among the state's three main communities. The loss of identity among the Muslims in Punjab was compensated partially by the creation of Pakistan, of the Hindus by the creation of Bharat. The Sikhs felt that they got little or nothing. After the subsequent mishandling by the union government, Sikh separatism was bound to erupt. The Khalistan movement further depleted the community. Today Punjab is the sufferer. Witness the very large number of youth in Punjab who seek migration to make a future abroad. Is it not symptomatic?
Sikh militants


IT is in this context that the unfolding drama across the border may revive the Khalistan demand in a new avatar. Current reports suggest that the ISI is reviving the Khalistan insurgency. Good! This might become the agency's biggest ever goof-up. Because now all the Sikh militants who are given sanctuary by the ISI in Pakistan could eventually switch loyalties. Egged on by Sikhs in India and their NRI financial backers abroad they could turn against the ISI and the Taliban. Defying New Delhi, India's Sikh militants could infiltrate into Pakistan not to seek sanctuary but to create disruption. There could develop for Pakistan a Kashmir syndrome in reverse. Might not Sikhs eventually seek common ground with the Pashtuns who share greater affinity with Afghanistan than with Pakistan? Might not the Afghan Taliban, which does not share as much the long-term goals of the Al Qaida as does the Pakistan Taliban, dump the ISI? 


If such developments do occur the Khalistan demand might revive for a region encompassing as much of Pakistan-ruled Punjab as the Indian Punjab. Along with Pashtunistan and Baluchistan, Khalistan too could become Pakistan's headache. Islamabad and New Delhi, caught in the pincer move of Sikhs and the Pashtuns, could be compelled to fundamentally alter the present sub-continental arrangement.
Does this sound like a wildly improbable scenario? Perhaps. But do wait for at least one year before arriving at a final judgment. 


The writer is a veteran journalist and cartoonist

 

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THE STATESMAN

EDITORIAL

'FEELING OF ALIENATION IS WORRYING'

 

Ved Prakash Marwah, who had served as Delhi Police chief and director general of the National Security Guard, was also Governor of three states, Manipur, Mizoram and Jharkhand. He worked as an adviser to two Governors, in Jammu & Kashmir and Bihar, and was the first secretary of the Indian High Commission in London. His policing skills during Operation Black Thunder in Punjab were widely recognised. He is the chairman, task force, National Security and Criminal Justice System, Centre-State Commission. Mr Marwah has authored several research papers and books including Uncivil Wars ~ Pathology of Terrorism in India and India in Turmoil: Jammu & Kashmir, Northeast and Left Extremism, in which he has dealt with internal security concerning India and its neighbours. He spoke to VIJAY THAKUR on issues related to terrorism.


The internal security situation the world over has changed over the years, especially after 9/11, and India is no exception. How do you see these changes?


Three decades ago, internal security was only related to problems of law and order, barring a few cases of terrorism in Punjab and north-eastern states. Police used to discuss conventional crimes and preventive measures. Then came the issue of extremism and police starting looking beyond law and order.
The difference between external and internal security became narrower over the years. Today, there is a very thin line between the two. A revolutionary change has been witnessed and it is no more a mere law and order problem. Rather, elements disturbing internal security have been posing a serious threat to the country's overall security.

You have seen violence in the Kashmir valley from close quarters and handled sensitive cases, including the Rubaiya Sayeed kidnapping. How is violence now different from the eighties?


Secessionist tendencies were there in some sections of people in Jammu and Kashmir for several decades. It did increase over the years. But till the nineties, the valley never had any communal feeling. Even in 1947, when the entire country was burning, the valley did not witness any communal violence. Unfortunately, today the Sufi elements of the valley are losing their sheen and communal feelings are on the rise. The Hindu-Muslim divide has increased alarmingly and fundamentalists have taken centre-stage.


Incidents of violence might have come down in the valley, but it is more because Jehadis (terrorists) are preoccupied with Pakistan and Afghanistan and at present Kashmir is not on top of their agenda.


How do you see insurgency in the North-east, Naxalism and communal violence in other parts of the country which security forces are finding difficult to handle?


Notwithstanding the government's claim that the north-east situation is improving, it is still simmering. At the time of independence there were only a few separatist groups, mainly Nagas. Today, there are over 100 separatist groups. Manipur alone has over 30 insurgent groups. Both anti-India forces and secessionists are apparently fighting a joint battle against India. But what is most worrying is the fact that the feeling of alienation is becoming stronger in the common man's mind. There is the fear that China might take advantage of it.


Left-wing extremism has also grown exponentially. Their influence has increased in the mainland and is affecting mines and industries. Their presence has increased so much that they can influence the country's economy either by attacking industries and mines where they have considerable presence or by attacking the country's rail and road lifelines.


Equally serious is the spread of communal violence. The divide between Hindus and Muslims is increasing, especially after the Babari demolition in Ayodhya. It has given an opportunity to Jehadi and fundamentalist forces to exploit religious sentiments of both communities and further widen the divide. In Punjab also, terrorism is showing signs of revival. There are reports that the ISI is trying to prop up dormant Sikh terror organisations to divide Hindus and Sikhs and revive militancy in the state.


What are the other factors besides terrorism and communal violence that are posing a threat to the country's internal security?

 

One is organised crime, where criminals have joined hands with anti-India forces. Earlier organised crime was confined to kidnapping, extortion and to the financing of film industry, but today it has spread its tentacles to other areas as well. We have seen it in the 1992 Mumbai riots, directly or indirectly, its impact is visible in other terror incidents as well. Secondly, terror organisations based in neighbouring countries are trying to disturb the peace and tranquility of the country, whether it is Maoists in Nepal, LTTE in Sri Lanka or Jehadis In Pakistan and Bangladesh.


Given the circumstances, what do you feel the government must do to meet these challenges?


First and foremost we should stop politicisation of the police force. Police have virtually become the armed militia of the ruling party. We have seen how the rule of law has broken down in some states of north-east. Misuse of police for political purposes should end immediately and they should be made to work in a more professional manner. It is an irony that the number of police officers sacrificing their lives while combating terrorism is on the rise, yet the police image as a whole is at its nadir. Unless police get public cooperation, which is sadly lacking, they cannot do much.


It is high time the police got back to basics. Improve training of its officers, provide better equipment, free it from the clutches of politicians and ask them to work in a professional manner. The Union home minister, Mr P Chidambaram, has taken some steps in this direction by bringing more professionalism into the police. He is trying to improve the intelligence-gathering infrastructure and mechanism to provide actionable intelligence to police officers working at ground zero. Yet there is a lot more to be done. Police should make best use of technology in gathering intelligence. And lastly, promotions and postings of police should be transparent and based on merit.

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THE STATESMAN

EDITORIAL

PERVADED BY DARKNESS, PEOPLED BY OUTSIDERS

 

All the imagery for the characters indicates some type of mental weirdness that everybody goes through in this adaptation of the Lewis Carroll classic, says Gill Pringle

 

Tim Burton looked bewildered when he was treated to a rock star's welcome as he mounted the podium at last year's Comic Con film-fan event in San Diego to introduce a clip from his film Alice in Wonderland. The frenzied crowd showed no greater excitement even when he was later joined by his long-time leading man Johnny DeppSuch is the enduring mystique of the shy 51-year-old film-maker whose directorial feature debut, Pee-wee's Big Adventure, 25 years ago, offered little hint of what was to come. The film made it on to several of that year's 10-worst lists, only to be described a few years later by several of the same critics as a "classic". Depp has been along for much of the ride, too. He first worked with Burton in 1990 as the eponymous Edward Scissorhands, collaborating six further times with Ed Wood, Sleepy Hollow, Charlie and the Chocolate Factory, Corpse Bride, Sweeney Todd, and now with Alice in Wonderland.


Most curiously, it's a relationship which has brought both men a seemingly endless supply of cool. Few actors, and even fewer directors, can claim to have been considered hip for more than a quarter of a century. Yet today Burton is so revered as an artistic visionary that a four-month retrospective of his work is being held at New York's Museum of Modern Art.


Recalling his formative years in suburbia he says: "I was always a loner and spent a lot of time by myself, making up stories and that kind of thing. We lived near a cemetery, so I'd like to go there and wonder about the scary guy who dug graves. I never really hung out with other kids and always found it difficult to really connect with people, in particular, girls. Looking back, it's kinda scary how solitary I was. I think if you've ever had that feeling of loneliness, of being an outsider, it never quite leaves you. You can be happy or successful or whatever, but that thing still stays within you.


"Growing up, I had these two windows in my room, nice windows that looked out on to the lawn, and for some reason my parents walled them up and gave me this little slit window that I had to climb up on a desk to see out of. I never did ask them why. But my parents are dead now, so I guess the question will remain unanswered as to why they sealed me in a room. I guess they just didn't want me to escape. I don't know.
"In movies you kind of work out your issues, but then you realise that those kind of traumatic issues stay with you forever so somehow they kind of keep recurring. No matter how hard I try to get them out of my head, they sort of stay there." No wonder, then, that the quirky film-maker has always been drawn to the dark and gothic, so much so that you speculate whether his trademark tinted shades help enhance that peculiar vision of the world.


If fans need not look too far to find a dark and scary thread running through Burton's work, the film-maker himself insists it's not that simple: "It's easier to look at things in retrospect and see where you were mentally. At the time you're doing things, you're just kind of in that zone of the present, so I think it takes time to see where things lie in terms of that kind of thing.


"People have said to me: 'You either have a lot of confidence or you're completely insane'. I think its somewhere in the middle. I have this reputation for being dark which I don't think I really am," he insists.
"I grew up with no weather and I like the weather in London better. London is the exact opposite of sunny California. It almost seems like it was by accident that I was even born there. I really enjoy all the history in London."
Based on Lewis Carroll's Alice's Adventures in Wonderland and Through the Looking Glass, Burton has taken his big, Hollywood-budget film and colonised it with a uniquely British cast. Aside from Depp's Mad Hatter, Anne Hathaway's White Queen and Australian newcomer Mia Wasikowska's Alice Kingsley, Wonderland is populated by countless Brits, including Bonham Carter's Red Queen, Michael Sheen's White Rabbit, Stephen Fry's Cheshire Cat, Alan Rickman's hookah-smoking caterpillar, Barbara Windsor's Dormouse, Timothy Spall's Bloodhound and Christopher Lee's Jabberwocky. Comics Matt Lucas (playing the dual roles of Tweedledee and Tweedledum) and Paul Whitehouse (the March Hare) have been recruited, as well as Brit thespians Lindsay Duncan, Frances de la Tour and Geraldine James.


Pondering what exactly drew him to take on Alice ~ tackled scores of times on TV and film by countless other film-makers ~ he says: "All these kinds of stories, whether it be The Wizard of Oz or Alice in Wonderland, are an internal journey. I think that's a fairly universal concept. These characters represent things inside the human psyche. I think that's what every child does. You try to work out problems as you go along. Same thing as an adult. Some people get therapy, some people get to make movies. There are different ways of getting this sort of thing worked out. What really interests me is taking some of those classic stories and contemporising them. I've always liked strange characters and Lewis Carroll's characters are among the strangest creatures in literature. I first read the books when I was maybe eight.


"I had a weird connection because I bought the house... I don't know if you're familiar with the illustrator Arthur Rackham? In 1905, he did some amazing versions of Alice in Wonderland, Sleepy Hollow, things that I've been involved with, so I felt there was a weird connection to me ~ the material, and life. It always helps somehow. So today I live and work out of his studio.


"But I've never really liked any of the Alice movies I've seen. The Disney cartoon (1951) is probably the first version I ever saw. There's a 1930s version, and several other TV versions. I never really got into them. It was always a series of a girl wandering around from one crazy character to another. So that was the challenge to me. I tried to give every character their own specific weirdness, so they're all different. I think all the imagery for the characters indicates some type of mental weirdness that everybody goes through," says the film-maker.
Burton's own Alice in Wonderland is an entirely new story, with Wasikowska's Alice returning to Wonderland for the first time since she was a child, and with no memory of her previous adventures there. "Some of it is based on the 'Jabberwocky' poem in one of the stories, although I've used elements of all the books. They don't necessarily follow a specific linear structure. The thing about Wonderland, like any fairy-tale land, there's the good and the bad. One of the things I like about Wonderland is that everything is slightly off, even the good people."


The Independent

 

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THE TELEGRAPH

NOT RADICAL, BUT SOUND

 

The budget, according to the Union finance minister, Pranab Mukherjee, is the government's vision of the future. What this budget does is that it clearly delineates the views of the government about the respective roles of the private and public sectors in achieving the government's objective of inclusive growth. It seeks to create a stable environment within which the private sector will be the leading player in accelerating the overall growth of the economy. The government will be responsible for strengthening infrastructure and enlarging the scope of social security measures. With this in mind, Mr Mukherjee has made only a relatively modest attempt to raise resources through additional taxes, the net amount to be raised being only Rs 20,000 crore. Much of this additional revenue comes from the increase in Central excise taxes, which had been successively lowered in three installments as part of the government's earlier fiscal stimulus package. Since the economy is now in a much healthier state, virtually everyone had expected the rate to go up. Perhaps what may have come as a surprise was the decision to raise taxes on petroleum products excluding liquefied petroleum gas and kerosene. The increase merely reverses the earlier reduction, which was effected when crude prices were significantly higher. There has not been much change in the structure of indirect tax rates, except that tobacco, and some "luxury" goods will cost more. The middle class will benefit because the income tax slabs have been widened. Another additional benefit to individuals comes from the increased deduction from taxable income, available to those who invest in approved infrastructure bonds.

 

The overwhelming bulk of increased government expenditure will be in infrastructure and the social sectors, the latter demonstrating the government's desire to promote 'inclusive' growth. However, the increase in overall government expenditure (both plan and non-plan) is designed to be relatively modest, reflecting the finance minister's desire to restore fiscal discipline. He plans to keep the fiscal deficit to 5.5 per cent of the gross domestic product during the next year, and has even laid down a roadmap according to which the deficit will be brought down to just over four per cent within three years. He plans to achieve the immediate target by raising as much as Rs 40,000 crore through disinvestment of public sector enterprises and an additional amount of Rs 36,000 crore through spectrum auctions. The actual realizations may be significantly lower if the current optimism about the prospects for the economy turns out to be misplaced.

 

This is a budget devoid of frills. But those who know Mr Mukherjee expected none. However, this budget does seek to achieve some worthwhile goals — strengthening infrastructure, promoting social welfare and restoring fiscal discipline. This budget will be judged by the extent to which the government achieves these goals.

 

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THE TELEGRAPH

EDITORIAL

RETURN TO RESPONSIBILITY

PEOPLE WILL BE GRATEFUL THAT THE FINANCE MINISTER HAS LEFT THEM ALONE

ASHOK V. DESAI

 

Congress finance ministers in the past five years followed what in my view were unwise macroeconomic policies. P. Chidambaram ruled the ministry at a time when the economy was booming; so, therefore, was government revenue. If only he had kept expenditure growth slightly below revenue growth, he would have rapidly reduced the fiscal deficit. Instead, he made broadly revenue-neutral budgets, and threw away a chance to put central finances on a sounder basis.

 

But compared to his successor, he was a paragon of virtue. Pranab Mukherjee, who succeeded him in 2008, spent as if there was no tomorrow and winning the general election was all that mattered. He told farmers they did not have to repay loans. He funded the rural employment guarantee programme under which any one person from a rural family could go to a collector and ask for a hundred days' work every year; if he was given work — and even if he was not — he could get Rs 100 a day. In other words, Mukherjee showered money on villagers who had votes. And they gave his party votes; that is why he is back as finance minister.

 

But that electoral bargain cost the country dear. According to the finance minister's figures, the fiscal deficit ratio in the past two fiscal years was 7.8 and 6.9 per cent. But yesterday, he promised to mend his ways, and to bring down the ratio to 5.5, 4.8 and 4.1 per cent in the coming three years. He promised to revert to fiscal sanity, though not too fast.

 

If he keeps this promise, he will do an enormous favour to the economy. For to bridge the fiscal deficit, he borrows chiefly from banks. Being owned by the government and risk-averse, they lap up government debt; they just love it. If it becomes less abundant, however, they will start financing farmers, traders and industrialists. Instead of financing the government's wasteful consumption, they will begin to fund productive investment. That would be an important step towards the eight per cent growth all Congress finance ministers dream about.

 

The finance minister did not have to sweat to achieve the 5.5 per cent deficit. If he had done nothing at all, it would have come down to 5.7 per cent, because the gross domestic product keeps growing and thereby increasing government revenue. If he had only raised the taxes on goods and services that he did, he could have taken the ratio down to less than five per cent. But then he thought that would be going too far; he wanted to become good, but not too fast. To convince us that he was serious, he promised to table a status paper on public debt, and to follow it up with annual statements. He also promised to forsake the tricks he and his predecessor used to try to hide debt, like making oil companies pay subsidy on diesel, kerosene and liquid petroleum gas, and fertilizer companies on fertilizer. He did not promise reforms; as he put it, tax reforms are a process — as slow a process as possible. But meanwhile he promised to reform himself.

 

But why give people hope when you can make them happy? The finance minister raised the income tax brackets to give taxpayers a bit of relief. He reduced the surcharge on corporation tax that companies have to pay, and raised the deductions they earn on research and development — but increased the minimum alternative tax, which should have be abolished. Since the prime minister was once a social scientist, the finance minister gave tax refunds to those who would give money to social science institutions. He exempted charities from tax as long as they remained tiny. He exempted renewable energy equipment from customs duty, and agricultural equipment, as long as it did not compete with home-produced machines.

 

He bailed out Mamata Banerjee. She had commissioned a white paper which showed how old and shoddy the railways' assets were and how much investment was required to repair and renew them. But she did not have the courage to raise fares and rates and earn some money to invest. Instead she went and cried on his shoulder. They are not quite buddies; in the battlefields of Bengal politics they have often fought. Still, Mukherjee gave her Rs 167 billion.

 

The finance ministry is clearly concerned about the financial sector. All its efforts to spread banking into villages have come to nought; banks are simply not interested in chasing borrowers whose debts the government will eventually write off anyway. Now Mukherjee has come up with the idea of having a bank branch in every village with more than 2,000 people; but those branches will be mere shells. The domestic capital market is also not raising much capital for companies. Big companies prefer to raise money abroad, and have to be stopped by the Reserve Bank of India. The small enterprises are perpetually short of capital. So the finance minister announced a financial sector legislative reforms commission, and also a stability and development council, which he called a super-regulator for finance. Why two bodies? It seems that the finance ministry thinks it has a problem, but has no idea how to go about solving it. It has a tried and tested regulator in the RBI, but does not have the confidence to merge all the little financial regulators it has set up into the RBI. It does not know its own mind, and it is doubtful that two more bodies will help it do so.

 

Perhaps the most promising initiative mentioned by the finance minister is one that has nothing to do with his ministry: it is a plan to spread the green revolution to eastern India. The thought behind it is a good one; the states of the east and the Northeast have abundant rainfall and do not require investment in irrigation. Their yields are low and capable of being raised. So the next 100 million tonnes of grain should come from them. They cannot grow oilseeds and pulses; these will be promoted in 60,000 dryland villages. The government has spent so much time and energy giving jobs in villages without thinking about whether there is any work for people to do; all it can think of for them is to dig holes and repair roads — work which will all be erased in the next monsoon. If, instead of trying to give jobs, the government thought of creating a market for what villages can produce, it will do much more good at a lower cost.

 

Pranab Mukherjee had the tax code all ready; he had the report of the 13th Finance Commission on his table. He ignored both of them. He could have done so much; he did not. But he did not do any harm either. Admittedly, he faced a benign economic environment and did not have to take any hard decisions. Still, people will be grateful that he left them alone, and even made some smile. He will not be quicker or bolder in the future; but it is still to be hoped that he will last long enough to implement some of the good ideas he is sitting on.

 

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******************************************************************************************DECCAN HERALD

EDITORIAL

GROWTH GAMBLE

"SAVINGS FROM TAX WILL BE EATEN BY HIGH PRICES."

 

Finance Minister Pranab Mukherjee seemed to have banked heavily on growth prospects of the Indian economy to present a budget that aims to bring back fiscal discipline, to some extent, in the next financial year. And for the common man, though the FM has doled out major benefits in the form of tax savings, he has burdened him with higher prices of petroleum products.


One significant aspect of Mukherjee's budget is the plan to reduce the fiscal deficit in 2010-11 to 5.5 per cent of the gross domestic products (GDP) as against an alarming 6.8 per cent in the current financial. To reduce the gap between the expenditure and income of the government the FM, however, is gambling on growth and capital market. Increase in basic excise duty rate by 2 per cent on a higher GDP growth, which he expects to be 8.5 per cent, is estimated to bring in more tax revenue. He also hopes to raise around Rs 40,000 crore from disinvestment of PSUs and another Rs 30,000 by auctioning licence for 3G mobile. The government's borrowing plan for the next year is also lower than what was expected. While fiscal consolidation is certainly a good objective, there is no guarantee that the effort will succeed. Raising money by selling PSU shares, for example, depends on many factors beyond the government's control, including the state of global economy. Similarly, buoyancy in tax revenue will happen only if all factors responsible for economic growth work in tandem. Mukherjee has made a bold attempt to bring the economy back on a decent growth path knowing fully well that many things can go wrong.


Another positive of this budget is the signal to reform process. Mukherjee has promised to create a new body to handle all foreign direct investment (FDI) related issues. This will help encourage more foreign investment in the country. Similarly, he has promised to open up the banking sector for new private players. He has given firm dates to activate the new direct tax code and migrate to GST system. The budget, however, is silent on the need to cut down subsidy on a large number of items. Mukherjee, perhaps is trying to make people happy by cutting income tax and not touched subsidies keeping an eye on the votes needed to upstage the communist government in West Bengal next year.

 

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DECCAN HERALD

EDITORIAL

CYNICAL APPROACH

"THERE'S NO DESIRE TO SHARE NORMAL TIES."

 

In international diplomacy, it is good to meet and talk. To sustain it as an uninterrupted process is better. It is best if the process results in concrete positive outcomes. In India-Pakistan relations, however, the logic works very differently. Islamabad and New Delhi often think it is good for each of them not to meet or talk, probably better not to get stuck in any firm institutional arrangement for the purpose, and best to avoid producing any breakthrough towards resolving many contentious bilateral issues. In a way, bilateral meets/talks have also become war by other means. So, when this type of war reaches a point of breakdown, they call off the process/cycle. It happened in 1994, 1998, 1999, 2001 and then again in 2008 in the aftermath of the 26/11 Mumbai terror attacks.


On Thursday, foreign secretaries of the two countries ended the last 15 months' frosty phase. But only in a formal sense. Both New Delhi and Islamabad had done enough homework ahead of the meeting and prepared the ground to guarantee that it would be just another instance of war by other means. How else does one explain the fact that Pakistan's foreign secretary Salman Bashir had come armed with that core issue of Kashmir to be placed on the talks' table? Or, for that matter, could India have not avoided handing over three new dossiers on the involvement of Pakistani nationals in the 26/11 attacks? It could have been handed over some time ahead of this meeting or later. It is well-known that these are divisive issues that have hardly helped the two to reduce the so-called 'trust deficit' between them. Aren't there non-core issues of dispute on which the two can work together to initiate a process of trust-building?


The fact is there is as yet no sincere and honest acceptance of the merit in adopting a periphery-to-core approach to resolving the long-festering issues that stand in the way of building normal ties. Indeed, it is doubtful if both the sides share the objective of establishing normal and peaceful ties. Therefore, as in the past, the two sides will keep meeting and talking from time to time as and when they think it is good to do so or when goaded by the others, as a matter of mere diplomatic tactic. Will the two countries ever want to get out of this vicious pattern?

 

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DECCAN HERALD

A TRANSPARENT EXERCISE

THE BUDGET IGNORES THE MASSIVE FOOD INFLATION. HIKES IN PETROL AND DIESEL PRICES WILL FURTHER AFFECT THE FOOD PRICES.

BY S L RAO


This Union budget has focused on inclusive growth, and in the process forgotten high inflation and inflationary pressures. These had been ignored for years, despite high deficits and not transparently declared, to maintain the growth impetus.


Inflation was not due to monsoon failure only as the finance minister says. It was not a result of the 'stimulus' package of expenditures and tax cuts, much of which was mostly of social sector expenditures budgeted in earlier years. Indeed the 'stimulus' in 2009-10 was 2.7 per cent of GDP and 1.8 per cent in 2009-10. Excise and other tax deductions were 0.2 and 0.4 per cent respectively.


Government deficits

Inflation is also due to the large government deficits over many years, the talking up by Agriculture Minister Sharad Pawar of the prices of sugar, wheat and milk, not using the sizeable wheat stocks with government to swamp the market and bring prices down, and allowing large imported stocks of pulses and sugar to lie un-cleared at the docks while their prices were going through the roof.


The 2010 budget has been acclaimed by almost everybody. The Railways budget presented the day before was (largely West


Bengal-centric) and at Rs 94,765 crore with a surplus at Rs 3173 crore, versus annual capital expenditure plan of Rs 41,426 crore, that the optimistic but clueless Mamta Banerjee expects to be funded by borrowings and internal resources, also grossly overestimates revenues. She talks of bringing in the private sector through public-private partnerships, but has no details.


Pranab Mukherjee's budget deserves the accolades. The stock market had gone down sharply after 8 out of 10 earlier budgets, but went up for him. But it ignores the massive food inflation of many months. Hikes in petrol and diesel prices by raising excise duty will further affect food prices especially in the coming summer.
The Kirit Parikh recommendations to free petroleum product prices in line with international prices will further add to inflation. Why then choose this time to woo the middle classes with substantial income tax savings?  This budget has little else to criticise. It also is transparent and does not hide facts as earlier, which the minister alluded to that he did not have "above or below the line" items in calculating the deficit, since all items were taken up front.


There were some tax burdens. The minimum tax on book profits of companies will go up from 15 to 18 per cent. An additional Re1  excise duty on petrol and diesel will add to government revenues, not that of oil companies, and will raise consumer prices by over Rs 2 per litre. Tobacco products will attract more tax. Large cars, suv's and muv's will cost more. Companies will lose 2 per cent out of the 4 per cent reduction in excise duty in last year's 'stimulus.'


Against this there are many incentives:  60 per cent of tax payers, the middle classes, will pay much less tax, since income slabs have been revised upwards; surcharge on tax on domestic companies is to come down by 2.5 per cent; R & D expenditures in own laboratories, national laboratories or those of universities or colleges, and others, will get substantial additional weighted deduction. At last, social science research expenditures will attract similar exemptions. This is the first budget to recognise climate change and attempts to incentivise solar and wind energy as well as cycle rickshaws, and introduces a first time tax on coal, the major carbon emitter. Previous budgets made promises but this one signals intent to implement and sets up high level committees to report on method and feasibility.


The main reason for the stock market's welcome to this budget is the transparent reduction in the fiscal deficit to 5.5 per cent in 2010-11 from 6.9 and 7.8 per cent in the previous two years. Debt to GDP will in line with the Third Finance Commission recommendations fall to 68 per cent of GDP by 2015-16.


GDP in nominal terms, assuming inflation at 6.5 per cent will grow by a nominal 14 per cent, that is 7.5 per cent in real terms. Disinvestment generated Rs 25,000 crore in 2009-10 and is to generate Rs 40,000 crore this year. Revenue of around Rs 35,000 crore from 3G telecommunication auctions is not accounted.
Nutrient based pricing for fertilisers announced earlier, will improve the nutrient balance in agriculture, reduce the subsidy and in due course allow direct subsidies to farmers. Social sector schemes take 37 per cent of the budget. Infrastructure will take 46 per cent of total Plan allocations. Agriculture also sees significant additions.


FDI inflows

The budget speech mentions $29 billion of FDI inflows in 2009-10 (versus $21.1 billion in 08-09. It says nothing about the volatile FII inflows via Mauritius and other places which are exempted from short term capital gains tax. Volatile FII inflows (including Indian havala money) are also through participatory notes. Their effect is to make wild swings in the external value of the rupee, in stoking inflation, and huge swings in stock prices.


The budget speech also says nothing about the large imports of telecommunication and power equipment from China because they are cheap, good quality and get delivered in time. There has been talk of raising import  duties on this imported Chinese equipment.

 

In all, this is a balanced and transparent budget with a few gaps that need filling. It must be commended.

 

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DECCAN HERALD

EDITORIAL

THE IRONY OF IT ALL

THE STUDENTS WERE AMAZED AT HIS KNOWLEDGE OF MATHS AND PHYSICS.

BY KAUSALYA RAMASESHAN

 

When reading the article in your Middle: 'Lest we Forget' there is a reference to a Kannada writer Nemichandra who has a fictitious Jewish scientist fleeing the Nazi Germany and seeking sanctuary in Bangalore and the daughter gets married, and so on.


This triggered off something that happened about that time, not so romantic but very interesting as to what happened to an outstanding scientist who was trying to get out of Germany to escape the holocaust.


Sir C V Raman was the first Indian director of the Indian Institute of Science in 1933. The previous directors were all British and there were still a few of them in the faculty. It was about this time many well known scientists were trying to get out of Germany from Hitler's persecution. Raman knew many of them who were doing outstanding science and invited them to come and work at the institute.


He wrote to Erwin Schrodinger a physicist and the discoverer of 'wave mechanics' and a Noble prize winner. He was also a great philosopher and the author of 'The meaning of life.'


He replied to Raman his inability to come as he had just accepted an offer from Ireland. He wrote that he had unfortunately "missed the opportunity of being in the land of The Upanishads."


Raman also invited Max Born an outstanding theoretical physicist and Quantum Mechanics. He invited him to come and work in the physics department for six months. He came with his wife Heidi who fell in love with India, especially the Ramakrishna Order and felt that in her previous incarnation she was an Indian.
Born interacted with the students and they were all amazed at his knowledge of mathematics and physics. After some time Raman decided to offer a permanent post. Born decided to accept the offer.


At the council meeting much to the surprise of everyone a professor of the engineering faculty, an Englishman spoke in an insulting manner referring to Max Born as a second rater who has been driven out of his country-Germany and could not be a member of the faculty of the Indian Institute of Science! After this very derogatory and insulting remark Born and his wife wanted to leave Bangalore.


 The irony of it all was Born  was offered a professorship immediately at the Cambridge University, England by Lord Rutherford the nuclear physicist who in 1908 got the Noble Prize for Chemistry. Max Born acquired the citizenship of Britain within a couple of years and in 1954 got the Noble Prize for Physics!

 

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DECCAN HERALD

EDITORIAL

BE MY VALENTINE

WE CELEBRATED THE LAST ST VALENTINE DAY (SUNDAY, FEB 14) BY WELCOMING THE FIFTH MUSLIM GIRL IN OUR EXTENDED FAMILY.

BY KHUSHWANT SINGH


The first was Indian; the second Egyptian, the next two Pakistanis; and the 5th an Iranian. As if this was not enough to boast about, the more significant aspect of these unions was that besides initial reservations, parents of parties might have had, they accepted the couple with complete affection. There were no conversions from one faith to another as all of us were agreed that conversions are demeaning another's beliefs. Saint Valentine's Day celebrations were ample proof that inter-religious marriages are a healthy departure from rigid matrimonial rules of bygone a era.


As I said, the most recent addition to the family is an Iranian. She is a lady doctor, practicing in the United States. She arrived with her parents, members of her family and close friends a week before her nuptials. The six days of receptions hosted by the bridegroom's grandmother, parents and cousins were meant to get them to know their new Sikh relations.


There was feasting, drinking and dancing and singing of Iranian and Punjabi wedding songs. There was a mehndi ceremony when all the girls had patterns of henna drawn on their palms. The next morning there was Anand Karad according to Sikh rites.


 The couple had to be put through a few rehearsals of how to conduct themselves as neither of them is Sikh. The bridegroom is my brother's grandson whose father is a Bengali Hindu married to my niece. The bride, a Shia Muslim. They will have to go through Hindu rituals when they visit the father's family in Kolkata and a Muslim Nikah or a civil marriage in the United States where they intend to live.


Shrinking world

All this may sound unrealistic to most of my readers who had arranged marriages and plan doing the same for their progeny. They are in for many surprises to come. The world is shrinking fast and people of different races, religions and languages are learning to live as one community. We have to shed the Khap panchayat mentality riddled with gotras, castes and religious differences, and face realities of life. When young people fall in love, they don't give a damn for what other people may have to say: they simply get closer to each other, and if possible, get married. Love crosses all  barriers and always wins. St.Valentine's Day is an annual reminder of Love's supremacy.


Not many of the present generation would know very much about Hardit Singh Malik. He was the most distinguished Sikh of his time and had remarkable career as a sportsman, civil servant and diplomat. He was born into a well-to-do Sikh family of Rawalpindi in 1894. After schooling in Pindi for a few years, he proceeded to England for further studies. He was then only 14. When the First World War broke out in 1919 he volunteered for service in the French Redcross and ran an ambulance from the war front to different hospitals in France. After two years he returned to England and joined Royal Air Force, the first non-Brit with turban and beard to become a fighter pilot.


He took part in dog-fights with German War planes over Germany and France. His plane riddled with hundreds of bullets of which two pierced his legs crash-landed in France and while doing so broke his nost. After canvalescing for many months in England hospitals he was back in the battle field. When the war ended, he joined Balliol College Oxford. He played cricket and golf for the university. As soon as he finished college he was selected for the Indian Civil Service and posted to his home state. He returned home to India after 11 years abroad. He married the younger sister of his elder brother's wife. Both girls came from a Hindu Arya Samaj family. Both turned devout Sikhs. In their homes the days began and ended with recitations from the Granth Sahib.

Malik served in many districts of Punjab before he was appointed Prime Minister of Patiala. He stayed in the post for three years till it was merged in Punjab in 1947. Pandit Nehru appointed him India's first High Commissioner in Canada. He stayed in Ottawa for three years before taking over as Ambassador of India in France. After a life-time in service in India and abroad, he retired to his newly built home in New Delhi.

Passion for golf

Malik- had a passion for golf. He was seen at the Delhi Golf Club every afternoon till almost the end of his life. He  once expressed the will to die on the golf course. That was not to be. He had a massive heart attack in 1984. He recovered to resume playing golf. It did not last very long. A second attack in October 1985 proved fatal.
Malik had no intention of writing his autobiography. He was persuaded by his wife and children to do so. It lay untouched for many years till his daughter Harjis Malik took it upon herself to edit it and have it published. A Little Work, A Little Play: The autobiography of H S Malik (book wise) is now available in the market. It has an introduction by Pearson who he befriended in Oxford who later became prime minister of Canada. It will be a source of inspiration to the present generation specially to young Sardars who will learn how a person can be both devoutly religious and yet gain worldly success.

 

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******************************************************************************************THE NEW YORK TIMES

EDITORIAL

GOV. PATERSON'S NEXT STEPS

 

Gov. David Paterson of New York served up one of the great political understatements on Friday when he talked about the "accumulation of obstacles" to his campaign for election. He did the right thing — the only thing — by dropping out of the race, but that is not going to make his troubles go away.

 

Attorney General Andrew Cuomo is investigating the intervention by Mr. Paterson's administration

in a domestic altercation involving one of the governor's aides. And there are many other things

Mr. Paterson should be doing instead of running a quixotic campaign.

 

Mr. Paterson has 308 more days at the helm of a big state in the midst of disruptive and tough times. There is an $8 billion hole in the state budget, which must be balanced by March 31. And the abysmal ethical culture in Albany is still desperately in need of reforming — from a freewheeling Legislature that lives by its own twisted rules, to a State Police force that clearly needs a housecleaning, to, apparently, the governor's office itself.

 

Mr. Paterson's highest priority must be the budget. It has to be cut carefully, sensibly and fairly to make sure that those who can least afford it do not bear an unequal burden. Now, at least, Mr. Paterson does not have to worry about union television ads or special-interest lobbying. He should make certain that Lt. Gov. Richard Ravitch is his top adviser on the budget and a participant in every important budget meeting. Mr. Ravitch is a seasoned public official who helped New York City through its rough patch in the 1970s. He has the knowledge and gravitas to deal with these times.

 

The governor is losing clout by the day, but he still has a chance to use the political levers available to any New York governor. He can threaten to pluck lawmakers' favorite items out of the budget, for example, and he still has the power of the veto. Those powers, plus the freedom from political blocs and their agendas that dropping out of the race provides, could help him push through a real ethics reform package.

 

Mr. Paterson is not the only elected leader in New York who should be worrying about something

other than the election. Sheldon Silver, a leading Democrat and the Assembly speaker, and the leading Republican in Albany, Dean Skelos, the Senate minority leader, both need to recognize that the state is in a real emergency. John Sampson, the Democratic conference leader in the Senate, and others should not use this time for more of the mischief they got up to last year. New Yorkers are watching as never before.

 

Another thing that needs watching is the State Police. Mr. Paterson's withdrawal from the campaign came after news of his involvement in the handling of accusations of domestic violence against David Johnson, who once was the governor's closest aide. It was inappropriate enough that Mr. Paterson spoke to the victim, but there are even more disturbing questions about the involvement of the State Police, and especially the unit protecting the governor.

 

Members of the governor's security detail acknowledged meeting with the woman after the altercation. They said they wanted to offer counseling and talk about her "options." If that's true, it's impossible to imagine how it could have been appropriate. But the woman testified in court that state troopers were "hounding" and "harassing" her to drop the charges.

 

Mr. Cuomo investigated the State Police last September and found political interference at the highest levels going back to George Pataki's administration. The job of the governor's security detail is security, not public relations or, worse, cover-ups.

 

With all these challenges, it's hard to see how Mr. Paterson can redeem himself, but at least he has time to show political courage, instead of weakness, or worse.

 

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THE NEW YORK TIMES

EDITORIAL

INDIA AND PAKISTAN (BARELY) TALK

 

Low expectations for the first talks between India and Pakistan since the 2008 bombings in Mumbai were disappointingly on the mark. After the two sides met Thursday, Foreign Secretary Nirupama Rao of India said that she agreed only to "keep in touch" with her Pakistani counterpart, Salman Bashir. No future discussions were scheduled.

 

That is not enough. Not for the United States, which needs tensions eased so Pakistan can focus more on fighting the Taliban and other extremists. And especially not for India and Pakistan.

 

India's prime minister, Manmohan Singh, showed remarkable restraint when he decided not to lash back at Pakistan after the Mumbai attacks. But the situation is too dangerous to depend on one man's restraint. For the sake of both countries' security, they need a sustained dialogue and a sincere common effort to build trust.

 

The two have much to talk about, including terrorism, their nuclear rivalry, Kashmir and their counterproductive competition for influence in Afghanistan.

 

As Thursday proved, progress won't be easy. India is focused solely on Pakistan's support for extremist groups trying to force India out of Muslim-majority Kashmir. Pakistan, which certainly must do more to rein in extremists, wants a broader dialogue, with the priority being Kashmir's future. Neither nation is showing interest in adding Afghanistan to the agenda. They should.

 

While the Afghan Taliban — nurtured by Pakistani intelligence as a hedge against India — is battling American and NATO forces in Afghanistan, the Pakistan Taliban is fighting to bring down the Pakistan state. Lashkar-e-Taiba — founded with help from Pakistani intelligence to fight Indian rule in Kashmir — has been held responsible for the Mumbai bombings and is attacking other Indian targets.

 

In 2007, after three years of secret negotiations, the two sides were reportedly close to a deal to create an autonomous, demilitarized region in Kashmir. That ended when President Pervez Musharraf of Pakistan resigned in 2008. The initiative should be revived. Meanwhile, the two governments should share information on troop movements in Kashmir and encourage trade and people-to-people exchanges. Talks on water and environmental issues are another way to seek common ground.

 

The administration knows how important it is for India and Pakistan to lower tensions. At India's insistence, it has decided to take a low profile role, nudging the two sides discreetly back to the table. It should nudge harder.

 

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THE NEW YORK TIMES

EDITORIAL

CLUELESS IN KENTUCKY

 

Kentucky has lost about 60,000 jobs since the end of 2008. In December, its unemployment rate stood at 10.7 percent, the highest since 1983. So what exactly is going on in the minds of Kentucky's two Republican senators, Mitch McConnell and Jim Bunning?

 

This week, Mr. Bunning single-handedly shot down a one-month extension of unemployment benefits, along with a federal subsidy for the unemployed to maintain health coverage. Two weeks earlier, Mr. McConnell, the minority leader, objected to a one-week extension to give senators time to draft a longer-term package.

 

It should be a no-brainer to extend unemployment insurance when around 1 out of every 10 workers is unemployed. Standard unemployment benefits end at 26 weeks, yet 6.3 million workers have been out of work for more than 27 weeks. Congress has provided a series of extensions, and without another one, 400,000 people will lose their benefits in a matter of weeks.

 

Senator Bunning once cared about the unemployed. When the benefit was due to expire in November, he joined a unanimous vote to extend it until the end of February. "Kentucky has been hit hard by the current economic downturn," he said at the time. It still is, but Mr. Bunning refused to consider the extension unless it was paid for with funds from the fiscal stimulus plan. For years, Mr. Bunning didn't seem to have a problem with blowing up the deficit for the Iraq war and tax cuts. Now he's a deficit hawk when it comes to average Americans.

 

Maybe he's preoccupied. At one point during a debate on the issue Thursday night, he complained about missing the Kentucky-South Carolina basketball game.

 

Democrats must now defeat Republican attempts to lace the benefits extension with things like protecting the rich from the estate tax. To avoid a repeat of this nonsense every few weeks, unemployment benefits should be extended until the end of the year. Perhaps by Monday somebody can educate Senators Bunning and McConnell about Kentucky's unemployment rate.

 

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THE NEW YORK TIMES

EDITORIAL

THE MAN IN WHITE

BY LAWRENCE DOWNES

 

There's a dark and a troubled side of life. There's a bright and a sunny side, too, and the trick — if you're an artist of any depth — is not to get stuck on one side or the other. That can be hard to do, harder if you're dying.

 

Johnny Cash pulled it off through a series of late recordings made when he was sick and frail. The latest and probably last, "American VI: Ain't No Grave," comes more than six years after he died of complications from diabetes in 2003.

 

On some of these records, he's a wreck, his voice quavering. Covering songs like "Hurt," by Nine Inch Nails ("I hurt myself today/to see if I still feel"), the Man in Black seems to be summoning his last shreds of defiance before the light flickers out. Except the light doesn't. A remarkable thing about the new album is how free, how unhopeless it is. It saves its best surprise for the end — the last song, placed there at Cash's instruction, a farewell song, of course, but not one by the Carter Family or Hank Williams.

 

It's "Aloha 'Oe," by Hawaii's last monarch, Queen Lili'uokalani. It's melancholy and sweet, but it has become a twangy tourist joke, no thanks to Elvis. Some critics will listen to Cash's gentle version and hear schmaltz as he steps gingerly over the unfamiliar Hawaiian words, accompanied on steel guitar by Cowboy Jack Clement.

 

Cash heard something else. What, exactly, I don't know, but I can guess. It's a sound that the blues guitarist B.B. King heard as a young man and tried mightily to imitate. It's the sound — sweet but not sticky, sad but not morose, troubled and sunny — that pervades Hawaiian music. "A steel guitar is one of the sweetest sounds this side of heaven," Mr. King said.

 

Cash, who would have turned 78 on Friday, was a serious believer and a student of Christianity who once wrote a novel, "Man in White," about St. Paul. In its preface, he tells of a dream he had the day before his father's funeral. He saw his Daddy get out of a long silver car, looking splendid in a blue suit, white shirt and maroon tie, happy in the hereafter. He told his mother, who smiled "a smile of joy that comes from knowing a loved one is at peace and with God."

 

As his last word, Johnny Cash chose a song that says goodbye and hello, choosing as good writers do, to show, not tell, the sweetness of a good death.

 

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THE NEW YORK TIMES

EDITORIAL

TYLER PERRY'S CRACK MOTHERS

BY CHARLES M. BLOW

 

Mo'Nique is a favorite to win an Oscar next Sunday for her powerful and disturbing portrayal of an abusive mother in the movie "Precious."

 

If she wins, I may grit my teeth at the depraved depiction, but at least her character is merely juxtaposed with the crack scourge and isn't in fact an addict. That's heartening since the crack-addicted black mother has recently made a curious comeback.

 

There was a time when this character was more relevant: in the 1980s and 1990s when the crack epidemic plunged whole communities into violence, fear and chaos. (To be fair, "Precious" is set in the 1980s.) But this character now feels like a refugee of time — and discordant with the facts on the ground.

 

In the 1980s, President Ronald Reagan pushed the crack-baby myth. In 1991, "Boyz in the Hood" and "New Jack City" were released. In 1995, the late Tupac Shakur released "Dear Mama" in which he rapped: "Even as a crack fiend, mama/You always was a black queen, mama." Part of its poetry was that it was impossible to tell if this was an address or a lament.

 

And then there was Whitney Houston's breathtaking decline, and her infamous 2002 "crack is whack," "I want to see the receipts" interview with Diane Sawyer. Receipts for crack, Whitney? Poor thing.

 

That seemed a sort of cultural end cap, and data suggest that it was with good reason.

 

A National Survey on Drug Use and Health, a report released last week, found that young black adults ages 18 to 25 years old were less likely to use illicit drugs than the national average. (For those doing the math, you're right. Those are the children born during the crack epidemic.)

 

Also, a 2007 study of college undergraduates published in the Journal of Ethnicity and Substance Abuse found that young blacks' rates of illicit drug use was substantially lower than their counterparts, with black women having the lowest rates of all.

 

Furthermore, data from the Substance Abuse and Mental Health Services Administration revealed that of the total admissions to treatment services for crack use, blacks outpaced whites in 1996, but whites outpaced blacks in 2005 for those under 30 years old.

 

Then came Tyler Perry with his inexplicable fascination with this cliché, and his almost single-handed revival

of it.

 

In the last five years, he has featured a crack-addicted black mother who leaves her children in two of his films and on his very popular sitcom, "House of Payne." (In one of the films, the character is referred to but never seen.) In another film, a main character is a drug-addicted prostitute. And in yet another, a mother leaves her family for the drug dealer.

 

It should be noted that "Precious" is "co-presented" by Perry.

 

Let it go, Mr. Perry. These never-ending portrayals perpetuate the modern mythology that little has changed when much has. Even for Whitney.

 

Correction: An earlier version of this column incorrectly described Mo'Nique's character in the movie "Precious." She was not a crack addict.

 

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THE NEW YORK TIMES

EDITORIAL

PATERSON ON THE BRINK

BY BOB HERBERT

 

It's not like David Paterson had a choice. His decision to give up on a bid for election to governor in his own right was a decision to scrap a campaign that had no real support and absolutely no chance of succeeding. The bottom had completely fallen out of his election bid, and the question now is whether the same is true about his governorship.

 

When you are the first black governor of New York and black elected officials and members of the clergy are gathering to light the path to your exit, you are in deep, deep trouble.

 

There are two immediate questions for voters: Why did the governor select David Johnson, a man with a troubled background and no demonstrated command of state government policies or practices (at one time he was the governor's driver) to be his most powerful, most trusted adviser? And why, in the name of heaven, did people close to the governor, and perhaps even the governor himself, intervene to protect Mr. Johnson from an ugly domestic violence allegation?

 

These questions go to the heart of whether Mr. Paterson is suited to serve out the remaining 10 months of his term as governor. He is responsible for staffing his administration with the best people and for seeing that the great power of state government is used on behalf of the interests of ordinary New Yorkers, not as a club to protect his cronies.

 

Domestic violence was supposed to be an issue that Mr. Paterson knew something about. He was an advocate of tougher laws to protect victims and has not been shy about criticizing Hiram Monserrate, who was expelled from the State Senate after being convicted of misdemeanor assault for dragging his companion down an apartment building hallway.

 

The governor described the victim in that episode as "a classic case of a woman who was intimidated."

 

But when Mr. Johnson was accused of attacking his longtime companion — stripping off most of her clothes, choking her, slamming her against a dresser, preventing her from calling for help — state officials raised a protective cordon around Mr. Johnson, not the alleged victim. Even as the frightened woman was seeking an order of protection from the courts, she was being urged by powerful state forces to drop the whole thing.

 

When she failed to show up in court just one day after a conversation with the governor himself, the charges against Mr. Johnson were thrown out.

 

There is something terribly wrong with this picture. For one thing, the case was a local police matter, but the woman complained to the court that the State Police had been harassing her, trying to get her to change her mind about seeking an order of protection and pursuing her case against Mr. Johnson.

 

The State Police? It turns out, according to sources cited by The Times on Friday, that Maj. Charles Day, the head of the governor's own State Police security detail, personally contacted the woman. This is an outlandish abuse of State Police power. The police are supposed to be in the business of protecting crime victims — or alleged crime victims — not intimidating them.

 

The governor's top criminal justice adviser, Denise O'Donnell, was not at all hazy about this. She quit the administration on Thursday, saying:

 

"The fact that the governor and members of the State Police have acknowledged direct contact with a woman who had filed for an order of protection against a senior member of the governor's staff is a very serious matter. These actions are unacceptable regardless of their intent."

 

Mr. Johnson was not arrested as a result of the woman's complaint, which is not unusual. She alleged that he choked her, but choking is not a crime in New York unless there is evidence that the victim was injured. The charge raised against Mr. Johnson — and later dropped — was second degree harassment. That's not even a misdemeanor. It's a violation, the equivalent of a disorderly conduct charge.

 

But it was quite enough to get the big guns in state government rallying to Mr. Johnson's side, and that should cause us to take a much closer look at people like Major Day, and the State Police superintendent, Harry Corbitt, who learned of the encounter between the woman and Mr. Johnson within 24 hours. He doesn't seem to get that the State Police intervention was improper. Nor has he mastered the concept that cops are supposed to protect victims, not perps.

 

Mr. Paterson's job now is to reassure the public that his overall judgment is sound and that he understands what was wrong about his behavior, Mr. Johnson's behavior and the State Police's behavior in the domestic violence case.

 

If he can't do that, then he should hand the keys to the governor's residence to the next in the line of succession, Lt. Gov. Richard Ravitch.

 

Gail Collins is off today.

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THE NEW YORK TIMES

EDITORIAL

PUTTING THE COAST GUARD OUT TO SEA

BY LAWRENCE J. KORB AND SEAN E. DUGGAN

 

Washington

DESPITE the pressing need to cut government spending, under President Obama's spending proposal all the nation's military services are set to see their budgets increase — all, that is, except the Coast Guard, the nation's chronically overburdened maritime force, responsible for everything from global search and rescue to port security.

 

Under the president's proposal, the Coast Guard's budget will decline by 3 percent, to $10.1 billion, smaller than many medium-sized agencies under the other services. It's a puzzling decision, considering the increasingly critical role the Coast Guard plays in protecting the national security interests of the United States — and considering that many much less vital military programs have been spared.

 

Beyond combating drug smuggling and international piracy, the 41,000-member Coast Guard is our nation's first line of defense against nuclear terrorism. If someone wanted to detonate a nuclear bomb in this country, would hebe more likely to launch it on a missile with a return address, or would he try to smuggle it in a container through one of our ports? The latter, obviously — and the Coast Guard's Port Security Units would play a pivotal role in stopping him.

 

The Coast Guard is also our nation's first responder to natural disasters and maritime emergencies, both at home and abroad. The service played a vital role in the American assistance effort after the 2004 Asian tsunami; at home, it rescued nearly 25,000 people and medically evacuated close to 10,000 after Hurricane Katrina struck the Gulf Coast. Coast Guard cutters were also the first American ships to arrive after the devastating earthquake in Haiti last month. It helped evacuate the first Americans and has continued to provide crucial search and rescue and medical assistance there.

 

All this activity is already straining the Coast Guard budget. Most of the 19 cutters that were sent to Haiti eventually needed help themselves — thanks in large part to their age, 12 of them suffered severe problems at sea, and three required emergency dry-dock repairs. That's not surprising, since the average "high endurance" cutter is 41 years old, compared to 14 years for the average Navy ship. The fleet's deteriorating condition, in the words of the Coast Guard commandant,Adm. Thad Allen, is "putting our crews at risk, jeopardizing the ability to do our job."

 

True, the deficit means painful cuts have to be made somewhere. But consider some of the programs that haven't been cut, like the missile defense program. Although it has yet to be successfully tested under realistic conditions, it will receive more funds in the proposed 2011 defense budget than the entire Coast Guard.

 

Why has the Obama administration taken to slashing the budget of such a critical military service, while allowing the budgets of other defense programs and of the four other services to increase significantly? Because unlike the programs and services grouped under the Department of Defense, the Coast Guard is part of the Department of Homeland Security, and therefore must compete for scarce dollars with its 22 other agencies, including the Federal Emergency Management Agency and the Transportation Security Administration. The Pentagon, in contrast, receives virtually unconstrained defense funding, which has doubled in real terms in the last 10 years.

 

The solution is simple: we need a unified national security budget. That would let lawmakers see that, for example, the F-35 Joint Strike Fighter, a next-generation aircraft that is not needed in the military operations in Iraq and Afghanistan, is projected to consume more money than the entire Coast Guard in 2011. Yet the F-35 program has suffered so many cost and technical problems that Secretary of Defense Robert Gates just fired its manager. Such inefficiencies and disparities are obvious when compared directly, but they get blurred when the Coast Guard and the other services are considered under different budgets and by different sets of Congressional committees.

 

Under a unified budget, savings garnered by cuts in a defense agency could be easily moved over to finance a homeland security agency. For instance, part of the Navy's $16.1 billion shipbuilding budget for 2011 includes an extra $2.7 billion Virginia-class submarine, an arguably unnecessary expense in the post-cold war world. That money could help the Coast Guard buy new ships before large parts of its current fleet are forced into retirement.

 

There is no doubt that this nation must reduce its discretionary spending if it is to get its deficit under control. But asking the Coast Guard to reduce its budget by 3 percent and forcing it to reduce its personnel and ships, while allowing the Pentagon to spend tens of billions of dollars on unnecessary and troubled programs, will only further degrade our national security.

 

Lawrence J. Korb, an assistant secretary of defense in the Reagan administration, is a senior fellow at the Center for American Progress, where Sean E. Duggan is a research associate.

 

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THE NEW YORK TIMES

EDITORIAL

LET THE S.E.C. HELP ITSELF

BY JOEL SELIGMAN

 

Rochester

WHAT is the most effective way to prevent another financial scandal on the scale of Allen Stanford's alleged securities fraud or Bernard Madoff's Ponzi scheme? No other single reform would accomplish more than allowing the Securities and Exchange Commission — the federal agency responsible for full disclosure of corporate information and the regulation of stock exchanges, broker-dealers and investment advisers — to fund itself through corporate fees.

 

Because the commission is financed by Congressional appropriations, it has long been trapped in a budgetary vise, without enough staff members to police illegal activity. After a legendary start in the New Deal era, when the commission was considered a model independent regulatory agency, its staff declined from 1,678 in 1941 to 667 in 1955.

 

The S.E.C.'s capacity to review corporate filings and market activity deteriorated, and, predictably, the late 1950s were marked by a resurgence of fraud, particularly on the American Stock Exchange. In response Congress added 250 staff members in 1961 and broadened the commission's jurisdiction, including a new program to investigate insider trading, which helped lead to a significant rebound in its performance.

 

Nevertheless, the binge-and-purge diet continued. From 1993 to 2000, the S.E.C. staff grew by about 1 percent per year, even though the value of securities traded on all exchanges tripled and initial public offerings approximately doubled. The result? According to a 2002 Senate report, between 1999 and 2002 the commission's Division of Corporate Finance had failed to review 53 percent of Form 10-K annual reports — the single most important disclosure document for both investors and markets. The last full review of Enron's Form 10-K was in 1991 — ten years before the company collapsed.

 

The Obama administration has requested long overdue increases in both budget and staff for the S.E.C., and has plans to add as many as 374 employees. Those increases are vital, but because they're dependent on Congress, there is no guarantee that they will be sustained.

 

Instead, the commission should finance itself — much as the Federal Reserve and the Federal Deposit Insurance Corporation do today through fees on banks. These two pivotal financial regulatory agencies thus have the flexibility to adjust their own staff.

 

Such a self-financing system would not mean higher fees; the commission collects far more in fees from corporate filings and stock market trading than it gets from Congress. But those fees go back into the federal coffers. In 2007, the S.E.C. brought in $1.5 billion, almost twice its 2007 budget. Nor would it undermine Congressional oversight. Like the Fed and the F.D.I.C., the commission would continue to report to Congressional committees and its officials would be subject to Senate confirmation and Congressional legislative direction.

 

All that would change would be the S.E.C.'s ability to effectively review key filings and to investigate the vast array of public companies under its jurisdiction. In the grand scheme of Washington budgets, that would not require a lot of money — but it would arm the commission against the next wave of would-be Bernie Madoffs.

 

Joel Seligman, the president of the University of Rochester, is the author of "The Transformation of Wall Street: A History of the Securities and Exchange Commission and Modern Corporate Finance."

 

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 I. THE NEWS

EDITORIAL

WIDENING CHASM

 

The foreign-secretary level talks in New Delhi have yielded little that is positive. The two sides felt that they had insufficient common ground to even issue a joint press briefing; there was no agreement on any issue and only a vague agreement to 'remain in touch'. There has been media comment on the 'good chemistry' between Salman Bashir and his Indian counterpart Nirupma Rao, but this on its own means nothing at all. The normalcy of ties being sought is still evasive. India has remained almost entirely focused on the issue of terrorism, with two new dossiers handed over to Pakistan. This, of course, is a disappointing outcome. The talks offer from New Delhi had generated a great deal of excitement. Indeed, one wonders why it was made if the Indian side had no concrete plans to make an attempt to move ahead on key issues or at least set up a platform on which the future process of dialogue could stand. Mere photo opportunities are, after all, meaningless. We wonder if New Delhi, under pressure from Washington and elsewhere, was merely trying to establish an image as a 'good' guy rather than a nation that had spurned all previous efforts from Pakistan to establish an improvement in ties.


Regardless of the gloating from the hawks and others who had been eager to see the talks fizzle out and fail, we should, however, hang on to hope. At least some kind of contact has been established. Perhaps, in time, it will grow. But if this is to happen with any degree of satisfaction, it is important that the two sides develop a means to move closer on terrorism and the issues related to it. So far the gap stays wide open. We know that Kashmir and Kabul are in many ways linked. India needs to realise this and find realistic ways to address the question of terrorism and the tensions it generates. In the meanwhile, the effort to normalise relations must continue in both capitals. There is a great deal to be gained from this. The evidence from the encounter in New Delhi suggests a need for more work behind the scenes. The base for dialogue must be laid. This means the building up of trust which, for now, seems to have faded away. The process will take time. But it must be attempted so that we can move towards the improvement in ties that would better the future of the entire region.

 

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I. THE NEWS

EDITORIAL

FAMILIAR WORDS

 

We have heard words that have become extremely familiar. On a visit to Balochistan the president has spoken once more of establishing trust between the centre and the province and the possibility of opening up dialogue with exiled leaders. The question is why, so far, this process has not moved beyond rhetoric. Promises on their own, without any implementation, mean nothing at all. Since it came to power two years ago, the PPP has spoken of resolving the issues of Balochistan. A few months ago a package for the province was announced amidst much fanfare. Much of what was said in it was accurate and correctly identified key concerns. But the fact remains that on the ground very little has happened.


Even all the 'missing' people of Balochistan have yet to be freed. There have been limited initiatives in other sectors. With each passing month, the unrest in the province grows. The targeted killings we have seen on ethnic grounds are proof of this. Things could worsen as the disquiet and the anger grow. The fact is that Balochistan – and with it the country – faces a crisis. Urgent measures are needed. President Zardari's latest outpourings, and his insistence that he 'understands' the problems of the province, serve no real purpose at all. The furore created by the security arrangements surrounding his visit, which led to a woman caught up in a traffic jam giving birth in a rickshaw, has in fact dominated all else. Little has been achieved in real terms, and because of this the issues of Balochistan will simmer on across the sandy terrain of the federation's largest unit.

 

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I. THE NEWS

EDITORIAL

WHAT A WASTE

 

We are a nation seemingly engulfed by a tide of waste, and the cities that expand by the month are generating waste faster than it can be carted away. Land-fill sites are polluting the water table and the burning of wastes often produces toxic fumes harmful to man and beast alike. The City District Government of Lahore decided almost two years ago to tackle a part of its waste problem by installing a Refuse-Derived Fuel plant, recycling rubbish into a cheap fuel. The cost of the project was at least Rs300 million, but it was expected that the outlay would be recouped as revenue would be generated for the government by the sale of fuel principally to cement factories. It was expected that the RDF plant would emulate the success of similar projects in Europe where RDF has largely replaced coal and oil in the manufacture of cement.


But it was not to be. The CDGL has now abandoned the project, the foreign investors have taken flight in the face of fears for their lives as well as their capital; and the foreign technicians and experts that were needed to get the project up and running have likewise left. The project had been dealt a blow six months ago when the Punjab Local Government Department prevented the CDGL from launching the RDF project on its own claiming that it had neither the capacity nor the expertise to launch and run an operation as sophisticated as an RDF plant. This seems an odd ruling as a month ago the Punjab government gave permission for all five of the CDGs to launch RDF projects by themselves – so why not Lahore? Gujranwala has commenced advertising for the project, and Rawalpindi, Multan and Faisalabad are working on the final details of similar schemes. Municipal waste is an eternal headache globally. It is expensive to collect and difficult to store or dispose of without creating yet more hazardous waste as a by-product of the disposal process. RDF plants are a proven technology, and when commissioned well within our technical capacity once staff are appropriately trained. An opportunity wasted for Lahore; and we wonder at what price?

 

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I. THE NEWS

CONSENSUS ON THE COD

ARIF NIZAMI


The recent breakfast meeting between PML-N supremo Mian Nawaz Sharif and Prime Minister Yusuf Raza Gilani has considerably reduced the political temperature in the country. However, there remain differences bordering on a threat perception between the PPP and the PML-N, the main opposition party. Whether Mian Nawaz Sharif still considers President Asif Ali Zardari "the biggest threat to democracy" remains to be seen.


Both parties swear by the Charter of Democracy signed with much fanfare almost four years ago by the late Ms Benazir Bhutto and Mian Nawaz Sharif in London. The prime minister after the breakfast meeting announced that the Constitutional Reforms Committee headed by Senator Raza Rabbani will complete its package of amendments based on the CoD and repeal of the 17th Amendment by March 23.


In the wake of broken promises this sounds too good to be true for Mian Nawaz Sharif. He is still skeptical whether the government will walk the talk. It is not yet clear whether the package will be merely presented in parliament before the announced March 23 deadline or it will also be approved by then. Theoretically, if consensus is evolved in the committee amongst the major parties, fast-tracking it through the parliament should not be a major problem. But there can always be the proverbial slip 'twixt the cup and the lip.


The CoD, a comprehensive document, provides a solid framework for laying the foundations for a lasting federal parliamentary democratic polity. What bigger tribute can President Asif Ali Zardari pay to the legacy of his late wife than implementing this historic document in letter and spirit? Such a move will put the ball squarely in the court of Mian Nawaz Sharif, who pays lip service to democratic ideals but has rarely lived up to them.

Judging from the slow pace of institutionalising democracy in the past two years, the basic message of the CoD that "military dictatorship and the nation cannot exist" seems to be lost on all and sundry. Have our politicians absolved themselves of their basic responsibility, as the CoD states, to set an alternative direction for the country in the light of the "democrat par excellence," the Quaid-e-Azam, is open to question.


The recent spate over appointments and elevation of judges to the superior judiciary would have been completely unnecessary if the CoD had already been in place. Admittedly, the present system is too skewed in favour of the judiciary and hence is indeed flawed. Some of the objections raised by the executive about certain appointments to the superior judiciary are well merited. Under the present dispensation, however, the chief justice of Pakistan is perfectly within his rights to apply a soft veto over appointment and elevation of judges.

Belatedly, the Rabbani Committee has agreed upon the mode of appointment of judges of the superior courts in the light of the CoD. It lays down a comprehensive procedure based upon setting up two commissions, judicial and parliamentary, for the purpose. The proposed system envisages a commission headed by a chief justice who has not taken oath under the PCO and has as its members non-PCO chief justices of the High Courts, presidents of the Supreme Court Bar Association and High Courts Bar Associations, the federal minister for law and the attorney general.


The proposed commission would forward three names for each vacancy to the prime minister, who would forward one name for confirmation to a joint parliamentary committee for confirmation through a transparent public hearing process. The joint parliamentary committee would comprise 50 per cent of its members from the treasury benches and the remaining from opposition parties, based on their respective strengths in parliament.

It is not clear whether the proposed system of judicial appointments makes an exception in case of the incumbent chief Justice of Pakistan and those of his colleagues who took oath under the PCO but later absolved themselves of their earlier misstep when they refused to do the same after the sacking of Chief Justice Iftikhar Chaudhry. Whether such a circuitous system of judicial appointments will be workable in actual practice is also open to question.


Interestingly, the CoD also recommends replacement of the "politically motivated NAB" with an accountability commission whose chairman would be nominated by the prime minister and consist of members of parliament — 50 per cent from the ruling party and the other half from the opposition. Notwithstanding the dire need for accountability of politicians, whether it was the notorious Ehtsab Bureau under Nawaz Sharif or Musharraf's NAB, both have been largely used to victimise political opponents.


Musharraf cynically used the NAB as a bargaining chip to buy political loyalties. The notorious National Reconciliation Ordinance, the mother of all evils in our fractured polity, was a hallmark of this jaundiced mentality. Hence, an across-the-board fair and transparent accountability process will be along awaited welcome change.


Unless politicians across the spectrum do not evolve a code of ethics no system of accountability will work. Setting up of industrial and business conglomerates while one is in power has become the norm rather than the exception. Main Nawaz Sharif cries hoarse about the reopening of the Swiss cases against President Zardari and Ms Bhutto, but can he himself pass the same strict test of scrutiny that he recommends for others?

Mr Shaukat Tarin, the outgoing finance minister, has set a solitary example by choosing to resign his post as well as his Senate seat, instead of using his position to induct an investor for the bank owned by him. His political bosses, as well as US special representative Richard Holbrooke, failed to persuade him to change his mind. Unlike our mainstream politicians the technocrat finance minister understands the meaning of conflict of interests. The need of the hour is to formulate such a law that makes it virtually impossible for those in power to misuse their authority to enrich themselves.


Emulating Tarin's example it is high time President Zardari showed the door to his corrupt and incompetent advisors and ministers. The argument that such a move will increase the pressure on the already beleaguered government is facile. On the contrary corruption, cronyism and incompetence is bogging down the government by severely impairing good governance. Hence, sooner than later, the prime minister should be allowed to shuffle his pack.


The trouncing of the maverick Sheikh Rashid by the PML-N candidate in the NA-55 Rawalpindi bye-election is being celebrated as a resounding reaffirmation of the party's popularity. Mian Nawaz Sharif, making a surprise appearance at the victory celebrations, did not hesitate to take an unnecessary swipe at Mr Zardari by declaring Rashid the candidate of "Ali Baba and the Forty Thieves."


Apart from being in poor taste it was bad strategy for the PPP to support a candidate like Rashid who is a hated figure amongst its rank and file for his vitriolic and personal attacks against the late Ms Bhutto in the past. However, when a broad consensus on the repeal of the 17th Amendment is emerging, it serves no purpose for the PML-N to raise the ante. According to PPP circles the agreed package to repeal the 17th Amendment in all probability will be placed before parliament much earlier than March 23 to enable President Zardari to address the joint sitting of parliament.


Mian Sahib should also revisit his present strategy that has rendered him a part-time politician. For starters he must enter parliament by getting himself elected from a safe constituency in order to play his role as leader of the opposition, instead of waiting for the two-terms restriction for prime ministers to go.

Governance issues are not restricted to the federal government only. There is need to rethink the prevalent practices in Punjab which has become a financially deficit province in less than two years. Hence, reading too much into the NA-55 victory by the PML-N will only create a false sense of security amongst its rank and file.

The writer is a former newspaper editor. Email: arifn51@hotmail.com

 

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I. THE NEWS

EDITORIAL

A SHIFT IN POLICY?

ASAD MUNIR


Two important Taliban leaders were detained in Pakistan in the past one month. Mullah Abdul Ghani Baradar and Mullah Abdul Salam, the first in Karachi and the other in Faisalabad. The arrests coincided with the launching of a major offensive by the Nato forces in Marjah, in Afghanistan's Helmand province, a stronghold of the Taliban. Since details about how and when these detentions took place are seldom revealed by official circles, one has to rely on media reports, which are not always accurate and generally based on speculation.


However, these arrests may help in changing the perceptions of the West about Pakistan-Taliban relations. Doubts were always expressed on Pakistan's handling of the Afghan Taliban, not only by outside elements but also internally. There is a widespread impression that Pakistani intelligence agencies and security establishment are pro-Taliban and events taking place in the country are with the approval of local intelligence elements.


The whole story about the rise of the Taliban in 1994 is based on half-truths, fiction or speculations. The role of the ISI and government functionaries then at the helm of affairs has been exaggerated to some extent. The rise of the Taliban was never a planned strategy. They are the product of circumstances. The other actors were activated when Kandahar was captured by the Taliban in November 1994.


So, strictly speaking, the Taliban movement is not the brainchild of one institution, as generally believed. After the Taliban's initial success, plans were formulated by the Pakistani security establishment to exploit the potential of this force to control Afghanistan, something the Afghan Mujahideen factions had failed to achieve even six years after the Russian troops withdrawal.


Since its independence Pakistan has had issues with Afghanistan, the only country which voted against Pakistan's entry into the UN. The Durand Line treaty defining the British-Afghan boundaries was signed in 1893. It was ratified twice by successive Afghan governments. However, once the British left the subcontinent the Afghan government laid claim to the Pakhtun areas of Pakistan, arguing that following the departure of the British the treaty was no longer valid. Pakistan, on the other hand, refuted this claim as the people of NWFP voted to join Pakistan through a referendum at the time of partition.


Pakistan, during all this time, showed restraint and patience and all its policies were focused on India since it did not want to open another front on its western border. Afghanistan also reciprocated and during the 1965 and 1971 war, the 7th Infantry Division was moved from Peshawar to the eastern front and Afghanistan did not take advantage of an unguarded border. In 1976 Prime Minister Bhutto and President Daud held meaningful negotiations on improving relations between the two countries. However, before the foreign policy roadmap could be implemented, Mr Bhutto's government was overthrown by Zia. The history of jihad during the Zia regime is well known.


From 1947 to 1992, for obvious reasons, India had more influence in Afghanistan as compared to Pakistan. The Pakistani security establishment went all-out to support the jihad, presuming that ultimately Pakistan will have a friendly dispensation in Afghanistan and the Pakhtunistan issue will be buried forever. They did not visualise the impact and effects of the Afghan jihad on the internal social structure of Pakistan, which had been a liberal country prior to the Afghan jihad and the Zia era. The advantage Pakistan received during Taliban rule was that Indian influence was diluted to a great extent and New Delhi had no say in the affairs of Afghanistan.

After 9/11 the US administration did not take into consideration the sensitivities of Pakistan regarding Indian presence in Afghanistan. The US can never win the war on terror without the active support and assistance of Pakistan. This is a geographical reality. The Indians were allowed to open four consulates in Afghanistan. Though in a normal environment this may have been a routine diplomatic activity but the US and Afghan governments did not visualise the concerns of the Pakistani security establishment.


The role of these consulates is being viewed with distrust by the media and civil society and the average Pakistani is not prepared to believe that these are normal diplomatic missions. The general perception is that these consulates have been established to launch agents for the destabilisation of Pakistan. This perception is widespread and the number of consulates is being exaggerated, and these diplomatic missions are being accused of destabilisation of the country and helping anti-Pakistan elements, specifically in Balochistan.

 

With this background the arrests of these important Taliban leaders should be analysed. Pakistan proved its seriousness to fight the war on terror as a close ally immediately after 9/11. The army was moved to administratively inaccessible areas of Tirah, and to Khyber and Kurram Agencies in 2001. A large number of AL Qaeda members were arrested by Pakistani intelligence and security forces. The madrasa of Jalaluddin Haqqani in Miranshah was raided thrice in 2002 and 2003. Sirajuddin Haqqani was reportedly injured in a raid conducted in June 2002 in South Waziristan. Raids were conducted against all the prominent Afghan Taliban leaders whenever some intelligence information was received.


Those who allege that Pakistan is not serious in taking on the Taliban have not produced any evidence to substantiate their allegations. Pakistan realises that Taliban activities affect local tribes too and create an internal security threat to the country. Pakistani forces have conducted more operations against terrorists and have suffered more casualties than Nato forces have.


However, with Obama's plan of withdrawal from Afghanistan in 2011, Pakistan has to make some readjustments in her Afghan policy. Pakistan would not like a hostile government in Kabul once Nato forces withdraw from Afghanistan. Pakistan would like to be a part of any negotiations held with the Taliban. Pakistan would like to be consulted in any new arrangements planned for Kabul in a post withdrawal scenario. Pakistan, or internal security reasons, may not like Afghanistan to return to a system of government which was in place in the pre-9/11 environment.



Pakistan would also want the Durand Line issue to be resolved before the withdrawal of forces from Afghanistan. These are the likely objectives which Pakistan would like to achieve, and the recent detentions of the Taliban leaders in no way indicate that there is a shift in Pakistan's policy towards Afghanistan.


The writer is a retired brigadier. Email: asadmunir38@yahoo.com

 

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I. THE NEWS

EDITORIAL

CIVIL SERVICE REFORM REVISITED

SANIA NISHTAR


The International Crisis Group's Report on Civil Service Reform has sparked conversations around the need and potential avenues for restructuring Pakistan's civil service. This, however, is not the first time that a report on the subject has been made public. Ever since the country's creation, more than thirty commissions/committees have been constituted and convened to frame normative guidance relevant to this area. A detailed account of past efforts has been summarised in the report of the National Commission for Government Reform (NCGR), the most recent of these initiatives, which was tasked with the responsibility of developing recommendations to reform the executive branch of the state. The report states that previous recommendations have "been neglected, were partially implemented or distorted beyond recognition".


The denotation of civil service reform in the reform jargon is not an isolated or a defined restructuring measure, but a set of locally-suited interventions centered on restructuring laws, codes of conduct, remuneration norms, institutional devices, and policy frameworks. Given this diversity, priorities for action and a plan for phasing reforms are important. In order to do that, the key problems with Pakistan's civil service must be appreciated as a starting point. Broadly, these fall into three categories.


First, is the 'colonial-contemporary lag'. Pakistan's civil service has been modelled on the colonial system, where the bureaucracy was geared towards command and control. In the district-divisional system, a single person was empowered to collect revenue, dispense justice, exercise administrative control, assume responsibility for delivering services, and allocate land rights—in other words, absolute control. Comparable prerogatives existed at the secretariat/divisional and departmental levels. This model served the purpose of keeping citizens sub-ordinate. The realities of the state are very different today. The government must not 'rule' but 'govern' in a democratic system; it must reconfigure its capacity to harness the resources of the economy towards the goals of development and learn to engage with the private sector in areas which were previously thought to be in the 'public domain'. Although successive governments have attempted to make some changes to be responsive to these realities, those measures haven't borne fruit. The local government system, which was meant to be a departure from the post-colonial style of administration, wasn't able to deliver on its premise — its current restructuring also offers little hope for reform. Frameworks for public-private partnerships, despite being in existence, have not been functioning because of institutional wrangling. And as for institutional performance, it is ironic that the most important organisation in the country — the government — upon which the functioning of almost everything else hinges, has not learnt from contemporary organisational management and business processes, and remains aligned on antiquated paradigms of ruling, which put the state at a disadvantage with respect to domestic realities and meaningful global existence.


The second problem relates to limited understanding of human resource management. In the public sector, human resource management is generally considered as being synonymous with the creation of posts, placement of staff, and disciplinary action, and is, as such, often used as a lever of power. Human resource management usually does not appear to be a priority and the capacity to plan in this area often does not exist within ministries. The environment is additionally not conducive to fostering improvements in performance. The system does not reward high performers, in general. Rules and regulations governing administrative and financial prerogatives are overtly cumbersome and tend to centralise decision-making. This is particularly relevant to operational decision-making, in relation to domains where strategic decisions have already been made at a higher level. A case in point is the re-seeking of permission for activities stipulated under approved PC 1s, which accounts for unnecessary delays and ingrains inefficiency.

The third problem and one which compounds the other two relates to the space that exists for institutionalised manipulation. Over the last several decades, numerous changes have been made in the structure of civil service in the guise of 'reforms'. Some, as stated in the International Crisis Group's report, have "weakened the constitutionally guaranteed protection of employment that had previously shielded the bureaucracy against political interference". Other 'reforms' were aimed at ideologically reorienting the bureaucracy, entrenching military's presence in the bureaucracy, whilst still others eroded neutrality at all levels of the administration. By-and-large, administrative restructuring was used as a tool by many rulers for personal gains and political patronage in order to consolidate their bases. Over the years, therefore, a culture emerged where civil servants were patronised and promoted, not on merit but on perceived loyalty to their respective unnamed political affiliations. Civil servants have responded to this in many ways. Whilst a majority resents this trend and still tries to operate honestly in a politicised environment, others feel unprotected due to the fear of undue accountability and choose to defer decisions whilst still others — and a growing number — tend to please their superiors rather than being responsive to citizens' needs. In doing the latter, they become party to politically expedient decisions that have limited grounding in evidence. These institutional behaviours promote a culture where a range of ethical, intellectual, procedural, and financial forms of malpractices are becoming pervasive in the system.


As a result of all these factors, Pakistan's system of civil service — which has yet to conform to contemporary realities after 63 years of the country's existence — has fallen prey to exploitation, both from within its ranks as well as from outside as a result of collusive behaviour of non-bona fide entities within the political system and the private sector. And hence malpractices and inefficiencies are getting institutionalised. Poor management and lack of accountability exacerbate malpractices, whereas on the other hand, there may be a disincentive for administrators to strengthen management and mainstream mechanisms that compel accountability. Both these factors complement each other in a vicious cycle.


Civil service reform, therefore, cannot be achieved through isolated technocratic solutions; the latter can only be useful if the broader political determinants are conducive.


Measures to reform the civil service are further deeply interlinked with the collective organisational structure, procedures, protocols, and sets of regulations to manage government's activity — in other words the prevailing system of bureaucracy. There are many unresolved questions of relevance to Pakistan in this space that need to be addressed: the relationship of the federal, provincial and district governments, the question of provincial autonomy, the fate of the many parastatal agencies, which cause the fiscal system to hemorrhage; the institutional relationships with respect to policy making, regulation and implementation; the structure of pre-service, in-service and ongoing training and capacity building; the government's supporting infrastructure, such as e-governance, and so on.


Reform of civil service, implicit within which is a set of measures to restructure recruitment, retention, training, career progression, capacity building, remuneration, and accountability frameworks, therefore, cannot be taken in isolation and needs to be framed in the context of this entire structure, which determines how a government functions. The feasibility of these changes additionally has to be locally determined, as there isn't a cookie-cutter multilateral framework that can make reforms work in any setting. Rather than reinventing the wheel at the cost of the taxpayers' money, it appears most logical to use the recommendations of the NCGR to develop a multi-partisan consensus on the way forward, and analyse the resource implications of an agreed plan, based on which a phased approach can be adopted.


Pending long-term solutions, the single most important measure is to let merit and performance take over. There are many champions within Pakistan's bureaucracy whose potential can be harnessed through this approach.
The writer is the founding president of the NGO think tank, Heartfile. Email: sania@ heartfile.org

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I. THE NEWS

EDITORIAL

TRUST DEFICIT

TAYYAB SIDDIQUI


The time is approaching fast when the US-Pak relations will be at a cross roads. The US leadership, be it in the Capitol Hill or White House, while recognising the key role of Pakistan in the success of its AF-Pak strategy, remains oblivious of Pakistan's concerns that the trust deficit, acknowledged by both sides, is widening. There are stirring statements from President Obama down to a State department functionary that the US is determined not to repeat the mistakes of the past and that it will remain a partner and strong supporter of Pakistan's solidarity and prosperity. President Obama declared that "America will remain a strong supporter of Pakistan's security and prosperity long after the guns have fallen silent". however, the Pakistanis are not convinced. The reason for this trust deficit and suspicion with regard to each other's intentions and actions are not far to seek.


The chequered history of bilateral relations during the last six decades bears out the fact that the US has been fickle in its policy and unreliable in its commitments. Following the 9/11 tragedy and Pakistan's pivotal role in the success of the US' strategy, there have been quite a few occasions when this partnership has come under serious strains. President Bush visited Pakistan in February 2006 and affirmed that the long term strategic partnership between the two countries is "based on the shared interest in promoting peace and security". The commitment included "wide ranging strategic dialogue under the strategic partnership including increased trade and investment, assistance to Pakistan's growing energy needs and build a robust defence relationship to meet Pakistan's legitimate defence needs". Support for Pakistan's social sector such as health, education, science and technology etc. was also promised, along with a mechanism and a time frame to achieve these objectives. It is a matter of record that neither of the commitments has been addressed seriously.


Not only that no meaningful action has since been taken to implement the decisions contained in the joint communiqué, but discriminatory and humiliating treatment of Pakistan has periodically occurred. Despite Pakistan's critical energy needs, Bush declined nuclear cooperation with Pakistan along the Indian model stating "Pakistan and India are different countries with different needs and different histories". The Obama administration has followed the same policy and no other US cooperation or initiative has been noted in the energy sector. Indeed Pakistan is under pressure to abandon agreement with Iran on the Iran-Pakistan-India gas pipeline. Equally disappointing has been the inaction on the bilateral investment treaty and concessional terms for trade. These references highlight, why the US has lost its credibility and that its declaration of friendship and partnership is taken with a pinch of salt.


In total disregard to Pakistan's sensitivity and sovereignty, the US has launched drone attacks in the tribal areas with impunity ignoring the official protests. The drone attacks have not only created severe strains, but have also enraged the Pakistani masses and in the process fuelled anti-Americanism.


The Pakistan-US partnership is weak and fragile and cannot sustain any more unilateral actions. The US has been cautioned of the impending crisis both by Zardari and Gilani who have also conveyed Pakistan's concerns to the stream of high level delegations visiting Pakistan frequently. President Zardari, to underscore the importance of these issues, had addressed a three-page letter to President Obama in December 2009 briefing him on the state of bilateral relations and of Pakistan's concerns and core interests. The missive remains without response.

The US Congress and media make much fuss on the $1.5billion annual assistance, ignoring the fact that Pakistan has suffered a loss of $35billion due to this war on terror. Military operation in Swat Valley alone has cost Pakistan $2.5billion. As much as 2953 security personnel have sacrificed their lives in this war on terror, which initially was not Pakistan's war.


If the US is really interested to have a long term relationship with Pakistan it must honour the promises and commitments to make an average Pakistani believe in President Obama's pledge that "we are committed to a partnership with Pakistan that is built on a foundation of mutual interest, mutual respect and mutual trust".

The writer is a former ambassador.Email: m.tayyab.siddiqui@gmail.com

 

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I. THE NEWS

EDITORIAL

OUR SENSE OF 'ENTITLEMENT'

BABAR SATTAR


The writer is a lawyer based in Islamabad.


The ruling government's blatant obstinacy over implementing the NRO decision in relation to the Swiss cases is not just misconceived but almost malicious. The government is contriving yet another legal crisis by propping up issues that have no relevance to the order of the Supreme Court.


The view that the ruling party's legal wizards have conceived a shrewd strategy to thwart the apex court ruling is extremely charitable. A more realistic assessment would be that the government's motley legal crew is marred by incompetence and mischief. These attributes, together with a larger sense of "entitlement" infesting our society which bolsters the belief that the elites and pseudo-elites are above the law and can defy it at will, is responsible for the PPP's foolhardy policy towards rule of law and court orders.


In the NRO case the Supreme Court ruled that the letter written to the Swiss attorney general forfeiting Pakistan's status as civil party in proceedings pending against Asif Zardari, revoking the request for mutual legal assistance and forfeiting the state's claim to the allegedly laundered $60 million, was an "unauthorised, unconstitutional and illegal" act of Malik Muhammad Qayyum. Consequently, it held that "the federal government and other concerned authorities are ordered to take immediate steps to seek revival of said (mutual legal assistance) requests, claims and status (as civil party)." What the apex court held with regard to suspension of proceedings in the Swiss cases is therefore different from the revival of cases within Pakistan.


The cases in Pakistan that were discharged under the National Reconciliation Ordinance stood revived when the NRO was declared unconstitutional and void ab initio. In this instance there was no legal question with regard to the validity of the process through which these cases had been terminated. Withdrawal of the Swiss cases stands on a different pedestal. Here the court held that, separately from the question of whether or not Pakistan could concede its status as civil party under the NRO, the process through which such request was made was unauthorised and thus illegal.


As Malik Muhammad Qayyum had simply not been authorised by the federal government to withdraw Pakistan's request for mutual assistance and its claims to the allegedly laundered money, the communication he sent to the Swiss authorities must be deemed to be no communication at all. Consequently, the federal government and other authorities concerned have been instructed to communicate to the Swiss authorities that Pakistan has not forfeited its claim, withdrawn its request for mutual legal assistance or ceded its status as civil party. The questions whether Asif Zardari as president enjoys immunity under Article 248, and whether or not investigations in cases pending against him in Switzerland can be reopened, are simply not relevant to ensuring compliance with the NRO ruling.


Had Malik Qayyum been properly authorised to withdraw the Swiss cases in accordance with law, the PPP government might have been able to make a frail argument that the federal government is barred from initiating proceedings against the president under Article 248 of the Constitution. In the present case, however, it only needs to communicate to the Swiss authorities that the state of Pakistan never withdrew its request for mutual legal assistance or forfeited its status as civil party, and the letter written by Malik Qayyum had no legal effect and was of no consequence whatsoever. Such communication is not a request for initiation of proceedings, but simply the communication of a factual statement.

Whether as a consequence of such communication the Swiss authorities reinitiate investigations against Asif Zardari is for them to determine under Swiss law. In the event that the Swiss do elect to initiate proceedings on receiving such communication from Pakistan, can Asif Zardari seek a suspension of such proceedings so long as he is president under Article 248 of the Constitution or by asserting sovereign immunity? Asif Zardari's counsel in Switzerland can certainly take up such pleas. But any possible defence that Asif Zardari might or might not be able to raise in Switzerland has nothing to do with the federal government communicating to the Swiss authorities that the previous missive they received from Malik Qayyum must be disregarded.


The only question to be determined by the federal government after the Supreme Court's unequivocal ruling was who on behalf of the government would write to the Swiss. Section 21 of the NAB Ordinance clearly authorises the chairman of the NAB to communicate with foreign authorities in seeking mutual legal assistance or status as civil party in other jurisdictions. The NAB chairman has been vested with such authority under a federal law. While the federal government can also authorise an additional person or authority to engage in communications with foreign authorities under Section 21 of the NAB law, neither the law minister nor even the prime minister can deprive the NAB chairman of his lawful authority. The ministry of law has no legal and administrative control over the functioning of the NAB, which was specifically created as an autonomous statutory body to remain independent of the influence of the federal government in operational matters. Consequently, the law minister has no authority to issue instructions to the NAB chairman and the NAB is under no obligation to seek legal opinion from the law ministry prior to implementing binding instructions of the Supreme Court.


There should have been no complication in implementing the NRO ruling with regard to the Swiss cases. As the NAB has the power to initiate such communication under the NAB Ordinance, the federal government can specifically authorise someone to make such communication, and the law ministry and the foreign ministry are also authorised to initiate such correspondence under the Rules of Business.


The PPP government's legal wrangling over this issue thus seems to spring from the conceited view that elites are above the law and can get away with its defiance. This sense of entitlement pervades our society and is inimical to the very concept of rule of law and constitutionalism. The PPP's obduracy towards the binding instructions of the highest judicial forum of the country has the potential of deepening this abhorrent sense of entitlement that rubbishes the idea of legal equality before law and promotes the view that power springs from brute force and not legal authority and that individuals are larger than the law and legal institutions.This sense is entitlement slaps you in the face when you return to Pakistan and find minions of state agencies sprawled next to airport entry doors to help those with influence jump immigration cues. It is apparent when a traffic sergeant is hurled with abuse when he attempts to issue a ticket to anyone higher than him in state hierarchy, or even someone who has access to the holder of an influential state office. It is apparent when the courts issue summonses to senior khakis who not only refuse to show up but are enraged at the audacity of a civilian court to issue process and assert jurisdiction. And it is apparent when the newly empowered Black Coats gang up to ensure that law is enforced against all except one of their own.


This loathsome sense of entitlement has become so pervasive that even the reactions of state institutions responsible for law enforcement are influenced by it. Police officials, except for some insane exceptions, apologise for their desire to enforce the law when confronted by someone who is able to offer recommendatory introduction (taarruf). Likewise courts are loath to applying the law when it comes to bigwigs and holy cows. This culture of entitlement is not compatible with the concept of constitutionalism. If we wish to be a society where law is king, we will have to root power back into legal authority, ensure that legal instruction of a magistrate is as weighty as that of a Supreme Court bench, and that accountability for acts and omissions of individuals flows automatically notwithstanding the incidence of their birth or station in life.

Email: sattar@post.harvard.edu

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I. THE NEWS

EDITORIAL

JOBBERY!

ANJUM NIAZ


The yellow sticky 'post-it' became Benazir's Achilles Heel. It's alleged that she would use them whenever she didn't want to leave a permanent record on the files. As prime minister, she often appointed people based not on merit. President Farooq Leghari knew what was going on. He was from her party. But when he had had enough of jobbery, he dug out all the yellow 'stickies' and prepared a dossier based on them to dismiss her government.

Prime Minister Gilani and President Zardari are today following the same unethical practice of a spoils system. The ambassador to Syria is the latest howler. He's Zardari's appointee. A mere graduate, we're told. Ambassador Aminullah Raisani has carted his whole extended family to Damascus and provided them with jobs at the Pakistan International School. How smart is that! During his two-year term, the man will rake in close to a million dollars as salaries paid to his sister Saeeda (who has been made the principal); another sister Ms Abbas (Urdu teacher); daughters Amna and Quratulein (teachers-at-large) brother-in-law Ishaque (accountant); nephews Atiq and Ali (business teachers); granddaughter Nayla (math teacher); son-in-law of sister Abdullah and cousin Ahsan (teachers without portfolio); and cousin Rasheed (biology teacher).


"The only one left out is the ambassador's dog!" a former ambassador to Syria tells me. "And if the ambassador should deem fit to appoint his dog at a princely salary, there is nothing anyone can do. The ambassador has the sole authority to deal with the affairs of the school as he pleases. You can write as many columns as you want, the sad truth is that no one can do a thing to take the ambassador to task. He's a non-career diplomat. He's a direct hire of Zardari."


The Foreign Office is thus helpless. What a shame!


But the sacked teachers of the school in Damascus have taken the Pakistan embassy to court. Apart from the ambassador making a mockery of his position abroad, imagine how much of our valuable foreign exchange will now be sunk in defending the ambassador's blatant nepotism. If the news report is true, does a starving nation, surviving on the 'fruits of democracy' as Zardari says, deserve to have such people as Raisani represent them abroad?

Thankfully, our embassy in Paris has been saved the humiliation of having a junior joint-secretary level DMG officer head the embassy. Fashion designer Mehmood Bhatti recommended the officer to Zardari who as we all know too well by now likes to honour his friends' wishes. The senior civil servants protested by going to court and had the appointment cancelled. Why does our president continue to appoint people who don't merit the job? By the time Raisani and his family leave Damascus, the reputation of the school, considered one of the best, would be mud. The handsome earnings that the school fetches would be in family coffers. How sad. The ambassador is the chairman of the board and controls all the money which is non-auditable.


"We are but helpless onlookers," says the former ambassador to Syria who lists out his own achievements in making the 20-year-old school a success story.


Then we have the story of Brig (r) Aziz Ahmad, rector of the National University of Modern Languages (NUML). The man in broad daylight has the gall to get his whole family on board, literally. Daughters, nephews, brothers and daughter's father-in-law are on NUML's payroll. Earlier this very enterprising brigadier wangled scholarships for daughter and son-in-law for doctoral studies in Britain. (Gosh, the guy must love his daughter a lot!).

And guess what, he even accommodated his darling daughter's father-in-law Maj (r) Akhtar as deputy director Peshawar Campus.


One can only ask Sardar Aseff Ahmed Ali, prime minister's adviser on education to rectify the wrongs being perpetrated at home and abroad. He can do it.


Email: anjumniaz@rocketmail .com

 

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PAKISTAN OBSERVER

EDITORIAL

INDIA NOT READY EVEN FOR DIALOGUE

 

AS was widely apprehended, the Delhi parleys between Foreign Secretaries of Pakistan and India produced nothing substantial mainly because of the belligerent attitude of India. All media accounts of the short interaction between the two sides suggest that no progress could be made towards normalization of relations as India was not willing to discuss the real issues in a meaningful manner.


Despite the fact that no progress was achieved in New Delhi, some observers point out that the meeting itself was a step forward in the sense that the two countries were not on speaking terms ever since Mumbai incident and, therefore, their engagement augurs well for the future. The talks afforded an opportunity to Pakistan Foreign Secretary Salman Bashir to present the country's point of view on issues of concern to Islamabad in an articulate and forceful manner. Though publicly India had been claiming that it would not discuss anything except terrorism but credit goes to Salman Bashir for a straight talk on the core issue of Jammu and Kashmir, violation of Indus Basin Treaty by India and the issues of Siachin and Sir Creek. This is because Pakistan firmly believes that there can be no genuine peace and progress in South Asia without just settlement of the problems that bedevil relations between the two nuclear neighbours. However, response of the Indian Foreign Secretary, though understandable, was shocking as she claimed that time was not ripe for composite dialogue. This forced the Pakistan side to convey to India that the focus was unfair, unrealistic and counterproductive and that the process of dialogue should not be allowed to stall by a single incident. This is also important in the backdrop of the reality that Pakistan itself is witnessing almost on a daily basis the Mumbai-like incidents. Indian approach is highly deplorable and should be a cause for concern for policy-makers in Islamabad. If India is not even willing to talk then how can we expect that New Delhi would ever reciprocate in sincere and serious manner to address the real issues? The two countries have been holding talks for decades but these have produced nothing worthwhile except conveying a false impression of engagement to the outside world. We would, therefore, urge Pakistani leadership to insist on a timeframe for negotiations, otherwise we would again be falling into Indian trap.

 

 

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PAKISTAN OBSERVER

EDITORIAL

INTRUSIVE INSPECTION BY IAEA

 

THE Chemical Arms Inspectors of International Atomic Energy Agency (IAEA), now on a visit to the country, inspected Pakistan-Arab Fertilizer Factory in Multan. The two inspectors were taken to the plant in a helicopter and they visited its different units to take stock of the nitrate and other chemicals used in the factory.


Pakistan is a signatory to the UN's Chemical Weapons Convention Treaty, which requires of the member countries to destroy their chemical weapons and open their sites for inspection and the visit is obviously part of that arrangement. Such visits are taking place for the last several years and in the past the inspectors visited various industrial entities and gave them clearance. This is because Pakistan has no chemical weapons programme and it signed the Chemical Weapons Convention back in 1993. But these intrusive inspections raise legitimate concern among the people of Pakistan because of the known bias of the Western world and the organizations that serve as their tools in advancing their objectives. There was a time when inspectors from the IAEA even wanted to look under the bed of former Iraqi President Saddam Hussein in their bid to substantiate the unfounded claims about weapons of mass destruction in that country. Pakistan too has remained in the focus because of the Western propaganda about its nuclear programme and the deliberate but mischievous statements being churned out day in and day out by some of the Western leaders regarding the far-fetched idea of Pakistani nuclear bombs falling into the hands of terrorists. This is despite the fact that the country's command and control system was more reliable than some of the known nuclear powers. In our view, such inspections are nothing but attempts to harass and pressurise the countries like Pakistan.

 

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PAKISTAN OBSERVER

EDITORIAL

EXPORT TARGET CAN BE EVEN MORE THAN $20 BILLION

 

PRIME Minister Syed Yousuf Raza Gilani has expressed confidence that the country would achieve export target of $20 billion during current financial year. Speaking at the formal inauguration of 5th edition of mega exhibition Expo Pakistan 2010, organized by Trade Development Authority of Pakistan (TDAP) in Karachi he showered praises on the private sector for its ingenuity and enterprise because of which the country was able to reduce adverse impact of the severe global recession.


It was indeed a pleasant sight that at this point of time when the country was suffering from the stigma of terrorism and the overall law and order situation was not satisfactory especially in Karachi, which is hub of the economic activities, the TDAP was able to organize a successful event and attract foreign buyers in large numbers from the length and breadth of the globe. It is really a tribute to the leadership qualities and vision of its Chairman Syed Mohibullah Shah and his team that have worked hard to project Pakistan as an attractive destination for investors. We are confident that with the strenuous efforts of the TDAP as well as the private entrepreneurs, the country would achieve the target of twenty billion dollars' worth of exports. There is indeed greater potential but if proper planning is done and steps taken then the country can go beyond $25 billion target fixed in the new textile policy for the next five years. We all know that the country's exports hovered around $9 billion for years but then tangible steps were taken by the previous government that made a real difference. We hope that the Prime Minister would get input from all stakeholders on how to accelerate growth of our exports so that we can lessen dependence on foreign aid. The potential, as we have mentioned, is there but for this to materialize, the Government will have to create the enabling atmosphere, which regrettably is not the case at the moment. Only the other day the National Assembly was informed that the rate of electricity went up for 19 times during the last two years and these are bound to go up further in the next few months. Gas rates are also being hiked every now and then while shortage of power and gas is hitting hard the industrial production. Similarly, the mark-up rate is alarmingly high, making it quite challenging for entrepreneurs to go for investment. Then there are also issues of law and order and security of foreigners besides the bureaucratic hurdles that the investors have to face. We hope the Prime Minister would find time to look into these and other relevant issues that hamper growth of our exports.

 

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PAKISTAN OBSERVER

EDITORIAL

JINNAH'S DREAM UNREALIZED!

NOSHEEN SAEED

 

The founding father of Pakistan Muhammad Ali Jinnah not only laid the foundation of our beloved motherland but left behind a comprehensive blue print for the social, economic and political development of the State. His Presidential Address to the first Constituent Assembly of Pakistan, 11th August 1947 was directional, clearly outlining a road map that should have been followed in letter and spirit. Had this speech been the cornet stone of the State's policy, perhaps things would have been different. Compare his speech to the Pakistan of today and one would conclude that those in the echelons of power negated the very essence of his creation. A deliberate attempt was made to cleverly conceal from the public his lofty principles and guidelines. Ordinary Pakistanis especially our younger generation were indoctrinated with false propaganda that Jinnah was in favor of a theocracy; that democracy, tolerance, education, human rights, women and minority rights were secondary; that the principles of secular democracy was opposed to religion.


Gradually it became a taboo to discuss Jinnah's personal life and any effort to eulogize Quaid-e-Azam's vision and beliefs raised a hue and cry of "Islam in danger" and "Pakistan in danger." Thus the voices of the followers of Jinnah were subdued. Consequently a nation that was founded on the principles of "live and let live" and "peace within and peace without" and a "safe haven for all to live in peace and harmony", turned into a safe haven for extremists and terrorists. Jinnah's Pakistan full of hope, optimism, and security turned into an insecure state, held hostage by the forces of religious intolerance, fanaticism obscurantism and religious dictatorship. A state our beloved founding father dedicated his life for the preservation of equal rights of men and women, so that they could live in a land free of prejudice and discrimination turned into a sanctuary of discrimination, injustice, sectarian violence and racism. A state out to protect the lives, properties and culture of the subjugated Muslims of the sub-continent became a dream.


Let's analyze Mr. Jinnah's presidential address to the first Constituent Assembly of Pakistan, he emphatically stated, "The first duty of a Government is to maintain law and order so that the life, property and religious beliefs of its subjects are fully protected by the State." He labeled bribery and corruption, biggest curses and poison that must be put down with an iron hand; then termed black-marketing a monster and colossal crime against society and emphasized, "A citizen who does black-marketing commits, I think, a greater crime than the biggest and most grievous of crimes. These blackmarketeers are really knowing, intelligent and ordinarily responsible people, and when they indulge in black-marketing, I think they ought to be very severely punished, because the entire system of control and regulation of foodstuffs and essential commodities, and cause wholesale starvation and want and even death." The next "great evil" he talked about was nepotism and jobbery, "I want to make it quite clear that I shall never tolerate any kind of jobbery, nepotism or any influence directly of indirectly brought to bear upon me."


Quaid-e-Azam envisaged Pakistan as a modern welfare state, with the state accepting the responsibility for the provision of comprehensive and universal welfare for its citizens. He believed in the empowerment of the common man through economic emancipation, education and confidence building in order to raise the quality and standard of his life that is why he spoke of ensuring social justice and better governance. In fact the Quaid linked the prosperity of the state to the prosperity of its people by saying, "Now, if we want to make this great State of Pakistan happy and prosperous, we should wholly and solely concentrate on the well-being of the people, and especially of the masses and the poor. If you will work in co-operation, forgetting the past, burying the hatchet, you are bound to succeed. If you change your past and work together in a spirit that everyone of you, no matter to what community he belongs, no matter what relations he had with you in the past, no matter what is his colour, caste or creed, is first, second and last a citizen of this State with equal rights, privileges, and obligations, there will be on end to the progress you will make."


Being committed to building a peaceful, united and prosperous society that cherishes diversity, interfaith harmony, upholds human rights and practices equality of citizenship and social justice and to safeguard the interest and rights of all Pakistanis and to ensure that no group is neglected and that all citizens have a stake in nation building the Quaid said, " and in course of time all these angularities of the majority and minority communities, the Hindu community and the Muslim community, because even as regards Muslims you have Pathans, Punjabis, Shias, Sunnis and so on, and among the Hindus you have Brahmins, Vashnavas, Khatris, also Bengalis, Madrasis and so on, will vanish. Indeed if you ask me, this has been the biggest hindrance in the way of India to attain the freedom and independence and but for this we would have been free people long long ago."

His famous lines followed, "You are free; you are free to go to your temples, you are free to go to your mosques or to any other place or worship in this State of Pakistan. You may belong to any religion or caste or creed that has nothing to do with the business of the State." Citing the example of Roman Catholics and the Protestants, the Quaid explained, "The Roman Catholics and the Protestants persecuted each other. Even now there are some States in existence where there are discriminations made and bars imposed against a particular class. Thank God, we are not starting in those days. We are starting in the days where there is no discrimination, no distinction between one community and another, no discrimination between one caste or creed and another. We are starting with this fundamental principle that we are all citizens and equal citizens of one State."


The line, "all citizens and equal citizens of one State" is the most significant. It points to the fact that no one is a majority or minority in the state of Pakistan and that all citizens enjoy equal rights, privileges and obligations. Which only means that Hindus, Christians and Parsis can't be declared a minority in their own State? They can be called non-Muslims but certainly not a minority! Defining the separation of the state and religion that fully respected and protected the freedom to practice one's beliefs the Quaid said, "Today, you might say with justice that Roman Catholics and Protestants do not exist; what exists now is that every man is a citizen, an equal citizen of Great Britain and they are all members of the Nation. Now I think we should keep that in front of us as our ideal and you will find that in course of time Hindus would cease to be Hindus and Muslims would cease to be Muslims, not in the religious sense, because that is the personal faith of each individual, but in the political sense as citizens of the State."


Quaid-e-Azam ended his speech with the words, "I shall always be guided by the principles of justice and fairplay without any, as is put in the political language, prejudice or ill-will, in other words, partiality or favouritism. My guiding principle will be justice and complete impartiality, and I am sure that with your support and co-operation, I can look forward to Pakistan becoming one of the greatest nations of the world."

 

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PAKISTAN OBSERVER

EDITORIAL

SOLIDARITY WITH PALESTINIANS

MOHAMMAD JAMIL

 

Pakistan has always been persistent in its support at all levels and forums for resolving the Palestinian dispute in accordance with relevant UN Security Council resolutions. During his visit to Pakistan, Palestinian President Mahmoud Abbas had separate meetings with President Asif Ali Zardari and Prime Minister Yousuf Raza Gilani, who assured the former that Pakistan favoured an early settlement of the Palestine-Israel conflict on the basis of two-state solution. They asseverated that Pakistan will continue to take a principled stance of unqualified support to the Palestinian people for their right to self-determination and sovereign state. In the past also, irrespective of any shade of government, Pakistan has always given unqualified support to the Palestinians who are struggling against illegitimate occupation of their land by Israel since 1948 when the Zionist/imperialist state of Israel was created in the heart of Arab land.


Palestinians have undergone the longest suffering and ordeal in the annals of history, and despite various UN resolutions and accords there seems to be no end in sight to the atrocities perpetrated on them. After 9/11, former president George W Bush had said that the enemies of freedom have attacked the US because "they hate our freedom, democracy and values". But the fact of the matter is that 9/11 events were the result of unqualified US support to the criminal policies of Israel, and this is one of the reasons that the US is hated throughout the world. It has to be mentioned that 11th September is the anniversary of the League of Nations proclaiming the British Mandate in 1922 that paved the way for the creation of Palestine. The date represents the first physical step towards the implementation of the Balfour Declaration and the establishment of Israel. But this fact was never brought to light because international mass media are owned or dominated by Jews. The British Mandate of Palestine was given by the League of Nations to the United Kingdom to administer the territory comprising today's Jordan, Israel and territories governed by Palestinian Authority and formerly governed by Ottoman Empire. But what was Balfour Declaration? This was a letter dated November 2, 1917 from British Foreign Secretary Arthur James Balfour to Lord Rothschild, a leader of the British Jewish community for onward transmission to the Zionist Federation, on the partitioning of the Ottoman Empire in the aftermath of the World War I. The letter stated the position agreed at a British cabinet meeting on October 31, 1917 that "British government supported Zionist plans for a national home in Palestine with the condition that nothing should be changed, which might prejudice the rights of existing communities there". There was also perception that European countries were wary of the Jews, and Hitler had started their genocide because of their total control over Germany's economy.


On 14th May 1948, the UN, the successor to the League of Nations, implemented the 1947 UN Partition Plan and established the state of Israel. With backing of the West, Israel continued usurping the Palestinian land, and balked at UN resolutions giving the Palestinians the right to have an independent state. In July 2004, after 37 years of 1967 war an international court had declared the occupation of Palestinian lands by Israel as illegal. International Court of Justice in its judgment had declared the West Bank barrier built by Israel as illegal, and Israel was under an obligation to cease forthwith the construction of wall built in the occupied Palestinian territory including in and around Jerusalem, and to demolish the raised structures. The court had called upon the UN General Assembly and Security Council to take action to halt the construction work, but to no avail. The moot question remains unanswered whether any country has the right to invade and occupy the other's land? What is the legal position of Palestinian lands - Gaza Strip and the West Bank when the UN charter does not allow such occupation?


The Oslo Accord was based on the principle of "Land for Peace", and the US was a guarantor for implementation of the agreement. But Israel would not implement it. Even President Bush's 'road map' has been torn into bits by Israel, and Sharon had unilaterally announced to withdraw from Gaza Strip, where Israel forces earlier continued moving in and out with the tanks and armoured cars killing hundreds of Palestinians whenever they felt like doing it. It is too well known that the Israeli lobby afflicts US Congress and the President. The immense power of the Jewish lobby is a proven fact, and nobody on Capitol Hill will dare defy this all-powerful lobby. Perhaps it would not be wrong to say that the security of Israel is the cornerstone of the US foreign policy. When Afghanistan was bombed during Clinton's presidency, it was to kill Osama bin Laden because he wanted that Israel should vacate Arab lands. He also wanted that the US should withdraw its forces from Saudi Arabia, because the objective of their presence is keeping the region under its control, which is in the interest of Israel. Even when the US attacked Iraq, it was to destroy a powerful Arab country that could have offered a palpable threat to Israel.


The six-day war of June 1967 between Israel and Arabs brought total ruination and humiliation on Arabs, who did partially succeed in restoring their lost honour in October 1973 war. But recognizing the futility of seeking recovery of their lost territory through UN, Egypt entered into peace treaty – The Camp David Accord with Israel and recovered Sinai. The Palestinians however continue to groan under Israeli-occupation, which with passing of each day is becoming more repressive and intolerable. The Palestinian existence in the occupied lands has become a long night of terror and misery, with relentless Israeli policies of dispossession and deprivation. During last 40 years, a number of initiatives for peace have been taken, in the context of Security Council Resolution 242 but none has succeeded. Palestinian problem continues to defy any solution, primarily due to intransigence of Israel, blindly supported and encouraged by US. The Palestinian tragedy has been further compounded with the treachery of Arabs, duplicity and silence of International Community.


And in no small measure due to the incompetent leadership of the Arab countries, which preferred rhetoric to reality and indulged in romantic belief that the justice of their cause would eventually prevail. Security Council Resolution 242 of November 22, 1967 had provided the basic framework for negotiations and peace to remove the effects of 5th June war. Subsequent efforts at negotiated settlement were made, and Oslo Accords were based on this resolution. That these peace efforts and accords have failed to deliver are due to the ambiguity of the 242 and also Israel's policy of aggression and expansion. Resolution 242 "emphasizing the inadmissibility of the acquisition of territory by war" asked for "withdrawal of Israeli armed forces from territories occupied in the recent conflict" and respect for "sovereignty, territorial integrity and political independence of every state in the area, and their right to live in peace within secure and recognized boundaries".

 

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PAKISTAN OBSERVER

EDITORIAL

EID-MILAD-UN-NABI: UN CHARTER

PARVEZ JAMIL

 

Beyond the set and standard thinking, rising over and above ego and conflicts and observing the human situation in the altruistic and universal perspective, it is discovered that what are merely words in lofty ideals of the UN Charter is a fraction of what was reflected magnanimously from the life of the Holy Prophet Muhammad (PBUH). Words and deeds: In words, the Preamble of the UN say in all logic or fairness about its resolve "to save succeeding generations from the scourge of war, which twice in our lifetime has brought untold sorrow to mankind". Among the cherished objectives of UN is to promote world peace and security. But in practical reality it is altogether a different story that needs no introduction.


Indeed, a major part of Prophet's mission was to bring peace to the world. One of the ways in which he strove towards this end was to attempt to convince people that all men and women, albeit inhabiting very different regions of the world, and different from one another in color, culture and language represent the family of humanity. Life of Prophet Muhammad (PBUH) is full of examples of the practicing reality of what he said or preached. Hazrat Bilal, who was sidelined for his so-called voice disability and for being black to perform 'azaan' (call for prayers), was the first choice of Prophet Muhammad (PBUH) more for the genuineness of his love, feelings and passion in this regard. Among the hadith of Prophet Muhammad (PBUH) regarding peace and humanity, is a selection and translation of the following hadith by Kabir Helminski of the Threshold Society, Turkey working on Islam and Sufism: Power of peace: According to Prophet Muhammad (PBUH) "A perfect Muslim is one from whose tongue and hands mankind is safe." He (PBUH) says: "Power consists not in being able to strike another, but in being able to control oneself when anger arises." To practice what Prophet Muhammad (PBUH) preached are examples of foes turning friends through winning tolerance and forgiveness and friendship with the POWs. Battle of Badr and Battle of 'Khandaq' are a couple of awesome examples in this regard. Wars were waged against Muhammad (PBUH) but he showed his antagonists that the power of peace was far greater than that of war. The peace treaty of al-Hudaybiyyah is an example of this, when the Prophet agreed to every demand his antagonists made on the sole assurance that peace would subsequently prevail. His (PBUH) personal examples in love, peace, justice, tolerance, caring and sharing that overwhelmed even the worst enemies who later became the torch bearers of Islam and humanity.


Worth of a human: Included in the UN preamble is the hope "to reaffirm faith in fundamental human rights, in the dignity and worth of the human person, in the equal rights of men and women and of nations large and small". However, the UN and the UNESCO Commission subject human rights to certain conditions and limitations. They further differentiate between a person owning those rights and application of those rights according to the local law. Human rights as outlined in the Holy Qur'an and transformed into practical reality by Muhammad (PBUH) are not subject to the whims of nations, indigenous laws or individuals. If one examines three most celebrated documents on human rights: The British Magna Carta, The American Constitution and The United Nations Charter of Human Rights it is discovered that these intelligently written human documents seem to fade away in comparison to just one sermon of Muhammad (PBUH)! The practical reality of this sermon lies in such practical examples as the (emancipated) black slave of Ethiopia, Bilal, the poor laborer of Rome, Suhaib, and the lonely wanderer of Persia, Salman, were equal to, and had the same rights as, the most powerful man of the time.


Law beyond whims: UN preamble includes the provision "to establish conditions under which justice and respect for the obligations arising from treaties and other sources of international law can be maintained". However, it is totally a different story in practice where "might is right" practice steals the show in international affairs. For example, the transition from bipolarity to a unipolar world, the provision of the UN veto power and 'aid with strings' of the 'haves for the have nots' speak volumes of the flouted international law indeed. However, human respect, grace, dignity and honor reflect from the life and teachings of Prophet Muhammad (PBUH) for the child, women, senior citizens, minorities, POWs and in interpersonal communication, business dealings, civic, public and political affairs toward accountability, justice and fairplay in all walks of life. He (PBUH) He was by far the most remarkable man that ever set foot on this earth. He preached a religion, founded a state, built a nation, laid down a moral code, initiated numerous social and political reforms, established a powerful and dynamic society to practice and represent his teachings and completely revolutionized the worlds of human thought and behavior for all times to come. Tops in human history:


Holy Prophet Muhammad (PBUH) is rated as the all-time most able, noble, humble and gentle personality, Allah's greatest creation, saviour of humanity and mercy for the whole of humankind by more than 1.5 billion Muslims irrespective of their sectarian, cultural, geographical and political differences. Many renowned non-Muslims writers, historians, philosophers, intellectuals and political leaders have rated Muhammad (PBUH) most highly for his noblest character. They include George Bernard Shaw, Annie Besant, Alphonse de La Martaine, J.W.H. Stab, Dr. Gustav Weil, Thomas Carlyle, Johann Wolfgang von Goethe, etc. For example, Michael H. Hart, a Christian American astronomer, mathematician, lawyer and scientist, after extensive research, has published biography of 100 most influential personalities of all time and rated Muhammad (PBUH) as number one in human history in his book "The 100", which included personalities as Jesus Christ, Moses, Napolean, Shakespeare, Columbus etc.

 

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PAKISTAN OBSERVER

EDITORIAL

RUSSIA & WAR IN AFGHANISTAN

DMITRY SHLAPENTOKH

 

As time has progressed, it has become clear that Afghanistan is an increasingly challenging endeavor for the USA. While America has engaged in fighting a variety of forces, the most dangerous is international jihadism or, as it is usually called, Islamic extremism. While its ideology, as well as the ideology of any movement, is often contradictory, it still has clearly defined features that make it appealing to many people. One might state that the ideology of jihadism, in a way, replaces the Marxist ideology of old. First, it proclaims that Muslims are brothers regardless of their ethnicity or race. Secondly, it emphasizes social/economic equality and states that rich Muslims should share their wealth with the poor. Thirdly, it stresses armed resistance and martyrdom as the way to exit from life and shows this by example to others. Finally, the ideologists of jihadism visualize the future as a universal Khalifat—the ideal society, sort of a replacement of Marxist communism.


This universal aspect of jihadism makes it attractive to quite a few Muslims, some of whom go to Afghanistan, which is seen as one of the major battlegrounds between Muslims and infidels. There are a considerable number of jihadists from all over the world who go over there, including from Russia where several sources of jihadists have emerged. The first, and the most important, is, of course, the Russian Northern Caucasus. The anti-Russian resistance broke out here in the early 1990s under, basically, a nationalistic agenda—the creation of an independent state. By the late 1990s and, especially, in the early 2000s, nationalists with often pro-Western sympathies were increasingly pushed aside by the jihadists. Finally, in 2007, Dokka Umarov, the leader of the Chechen resistance and the president of the virtual Chechen republic promulgated an "emirate," which heralded the end of the jihadist transformation of the movement.


A similar process could be recorded in the other Muslim enclaves of the Russian Federation. Tatarastan, for example, had mostly a moderate nationalistic opposition throughout most of the 1990s. Still, with increasing pressure from the Kremlin, extremist jihadism became an attractive option. Jihadism also started to spread even among people who had never been historically Muslim. For example, a certain Said Buryatsky, who perished in a terrorist suicide attack, had at least some Buryat blood. (Buryats, close to Mongols, are traditionally Buddhists.) There were also increasing cases of ethnic Russians converting to Islam, and some became jihadists. This was, for example, the case with a certain Pavel Kosolapov, who has engaged in several terrorist attacks in Russia.

Jihadists, similar to Marxist radicals of old, regard it their duty to fight what they regard as anti-Islamic, wherever they are located. Consequently, they often move beyond the borders of the Russian Federation and even the former USSR. Some of them moved to Afghanistan even before the American invasion in 2001. During the early years of the war, some of them were captured and landed in Guantanamo, later to be released and sent to Russia. Still, new jihadists recruited from Russia continued to arrive and participate in the fighting. According to some reports, there were several Chechens among the victims of a recent air strike called by a German commander in Baghlan Province in Afghanistan. There are indications that jihadists—quite a few of them from Tatarastan—have participated in the fighting in Pakistan, at least if one would trust their Internet sites.

What is the implication of these jihadists for the war? It is true that although their numbers are still small, they could well have a considerable impact on the combat abilities of the fighters. The jihadists from the Russian Federation usually have good knowledge of weapons and, in the case of people from the Northern Caucasus, considerable combat experience and stamina. Thus, their role in the war in Afghanistan and Pakistan should not be downplayed. What could be done to deal with the problem? What is the most important way of slowing down the penetration of these people into the war zone? Cooperation with Russia and other states that have borders with Afghanistan is the most important way: the sharing of intelligence and other confidential information would help to trace and wipe out potential fighters. Cooperation with Russia is not absolutely impossible, for a considerable segment of the Russian elite understand well that the Americans' defeat and departure from Afghanistan would constitute a great danger, not just for the USA but for Russia as well. Still, the tracing of these individuals would be a daunting task, not only because of the lingering mistrust between Russia and the USA, but also because such an enterprise would require full cooperation with Iran and Pakistan's full control over its borders. —The CG News

 

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PAKISTAN OBSERVER

EDITORIAL

RIGI'S ARREST: LET'S TRUST EACH OTHER

DR RAJA M KHAN

 

The arrest of the most wanted terrorist, Abdolmalek Rigi, the head of Jundollah militant outfit on February 23, 2010, is considered as the utmost success of the Iranian intelligence agencies. For the people of Pakistan, this arrest has two dimensions of enchantment. First; this arrest would reduce the ache of the Iranian brethrens, being caused owing to the repeated terrorist attacks on the innocent people by this militant outfit. Second; his arrest has brought an end to the Iranian accusations that Rigi is hiding somewhere in Pakistan and that Pakistan has been abetting him and his group against Iran. There is a number of differing information available regarding the form of arrest. However, all reports and information are converging one point that his arrest has taken place within Iranian borders. As per the resources within Iran, Abdolmalek Rigi, was on his way to Bishkek, the capital of Kyrgyzstan from Dubai, once the commercial flight on which he was travelling was forced to land en route in Iran. After arrest of Rigi and one of his deputy, the plane was allowed to complete the remaining journey. Iranian officials claim that Rigi was travelling on the Afghan passport, which has been confiscated by Iranian authorities.


Iranian intelligence officials claim that Rigi was in the US military camp twenty four hours before his arrest. As per Mr. Minister Heydar Moslehi, the Iran's intelligence chief, "Regi's capture is a great defeat for the United States, and that —Regi had contacts with American Central Intelligence Agency (CIA) and Israeli foreign intelligence service Mossad." He said that he had even met NATO Military Chief Jaap de Hoop Scheffer in Afghanistan in April 2008, after which the fatal suicide attack "inside the Amirul Momenin Mosque in Zahedan" was undertaken on May 28, 2009. This attack killed 25 people. As per Iranian investigation this militant outfit is being "trained and financed by the US". The US however, rejected all these accusations. Regarding the Rigi's arrest, resources say that Pakistan has played a key role in it. It was indeed the lead given by Pakistani sources that helped Iranian spying agencies in apprehending the man wanted most by either side. This conjecture has even been confirmed by Pakistan's Ambassador to Iran, Mr. Mohammad Abbasi. Mr. Abbasi further said that; "I must tell you that such action cannot be carried out without the cooperation of Pakistan.

I am happy that he has been arrested." Abdolmalek Rigi and his militant outfit Jundolah is said to have been involved in over a dozen terrorist attacks inside Iran. The last terrorist act conducted by this group was on October 18, 2009, on Iranian Revolutionary Guard Corps (IRGC) at Pisheen, a town of Sistan-o-Balochustan. Regretfully, owing to the misperceptions prevailing since 1990s, Iranian leadership and high-level officials pointed fingers at Pakistan, immediately upon the occurrence of the suicide attack. Iranian Foreign Minister without naming the group responsible for the attack said, "They cross into Iran illegally. They are based in Pakistan —and the hands of those behind the crimes in southeast Iran must be cut". Sequel to attack, Iranian Interior Minister Mr Mostafa Mohammad Najjar, visited Pakistan. Pakistan, however, clarified him its stance and assured him that, it would never encourage such type of attacks in the territorial jurisdiction of its traditional friend. He was ensured that Abdolmalak Rigi, the head of militant outfit Jundallah was not in Pakistan. Both countries have inked a number of agreements to strengthen the security on both sides of the Pak-Iran border.


Pakistani Foreign Office also elucidated that, "There are forces which are out to spoil our relations with Iran. But our ties are strong enough to counter these machinations." While dismissing the charges that Pakistan was being used as a springboard by Jundollah to launch attacks inside Iran, the spokesperson said; "there is no question given the excellent relations between us that Pakistani territory be allowed to be used for terrorist act against Iran." Otherwise, a year before, Pakistan has handed over a number of militants including Abdol Hamid Rigi, brother of the head of Jundollah militant outfit, to Iran. Hamid Rigi is waiting for the death penalty by the Iranian Government. This should have been a sufficient evidence of Pakistan's sincerity towards Iran. Therefore, an Indian type provocative response and later an attempt of hot pursuit indeed hurt the emotions of the People of Pakistan who have a deep love for the people of Iran. Such type of response would weaken the traditional bondage between the two brotherly Muslim neighbours. Thus, providing opportunities to the forces considered the common enemies of both for exploiting the situation in their favour.


In fact, how could Pakistan support this outfits, knowing that this group was involved in the suicide attack on the former President Pervez Musharraf and former corps commander Karachi. Besides, the group was also found involved in a number of other terrorist acts in Pakistan. Moreover, Pakistan cannot afford to destabilize its only secure border that runs with Iran. Besides, over the last few years, both countries are desperately working for a gas pipeline from Iran to Pakistan, and a number of other projects of mutual interest.


The fact is that Rigi and his organization has its origin in Sistan-o-Balochistan area of Iran. Rigi is a well known tribe of the Iranian Balochistan. This tribe is totally dedicated to revolt against the policies of Iranian Government. This can be imagined from the fact that another brother of Abdolmalek Rigi, Abdolgafoor Regi – blew himself in a suicide attack on the headquarters of Iran's joint police and anti-narcotics unit in the Saravan city on December 28, 2008. In an online telephonic conversation Abdolmalek Rigi, the head of the militant organization told Rooz News Agency of Iran that; "he considered himself an Iranian and the Baloch grievances must be settled within the present day Iran". Regarding his linkages with US and Western world, on April 2, 2007, Abdolmalek Rigi; "appeared on the Persian service of Voice of America, as the leader of the popular Iranian resistance movement. Although the stated objectives of Jundallah have been to protect Baloch rights in Iran".

The organization indeed comprises of locals of the Sistan-o-Balochistan who considered that the Iranian Government in almost all fields has ignored them. Coloured in the Sunni sectarian group, the organization indeed has elements that are professional criminals, patronized by spying network of extra-regional forces, operating for a greater agenda on behest of its masters. Even Rigi himself is not a religious minded person. Under such a scenario, there is a requirement that the leadership of Iran and Pakistan should work synergistically to proactively stem the conspiracies being hatched for both.

 

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THE INDEPENDENT

EDITORIAL

EID-E-MILADUNNABI

 

Today is the 12th of Rabiul Awal, the third month of the Arabic calendar. The day has a great significance for Muslims around the world. It was the holy occasion which marks the advent of  our Prophet Muhammad (SM) in a society which was steeped in ignorance, idolatry and turpitude  -  a period better  known as Aiyam-e-Jaheliat or the days of darkness. As his feet touched the earth, the birds sang, the stars danced and the whole nature was full of merriment as if the whole universe was waiting for his arrival. Yes, he was the last and the greatest of all messengers of Allah and his coming was a turning point in human history.
 As a youth he impressed this barbaric society as a truthful person, someone who never told a lie. He formed a society to help the poor, the widows and the invalid and with the help of other youths turned it into a social movement. The Makkaites in admiration and great fondness called him 'Al Ameen' - the truthful.
His marriage with Hazrat Khadija, a rich woman 15 years older than him was a significant event as it was she who first realized he was the last Prophet as mentioned in all the previous revealed religious books. This youth shunned the joys of his youthful days and spent days and nights in meditation in a mountain cave named Hera. This went on for nearly 15 years until one night Gabriel came and requested him  to recite the  first Quranic verse - Iqra, read in the name of your Lord.


Soon he called out to his community to accept the Truth - the truth of Allah being one and unique and Muhammad being his holy messenger. It created a great stir among the poorer segment of the society and they started accepting his Faith. The rich and wealthy, who still called him the truthful, opposed him tooth and nail and at one stage he had to migrate to Madina where people accepted his Faith. Here he established his Islamic state and drew up a covenant with the Jews which is known as the Charter of Madina, the first written constitution long before the Magna Carta.


Sadly enough a religion which preached peace for humanity has become a religion bereft of all its cardinal virtues. Some have begun to kill innocent civilians in the name of Jihad which is totally forbidden in Islam. Further, it has turned into a religion that has become given to rituals only. The spirit is gone.
On this day of his holy birth as we indulge in merriment and rightly so, let us not forget his cardinal principles. If we just follow one of the principles, that of speaking the truth, nothing more is necessary to change this corrupt society full of strife and conflict. It is the love for the Prophet (SM) that can reform us and make us into his real followers. 


Otherwise, we will be left with rituals only which are worse than idolatry.

 

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THE INDEPENDENT

EDITORIAL

PENDING CASES

 

The number of pending cases in the country's High Court has assumed gigantic proportion. According to a report published in this newspaper yesterday, a staggering total of 300,000 cases of all types are remaining pending at the High Court alone because of some obvious reasons such as insufficient staff, enough logistic supports and absence of a certain provision in dealing with case. The number of cases is increasing in each successive year with filing of about 150 new cases everyday. If this gridlock of cases is not addressed right now, the whole judicial system of the country may face serious problems.


For the quick disposal of the huge number of pending cases, increasing number of judges in the court is as important as it is important to ensure their quality and skill. Therefore, the government has to act in this direction, and soon.


What about the progress of the attempt to introduce Alternative Dispute Resolution (ADR) such as mediation and arbitration? If this can be put in place now, it would help reduce pending of cases, as the Law Minister Barrister Shafique Ahmed recently mentioned. 

 

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THE INDEPENDENT

BOB'S BANTER

OUR LIVING ROOMS..!

ROBERT CLEMENTS

 

Like Indian woman who looks distinctively dissimilar at different times in the day, so do our living rooms, if not all, most of them!


Look at our women towards evening, all decked up and ready to go, dressed in wedding finery, jeweled nose ring balanced against ear lobes carrying glittering pearl inlaid in gold, her sari, Kancheevaram all six yards, yet, same woman in the morning, so different as she balances rolling pin and rolls out a half a hundred chappatis, sweat gleaming, eyes red with effort and night dress still crumpled from her tryst with attempted sleep.
And so throughout the day, do our women change, from, maid to mother to model.


And so throughout the day do our living rooms change, if not all, most of them:


If perchance you visit friends home and ring doorbell without warning, you may find yourself standing a little longer outside as frenzied activity goes on to get living room, out of its bedroom look. You ring bell again and a voice shouts, "Just a minute!" And another two goes as little brother and sister who used divan to sleep on during the night are rushed off still bleary with sleep, and clutching pillow to the bedroom next door. Mamajee who has fallen asleep on two sofas put together is rudely woken up and told to move, also in with two children, "Quickly uncle quickly!"


Chairs are moved, cover spread over divan and door is opened to welcome you to a living room, which looks like it's just had a makeover; so fresh, so clean, till you glance under divan and see little girl's doll and uncle's hastily thrown cigarette pack, reading glasses, pajamas, and yes a stub or two.


Afternoon, its bedroom again and in the evening living room becomes home theatre as giant screen has whole family, neighbour's children and pretty neighbour whose husband comes back late, watching favourite movie or serial.


Our living rooms live!

Not for us a living room, kept like a museum only for guest or visitor, oh no, sometimes sahib spreads his account books out and madam sits with him on floor and helps him record his cash and cheque transactions so that income tax official will not surprise them like you did this morning.


Our living rooms change throughout the day, if not all, most of them, like our women; maid and mother and model; our living rooms live..!

bobsbanter@gmail.com

 

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THE INDEPENDENT

THE GREATEST CHAMPION OF WOMEN'S RIGHTS

PROPHET MUHAMMAD (PBUH)

SYED ASHRAF ALI

 

Mary Wollstonecraft, Anne Nurakin, Margaret Spranger, Kate Millet and Germaine Greer are all universally acknowledged as pioneers in the world of Women's Liberation. People in every nook and corner of the globe remember with deep respect the salt of the earth whenever they discuss women and their emancipation from the clutches of Male Chauvinism. But  very few of us are really aware of the fact that the first person to advocate effectively the cause of the fair sex in history was not a lady - he was a man, born not in Europe or America, not in the Modern Age, but in Arabia, in the sixth century Anno Domini. The first person to effectively champion and establish the rights and privileges of women - the most neglected and the most disparaged section of human race - was indeed the holy Prophet  Muhammad (peace be upon him).


Nobody on this clay of a cold star denies today the fact that in every country women play a significant role in society. Most of us admit today that woman is the builder and moulder of a nation's destiny. Though delicate and tender and soft as lily, she has a heart far stronger and bolder than that of a man. She is the supreme inspiration for man's onward march - an embodiment of love, pity and compassion. She inspires not only ordinary men, men who are shaky and feeble-hearted, but even the salt of the earth. Giants with unshakeable conviction and dedication, titans with supreme qualities of head and heart also need inspiration and assistance from the fair sex in the crucial hours. History testifies that even the greatest of all creations, Prophet Muhammad (pbuh), immediately after the first Revelation, received and enjoyed inspiration and advice and consolation not from any man but from his wife Khadijatu'l-Kubra (RA), an exemplar among the womanhood of Islam. That is why even a great general and renowned statesman like Napoleon Bonaparte claims unequivocally: "Give me good mothers and I will give you a good France."


But the situation was not always that favourable for the woman in the annals of civilisation. National pride and religious bigotry gave rise to various divergent theories regarding the social exaltation of women among the cultured classes in history. It is true that the Greek philosopher Plato was a strong defender of female equality and even admitted a few women to his academy. In Republic he argued that "since they are competent and of a like nature" as men, women should share equally in all rights and public affairs. But Aristotle disagreed with his mentor on this point and believed that women were inferior and should be ruled by men. The overall situation in ancient Greece was indeed very detrimental to the interest of the fair sex and women were not permitted to work outside the home. In early Roman times as well, a woman was under the sole domination of her husband. She never became a legal member of her husband's family. She was, however, able to acquire her own property rights to some extent and had a greater choice in whom she married. But even these trifling rights enjoyed by Roman women were later denounced by early Christian leaders who saw it as a sign of moral decay. "As Christianity became dominant throughout Europe," writes Bernhard J. Stern in the Encyclopaedia of the Social Sciences, "women were deprived of that freedom which they attained in Rome." In the view of the Church, women were basically dependent and subordinate. - "The head of every man is Christ, the head of a woman is her husband." (Corinthians, II) Even divorces were forbidden - "Whoever divorces his wife and marries another, commits adultery against her; and if she divorces her husband and marries another, she commits adultery. " (Mark, 10 : 11-12). St. Tertullian, the renowned Christian theologian, polemicist and moralist, represented the general feeling when he described women as "the Devil's Gateway, the unsealer of the Forbidden Tree, the deserter of the Divine Law, the destroyer of God's image - man." St. John Chrystom (347-407 AD), who is recognised as a saint of high merit, "Interpreted the general view of the Fathers," says Lackey, "when he pronounced women to be a necessary evil, a natural temptation, a desirable calamity, a domestic peril, a deadly fascination, a painted ill." The "Original Sin" was universally accepted as the woman's creation - "Adam was not deceived, but the woman being deceived, was in the transgression." (Timothy 2:13-14).
The position of the women in ancient India was equally terrifying and miserable. A woman was debarred from studying the Vedas or participating in the oblations to the manes, or in the sacrifices to the deities. The wife's religion was to serve her lord; her eternal happiness depended on the strict performance of that duty. And the faithful wife, who sacrificed herself on the funeral pyre of her dead spouse, found a niche in the hearts of all the votaries of Hinduism as one of the best and noblest of her sex; and often became herself the object of worship. The great Code of Manu, of which Hinduism is justly proud, and which became in later centuries the model for the legal doctrines of other Eastern races, declared unhesitatingly: "Women have impure appetites; they show weak flexibility and bad conduct. Day and night must they be kept in subjection." Prof. Indra echoes the sentiment prevalent in those days when he writes in Status of Women in Mahabharat : "There is no creature more sinful than woman. Woman is burning fire. She is the sharp edge of the razor. She is verily all these in a body ...... Men should not love them." (Pp. 16-17). According to Hindu Law, a woman had full and unrestricted ownership only over Stridhan, but she had no right or share in the property of the family. Even divorce was not permitted, however degraded, characterless or tyrant the husband might be. Hindu marriage was indissoluble. It was a union of two souls for good, an eternally unbreakable bond. "As the shadow to the substance, to her lord is the faithful wife. She follows her lord to death or life."


It was the Prophet of Islam (pbuh) who for the first time in history had the sagacity, courage and conviction to declare that the woman is not "a scorpion ever ready to sting", not "an organ of the Devil", but she is the Mohsena - an impregnable fortress against the conspiracies of Satan. He was the first to acknowledge that "the wife is the empress of the husband's house", the first to declare that a man or woman's first duty is not to help his/her father first but he or she should attend to her mother's need first. That is not all. It was the holy Prophet Muhammad (pbuh) who was the first to assert that he is the best among human beings who behaves best with his wife. He also said, He is the best who is considered best in the eyes of his wife. (Tirmidhi). He also declared in unambiguous terms that the Heaven lies not at the feet of the father or husband, it lies at the feet of the mother. What is more, the Holy Quran denounces in unequivocal terms the heinous attitude of those who hate or dislike female children: "When news is brought to one of them, of the birth of a female child, his face darkens, and he is filled with inward grief! With shame does he hide himself from his people, because of the bad news he has had! Shall he retain it on sufferance and contempt, or bury it in the dust? Ah! what an evil (choice) they decide on?" (Sura Nahl,  16:59-61) It is true that the Holy Quran states : "Men are protectors and maintainers of women, because God has given the one more strength than the other, and because they support them from their means." (Sura Nisaa, 4: 34). But it also states: ye are forbidden to inherit women against their will. Nor should ye treat them with harshness, that ye may take away part of the dower ye have given them . . . . Would you take it by slander and a manifest wrong?" (Sura Nisaa, 4: 19-20). No wonder, centuries before Anne Nurakin or Kate Millet could even dream of Women's Liberation, the holy Prophet of Islam (pbuh) blessed the womenfolk with rights and status and honour based on the concept of equality, liberty and fraternity.
There must indeed be something most extraordinary, most chivalrous about this "Child of the Desert" that alone among the great teachers of mankind did he confer the first legal status of honour and responsibility upon women making them Sui Juris, ensuring their economic independence and providing them opportunities in every sphere of human activity and in every domain of thought, guaranteeing their rights in the properties of the deceased parents, of the husband and the children "From what is left by parents and those nearest related there is a share for men and a share for women, whether the property be small or large  ¾ a determinate share."(Sura Nisaa, 4:7) These are rights and privileges which could not even be conceived of till the enactment of the Married Women's Property Act in England by the middle of the 19th century - rights which are being conceded by the civilized nations of Europe and America in the twenty-first century.


Mention may be made in this connection that in the case of marriage also a Muslim woman enjoys rights and privileges which have never been granted in any other religion. Marriage in Islam, though considered a sacred relation between the husband and the wife, is not a sacrament, but purely a civil contract. No person can marry a woman without her consent. Liberty is allowed a woman, who has reached the age of puberty, to marry or refuse to marry a particular man, independent of her guardian, who has no power to dispose of her in marriage without her consent or against her will; while the objection is reserved for the girl, married by her guardian during her infancy, to ratify or dissolve the contract immediately on reaching her majority. It is indeed essential to the validity of the marriage in Islam that there would be (1) declaration or offer on the part of the one, (2) acceptance by the other, and (3) before sufficient number of witnesses (in Hanafi Law, two). What is more, it is obligatory on the part of the husband that he should promise to pay or deliver a sum of money or other property as dower to his wife. This settlement of money or property on the wife, without which a marriage is not fully legal, is known as Mahr. It is, therefore, evident that in a Muslim marriage it is the bridegroom who has to pay the Mahr. It is really unfortunate that Muslim bridegrooms in our society nowadays force the brides or their parents to pay the dowry - an act which is never permitted in Islam. And many among us are not even aware of the fact that Islam also empowers the wife to effectuate a divorce on various grounds including cruelty, insanity and impotence of the husband.


The Holy Quran ordains: "Reverence God, through Whom ye demand your mutual rights, and reverence the wombs that bore you: for God ever watches over you." (Sura Nissaa, Verse 1). It states without the slightest ambiguity that while the decencies of family life should be enforced, women should always be held in honour and their rights recognised, in marriage, property and inheritance. Never does Islam admit or assert that Adam was not deceived, but the woman being deceived, was in the transgression. On the contrary, Islam very rightly condemns both Adam and Eve for the unfortunate incident and both had suffered equally for the folly. It simply refuses to brand woman as the "First deserter of Divine Law who destroyed God's image." And it is to remove the age-old misconception and superstition that Islam eulogises woman as Mohsena - the fortress against the evil designs of Satan. What is more, the Holy Quran emphatically warns: "Those who slander chaste women, indiscreet but believing, are cursed in this life and in the hereafter: for them is a grievous penalty." It also declares: "And those who launch a charge against chaste women, and produce not four witnesses (to support their allegation), flog them with eighty stripes; and reject their evidence hereafter; for such men are wicked transgressors." (Sura Nur, Verse 4).


The Holy Quran has also totally quashed the age-old belief that women have no soul and are not entitled to enter paradise. It declares in very clear terms: "Never shall I suffer to be lost the work of any one of you, be he male or female: you are members, one of another.... If any do deeds of righteousness, be they male or female, and have faith, they will enter paradise, and not the least injustice will be done to them." (Sura Al-i-Imran, Verse 195, and Sura Nisa, Verse 124). And that is why, about the Christian Era 620, when people were still doubtful whether woman had soul or not, whether she was human or otherwise, we find two women delegates amongst the 75 Yathribites (Medinites) who came to the holy Prophet (pbuh) asking him to migrate to Yathrib (Medina) where there were better scope for the Call of Islam (Da'wa). The two women were Nusaiba bint Ka'ab (Umme Ammara) of Banu Nasiba and Asama' bint Amr (Umme Mani) of Bani Salma.


With the advent of Islam a woman was no more considered a mere chattel, she formed an integral part of the estate of her husband or her father. It is true that Muslim women do also fight and struggle for greater rights and  better facilities for them, but their ideas and vision do not tally with those of Germaine Greer when she writes in The Female Eunuch that "the majority of women drag along from day to day in an apathetic twilight .... Women have very little idea of how much men hate them." On the contrary, the women in Islamic countries have every reason to continue to find meaning in their existence through motherhood, an honoured institution as the presiding deity of every household. And Islam, which as a complete code of life guides in every sphere of activity and in every domain of thought, clearly ordains: "Ye are forbidden to inherit women against their will. Nor should ye treat them with harshness. ... On the contrary, live with them on a footing of kindness and equity."(Sura Nisaa, Verse 19). There is, therefore, nothing surprising that in every sensible Muslim society in the world women are still considered to be man's "dearest partners of greatness", testifying so eloquently to the emphatic declaration in the Holy Quran: "They (women) are your (men's) garments and you are their garments." (Sura Al-Baqara, Verse 187).


The Muslim women indeed look at the "Women's Lib.", so popular in the West today, with a different angle of vision. The Western woman is pining to leave hearth and home to seek equality with man and an independent identity divorced from man. The protagonists of Women's Lib. vehemently reject the assumption that a woman's identity is never complete without a man around. But the Muslim woman continues to find meaning in her co-existence with man, an existence with honour and dignity and respect.

 

(The writer is a former Director General of Islamic Foundation)

 

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THE AUSTRALIAN

EDITORIAL

STRETCHING THE FRIENDSHIP

NOBODY SHOULD REGRET THE DEMISE OF A HAMAS WARLORD

 

IF Mossad agents did indeed steal and misuse Australian and other passports in the operation to assassinate Hamas militant Mahmoud al-Mabhouh in Dubai, it was an appalling mistake. The facts are still far from clear, but on the available evidence the Israeli intelligence service tops the list of suspects. Israel clearly had the motivation to kill Mabhouh, a founder of the Izzedine al-Qassam Brigades, Hamas's military wing. It also had the justification. Hamas and Israel are at war, with Hamas committed to the eventual obliteration of Israel and its replacement with an Islamic state. As a leading commander for 20 years, Mabhouh carried out scores of attacks against the Jewish state. He is accused of playing a key role in smuggling Iranian weapons to Hamas militants in the Gaza Strip and kidnapping and killing two Israeli soldiers in 1989. Hamas also holds the despicable distinction of deploying the world's first known female suicide bomber in 2002, giving a hollow ring to any claims it might make about Israeli dirty tricks.

 

However legitimate the target, intelligence missions designed to kill are problematic in foreign jurisdictions, with modern surveillance technology capturing agents' comings and goings, as happened in Dubai. But in its outcome and execution, the operation that killed Mabhouh in a Dubai hotel room on January 20 was successful. Critics of campaigns such as the three-week Gaza offensive mounted by Israel after 3000 Hamas rocket attacks during 2008 should not criticise a precisely targeted attack on a warlord such as Mabhouh.

 

Not for the first time, however, Mossad's reckless conduct has tarnished Israel's standing and made it harder to win the public relations battle. Canada's relationship with Israel deteriorated sharply in 1997 when two Mossad agents were caught with Canadian passports during a failed assassination attempt on a Hamas official in Jordan. New Zealand imposed diplomatic sanctions on Israel in 2004 after two suspected Mossad agents were jailed for six months for trying to obtain New Zealand passports on false grounds. That botched attempt involved stealing the identity of a cerebral palsy sufferer.

 

Of the five nations with passports alleged to have been used in the latest case, Australia is possibly Israel's closest ally. That makes any abuse of passports belonging to Australian citizens living in Israel all the more shocking. The fact Australian authorities approached the Israeli government years ago to seek assurances Australian passports would not be abused would make any deception worse. It feels like a betrayal of trust of an old friend, and is especially distressing for Australia's highly respected Jewish community, which is rightly proud of Israel's achievements as a lone beacon of democracy in a hostile region.

 

Australia has long valued Israel as a close, democratic ally in the Middle East, and in hostile UN forums has stood up for its right to defend itself. Most recently, Australia voted with the US in November against an Arab-sponsored UN resolution calling on Israel and the Palestinians to probe war crimes allegedly committed in Gaza in December 2008 and January last year. Britain and France abstained.

 

It is in both Australia's and Israel's interests for the relationship to remain strong. But Kevin Rudd, a former diplomat, was right not to mince words in making Australia's concerns clear. Abuse of passports by officials of any foreign government is an outrage. The Prime Minister has put Israel on notice: Australia would not regard the abuse of our passports as the act of a friend. Israel, which has a healthy national pride, should respect such a strong stand. It would not tolerate abuses of its own passports, and nor would its staunchest ally, the US.

 

Israel's best course is to take Australia's concerns seriously, co-operate with investigations, acknowledge wrongdoing and ensure it is never repeated. Few Australians will shed tears at the demise of the contemptible Mabhouh, but Mossad's apparent abuse of the rights of Australian citizens is deeply upsetting. If Israel was responsible, it must go out of its way to avoid stretching the friendship any further.

 

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THE AUSTRALIAN

EDITORIAL

 

NEVER MIND THE POLITICS, LET'S TEST THE POLICIES

OUR LEADERS NEED TO GET BACK TO BASICS IN AN ELECTION YEAR

 

POLITICS is about many things, but without policymaking at its heart, it becomes a hollow exercise. Which is why both Labor and the Coalition need to make sure this federal election year does not become a paint-ball game, with claims and counter-claims splashed about with abandon.

 

Australia finds itself in an enviable position, with unemployment on the way down, healthy growth prospects based around our mining sector and, most of all, largely free of the fallout from the global financial crisis that continues to haunt far bigger economies such as the US, Britain and a posse of European states.

 

If ever there were a time when the Australian electorate needed a mature debate on long-term policy development, it is now. Our economic fundamentals are sound but, just as importantly, Australians understand we are in this sweet spot because governments on both sides have spent the past 30 years remaking the nation. For Australian voters, reform is not a dirty word.

 

In this benign political climate, Kevin Rudd and Tony Abbott have an opportunity to continue what should be a constant process of renewal in any modern economy. Yet the policy debate is wide open.

 

Revived under its combative new leader, the federal opposition is in attack mode -- and the polls suggest this is going down well with some. But this could prove dangerous in the medium term as voters demand more detail. The government has a different problem. On his own account, the Prime Minister made about 600 pre-election promises in 2007. Adding more scattergun commitments this time would test credulity. Instead, the government must focus on those measures that contribute to a broader reform agenda.

 

The theatrics of Punch and Judy politics, which regrettably dominate Canberra media coverage, obscure an important point: there is broad consensus among business, policymakers and commentators about where the policy focus needs to be. Productivity and workforce participation must rise; governments must spend prudently; federal and state responsibilities must be streamlined. There is little argument about the need to improve infrastructure; to continue to improve delivery of education and health services; and to nurture our open and flexible economy. There is even a meeting of minds on the vexed issue of energy and the environment, with a bipartisan commitment to a 5 per cent reduction in our carbon emissions by 2020 and to a bigger effort beyond that if the international consensus allows. These are the issues around which the policy debate should focus.

 

For the Coalition, which staged its own policy think tank in Canberra yesterday, the next few months should be about specifics. Having rallied around the issues of debt and deficit, it needs to outline a detailed plan to secure prosperity. Uncomfortable memories from 2007 should not deter the Coalition from pursuing industrial relations. Now that the mining industry is starting to identify its real concerns about the Fair Work legislation, the Opposition Leader needs to spell out how he will fix this.

 

Mr Abbott, once a member of a government that increased middle-class welfare, seems to have his own ideas about ending rorts in areas such as disability payments.This is a tricky debate to conduct because much-needed reforms can be easily derailed by scare campaigns. Mr Abbott should hold his nerve and continue working on the detail.

 

For its part, the government must not be diverted from the larger policy debate by immediate problems, such as the household insulation debacle. Similarly, it must do more than simply announcing its plans on hospitals: that feels like old news for voters, who were promised a solution in 2007. Nor can it coast on the education reforms initiated by Deputy Prime Minister Julia Gillard.

 

The government has the advantage of incumbency in proving its credentials in the key area of government spending: the May budget will act as its policy document here. But Mr Rudd must also say what he plans to do about tax and the recommendations in the Henry tax report. Public policy would be helped immensely by the report's early release.

 

The media has a responsibility to guard against dumbing down the issues. While around-the-clock television and digital news have made politics far more immediate for many people, they are not easy places to conduct detailed policy discussion. Australians are politically and economically literate and deserve a considered debate that goes beyond sound bites.

 

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THE AUSTRALIAN

EDITORIAL

TECHNOLOGY OUTSTRIPS THE LAW

THE INTERNET SHOULD NOT BE BEYOND THE REACH OF JUSTICE

 

THE sickening Facebook posts following two child deaths in Queensland should deliver a jolt to authorities, who have up to now been reluctant to enforce the law in cyberspace. This week, web vigilantes set up hate sites against Allyn John Slater, accused of killing Bundaberg schoolgirl Trinity Bates. Incredibly, the Facebook tribute site for the eight-year-old victim was plastered with pornography and obscene postings, as was the site set up last week as a memorial to Elliott Fletcher, 12, who died in an alleged knife attack at his Brisbane school. The material, which would lead to certain prosecution if it were published in print, compounded the grief of bereaved family and friends. Some posts about the alleged killers and how the killings supposedly took place also contravened the contempt laws that bind the mainstream media. Facebook pulled the material down at the instigation of Queensland police, but the organisation has not faced the serious legal sanctions that other media would expect for such irresponsibility.

 

The mother of Sunshine Coast boy Daniel Morcombe, who disappeared in 2003, has also been sickened by a Facebook site pretending her son would be returned if the site attracted a million members.

 

Communications Minister Stephen Conroy and Queensland Premier Anna Bligh have told Facebook to overhaul security, but the fact that authorities are talking rather than acting suggests that technology has raced ahead of the law. Defamation laws are enforced less rigorously for online sites than for print media, while sites such as Crikey opt not to subject themselves to Press Council scrutiny.

 

In a world of international electronic publishing, international lawmakers are creating confusion with a random, scattergun approach. While Facebook gets away with too much in Australia, the Italian legal system has shown more bite, convicting three Google executives of violating the privacy of a Down syndrome schoolboy after film of him being beaten and verbally abused was posted online. In contrast to the Italians' proactive approach, Australia's Federal Court earlier this month ruled that internet service provider iiNet had no responsibility to prevent illegal file-sharing of copyright movies.

 

At the other extreme, Britain's libel laws favour claimants so heavily that they attract "libel tourism" lawsuits from foreigners that would have failed in their own countries, especially the US, where freedom of speech is prized. In one exceptionally ludicrous case, a Saudi businessman successfully sued a US academic over a US-published book about financing terrorism that sold a mere 23 copies in Britain. When not applied consistently, laws become meaningless. Our legal system has a long way to go to come to terms with the modern age.

 

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THE SYDNEY MORNING HERALD

EDITORIAL

OPPOSITION IS MORE THAN JUST OPPOSING

 

THE Leader of the Opposition, Tony Abbott, has been keeping to his script in the past week if he sees cameras rolling and sound recorders running, referring to his opponent as often as he can as "Prime Minister blah-blah". Readers will be familiar with the argument to which this leaden sound-bite refers. Kevin Rudd, the opposition wants voters to believe, is all talk and no action.

 

True, there are some grounds for saying this. Some - but not as many as the opposition wants. The government has not lived up to its promises on reforming health administration. Its carbon pollution reduction scheme, trumpeted before the Copenhagen summit late last year as a big political plus for the government, has fallen flat with the failure of that summit. There are excuses for this, of course. Health is an enormous portfolio. Change will come slowly, if it comes at all. And the constitutional change required if the federal government is really to take on this state responsibility is a still slower, more daunting task. Similarly, manoeuvring Australian public opinion to accept effective action on climate change is hard enough; getting the world to agree multiplies the challenge a thousandfold - even had the Chinese not sabotaged the venture.

 

But though there may be reasons why he has failed to deliver what was expected, Rudd did make promises which did raise expectations.

 

Yet if Rudd is indeed a lot of talk and not much action, the opposition's blocking tactics in the Senate have helped make him so. There, the opposition, backed now by the Greens and by the egregious independent Steve Fielding, has managed to turn its own soundbite into reality by stymying much of the government's legislative program.

 

The tactic runs parallel to that of the Republican Party in the United States. Faced with an opponent who was elected with a thumping mandate for change, conservative America has relentlessly opposed him at every step, to the point where Barack Obama is unpopular and, like Rudd, unable to make good his promises and so seen as ineffectual. In both cases this is opportunistic politics, not something done out of belief or principle.

 

The Coalition's bafflingly illogical alternative to the carbon pollution reduction scheme is an example: it represents a return to the sort of bureaucratic, dirigiste centralism that most would have thought ended with the Menzies and Whitlam eras. Similarly, its opposition to changes to the Youth Allowance have little to do with good government or responsible policy. It appears to be trying simply to alienate students from the government in the most brutal way - by ensuring the latter cannot make the payments which the former were relying on.

 

In behaving this way - saying and doing whatever it takes to win power and to hell with the consequences - the Abbott-led Coalition resembles the opposition to Gough Whitlam under Billy Snedden and then Malcolm Fraser. Having been ejected from office after 23 years, the Coalition in the years after 1972 seemed unable to believe what had just happened to it. Perhaps the reason for its tendency to do this is to be sought in the way conservative politics works.

 

The conservative outlook is more reactive, less enthusiastic about using government as an agent of change. Parties of the centre-right, such as the Coalition, often seek power in order to ward off government rather than wield it to transform society. Somewhat paradoxically, this means that, for the conservative side of politics more than for Labor, holding office provides a necessary discipline and reason for existence. Loss of power leads to a loss of cohesion, and confusion over directions and ideas. It looms as an almost existential threat. That is why now, as in 1972-75, the Coalition in opposition is becoming relentlessly negative and destructive. As a tactic, it certainly worked in 1975 - as it may well again.

 

Yet it is inherently dangerous. Simply saying no to everything the elected government has on its program sets at nought the value of the popular mandate which an election win confers. It sets a precedent for future oppositions which retain a Senate majority to engage in similar destructive behaviour from the other side. Voters get the politicians they deserve, but it is unlikely that Australia's voters have been wicked enough to deserve politicians who are continually prevented from doing what they promised. The opposition should drop its self-interested extremism, and let the elected government govern.

 

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THE SYDNEY MORNING HERALD

EDITORIAL

SCIENCE VS HOLLYWOOD: THIS TIME IT'S PERSONAL

 

SCIENTISTS are standing up for themselves for once. They are demanding that science fiction make sense. Guidelines have been drawn up by a committee of eminent professors who have nothing better to do, insisting that film makers restrain their natural urges and break only one law of physics per film. Giant insects, for example, are out, because insects that big would collapse under their own weight. ''The hope is that it will get better science into film while still making them interesting,'' one professor said. The Herald, which has whacked many a creepy-crawly in its time using only a tightly-rolled copy of itself, believes this is a forlorn hope. We actually rather like films in which giant insects are beaten to death by heroes bold enough to defy several laws of physics simultaneously. Giant insects collapsing under their own weight, meanwhile, are humdrum - the stuff of everyday life. They can be found under the toaster by any who care to look. Sci-fi filmmakers do what comes naturally. Why can't these professors leave nature well enough alone?

 

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THE SYDNEY MORNING HERALD

EDITORIAL

FRIENDS DON'T FAKE EACH OTHERS' PASSPORTS

 

AUSTRALIAN passports are basically very safe, according to Deputy Prime Minister Julia Gillard. And so they are, if ''very safe'' is measured by head counts. Most people can leave the country and return to it without risk of their passports being used to create fake identities for members of assassination squads dispatched by foreign intelligence agencies. As the world now knows, however, three Victorians living in Israel, Joshua Bruce, Adam Korman and Nicole McCabe, were among 26 people from several countries whose passport details appear to have been stolen and used in precisely that way. Although Israel has maintained its usual practice of neither confirming nor denying involvement in what it calls ''targeted killings'', the assassination in Dubai last month of a Hamas operative, Mahmoud al-Mabhouh, is generally believed to have been the work of the Israeli secret service, Mossad, whose agents are said to have used stolen identities to enter and leave the Gulf state.

 

The governments of Australia and the other nations whose citizens' identities were used - Britain, Ireland, France and Germany - have all issued strong diplomatic protests at the misappropriation, though without directly accusing Israel of responsibility for it. The diplomatic niceties were preserved in Foreign Minister Stephen Smith's judiciously phrased statement that ''If the results of that investigation [by ASIO and the Australian Federal Police] cause us to come to the conclusion that the abuse of Australian passports was sponsored or condoned by Israeli officials, then Australia would not regard that as the act of a friend''.

 

Nor should it. The question, however, is whether Israel recognises any obligation to comply with the legal and ethical standards prescribed by the international community for the use of travel documents, and whether, in the case of countries such as Australia, Israel is willing to reciprocate the loyal friendship and diplomatic support they have shown towards the Jewish state since its foundation. The insouciant attitude that Israel's government has adopted to the diplomatic row over the identity thefts suggests, on the contrary, that Israel regards itself as bound by no such obligations, and is constrained only by a need to defer to nations whose friendship is too important to alienate. It is noteworthy that no American passports were used in the Dubai operation.

 

The indifference Israel has shown to the wider world by this exercise goes beyond its apparent willingness to betray the trust of Mr Bruce, Mr Korman and Ms McCabe, who are presumed to have no knowledge of what was being done in their names.

 

As The Age reports today, three Australian men who migrated to Israel in the past decade and retained dual citizenship have returned here on several occasions to change their names legally and obtain new passports. All three are reported to have used their new Australian identities and passports to enter countries that do not allow visits by Israeli citizens, including Iran, Syria and Lebanon, and to have worked for a European telecommunications company with a subsidiary in Tehran. The implication is clear: Australia has apparently become a convenient passport factory for Israeli agents.

 

Five years ago the then Palestinian representative in Australia, Ali Kazak, warned that this was happening, and claimed that a Mossad agent in Sydney had obtained 25 false passports. Shortly after, two suspected Mossad agents were arrested in New Zealand and served six-month jail sentences after pleading guilty to charges of having attempted falsely to obtain a passport. The incident led to strong condemnation of Israel's action by then New Zealand prime minister Helen Clark, who suspended diplomatic relations between the two countries. Ties were not restored until after an Israeli apology, more than a year later.

 

Mr Kazak says that his warnings were played down by the Howard government's attorney-general, Philip Ruddock, although the foreign minister in that government, Alexander Downer, says his recollection is ''that over time we have raised this issue with the Israelis''. If Mr Downer's memory is correct, Israel was obviously unmoved by his representations. And now, Prime Minister Kevin Rudd, who has described himself as a strong supporter of Israel, says he is deeply concerned and ''Australia will not be silent on this matter''. If the investigations by Australia's security services do conclude that Israeli operatives misused Australian passports, it must be hoped that Mr Rudd is as resolute in his response as Miss Clark was in New Zealand. Israel should understand that although Australia's friendship is not in doubt, that friendship is not a licence for Israeli agents to behave as they please.

Source: The Age

 

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THE GUARDIAN

EDITORIAL

UNTHINKABLE? USEFUL GODPARENTS

 

Plenty of modern godparents remain conscientious, perhaps especially those who take the traditional religious side of the role seriously"It is true," Martin Amis confessed on the Guardian letters page this week, "that I am a useless godfather." Many ageing godparents will probably know the same guilty feeling. As years pass and lives diverge, the original flattering request by the new parents, once so delightedly offered and so proudly accepted, can become a distant memory. But not always. Plenty of modern godparents remain conscientious, perhaps especially those who take the traditional religious side of the role seriously. Yet godparenting slipped its religious moorings a long time ago. Lots of godparents are firmly secular but still reliably useful to their charges, even if that only means fulfilling their responsibility with the occasional ticket to the zoo or ballet rather than busybodily ensuring any theological or other rectitude. For obvious reasons, the generations who were scarred by war were particularly likely to encourage godparents. The lives of many postwar babyboomers were enriched by such relationships. Today, less uncertain of our future, the tradition has probably dwindled. Few people, though, can claim that the pressures on parents and the needs of children for strong reliable relationships have declined. On the contrary, with the spread of working parenthood and the extended family in decline, the pressures and needs are more intense. A more modern form of godparenthood could play an important supportive role in today's scheme of things – and be good for more than the annual gift of a fiver.

 

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THE GUARDIAN

EDITORIAL

THE ECONOMY: DON'T GET YOUR HOPES UP

 

Yesterday's figures were the best bit of economic news for the government so far – the trouble is, they were not all that goodIn normal times, a document called "UK output, income and expenditure" published by the Office for National Statistics with revised figures on how the economy did at the end of last year would be one for the economic anoraks. But these are not normal times.

 

The UK has not only been through one of the sharpest economic contractions in decades, it is about to have a general election in which for the first time since 1992 economic policy will be front and centre. The Conservatives will blame Gordon Brown for the mess we are in, while Labour will contend that to allow David Cameron and George Osborne to mind the shop will be to endanger any economic recovery. And so yesterday's report showing that the UK economy grew 0.3% at the end of the last year rather than the 0.1% previously estimated is a prime exhibit in this case. The easy political interpretation of that news will be that Labour have scored an early point, that Mr Brown has another bit of evidence to show that his policies are working.

 

Which is, to be blunt, pushing it a bit. Yesterday's figures were indeed the best bit of economic news for the government so far this year – the trouble is, they were not all that good. For a start, the only reason official statisticians increased the figures for the end of 2009 was because they found that economic performance beforehand had been even worse than previously calculated. So compared to the preceding downturn, the upturn is a bit steeper: some improvement. Even more worrying, the big boosts for the UK economy were the car scrappage scheme, the VAT cut and government investment. One does not need to be especially sharp-eyed to note that these boosts are all either now at an end or about to end. There is still precious little sign of a private-sector recovery. And, if Mr Brown holds out for a May or June election, the next GDP report will be released in April for the first three months of this year – a period in which any nascent economic growth will have been buried under piles and piles of snow. And that could be the start of the now infamous double dip in the economy.

 

At this election, for the first time in well over a decade, the prospects for the UK economy are very uncertain. It remains on life support and to remove that early, which is still the official Conservative position, would be very dangerous. That is hardly the most ringingly optimistic message for Labour to be voicing, but it is true. It also suggests that Labour's economic strategy needs to be about more than fire-fighting and fiscal stimulus but should also address the question of rebuilding the UK economy and reforming the finance sector. Mr Brown has to offer more than disaster management.

 

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THE GUARDIAN

EDITORIAL

CITIZEN ETHICS: THE ART OF LIVING

 

It seems there is a significant appetite to drill down into the assumptions which underpin our political life

 

A week ago we published Citizen Ethics, a supplement in which a range of prominent thinkers – philosophers, politicians, economists, theologians and writers – considered how the recent political and economic crises have thrown into sharp relief a set of ethical questions, perhaps best summed up by American philosopher Michael Sandel: who deserves what? It's the question which has been on many minds as the details of MPs' duck ponds and moats and bankers' bonuses have dominated headlines. What are the values we use to determine just reward? Do we leave it to the market to distribute riches or must the state intervene to ensure more justice than market mechanisms have achieved over the last 25 years? How do we strike a balance between justice and freedom?

 

These are debates which have resonated for generations – but in recent decades, they went curiously "mute" as Mary Warnock writes on our pages today. Successive governments have fallen in with Margaret Thatcher's quip, "You can't trump the market"; we largely retreated from a raft of questions and left them to be resolved by the market. The result has been unprecedented levels of inequality. The Citizen Ethics Network aims to kickstart a debate about what values should shape our political economy. It argues that such deliberations are a crucial part of civic culture and that a politics stripped of ethical bearings drifts into being captured by particular interests or masquerades under claims of being simply technocratic managerialism or, worse, it is driven by personality and presentation. We have been much afflicted by all three in recent years and now we rue the cost.

 

It will be interesting to see how far this initiative will achieve its ambition to inject a new dimension into political debate. Given the response on our Comment is Free site all week, there is a significant appetite to drill down into the assumptions which underpin our political life. Today, we publish some of the hundreds of comments, alongside those of the three main party leaders.

 

But it is also clear that such high-minded attempts, while brave, can fail to gain traction. Talk of ethics quickly prompts hostile reactions which illustrate something of the dilemma we have got ourselves into. People get nervous as soon as the word morality comes up, seeing it as a claim for authority in which someone will tell you how to live your life. We can't seem to imagine a process in which we collectively argue and debate our ethical values. Our fear is that someone will always end up climbing into a pulpit to claim superior authority; it's the hangover of the western religious tradition compromised by its institutional quest for authority. The result, as Warnock points out, is that we are embarrassed talking about ethics, believing them properly left to experts, rather than claiming it as a vital democratic space.To compound the problem, politicians understand that they must talk this language if they are to establish the legitimacy of their claim to govern us. Margaret Thatcher and Tony Blair both used the language of morality for their political projects, and emptied it of much of its meaning. But ethical purpose is part of the lifeblood of politics, and in the forthcoming general election it will be an essential element for how the parties propose to clean up the aftermath of the banking crisis and the MPs' expenses scandal. All three party leaders are aware of this and responded with enthusiasm to the invitation to engage. But citizen ethics is a challenge to the voter as much as the politician; it is about the questions we ask of politicians and what expectations we have of government. It is a call to reinvigorate civic culture with the debate of what is it that constitutes human wellbeing, to imagine a definition of humanity which is more than the pursuit of self-interest and material acquisition. John Maynard Keynes called it the art of living.

 

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THE KOREA HERALD

EDITORIAL

CAPITAL PUNISHMENT

 

In its second ever decision on capital punishment, the Constitutional Court ruled that capital punishment is constitutional.

 

The Constitutional Court's ruling on a petition filed by a provincial appeal court at the request of a 72-year-old man convicted of murdering four people upheld that the death penalty is a necessary punishment to protect the lives of the majority.

 

However, the 5-4 decision showed the Constitutional Court moving toward the abolition of the death penalty. In the 1996 ruling on the constitutionality of capital punishment, the court had ruled 7-2 to uphold the system. At the time, the court said that it was not proper to immediately abolish the capital punishment system, "given our current culture and reality." That statement had indicated that the Constitutional Court was in favor of abolishing the death penalty over time. Apparently, 13 years was not enough time to move away from the capital punishment system, which its opponents claim is state-sanctioned murder.

 

However, two of the concurring judges suggested gradually fixing the capital punishment system by limiting the types of crimes that are punishable by the death penalty and also reflecting the social milieu of the time. They said it would be preferable to resolve the issue through legislation at the National Assembly.

 

Indeed, Thursday's ruling is significant in that it asked the National Assembly to take up the issue. Given the controversial nature of the death penalty - both its opponents and supporters are unequivocal about their stance on the issue - the National Assembly is an appropriate forum for a meaningful discussion of the matter.

 

A 2006 National Human Rights Commission report said that about 70 percent of the population favored the death penalty. The proponents of capital punishment claim that with some 1,000 murder cases occurring every year, the death penalty should be maintained as a deterrent against heinous crimes.

 

However, the decision on whether to maintain the capital punishment system or to abolish it should not be left up to public opinion. Our National Assembly has failed to deal with laws on many controversial social issues - including abortion, adultery and the death penalty. Many of these matters have been brought to the courts for the Constitutional Court to decide. The Constitutional Court, on the other hand, has suggested that these matters should be decided by the legislature. The National Assembly should take a proactive position and not wait for the Constitutional Court's next ruling on the death penalty system.

 

Since President Kim Dae-jung - who was himself sentenced to death in 1980 but later pardoned - took office in February 1998, there have been no executions in this country. While there are 59 inmates on death row, Amnesty International in 2007 categorized Korea as having "virtually abolished capital punishment."

 

There are two bills on abolishing capital punishment that are languishing at the Legislation and Judiciary Committee of the National Assembly. The lawmakers should start deliberating on this crucial issue that is often seen as a mark of a country's level of civilization.

 

Around the world 95 countries have abolished capital punishment while 58 countries maintain the system. Another 35 countries maintain the death penalty but have not carried out an execution for 10 years or more. Clearly, the trend is toward the abolition of the capital punishment. The time has come for Korea to make the move toward abolishing capital punishment.

 

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THE KOREA HERALD

EDITORIAL

OLYMPIC LESSON

 

Korean figure skater Kim Yu-na won the country's first Olympic gold medal in women's figure skating yesterday, setting a world record with her score of 228.5.

 

The 19-year-old skated ever so gracefully to a Gershwin tune, captivating the spell-bound watchers as she showed all she had to give. Her victory was not only a personal one, but a victory of sort for the country which got its first gold medal in figure skating.

 

The Korean athletes at the Vancouver Winter Olympics have outperformed everyone's expectations. The national squad which went to Vancouver hoping to finish within the top 10 over all has so far earned six gold, four silver and one bronze. With three more gold medals up for grabs in short tracks events on Sunday - events in which Korea excels - Korea is expected to see its best performance ever at a Winter Olympics.

 

The Olympics are human drama at its best. Years of hard training, personal sacrifices and support from family and country all come together to yield the final result. Athletes shedding tears of joy or tears of disappointment all deserve applause for their Olympian efforts.

 

Korea has made a qualitative stride since the 2006 Torino Games when it won six gold, three silver and two bronze. Back then, 10 out of the 11 medals came from short track events, with one bronze earned in men's speed skating 500 meters.

 

At Vancouver, Korean athletes have won medals in women's figure skating as well as speed skating and short track events. Lee Seung-hoon who won the gold in men's speed skating 10,000 meters became the first Asian ever to achieve the feat.

 

Korea's strong performance at Vancouver should bolster the country's chances at its third bid at hosting the Winter Olympics in 2018. The country has made tremendous progress in winter sports since PyeongChang's first bid and it is hoped that the third time will prove to be the charm.

 

Congratulations and thanks go out to our fine young women and men who have brought us much joy since the Games kicked off Feb. 12. They have shown that hard work and determination are keys to success, an inspiration for their fellow compatriots.

 

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THE KOREA HERALD

EDITORIAL

PHONY ATTACK ON CLIMATE SCIENCE

JEFFREY D. SACHS

 

NEW YORK - In the weeks before and after the Copenhagen climate change conference last December, the science of climate change came under harsh attack by critics who contend that climate scientists have deliberately suppressed evidence - and that the science itself is severely flawed. The Intergovernmental Panel on Climate Change, the global group of experts charged with assessing the state of climate science, has been accused of bias.

 

The global public is disconcerted by these attacks. If experts cannot agree that there is a climate crisis, why should governments spend billions of dollars to address it?

 

The fact is that the critics - who are few in number but aggressive in their attacks - are deploying tactics that they have honed for more than 25 years. During their long campaign, they have greatly exaggerated scientific disagreements in order to stop action on climate change, with special interests like Exxon Mobil footing the bill.

 

Many books have recently documented the games played by the climate-change deniers. "Merchants of Doubt," a new book by Naomi Oreskes and Erik Conway set for release in mid-2010, will be an authoritative account of their misbehavior. The authors show that the same group of mischief-makers, given a platform by the free-market ideologues of the Wall Street Journal's editorial page, has consistently tried to confuse the public and discredit the scientists whose insights are helping to save the world from unintended environmental harm.

 

Today's campaigners against action on climate change are in many cases backed by the same lobbies, individuals and organizations that sided with the tobacco industry to discredit the science linking smoking and lung cancer. Later, they fought the scientific evidence that sulfur oxides from coal-fired power plants were causing "acid rain." Then, when it was discovered that certain chemicals called chlorofluorocarbons (CFCs) were causing the depletion of ozone in the atmosphere, the same groups launched a nasty campaign to discredit that science, too.

 

Later still, the group defended the tobacco giants against charges that second-hand smoke causes cancer and other diseases. And then, starting mainly in the 1980s, this same group took on the battle against climate change.

 

What is amazing is that, although these attacks on science have been wrong for 30 years, they still sow doubts about established facts. The truth is that there is big money backing the climate-change deniers, whether it is companies that don't want to pay the extra costs of regulation or free-market ideologues opposed to any government controls.

 

The latest round of attacks involves two episodes. The first was the hacking of a climate-change research center in England. The e-mails that were stolen suggested a lack of forthrightness in the presentation of some climate data. Whatever the details of this specific case, the studies in question represent a tiny fraction of the overwhelming scientific evidence that points to the reality and urgency of man-made climate change.

 

The second issue was a blatant error concerning glaciers that appeared in a major IPCC report. Here it should be understood that the IPCC issues thousands of pages of text. There are, no doubt, errors in those pages. But errors in the midst of a vast and complex report by the IPCC point to the inevitability of human shortcomings, not to any fundamental flaws in climate science.

 

When the e-mails and the IPCC error were brought to light, editorial writers at the Wall Street Journal launched a vicious campaign describing climate science as a hoax and a conspiracy. They claimed that scientists were fabricating evidence in order to obtain government research grants - a ludicrous accusation, I thought at the time, given that the scientists under attack have devoted their lives to finding the truth and have certainly not become rich relative to their peers in finance and business.

 

But then I recalled that this line of attack - charging a scientific conspiracy to drum up "business" for science - was almost identical to that used by the Wall Street Journal and others in the past, when they fought controls on tobacco, acid rain, ozone depletion, second-hand smoke and other dangerous pollutants. In other words, their arguments were systematic and contrived, not at all original to the circumstances.

 

We are witnessing a predictable process by ideologues and right-wing think tanks and publications to discredit the scientific process. Their arguments have been repeatedly disproved for 30 years - time after time - but their aggressive methods of public propaganda succeed in causing delay and confusion.

 

Climate change science is a wondrous intellectual activity. Great scientific minds have learned over the course of many decades to "read" the Earth's history, in order to understand how the climate system works. They have deployed brilliant physics, biology and instrumentation (such as satellites reading detailed features of the Earth's systems) in order to advance our understanding.

 

And the message is clear: large-scale use of oil, coal and gas is threatening the biology and chemistry of the planet. We are fueling dangerous changes in Earth's climate and ocean chemistry, giving rise to extreme storms, droughts and other hazards that will damage the food supply and the quality of life of the planet.

 

The IPCC and the climate scientists are telling us a crucial message. We need urgently to transform our energy, transport, food, industrial and construction systems to reduce the dangerous human impact on the climate. It is our responsibility to listen, to understand the message and then to act.

 

Jeffrey D. Sachs is a professor of economics and director of the Earth Institute at Columbia University. - Ed.

 

(Project Syndicate)

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THE KOREA HERALD

EDITORIAL

RADICAL IDEA LIVES ON FOR FREEDOM

 

A lot of important details get left out of the history of the civil rights movement.

 

Angela Davis shared many of them recently during the Second Annual Martin Luther King Jr. Keynote Address at the University of Missouri-Kansas City. Davis, an author, 1960s radical and retired professor, said the civil rights movement originally was called the freedom movement.

 

"Full citizenship does not by itself accomplish everything a person needs to be free," Davis said. Having civil rights, including the right to vote, is a pre-condition for freedom.

 

Black History Month is a time to show that freedom is more than civil rights. Freedom includes equal opportunity, access to good health care, stellar schools and good housing without the barriers of bigotry.

 

"Black people are still not free," Davis said. The freedom movement, she said, was "a continuation of the 19th century campaign to end slavery."

 

Davis asked people to think of Civil War-era leaders. Most people name Abraham Lincoln. Some remember Frederick Douglass, a former slave and fiery abolitionist. But people often forget the work women did to end slavery and in the civil rights movement.

 

Those women include former slaves such as Underground Railroad conductor Harriet Tubman and abolitionist Sojourner Truth. Women in the 20th century freedom movement included Rosa Parks and Jo Ann Robinson. Parks is credited with being the mother of the civil rights movement for refusing to give up her seat on a Montgomery, Atlanta, bus in December 1955.

 

Robinson fueled the effort that followed, mimeographing thousands of flyers calling for a boycott of the buses used mostly by blacks. The women who joined her and Parks to birth the freedom movement were servants, maids, cooks, laundry women and other domestic workers. They bore the burden, but history forgets. "We have a skewed historical memory," Davis said.

 

King was assassinated, she said, because his vision of the freedom movement was becoming larger. He was about to launch a campaign for poor people and was pushing for economic freedom and worker freedoms. King also spoke out against Vietnam.

 

Davis said the freedom movement today should include people respecting all species' right to live without industrialization forcing many of them into extinction. Freedom must include human rights for immigrants, people who've been in prison and lesbians and gays. Same-sex couples should be allowed to get married, and people should support them.

 

"Marriage is a civil right," Davis said. "Why shouldn't all people have the right to marry?

 

"We have to be willing to open up our minds. We have to be willing to go places for freedom. What freedom movements do is enlarge the terrain of freedom."

 

Davis said the movement has to continue even after the joy over the election of Barack Obama as the first black U.S. president. She explained that "all struggles were struggles against the government, struggles against the state."

 

She said even though people were elated that Obama was elected, they must still "organize to create a movement to put pressure on him to do the right thing" because he now oversees the established order. Criticism can be support.

 

The freedom movement today also must include bringing troops home from the wars, affordable health care and good public schools. Davis said many people knew that King said he had been to mountaintop.

 

"But he never told us what he saw on top of the mountain," she said. "He never told us what freedom really is."

 

She quoted former South African President Nelson Mandela, who wrote in his book, "Long Walk to Freedom": "I have walked that long road to freedom. I have tried not to falter; I have made missteps along the way. But I have discovered the secret that after climbing a great hill, one only finds that there are many more hills to climb. I have taken a moment here to rest, to steal a view of the glorious vista that surrounds me, to look back on the distance I have come. But I can only rest for a moment, for with freedom come responsibilities, and I dare not linger, for my long walk is not ended."

 

The journey for freedom in the United States also is far from over.

 

Lewis W. Diuguid is a member of The Kansas City Star's Editorial Board. -- Ed.

 

(McClatchy-Tribune Information Services)

 

By Lewis Diuguid/McClatchy Newspapers

 

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THE JAPAN TIMES

EDITORIAL

SHIFTING PLANS FOR JAPAN POST

 

The government plans to modify the process of privatizing Japan Post group, meaning people must continue to wait to find out how the services they rely on will be affected.

 

In October the government outlined a basic policy of requiring Japan Post to make not only postal services but also banking and insurance services available nationwide on an equitable basis. A bill passed in December froze sales of government-held stocks in Japan Post Holdings Co. and its associated postal bank and insurance firms. Now the government plans to submit a bill to the Diet in March that will make structural changes to Japan Post group.

 

At present, Japan Post Holdings Co. has under its umbrella the Japan Post Bank Co., Japan Post Insurance Co., Japan Post Service (mail delivery) Co. and Japan Post Network (over-the-counter services) Co. The government's envisaged changes will integrate the holdings, mail delivery and over-the-counter services companies into one firm, with the banking and insurance firms operating separately under its wing.

 

So far, the emphasis of the privatization process has been on increasing the profitability of the bank and insurance companies. Postal services, especially for rural regions, have been a secondary consideration. Tearing down the walls between the mail delivery and over-the-counter services companies will help to increase the efficiency of their operations.

 

At present, individuals are not allowed to have a balance of more than ¥10 million with the postal bank. There has been talk of raising the cap, but the government has made no decision on this front. It is also yet to decide on the size of its capital contributions to the new parent company envisioned under the reorganization.

 

The government must explain its fundamental objectives. Private financial firms will oppose the postal bank and insurance firms becoming too big. The government must consider how to ensure universal provision of post office services without sacrificing profitability. Before moving ahead, though, the merits and demerits of the privatization process thus far should be properly assessed.

 

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THE JAPAN TIMES

EDITORIAL

TOYOTA PROMISES REFORM

 

Toyota Motor Corp. President Akio Toyoda on Wednesday spoke of the massive global recalls of Toyota cars as he addressed the U.S. House of Representatives Committee on Oversight and Government Reform.

 

"I am deeply sorry for any accidents that Toyota drivers have experienced," he said. During the more-than-three-hour session, he denied that Toyota had tried to cover up any defects in its cars and pledged that the company will go back to its traditional safety-first policy. It may take some time, though, for the carmaker to ride out the current crisis, which is likely to bring slower sales and class-action lawsuits.

 

As for the factors that led to the recalls, Mr. Toyoda said Toyota expanded its business so rapidly that it was unable to "develop our people and our organization" to the extent needed to ensure safety and product quality. He also said "our basic stance of listening to customers' voices to make better products has weakened somewhat." To get back on track, he said Toyota will devise a system under which management will quickly respond to complaints from customers around the world and operations in each region will be able to make decisions concerning recalls.

 

As a company making and selling products whose defects could cause death to users and others, Toyota must quickly reform its organization along the lines laid out by its president.

 

Mr. Toyoda rejected claims that Toyota's electronic throttle-control system was behind a number of incidents of sudden, unintended acceleration. "I'm absolutely confident that there is no problem with the design of the ETC system," he said. This issue could linger because convincing people at this point that the technology is completely problem-free won't be easy.

 

Toyota officials' slow response early on to reported problems with its vehicles led to this emergency, and they face a challenge to maintain the good will of the public. Mr. Toyoda might have been able to lessen the damage to his firm had he visited the United States earlier. Toyota's crisis offers a lesson to other companies that a quick response and accepting full accountability are key to maintaining credibility.

 

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THE JAPAN TIMES

EDITORIAL

FALKLANDS WAR, ROUND TWO?

BY GWYNNE DYER

 

Jorge Luis Borges, Argentina's finest writer, dismissed the Falklands War of 1982 as "two bald men fighting over a comb," but it killed almost a thousand British and Argentine soldiers, sailors and airmen anyway. So what would happen if the bald men started fighting over something really valuable, like oil?

 

A deep-sea drilling rig arrived this week from Scotland and has started searching for oil and gas in the North Falkland basin, about 150 km north of the islands. Optimistic predictions suggest that there are up to 60 billion barrels of oil to be found around the Falklands. There might also be not very much at all — but Argentina has begun issuing warnings and veiled threats again.

 

This may only be bluster, but Argentina has claimed the islands, which it calls the Islas Malvinas, for almost two centuries. The local population are all English-speakers, mainly of British descent, and back in 1982 the islands' economy was based almost entirely on sheep. The Falklands had no value — but Argentina invaded anyway, because the military regime in Buenos Aires needed a boost in popularity and it looked like an easy win.

 

It should have been an easy victory for the military junta, because the islands are only 500 km from Argentina and they are 13,000 km from Britain. Moreover, Britain had substantially cut its military presence in the region, which suggested to the Argentine generals that it wasn't really committed to the islands' defense.

 

The British Foreign Office wasn't (and the foreign secretary of the time had to resign because of his neglect), but Prime Minister Margaret Thatcher certainly was. She sent a British task force to take the islands back, fought a two-month war at the end of an impossibly long supply line, and won. Which seemed, for a time, to have settled matters.

 

Argentina never did abandon its claim, and it never will. It has been drummed into many generations of Argentine schoolchildren that "The Malvinas are Argentina's," and the claim has become one of the pillars of Argentine nationalism. But defeat in the Falklands le