“There are various grounds, Sir. One such ground is that the financial implication is enormous. Then there is the question of weighing the different points of view and considering whether it would not be better to spend the resources for development purposes under the second -Five Year Plan rather than to raise the salaries now.”

That was Deputy Minister for Finance, B.R. Bhagat, in Nehru Government spurning the demand to set up second Central Pay Commission (CPC) in Parliament on 29nd February 1956. 

He continued: “In fact, as a result of the implementation of the recommendations of the last (1st) Pay Commission regarding salaries, bonus, medical facilities, housing etc. the financial implication was to the tune of Rs. 30 crores. And there is nothing new that has happened. Even on the basis of the consumer price index or other economic indicators, there is no reason for the appointment of such a Commission.”

Pressured further by a belligerent member from the Opposition Benches, Mr Bhagat articulated the Government’s reluctance: “There are various reasons—price index and other indicators. But taking a long-term view, once the Commission is appointed and the recommendations are made, it will be difficult for the Government to resist such recommendations.”

Nehru Government ultimately buckled under the pressure from trade unions: It constituted the 2nd CPC in August 1957. 

Over the next 60 years, successive Governments failed to resist pressure from trade unions, which have transformed governments and its appendages into heavens of prosperity and job security.

The ruling political alliances turned deaf ears to the advice from Finance Commissions and other entities against setting up of pay commissions to upgrade pay scales after every 10 years.

It is no wonder then that the annual burden resulting from implementation of respective CPC award on national exchequer has risen from Rs 30 crore in 1947-48 (Ist CPC) to Rs 1,02,100 crore in 2016-17 (7th CPC).  Modi Government’s approval in the latest case is certain if the initial response of Finance Minister Arun Jaitley is taken as a valuable cue. 

(RBI Governor  & Finance Minister:  Edited Image Courtesy-PIB)  

 

Govt must be Equally Accountable as RBI for Failure to Subdue Inflation

 

Facts have become the casualty once again. And the urgency for an integrated approach to inflation control has got derailed with the national discourse riveted to media-hyped “rift” and “escalating tension” between Finance Ministry and Reserve Bank of India (RBI).  

A few news stories have tried to project the old professional differences between the two entities as the ones between Finance Minister Arun Jaitley and RBI Governor Raghuraman Rajan.  

Mr. Jaitley has thus aptly stated that there is no disconnect between the Ministry and RBI and both are engaged in constant and frank discussions. 

Before coming to need for a rationale and comprehensive inflation control strategy, consider first a few facts. It is fact that the differences over public debt management agency (PDMA) and monetary policy committee (MPC) are not between Mr. Jaitley and Mr. Rajan. Both are merely reflecting the well-know respective stance of the respective entities they head. 

The differences are not new. They had developed much before the two decision-makers assumed charge of their respective offices.  It is just a re-emergence of turf battle that has simmered for several years.

Mr. Rajan has in fact staged climb-down from RBI’s well-reasoned reservations over setting up of PDMO and inflation management as stated in December 2012. RBI had communicated its reservations as feedback on Financial Sector Legislative Reforms Commission’s (FSLRC’s) Approach Paper.

Image courtesy:efilelabourreturn.gov.in

 

 

(Published by taxindiaonline.com on 18th November 2014)

 

“Look at the positives,” a friend of mine in the BJP advised me. The advice came against the backdrop of this column’s criticism over the Modi Government’s delay in clearing UPA-spun web of regulatory hurdles in the path of economic growth and mass employment.  Appreciating his advice, I told him that the Government is hardly sharing developmental news with the media. 

And now the social media-savvy Government has given the biggest proof of its reluctance to disseminate positives to the public through the conventional media. Neither Prime Minister nor the Finance Minister tweeted the disclosure of 8-page ‘India Employment Plan 2014’ (IEP) and 35-page ‘Comprehensive Growth Strategy: India’ (CGS) at the G20 Leaders Summit in Brisbane. 

The websites of respective administrative ministries and Press Information Bureau (PIB) have not yet uploaded these documents. These ought to be communicated effectively to millions of voters waiting for the dream jobs.  Communication is important to reduce the prospects of analysts highlighting elements missing from the two documents. They delineate NDA Government agenda for inclusive and fast development. Entrepreneurs, workers, stock market and all other stakeholders have a right to know what the Government is doing to galvanize the economy.  

In its eagerness to publicize Mr. Modi’s interventions/speeches at the Summit and his pictures at different events, the Government also overlooked the need for sharing certain other vital G20 disclosures with the Indian public. 

It, for instance, has not uploaded on its websites its anti-corruption measures disclosed as a 32-page reply to Accountability Report Questionnaire 2014. The questions were put by G20 Anti-corruption Working Group to all G20 members.