What is new
India Scripts History With General Govt Debt Rising Towards 100% of GDP
- Published on 24 November 2021
(Image Courtesy: taxindiaonline.com)
“India scripts history” tweeted Prime Minister Narendra Modi on 21st October 2021 with hashtag #VaccineCentury. This pertains to India crossing milestone of administering 100 crore doses of covid vaccines.
The country is most likely to script another history that no one wishes for. And Mr. Modi has avoided making any reference to it in his daily sermons with clinical precision.
This is about emerging, alarming prospects of India’s public debt (PD) / general government debt (GGD) touching unsustainable 100% of gross domestic product (GDP). International Monetary Fund (IMF) last month analysed how close is India towards hitting the maiden GGD century. More of this later in this column.
As it is, official PD data is an under-estimate for two reasons. First, central and state governments continue to contrive new variants of off-budget borrowings (OBBs) to avoid their booking in the fiscal deficit. A search for ‘OBBs’ in CAG reports on central and state finances would show how deeply-entrenched is this problem.
Hiding data - A favourite Obsession
- Published on 20 October 2021
Hiding Data (Image Courtesy: taxindiaonline.com)
Rajiv Mehrishi, former Comptroller and Auditor General (CAG), last month disclosed that Modi Government has held back a report he had submitted in April 2020 to end “a nightmare of accounts that militates against good governance”.
Mr. Mehrishi, who retired in August 2020, quoted Article 150 of the Constitution as saying “The accounts of the Union and of the States shall be kept in such form as the President may, on the advice of the Comptroller and Auditor-General of India, prescribe”, according to a story in a leading business daily.
He pointed out that none of his predecessors in CAG had offered such advice. “We departed from that to give a detailed advisory to the President on how the form and manner of keeping public accounts should be”.
The instances of dubious governance he cited include 25% of budgeted expenditure classified as expenditure under accounting head “other expenditure”, creation of non-lapsable funds for certain sectors/schemes and lack of uniformity in accounting of welfare and development funds given by the Centre to the States.
Add to this concern the little-noticed fact that Government did not present to Parliament a single CAG report during the monsoon session. The last time when CAG report was presented was 24th March 2021.
CAG already behaves like a lame-duck under the present regime. Its reports lack the usual punch that CAG delivered under UPA and previous regimes. CAG’s quantitative and qualitative output is woefully inadequate as compared to its US counterpart GAO.
The outdated CAG’s (Duties, Powers and Conditions of Service) Act, 1971 must be amended or replaced with a new one in keeping with Mr. Modi’s confession: “India's 21st century needs cannot be met by the ways of the 20th Century”. This vision has been flaunted to rationalize three central farm laws originally sneaked through ordinance route during 2020 lockdown.
The NDA Government should explain as to why it is toeing UPA line by not disclosing its decision on a comprehensive draft of the new act that CAG submitted in November 2009. Nobody knows what the draft bill envisaged.
As it is, Modi Government has kept the public in dark about the flaws in the defence sector by not making online its CAG reports. The restriction has been imposed ostensibly to safeguard national interests.
Oil Palm - MSP - Shielding Whom?
- Published on 15 September 2021
The Modi Government has enriched farm pricing mess by coining two new terms -Viability Price (VP) and Formula price (FP).
These have been contrived to shield edible oil companies from paying minimum support price (MSP) to oil palm (OP) farmers. The difference between VP and FP would be known as viability gap funding (VGF). It would be paid by the Government. It is thus a deemed subsidy for oil mills.
The corporate giants that operate in this business are Adani Wilmar, Patanjali group’s Ruchi Soya and Godrej Agrovet Limited (GAL) and Cargill India.
It is perhaps for first time that concept of VGF has been applied to crop cultivation, OP farming to be precise. This confirms Government’s aversion towards statutory MSP for major crops demanded by farmers. It certainly doesn’t want agro-processing companies to buy farm produce at MSP or at a higher rate under contract farming.
The aversion surfaced from exclusion of the term ‘MSP’ in The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Service Act, 2020 (FEPAPAFSA). This central law overrides States’ contract farming laws/rules. Some of these such as the ones enacted by Rajasthan and Haryana stipulated MSP as the threshold under contract farming.
Would OP plantations be new battle ground between three Central Farm Laws & respective State’s oil palm law (OPL)? At present, each OP state has its own OPL. Such enactment empowers a State Government to regulate cultivation, production, pricing and marketing of OP produce. Each farmer is assigned a specified processor/oil mill to which it is required to sell FFBs at state-determined prices.
Parliament ruckus - Ambedkar's Prophecy may come true!
- Published on 12 August 2021
(Image Courtesy: Lok Sabha)
The gulf between the ruling party/alliance and the Opposition is unbridgeable. Whatever little hope of consensus politics existed has been buried by Prime Minister Narendra Modi by calling the Opposition’s demand for debate, transparency and accountability on Pegasus and other contentious issues as anti-national politics.
Mr. Modi took pot shots at the Opposition the day India won the men’s hockey bronze medal. Without referring to disruptions of monsoon session of Parliament, Mr. Modi said “this great country cannot become hostage to such selfish and anti-national politics”.
A day prior to that at a meeting of BJP MPs, Mr. Modi described the Opposition’s protests in Parliament as an “insult to the Constitution, democracy and the people”.
What PM didn’t tell the Nation was disruption is like clap for which two hands have to clash. The Ruling party/Executive has always served as the trigger for disruption of Parliamentary proceedings. If the Government of the day practiced good governance, it won’t be scared of debate and scrutiny by the Opposition a and other stakeholders of democracy. It won’t hide anything, except national secrets. Many of these too can be shared with Opposition MPs subject to oath of secrecy.
What Mr. Modi didn’t disclose was that he has trashed his promise of pursuing consensus politics and avoiding vendetta politics. Recall what he said in his maiden speech from ramparts of Red Fort on 15th August 2014. “We want to move ahead on the basis of strong consensus”.
Remember his quote in the run-up to 2014 Lok Sabha polls: "I don't take a vindictive approach towards anything”. What happened later every Indian knows.