know your english

What is the meaning of ‘moxie’? (K Rajesh, Delhi)

First, let us deal with the pronunciation of this word. The first syllable rhymes with ‘box’, ‘fox’ and ‘pox’, and the ‘ie’ in the second sounds like the ‘i’ in ‘bit’, ‘sit’ and ‘hit’. It is pronounced ‘MOK-si’ with the stress on the first syllable. The word is mostly used in informal contexts to mean determined. A person with moxie is a fighter; he does not give up easily - no matter how often he is knocked down, he gets up. He is courageous in adversity.

Suraj showed a lot of moxie when he questioned some of the CEO’s decisions.

The girl has a lot of moxie in her. There’s no way she’s going to give up now.

The word comes from the name of a soft drink that was quite popular in the States in the early twentieth century. The advertisements claimed that the drink would ‘build up your nerve’. It is possible to buy a can of Moxie even today.

What is the difference between ‘terrified’ and ‘petrified’? (V Radhika, Madurai)

Both words suggest that you are extremely scared or frightened of something or someone; you are in a state of panic. When you are ‘terrified of’ something, you may choose to run or you may stand still because you are too scared to move. When you are petrified, you become paralysed; you stand there like a stone. You are too scared to move. The word ‘petrified’ comes from the Latin ‘petra’ meaning ‘stone’.

When they saw the tiger, the terrified villagers ran into their houses.

When the villager saw the tiger, he was petrified.

What is the meaning of ‘in the groove’? (Ajit Kumar, Vizag)

The ‘oove’ in ‘groove’ rhymes with the ‘ove’ in ‘prove’ and ‘move’. A ‘groove’ is a long, thin cut on a hard surface. For example, sliding doors and windows have grooves cut into them. They make it possible for a person to slide the door/window easily. When you say that you are ‘in the groove’, what you are suggesting is that you are doing something quite easily, without any real effort.

When Federer returns in 2017, it’ll probably take him time to get in the groove.

Anand didn’t like being a Manager at first; but now, he’s getting in the groove.

When you are bored of doing something over and over again, you say you are ‘stuck in a groove’. You have been doing the same thing for a long time and have become very set in your ways.

Anita’s job no longer excites her. She’s stuck in a groove.

Is it okay to say, ‘It’s high time you clean the motorcycle’? (M Priya, Chennai)

No, it is not. It should be ‘cleaned’ and not ‘clean’. The expression ‘high time’ is mostly used in informal contexts to mean that it is time to do something that should have been done a long time ago. In other words, you have unnecessarily delayed doing something. It’s high time Laxman bought a new car.

It’s high time that the children went to bed.

courtesy:the hindu

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Why doubling farmers’ income by 2022 is possible

Prime Minister Narendra Modi’s desire to double the income of farmers by the year 2022, that he expressed while addressing a farmers’ rally in Bareilly, Uttar Pradesh, on February 28, 2016, has evoked strong responses from various analysts, experts and the media. The goal has been dubbed as impossible and kafkaesque[kaf-ku'esk(unrealistic,अवास्तविक)]. On the very next day, the finance minister repeated what the PM had said, in his budget speech. This invited an even stronger reaction and criticism. Some commentators have produced calculations that agriculture will require an annual growth of 14.86 per cent per year for the next five years to double the income of farmers, and pointed out that this growth level hasn’t been achieved even for a single year in Indian agriculture. Most commentators ridiculed[ri-du,kyoo(make fun,उपहास उड़ाना)] the possibility of doubling farmers’ income. It seems that critics and sceptics[skep-tik(doubter,संशयवादी)] focused more on five years and ignored substantive aspects of the desire expressed by the PM and the intention of the FM.

The substantive points involve the following questions. Which is the targeted year for doubling farmer income? What is to be doubled — is it output, value added or income earned by farmers from agricultural activities? Is it nominal income or real income that has to be doubled? Does the targeted income include only income derived from agricultural activities or would it also include income from other sources? Clarity on all these points is important to assess the possibility of doubling the income of farmers as envisioned[en'vi-zhund(visualised,विचारना)] by the PM.

While talking about the income of farmers, the PM stated that it is his dream to see farmers double their income by 2022, when the country completes 75 years of independence. The time horizon to reach his dream is very perspicuous[pu'spi-kyoo-us(clear,स्पष्ठ)] in his statement. It is obvious that he is referring to a doubling of farmer income of the agricultural year 2015-16 by the agricultural year 2022-23. The budget speech creates slight confusion about the period for doubling farmers’ income. The FM’s speech first mentions the “focus on doubling farmers’ income in five years” and then, while elaborating on this, he says, “Government will, therefore, reorient its interventions in the farm and non-farm sectors to double the income of the farmers by 2022.” It is evident that both the PM as well as the FM are setting the target of doubling farmers’ income by the year 2022, which is seven years away from the current year. And, if anything is to be doubled by the year 2022-23, it will require annual growth of 10.4 per cent, and not 14.8 per cent, as reported in the media.

Again, it is important to point out that what is sought to be doubled is the income of farmers, not output or value added or the GDP of the agriculture sector. If technology, input prices, wages and labour use could result in per-unit cost savings, then farmers’ incomes would rise at a much higher rate than the rate of increase in output. Another very important source of an increase in farmers’ income is the relative increase in prices of farm products compared to non-agricultural commodities. Past estimates of farm incomes show a significant difference between growth in output and growth in farmers’ income. Between 2004-05 and 2011-12, agricultural output at constant prices increased by 34 per cent while real farm income per farmer increased by 63 per cent. In nominal terms, the output became 2.65 times while farmers’ income tripled in the eight-year period. Therefore, a doubling of farmers’ income should not be viewed as the same as a doubling of farm output.

It is obvious that if inflation in agricultural prices is high, in nominal terms, farmers’ income will double in a much shorter period. Twice over the last 30 years, farmers’ income at nominal prices almost doubled in six years — once between 1987-88 and 1992-93 and then between 2004-05 and 2009-10. Inflation in agricultural prices also leads to an increase in real farm income if agricultural prices received by farmers increase at a faster rate relative to the prices paid by farmers; that is, when terms of trade for agriculture improve. In a situation where non-agricultural prices do not rise, or rise at a very low rate, the growth in farmers’ income in real terms tends to be almost the same as in nominal terms. This is what is being experienced currently. The wholesale price index or WPI-based inflation for non-agricultural prices is declining, whereas the WPI-based inflation for agricultural prices has increased by about 5 per cent in the year 2015-16. This implies that price movements are resulting in a 5 per cent growth in real farm income. Thus, if similar price trends continue, there will not be much difference between nominal and real farm income. Anyway, the government’s intention seems to be to double the income of farmers from farming in real terms.

It is important to look at the possible drivers of income growth for farmers. The first source is diversification of farm activities towards high-value crops and enterprises. National-level data reveals that shifting to high-value crops can more than quadruple income from the same piece of land. The second source is irrigation, which can double productivity. The third source is better price realisation for farmers through competitive markets, value chains and improved linkage between field and fork.

The fourth source is an improvement in the terms of trade for agriculture. The fifth source is technology upgradation. Another important source is the shift of cultivators from farming to non-farm occupations. State-level data shows that agricultural income in real terms, including the effect of improvement in terms of trade, doubled between 2006-07 and 2013-14 in Gujarat, Jharkhand, Madhya Pradesh, Rajasthan and Telangana. Few states, namely Bihar, Chhattisgarh, Gujarat, Jharkhand, Karnataka, Madhya Pradesh, Rajasthan and Telangana, are experiencing a transition towards doubling farmers’ income in seven years while Uttar Pradesh and Maharashtra are showing the potential to do so. In conclusion, if the above-mentioned six measures are implemented unfeignedly[ún'feynd-lee(sincerely,सचमुच)] at the state-level, then farmers’ income can be doubled by 2022-23 in most of the states.

Courtesy:indian express

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Lessons for unifying agricultural markets

The government of India launched the National Agricultural Market Scheme in July 2015 in 585 markets and has, since April 14, started e-trading on the platform. This is in line with the Union Budget’s target to double farmers’ incomes in six years. To be sure, a doubling of incomes by 2022 would require them to grow at an annual average rate of just over 12 per cent. Achieving such a high rate of growth would require multi-faceted reforms in the agriculture sector.

Agricultural and allied sector in India grew at an annual average rate of 1.7 per cent per annum between 2012-13 and 2015-16 (at 2011-12 prices). The gross value added at factor cost in the agricultural and allied sector, which is a first approximation to the income generated in the sector, has shown a growth rate in excess of 10 per cent only in four years between 1950-51 and 2011-12 (measured in constant 2004-05 prices). All these supra-10 per cent growth rates came on the back of negative growth rates ranging from minus 1.1 per cent (1987-88) to minus 11.1 per cent (1979-80).

It is important to note that growth rate of agriculture and allied sectors in India has historically tracked the movement of the overall income growth in the country quite closely. The task of improving growth rates in the agricultural sector in a growing economy is easier than in a stagnant one. As such, this imperative for an unprecedented[ún'pre-si,den-tid(new,अभूतपूर्व)] growth rate will require reforms covering all facets[fa-sit(aspect,पहलु)] of the agricultural sector, such as irrigation, soil health, traditional farming, fertilisers, and extension services among others.

In this context, the e-trading initiative attempts to improve the marketing aspect of the agriculture sector. Reforming agricultural markets in the country is a project that requires serious effort and concerted[kun'sur-tid(joint,सम्मिलित)] action. As the Economic Survey 2014-15 pointed out, India has 2,477 principal regulated primary agricultural markets in the country. These markets governed by APMC Acts create segmentation and lead to inefficiencies in price discovery. There are often complaints of vested[ves-tid(unconditional,निस्वार्थ)] interests of commission agents (arhatiyas) and other middle-men driving a wedge between the farmers and the traders (who are the buyers of the crops).

A similar experiment, called the Rashtriya electronic Market Scheme (ReMS), was launched in Karnataka in February 2014. By December 2015, 100 principal markets were unified by this e-platform. The reforms in the state have succeeded to the extent that an autonomous body — the ReMS Private Limited — is in charge of the entire process of unification and is proceeding according to a definite plan.

But the gains to farmers have remained muted. The software that is used for trading has a provision for including quality parameters of the traded commodities. To actualise this, plans are afoot to start assaying facilities in mandis. Since marketing of agricultural produce affects farmers, commission agents, traders, the APMCs and the government, introduction of these facilities without allaying the concerns of all these stakeholders may not have its impact.

For example, the commission agents in these markets fear that unification will affect them adversely. The farmers can directly enter the details of their commodities in the e-platform and sell to the highest bid-der without any mediation from the commission agents. This creates a very potent impediment[im'pe-du-munt(obstruction,बाधा)] against the forward movement of reforms and a standalone[stand-u'lown(automatic,स्वचालित)] e-product may not have the full desired impact. In some mandis though the assaying facilities were present, they remained in disuse because of apprehensions of loss of income felt by farmers.

Commission agents are the pet whipping boys[wi-ping boy(scapegoat,बलि का बकरा)] for agricultural economists searching for efficiency and unified prices. However, these “middle-men” provide real and substantive services such as credit facilities and crop loans to farmers in a timely manner. The farmers’ dependence on arhatiyas is mutually beneficial to a degree but may not be without elements of rent extraction. Like all things in life, we hit a grey area even in agricultural marketing.

The experience of Karnataka has a few pointers. It succeeded to the extent that an independent body outside the government (ReMSL) tasked with unification generated sufficient revenues and created a positive momentum. However, in the absence of an involvement of all stakeholders the gains are slow and minimal.

Reforms that rely only on technical solutions may not give the desired effect. If implementing unification within a state is a slow affair with frequent stoppages, one can only imagine the difficulties that unification can cause for an inter-state reform measure.

Courtesy:indian express

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Who needs public banks?

In an opinion piece just after the last general elections (‘What holds us back’, The Indian Express, May 23, 2014), I had argued that while the politics of policymaking might have become easier, economic reality hadn’t, and that the new government would need to identify and address the key constraints to India’s growth early on. One of those constraints was the alarming rise in corporate leverage amidst weakening growth and the consequent['kón-si-kwunt(resultant,परिणामी)] deterioration[di,teer-ee-u'rey-shun(worsening,बिगड़ना)] in banks’ loan quality. The government moved glacially, hoping that growth would take care of the problem and only recently realised that the high leverage itself was holding back growth. However, over this period, banks’ credit quality worsened to a point where it now needs, in the words of RBI Governor Raghuram Rajan, “deep surgery” and not “band-aids”.

Much of the public discussions have focused on two aspects of the debt problem. First, finding clever financial engineering solutions to fill the hole in the books of the banks (mainly public-sector banks or PSBs) as the government has committed woefully[wow-f(u-)lee(sadly,उदासी से)] inadequate[in'a-di-kwut(insufficient,अपर्याप्त)] budgetary resources compared to any reasonable estimate of the required recapitalisation needs. But financial engineering doesn’t erase bad debt; it only repackages it. Eventually, there has to be a transfer of real resources to fill the hole created by the bad debt. If the history of debt crises is any guide, it is likely to be India’s households that will pay for it through more financial repression or higher future taxes.

The second has been to use this funding pressure as an opportunity to enforce changes in PSBs aimed at improving their investment choices, purportedly[pu'por-tid-lee(supposedly,कथित रूप से)] because this got them in the mess in the first place. Most of the proposed changes are based on the recommendations of the P.J. Nayak Committee, and they range from greater separation between owners and management to changes in compensation packages that encourage better pricing and assessment of risk. I particularly favour the call for protecting bank managements from legal and criminal charges just because an investment decision turns out to be wrong later. As this year’s Economic Survey rightly exhorts, India needs to learn to tolerate investor mistakes and allow exits.

While capitalising PSBs and improving their efficiency are obviously important, I will argue that neither addresses the elephant in the room. Whether financial engineering provides a lease of life to these banks to live through another debt cycle or management changes are made to hopefully dampen future cycles skirts the more fundamental question: Do we need PSBs?

When Indian banks were nationalised in 1969, the ability of private banks to mobilise resources, that is household savings, was weak and their competence in allocating resources to meet India’s investment needs questionable. Over the next three decades, PSBs played a critical role in better garnering[gaa-nuing(collect,इकट्ठा)] household savings, funnelling them into the formal financial system, and fund the country’s development needs.

But over the last 25 years, successive governments have implemented extensive reforms to liberalise the system that, in turn, has substantially deepened India’s financial markets and allowed private banks and non-bank financial institutions to grow and become important players in the resource mobilisation process.

So do we still need PSBs to mobilise savings? Put differently, it is not a question of making the PSB branch in Churchgate function more efficiently, which is what the P.J. Nayak Committee recommendations intend to achieve; the question is whether there is even any need to keep the branch open.

I am not arguing that there is no role for PSBs. There is. In a country where both rural and urban poverty is rampant[ram-punt(uncontrolled,अनियंत्रित)], goods and labour markets deeply distorted[di'stor-tid(deformed,विकृत)], and where vast swathes of the population remain outside the ambit of the formal financial sector, there are important social and development functions that only publicly owned banks can perform. But these are much more limited functions, that is, those that the private capital market cannot do. Not the universal banking behemoths[bi'hee-muth(big,बड़ा)] that today’s PSBs have become.

So here’s a solution. Rather than tweak compensation packages or spend more taxpayer money to recapitalise, the government should sell all PSBs, as is, to existing and newly licensed private banks. (The investment subsidiaries, such as mutual funds, can be sold to non-bank financial companies.) The private sector is unlikely to have immediate capital to take over their public-sector counterparts simply because of the mammoth[ma-muth(big,बड़ा)] size of the latter, so some form of deferred payments needs to be designed. With the privatisation funds, the government can then capitalise a handful of retail policy banks (as opposed to the wholesale policy banks of today) that have an explicit, but limited, mandate to carry out specific social and development functions that private capital markets cannot. Employees of the disbanded PSBs who are not re-employed by the private banks or by the policy banks can be compensated (even generously) using part of the privatisation proceeds. There are many details to fill in: Should the sale be limited only to local banks or opened to foreign ones as well or should the retail branches be limited only to rural areas and second-tier cities, etc? Then there is the question of amending the various banking laws.

No doubt, the process will be arduous[aa-joo-us(difficult,कठिन)] with significant political challenges. A 50-year-old system necessarily creates its own deeply entrenched[in'trencht(established,स्थापित)] vested interests, including parts of the Central and state governments that fear eventually losing a captive source of budget financing. But that doesn’t mean we should not raise the question especially since one ends up getting a far more efficient financial system to carry out market economy functions, and, at the same time, establish financial institutions whose social functions are explicit, with unambiguous[ún,am'bi-gyoo-us(clear,स्पष्ठ)] accountability.

I am not holding my breath that any of this will happen. By the sounds of it, the government, the regulator, and the market are quite comfortable with some more band-aids. They just need to appear a bit more like deep surgery.

Courtesy:indian express

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The tip of the tip of the iceberg

Out of more than 11 million leaked documents of Mossack Fonseca, a legal firm operating out of Panama, a tax haven, only 36,000 pertain to Indians — 0.33 per cent of the total. This insignificant number contains the names of 500 Indian entities, some of whom have stated that their names have been misused while some others have denied any wrongdoing. Some officials have also argued that the papers need to be studied to distinguish[di'sting-gwish(recognize,पहचानना)] between the legitimate and the illegitimate. This has given a breather to the entities named in the leaked papers. The general impression is that anyone using the tax havens for their financial affairs has something to hide.

The question of legitimacy arises since after 2003 when the Liberalised Remittance Scheme (LRS) was introduced, sending funds abroad for a variety of reasons is not illegal. The amount allowed has varied and at present the limit is $2,50,000. Thus, one could have money in a bank, have a subsidiary, buy shares in foreign companies, etc. The issue remains whether it was legitimately done and if transactions other than the legally allowed ones took place via these instrumentalities. While the names and the year of activity are revealed by the documents, the annual transactions or movements of funds are not known. Thus, even if what has come out in the open was legitimate, what else was done and has not yet been revealed requires investigation.

Liberalisation of fund flows

The Foreign Exchange Regulation Act (FERA), that was in force till 1998, was stringent[strin-junt(strict,सख्त)] and did not allow Indians to take money out of the country or to keep funds outside the country without permission. But after the implementation of new economic policies in 1991, FERA was diluted and easier flow of funds from and to India allowed. The Foreign Exchange Management Act (FEMA) was enacted in 1999 and the Prevention of Money Laundering Act (PMLA) in 2005. What was a criminal act under FERA has now become a civil offence.

Trade account convertibility was introduced after 1991 and, subsequently, current account convertibility; but not capital account convertibility. Thus, after 1991, a limited amount of proceeds from international transactions could be kept outside. Committees headed by S.S. Tarapore twice recommended capital account convertibility in 1997 and 2007. However, due to the Southeast Asian contagion in 1997 and the global financial crisis starting 2007, this was not implemented. So, restrictions on Indians taking capital out of the country have remained.

People want to hold funds abroad for many reasons. They may have earned them from illegal sources or want to hide their trail of ownership for business reasons or if they earn the money abroad or purely as a hedge against risk and/or in expectation of higher returns. The first two involve some illegality. The third may also involve some illegality but the last two may be legitimate activities. However, even in a legitimate activity, some rules may be flouted so that illegality occurs and prosecution is called for. For example, taking out money is not felonious[fu'low-nee-us(illegal,अवैध)] but if more has been taken out via under-invoicing of exports and deposited in one’s account or if the money taken out legitimately was used to set up a company or one has not declared the income for tax purposes from the funds taken out, then prosecution becomes legitimate.

A large number of the well-off Indians have used the tax havens to shift funds out of India. The data from the Panama Papers and earlier from LGT Bank of Liechtenstein and HSBC Bank showed that not only big businessmen but also small ones and professionals have indulged in this activity. Politicians and bureaucrats also moved some of their ill-gotten gains abroad. According to our study, the opportunity cost of such funds for the Indian economy amounts to around $2 trillion between 1948 and 2012. A part of these funds have been round-tripped back to India, especially after 1991. While this may be considered beneficial, the outflow has accelerated during this period, so the country continues to lose capital. The reason is that as the flow of funds has been liberalised, it has become easier to mask the illegitimate flows. The fact is that while 6 per cent of the gross domestic product is leaking out of the country via flight of capital, only 2-3 per cent comes into the country as foreign investment (including round-tripping). Not only is India a net loser, liberalised flows have changed the very notion of what is legitimate and what is not, complicating prosecution and confusing the public. Loopholes deliberately created, such as the Mauritius route and Participatory Notes [instruments issued by registered foreign institutional investors to overseas investors who wish to invest in the Indian stock markets without registering themselves with the market regulator] which encourage inflow of capital also encourage more flight of capital. The inflow of such funds also spawns illegality in the country such as drug trafficking. It leads to speculation in the stock markets and makes them unstable. The benefits of liberalisation do not outweigh the loss to society.

Prosecution easier said than done

Given the scale of flight of capital from India, what has been revealed now is the tip of the tip of the iceberg(small view of big problem,बड़ी समस्या की छोटी सी झलक). Panama is only one of the 90 tax havens. Thus, it is likely that the entire financial operations of those whose names have been exposed are yet to be revealed. Further, out of the lakhs of Indians who could be holding funds abroad, data for not even 1 per cent of them have been leaked in all the cases of stolen data or declarations under the amnesty announced last year.

The stolen data, even though sketchy[ske-chee(incomplete,अधूरा)], leave the reader bewildered[bi'wil-dud(confused,परेशान)]. The salient feature that emerges is that funds are routed abroad via tax havens and use the process of ‘layering’ to hide the trail. Leaked papers further reveal that Mossack Fonseca was connected to various tax havens (such as British Virgin Islands and the Bahamas) and helped its clients hide their identity. If one works out the proportions, the 11 million documents possibly refer to 1,50,000 entities globally. Many of these entities, though not listed as Indian, could have Indian beneficial owners.

So prosecution is not going to be easy unless the government is proactive and finds out the details of the annual transactions of the 500 entities named (even if the accounts are closed now) and also finds out who else has not been exposed because of ‘layering’. The Panama government, and through it Mossack Fonseca, have to be forced to allow access to more data. The government has to investigate those who have been travelling to Panama or meeting Mossack Fonseca agents in India. That is how Bradley Birkenfeld was caught by U.S. authorities which then led to the prosecution of UBS Bank in 2007.

Even if technically one cannot prove that money was taken out or kept abroad illegally, what is the implication of taking money out to a tax haven and not keeping it in India? Inequity rises when the well-off escape taxation and that leads to poor infrastructure and higher indirect taxes. Indian tax rates are now moderate and hardly a cause for people to take capital out. This rising injustice and inequity due to flight of capital has not spurred action because almost all political parties and/or people close to them are involved in this activity. What has happened in Iceland [where the Prime Minister stepped down after his family was named in the Panama Papers], is unlikely to happen in India.

The problem is in India, and not abroad.

Courtesy:the hindu

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What Dalits want

In 1947, we opted for democracy as our political system post-Independence. “Democracy was something that would give the weak the same chance as the strong,” explained Mahatma Gandhi. Like many other democracies in the world, the three famous principles of the French Revolution — liberty, equality and fraternity — have inspired us too. Liberty we secured through a prolonged political struggle; equality we secured through our Constitution. But what about the third?

Bhimrao Ambedkar, the architect of our Constitution had said that his inspiration for liberty, equality and fraternity was Bhagwan Buddha. “What does fraternity mean?” he asked and went on to explain, “Fraternity means a sense of common brotherhood of all Indians — of Indians being one people. It is the principle that gives unity and solidarity to social life”.

Fraternity can’t be achieved through rules and laws in the Constitution. It requires a persistent[pu'sis-tunt(continuous,लगातार)] education of the people through public and private initiatives. In the last seven decades, have we been able to achieve what Ambedkar had described as fraternity?

Indian society is divided into castes and sub-castes. One single biggest challenge to fraternity today is the hierarchical[hI-u'raa-ki-kul(classified,वर्गीकृत)] caste system. Its roots are no doubt very deep. But its distorted[di'stor-tid(deformed,विकृत)] and utterly[ú-tu-lee(completely,पूरी तरह)] discriminatory[di'skri-m(i-)nu-t(u-)ree(unfavorable,पक्षपात)] manifestation today has no sanction in any Hindu dharmashastras.

“Janmana jatih” — caste by birth — is what we practise as the caste system. Although it had its roots in the varnashrama system of ancient times, the varnashrama system never sanctioned any caste hierarchy; nor did it allow any discrimination. In fact, transmigration was said to be the order of the day in that ancient system.

“Ajyestaaso akanistaasa yete — sam bhraataro vaavrudhuh soubhagaya (No one is superior or inferior[in'feer-ee-u(low,तुच्छ)]; all are brothers; all should strive for the interest of all and progress collectively),” proclaims the Rigveda (Mandala 5, Sukta 60, Mantra 5).

But the present-day caste system defies its own great scriptural wisdom and knowledge. It defies our Constitution in that it stands as a stumbling block in achieving fraternity in society. In a way, it has outlived its utility. The varnashrama system had depended on guna and karma — aptitudes and actions — in positioning a person in a varna. Today’s caste system has no connection with the old system. Hence, it should go lock, stock and barrel.

However, caste has not remained just a system. It got entrenched[in'trencht(established,स्थापित)] as an identity. Identities are not easy to erase. There is a need to find innovative ways to tackle this identity question.

Pending that, we shouldn’t lose sight of the immediate. The immediate issue is about discrimination based on caste. Article 17 of our Constitution has effectively and fully sought to abolish[u'bó-lish(leave,त्यागना)] untouchability and enforcing any disability on the basis of so-called low and high caste discrimination. Towards that end, we have also promulgated the Protection of Civil Rights Act, 1955, which made the offence of violating Article 17 punishable.

But has it really ended discrimination? Why is a Dalit, however well-educated and well-placed he may be, forced to hide his identity? Why is it that a leader from among Dalits is always seen only as a “Dalit leader”, which is not the case with other leaders? Hierarchical casteism is entrenched in the social psyche, and that is where the battle is.

Today, we are living in an era of caste assertion. In order for social unity and harmony to be well-maintained, we need to keep the discourse on track. In the mid-1990s, a Dalit sub-caste in Andhra Pradesh started using their caste name as a suffix to their names. This, in their view, was a proud assertion of their identity. This act led to serious discussion among the intelligentsia. Many were worried that casteism was staging a comeback. But a simple and profound question asked by a Dalit intellectual put the discussion to rest. In Andhra, people belonging to several non-Dalit castes use their caste name as a suffix. This has been the practice for long. Never did the question of growing casteism arise when Sharma or Shastry or Reddy was used as a suffix. Why this concern when a Dalit does the same?

This calls for a deeper understanding of the discourse within caste groups. For political correctness, one may declare that there is no discrimination in Hinduism and that a Dalit has an equal right to study the Vedas and become on par with a Brahmin. But the question a Dalit will ask is about this notion of “on par”. Why can’t it be that a Dalit reads the Vedas and still remains what he is? Why should he be doing it in order to become “on par” with some other caste?

This is the real discourse that we need to address. We assume that the Dalit discourse is all about more reservations and more jobs. No doubt, reservations are important and so are jobs. But the hunger today is for four things: Samman (respect and dignity), sahbhagita (participation and partnership), samriddhi (progress and prosperity) and, finally, satta (empowerment).

The government can take care of the last two, but the first two are the responsibility of society. Social and religious organisations have to take responsibility for addressing the Dalit hunger for samman and sahbhagita. That is when social equality is achieved.

Ambedkar was right when he warned the nation about it. “On the 26th of January 1950, we are going to enter into a life of contradictions[kón-tru'dik-shun(opposition,विरोधाभास)]. In politics we will have equality and in social and economic life we will have inequality. In politics we will be recognising the principle of one man one vote and one vote one value. In our social and economic life, we shall, by reason of our social and economic structure, continue to deny the principle of one man one value.

How long shall we continue to live this life of contradictions? How long shall we continue to deny equality in our social and economic life? If we continue to deny it for long, we will do so only by putting our political democracy in peril[pe-rul(danger,खतरा)].”

Courtesy:indian express

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When populism trumps public safety

The Sunday fire tragedy at the Puttingal Devi temple in Kollam, Kerala, which claimed more than 100 lives, raises several questions with regard to public safety management and the role of the district administration in ensuring safety during occasions such as major religious festivals. The chief issue is whether the Kollam administration — mainly the police — was incompetent or merely negligent because of external pressure. A gargantuan[gaa'gan-choo-un(big,बड़ा)] Kumbh Mela that attracts several millions passes off without incident. But a Kollam festival that draws just a few thousands ends in a colossal[ku'ló-su(big,बड़ा)] mishap. How do you explain the contradiction? Is it that the Uttar Pradesh civil set-up is more sensitive and efficient than its Kerala counterpart? Or is it a case of government reluctance[ri'lúk-tun(t)s(unwilling,अनिच्छुक)] to be tough on the eve of Assembly elections?

One of the most complex tasks the Indian administration has to perform is the handling of massive religious congregations[kóng-gru'gey-shun(group of people,भक्तगण)] . Both of us have supervised a large number of festivals. On all these occasions we have had to encounter devotee indiscipline of the worst order, particularly the desire to be the closest to the sanctum sanctorum. Devotee exuberance[ig'zyoo-bu-run(t)s(enthusiasm,उल्लास)] is usually compounded by the lack of control over the event by the organisers, normally a local committee of citizens, some with a dubious[dyoo-bee-us(doubtful,संदिग्ध)] reputation for managing finances and some with high political connections. Public safety, for them, is often low priority. If we have had only as few accidents as have happened over the years, it is because of sheer[sheer(Pure,नीरा)] chance rather than professional crowd control.

Festivals and fireworks

The distinctive feature of many Kerala festivals is that they cut across religions, and are looked upon as more of a social event. The fireworks display is the most exciting feature of religious festivals in Kerala. In fact, it is a huge draw for foreign tourists. While it began as a Hindu phenomenon, over the years, a few Christian groups also started emulating[e-myû,leyt(follow,अनुकरण)] it. The practice usually is of simultaneous release into the skies of dazzling high-decibel firecrackers by rival teams. Each of the competing groups is finally assessed by the variety of fireworks they are able to assemble, the colour of their display, the number of layers they are able to climb in the sky and the intensity of the sound produced. Many who have witnessed the Thrissur Pooram (to be celebrated in the next few weeks) and the Thiruvambadi festival would vouch for the excitement that the display generates.

In the Kollam horror, there are reports that the local administration had turned down the request for a fireworks competition between groups which are regular participants in the festivities and come from various other temples in the region. If this was so, why was the order not implemented?

The site of the temple was a heavily built-up residential locality, and most of those who lived in the immediate neighbourhood were stoutly[stawt-lee(strongly,दृढ़तापूर्वक)] opposed to an excessive use of fireworks during the annual festival. Reports suggest that a local resident — an elderly woman — is known to have appealed to the district collector against allowing fireworks because they posed a threat to her house nearby every year. There is therefore reason to believe that the festival organisers were least sensitive to local feelings, and their only concern each year was to do better than the previous occasion.

This exuberance is not peculiar[pi'kyoo-lee-u(unusual,अनोखा)] to the Kollam temple or to Kerala. All over the country such mindless enthusiasm to expand the scope of a festival every year is a feature that the local authorities have to contend with and bitterly oppose, but not always successfully. Any stern[sturn(strict,सख्त)] order limiting the festivities is always resisted, sometimes with the support of the local ruling party. The overruling of a district collector or superintendent of police is a common occurrence. The administration in Kollam eventually permitted a mere display of fireworks instead of the competition.

No State government in India would like to antagonise[an'ta-gu,nIz(act in opposition,दुश्मनी मोल लेना)] even the smallest of religious denominations. This is the tragedy of our polity. There are no signs that this appalling situation will change even in decades.

Lessons not learnt

Both stampedes and fireworks at festivals have caused a large number of casualties in our country. Perhaps these account for far more than what we have suffered at the hands of terrorists. The stampedes at the Mahamaham Festival in Tamil Nadu (1992; 50 casualties), the Nashik Kumbh Mela (2003; 39 casualties) and Mandher Devi temple in Satara, Maharashtra (2005; nearly 300 casualties) come readily to mind. Consider these along with the fire accidents in Delhi’s Uphaar cinema (1997; 59 deaths) and Kolkata’s AMRI Hospital (2011; over 90 deaths) to convince yourself that we either do not have a uniformly stringent[strin-junt(strict,सख्त)] fire safety policy, or the wisdom and courage to enforce it if we ever had one.

We have learnt only few lessons from these gory happenings. The routine appointments of commissions of inquiry and suspensions of police personnel are a knee-jerk[nee-jurk(natural,स्वाभाविक)] response to what is becoming a human rights violation by the state in neglecting fundamentals to regulate religious assembles and to strictly implement safety measures on public occasions or inside public buildings. You have to watch movies at the so-called multiplex cinema houses in our principal cities to understand the dimensions of potential horrors. Many of these premises have narrow, steep staircases to substitute for lifts and escalators in the event of a fire. Also, they have entries and exits solely on one side of the auditorium, enabling conditions for a classic stampede. Local authorities are grievously callous[ka-lus(insensitive,सवेंदनाहीन)] on such matters and are known to give licences to cinemas and restaurants for an unspecified bribe that is shared by many at the top and in the lower rungs of the administrative hierarchy.

The tragedy is there is hardly any open debate in the country on safety at our public premises and gatherings in open spaces. There is a near paralysis in the civil administration on such vital matters, attributable mainly to acute[u'kyoot(sharp,तीक्ष्ण)] political interference. The situation is so bad these days that an organiser of a public function can go to a government official to either flaunt his religion — minority or majority — or his proximity to the ruling party in order to browbeat the official concerned into permitting even the most objectionable event. The Kollam tragedy is a manifestation of this disease that afflicts our polity. Such tragedies will continue to occur if public safety policies are not delinked from religion and politics, and the greed which dictates the response of many public officials, both petty and senior.

A final word about police practices and accountability. Many senior law enforcement officials continue to believe — wrongly — that throwing in a large number of policemen at a temple or a public meeting addressed by celebrities is a guarantee against chaos[key-ós(disorder,अव्यवस्था)] or disaster of the kind we saw at Kollam. Numbers deployed can help only to an extent. It is the quality of deployment, combined with the severity of adherence[ad'heer-un(t)s(following,समर्थन)] to the standard operating procedure which would eventually win the day.

Courtesy:the hindu

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Sort out the tax maze

The Panama Papers reveal that countries with much simpler tax laws, lower costs of compliance and a stronger administrative capacity to enforce laws than India have not been able to prevent the use of tax havens. In India, tax rates are higher, the system is complicated and capital controls restrict foreign financial transactions. Tax havens are more likely to be used not just for felonious[fu'low-nee-us(illegal,अवैध)] activity but even for legitimate businesses.

The government has ordered a probe into the leaks. But there are thin lines between the legal and the illegal. The difference between tax evasion and tax avoidance is one such line. Tax evasion involves not paying taxes on your income and is illegal. Tax avoidance, on the other hand, is about managing your taxes across different tax jurisdictions to take advantage of differences in tax rates, such as corporate tax rates, in tax treatment of different kinds of income, such as capital gains, and in tax treaties among countries. Tax havens such as Panama, the British Virgin Islands and the Bahamas try to attract business by offering low tax rates and easy compliance.

Officials from OECD countries on the Panama list are under public pressure because they have been advocating that tax avoidance, though legal, is cheating. A number of OECD initiatives have been taken to reduce tax avoidance: An agreement on Base Erosion and Profit Shifting (Beps) aims to prevent companies from choosing low-tax jurisdictions to book profits in. The Automatic Exchange of Information (AEOI) framework will facilitate information flows among signatories. The Foreign Account Tax Compliance Act (Fatca) targets non-compliance by US taxpayers and compliant countries have to provide customer information to the US government.

In addition to tax avoidance, as tax havens have laws to ensure greater confidentiality of companies and banking secrecy legislation, the companies may be used for money laundering. In general, there is a widespread perception that offshore companies are conduits for money laundering, illegal transactions, tax evasion or parking unexplained wealth. While offshore companies may be used for illegal purposes, law-abiding[lo-u,bI-ding(lawful,क़ानूनी)] citizens may hold them for making investments in other countries to help navigate the complex maze of tax treaties and multiple jurisdictions involved in managing tax liabilities. Hedge funds that manage money in multiple countries often use tax havens to reduce compliance costs arising from different tax treaties among jurisdictions.

The Indian case is more perplexing[pu'plek-sing(confusing,अस्पष्ठ)] than those of OECD countries. It has been made complicated by a set of tax laws that makes compliance more costly than in the OECD. We rank 157 in the ease of paying taxes. Further, the effective tax on profit is higher: The corporate tax rate and the dividend distribution tax put together make the tax rate on profits nearly 50 per cent. The capital gains tax makes financial transactions even more unattractive. This regime is made more tortuous[tor-choo-us(complex,जटिल)] by an onerous[ó-nu-rus(heavy,भारी)] set of capital controls.

As a consequence[kón-si-kwun(t)s(result,परिणाम)], companies operating globally have every incentive to set up companies in such jurisdictions.

There are some cases in which the actions are clearly illegal. The first, for example, is when the underlying activity is criminal,drug or arms trade. These activities are covered under the Prevention of Money Laundering Act. As a member of the Financial Action Task Force, India works with other member countries to prevent the use of the proceeds of crime.

The second is when there are cases of tax evasion: A person does not declare to the tax authorities in her home country her income, which is paid into a bank account of her company in Panama, and no taxes are paid. Here, a distinction between tax evasion and avoidance is relevant. If taxes have been paid in the tax haven at its lower tax rate, then there may be no illegality. When India introduces the General Anti-Avoidance Rule (Gaar), some of these activities may become illegal.

The third case is if there is a violation of capital controls. This is an India-specific issue. Under the Liberalised Remittance Scheme (LRS), every Indian resident is allowed to invest $2,50,000 abroad every year. In 2004, the limit was one-tenth of this. Money remitted abroad is from income on which tax has already been paid. If the amount invested abroad exceeds the amount allowed by the RBI, it is a violation of the law.

Fourth, the illegality may be the non-declaration of assets held abroad. A provision in the Finance Bill introduced in 2015 made it criminal not to declare foreign assets in annual tax returns. If the assets held in tax havens have been declared, then it is not illegal to hold them.

OECD countries have simpler tax laws with lower tax rates and lower compliance costs than India and no capital controls. The focus of the authorities is to broadly keep business in the country and to tax the income of its residents. Yet, the Panama Papers show that even with much simpler systems and more effective enforcement, it is a challenge to prevent illegitimate cross-border flows.

In India, it is not just entities engaging in crime and tax evasion that have offshore companies. Reports suggest, for example,

that many Indian technology start-ups are moving their headquarters to offshore locations due to our complexities. These muddy the waters as both legal and illegal activities move abroad.

Looking forward, first, rationalisation of capital controls should be a top . Many government reports have laid out the path forward. Second, India must move to a simple tax regime with lower compliance costs. The blueprint is ready in the Direct Taxes Code. When countries with simpler laws and better enforcement are not able to prevent violations of the law, we cannot hope to do so with our labyrinth[la-bu-rinth(complex system,भूलभुलैया)] of capital controls, maze of tax laws and much weaker tax administration.

Courtesy:indian express

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