The 5 questions that should have been answered today but weren’t

Nov 12, 2018

My take on the CBI issue after SC takes evasive action again and refuses to answer a straight question: Was it legal for the government to send Verma on leave? 

The first and most critical question was for the Supreme Court to answer: Legality of the central government’s order sending CBI director Alok Verma on leave in the mid-night coup. The government cut short his two-year tenure guaranteed by the Supreme Court’s Hawala judgement of 1997, which was later incorporated into the Delhi Police Special Establishment Act of 1946 (DPSE Act). Verma’s two-year tenure was to run till January, 2019. This was also the first question Verma’s petition raised in the apex court, but was not considered during the October 26 hearing or find any mention in the court’s interim order.

Back in the time of the Hawala scam in 1990s, the apex court was so serious about protecting the two-year tenure of a CBI director (as a part of arrangements to grant the agency autonomy and insulate it from government interference) that it only provided for his/her transfer within the tenure only “in an extraordinary situation” with the “approval of the selection committee”. No other way of cutting short the director’s tenure was mentioned, not even in the DPSE Act.

The second critical question is the legality of M Nageshwar Rao’s appointment as interim director: Was the due process mandated by the Hawala judgement and DPSE Act followed? The apex court’s interim order is silent on this too. The established process, as per the Hawala judgement and DPSE Act, is that a selection committee led by the Central Vigilance Commissioner – with Vigilance Commissioners, Union Home Secretary and Union Secretary (Personnel as members – draws up “a panel” of IPS officers on the “basis of their seniority, integrity, experience in investigation and anti-corruption work” and then recommend names to the central government. Was this process followed and if so, who were the officers shortlisted? How a relatively junior officer – Naheshwar Rao is a 1986 batch officer holding the post of a joint director in the CBI then – with corruption cases against him being probed by the CBI itself was selected?

It may be pointed out here that after the Lokpal and Lokayuktas Act of 2013 came into being the composition of the selection committee has changed. It now comprises of the Prime Minister, Leader of Opposition and Chief Justice of India. It is a different matter that appropriate amendment has not been made in the DPSE Act yet. Other elements of the due process remain the same. It is this new selection committee which approved Verma as the director in 2017. An associated question then is: Did this committee meet to approve Rao’s appointment? There is neither an alternate method of appointment nor any mechanism for an “interim” director in the relevant law or the Hawala judgement.

Intrinsically associated with the above questions is the third critical question: Why has the Lopal not been instituted yet? The law was notified in January 2014 – more than four-and-half years ago. The Lokpal was conceived as the apex anti-corruption watchdog after a long and nation-wide political battle led by Anna Hazare and Arvind Kejriwal, in which the BJP, now in power at the centre, and its associate organisations played active and critical role. In fact, a great deal of credit for the BJP’s massive mandate in 2014 goes to this anti-corruption movement. In spite of the repeated prodding and rebuke from the apex court, the Lokpal is nowhere to be seen. The question is why? Is the government not serious about fighting corruption?

The Hawala judgement led to the Central Vigilance Commission (CVC) Act of 2003 and the “responsibility of superintendence over the CBI’s functioning” was entrusted to it to free the CBI from government interference. But the CVC has failed spectacularly – as is evident from the mess the CBI is now in. There are corruption charges against the three main players in the agency by the agency itself – Verma, Rao and Rakesh Asthan, special director who was sent on leave along with Verma. The two top officers, Verma and Asthana, are now fighting each other openly through the courts (the matter is before the Supreme Court and Delhi High Court) and outside.

The CVC’s failures were evident after the first man to head it in the aftermath of the Hawala judgement, N Vittal, retired in 2002. The Lokpal was conceived to fill this gap. Section 25 of the Lokpal and Lokayuktas Act gives it the power of superintendence over the CBI. Though this power extends only to the cases entrusted to the CBI by the Lokpal, the existing law can be treated as work-in-progress and suitably amended to remove legal ambiguities around the CBI’s functioning.

Other administrative and legal mechanisms may also be explored to insulate CBI from political interference, but this issue has to be settled now if the mess around it has to be cleared for once and all.

The fourth critical question is: How did Verma with no experience in CBI or anti-corruption experience, as alleged in the dissenting note of the selection committee member Mallikarjun Kharge, was selected? Who drew up the list and who were the other officers in the list? The case of Asthana is even more curious. His promotion as special director was not only opposed by Verma in writing but also challenged in the apex court. This was an unusual case as he was being probed in a corruption case by the agency itself while being promoted. Though it was dismissed by the court then, the situation is different now that the CBI has filed an FIR against him in a corruption case – which was apparently the provocation for the mid-night coup. While the CVC is probing the corruption charges alleged against Verma, at the apex court’s prompting (interim order), what is the status of the corruption case against Asthana? Surely, the FIR can’t be brushed aside just yet.

The fifth and final question is: Why the legal and administrative arrangements around the CBI’s functioning continue to be anomalous?

There are three laws governing the CBI’s functioning – the CVC Act of 2003, DPSE Act of 1946 and Lokpal and Lokayuktas Act of 2013. These laws set out two different selection committees for appointing CBI director. There are different arrangements for superintending and administrative powers over the CBI. As per the existing DPSE Act, it is the CVC which is supposed to have the “superintendence and administrative” power over it. The Lokpal law also provides superintendence over the CBI to the extent of cases entrusted to it by the Lokpal. Real life experience shows that the department of personnel of the Government of India too has administrative control over it.

It is no longer clear who runs the CBI.

So long as these issues are not addressed are answered satisfactorily, there is no way the CBI can uphold its credo or get out the mess it finds itself in.

Sabarimala (to Ayodhya) row: BJP and Congress undermining Constitution's secular values without a second thought for country's future

Firstpost
Nov 10, 2018

As you read this, the BJP is rolling out a rath yatra and the Congress is holding several padyatras in Kerala to protect the Hindu faith amid the backdrop of the Sabarimala temple row. During the Diwali festival earlier this week, Uttar Pradesh chief minister Yogi Adityanath organised celebrations in Ayodhya and announced the construction of a “grand statue” of Lord Ram to honour the Hindu faith, at State expense, after offering prayers at the disputed site where the Babri Masjid once stood.

Yogi has also changed Muslim names of places: Allahabad, Faizabad, Mughalsarai now have Hindu names. A few days earlier, his deputy Keshav Prasad Maurya said “no power can stop” construction of a grand Ram temple at the disputed site and Union minister Giriraj Singh said the Hindus were “running out of patience” after the Supreme Court postponed hearings on the case to January.

These activities point to a growing and disturbing trend of political parties and governments acting on behalf of the majority Hindu faith, against their avowed commitment to honour and uphold the rule of law and the secular character of the Constitution. Once the Supreme Court ruled that women of all ages can enter the Sabarimala temple, that becomes the rule of law and so long as it is seized of the Ram Janambhoomi dispute, all parties to the case are supposed to desist from doing anything that could have a bearing on the judgment.

And the Constitution of India, which governs the central and state governments, is expressly secular in character–the ‘State’ has no official religion and equal rights have been granted to all citizens regardless of their caste, creed or gender—to which the political parties and governments have sworn allegiance.

Is it then the death of secularism and constitutionalism as we know it? The cavalier manner in which the two principal political parties and governments at different levels are operating to promote the Hindu faith certainly indicates this. The silence of the civil society and media have created a conducive environment for these political players to act with impunity and undermine the cherished ideal of India’s founding fathers, but they are not the focus of this article, the two principal political parties and their governments are.

The BJP is not exactly known for secular politics and to that extent, some may argue that it is acting on the expected lines now that it has an overwhelming political dominance. However, what is of greater concern is the complicity of an avowedly secular Congress. The Congress has not only vacated the secular space, it is now actively engaged in promoting communal politics. In the Sabarimala case, it sided with Hindu orthodoxy instead of standing up for women’s rights and the constitutional values on the basis of which the Supreme Court allowed their entry into the temple.

The Congress has also desisted from questioning the Uttar Pradesh government’s actions in converting the Diwali festivities into a State-sponsored programme, the announcement of building a statue of Lord Ram at State expense, which is not the business of a state government. Nor did it protest against a spree of changing only the Muslim names of cities, bazaars and railways stations. It did raise the issue of Ram temple, but not to object the role of the State or the propriety of it, but to say that this was a mere distraction to divert attention from the poor performance of the Centre.

Many would argue that the Congress bears a far greater responsibility for undermining secularism and constitutionalism. In fact, it is the Congress which provided a fertile ground for and provoked communal politics of 1980s by its highly questionable role in the Shah Bano and Ram Janambhoomi cases. Since then, it has hardly done anything to retrieve the lost ground or secular space. In recent times, it started flaunting temple visits of its president Rahul Gandhi, projecting him as a janeu dhari and Shiv bhakt. While such acts could be justified on the ground of negating an anti-Hindu narrative being built around the party and its leaders, the Congress can certainly push back communal politics in the cases of Sabarimala, Ayodhya or replacement of Muslim names.

As for the BJP, it is no revelation that secularism took a backseat once it established its political dominance and ‘secular’ became a dirty word. Those who espouse the cause of secularism are now simply dismissed as “sickular” without sparing a thought for its consequences for India and its future.

That was not the case when the party was launched in 1980 with Atal Bihari Vajpayee as its president. It put aside the communal politics of its precursor, the Bharatiya Jan Sangh and adopted “positive secularism”: describing it as “distillation of common moral values whether derived from different religions or from other historical and civilisational experiences and approach which always remained integral to the Indian civilization” as one of its five commitments. It was meant to be different from the secularism of the Congress which was criticised for being pro-Muslim and a vote bank politics.

After its first electoral defeat in 1984 (when it won just two Lok Sabha seats), the BJP, however, abandoned this position and went back to the hardline Hindutva ideology of the Bharatiya Jan Sangh. With LK Advani at the helm, “pseudo-secularism” and “Muslim appeasement” replaced the narrative. Then came Advani’s rath yatra to build a temple for the Hindus and the party went on to raise its Lok Sabha numbers to 85 in 1989. Since then, there has been no looking back. The party’s constitution still retains the words “positive secularism” but is described differently as “sarva dharma samabhav”. But that is precisely what its “positive secularism” is not in its actions and political discourses.

When the courts (Bombay High Court and Supreme Court) allowed Muslim women entry into Mumbai’s Haji Ali dargah in 2016, the BJP welcomed it saying that it was a fight for women’s rights, supported by court judgment. Its government in Maharashtra told the court that the fundamental rights of citizens were above customs and traditions. A few days later, 400 women entered the dargah and offered prayers while the trustees of the dargah paid their courtesies to them.

The party also championed the cause of the Muslim women in the triple talaq case. Union Law Minister Ravi Shankar Prasad, for example, said, “It is not about caste or religion or faith but gender justice, dignity and equality for women” One of his tweets read: “The government of @narendramodi has stood firmly for safeguarding the rights of Muslim women in the triple Talaq matter. #ModiGovtEmpowersWomen”.

But when it comes to the Sabarimala case, these lofty ideals of gender justice, dignity and equality for women or the sanctity of court judgment are abandoned. The narrative turns to protecting the Hindu faith. No less than the party president Amit Shah threatened the Kerala government and reprimanded the Supreme Court by saying that “you should issue orders that can be implemented, not the ones that break the faith of people...”

The BJP and Congress, or any other political party for that matter, and their governments are not supposed to play footsie to any faith:  unless they are seeking to rebuild India into a theocratic State. Assuming that that is not the case now, the two principal political parties should do well to revisit their own party constitutions which solemnly declare that they shall “bear true faith and allegiance to the Constitution of India as by law established and to the principles of socialism, secularism and democracy and would uphold the sovereignty, unity and integrity of India”. There is no allusion to theocracy anywhere.

In fact, it is precisely this kind of behaviour of the BJP and Congress that BR Ambedkar warned against and described as “grammar of anarchy” in his speech while handing over the Constitution to the Constituent Assembly on 25 November, 1949. It is worth quoting the entire paragraph here. He said:

“If we wish to maintain democracy not merely in form, but also in fact, what must we do? The first thing in my judgment we must do is to hold fast to constitutional methods of achieving our social and economic objectives. It means we must abandon the bloody methods of revolution. It means that we must abandon the method of civil disobedience, non-cooperation and satyagraha. When there was no way left for constitutional methods for achieving economic and social objectives, there was a great deal of justification for unconstitutional methods. But where constitutional methods are open, there can be no justification for these unconstitutional methods. These methods are nothing but the Grammar of Anarchy and the sooner they are abandoned, the better for us.”

The constitutional way is the right way to resolve every conflict, at least so long as the Constitution of India continues to govern India.

Debts drive breadbasket farmers to daily wage labor

In Villagesquare.in
Nov 7, 2018
Sangrur, Punjab & Kaithal, Haryana

With farm income failing to keep pace with their debts, a large number of small and marginal farmers in Punjab and Haryana have started supplementing household earnings through daily wage labor

While the farmers of Punjab and Haryana face opprobrium for burning crop stubble that leads to severe air pollution in Delhi and other parts of north India, there is very little attention paid to their daily grind, particularly the marginal and small farmers who constitute a substantial chunk of population in these relatively prosperous states that constitute the breadbasket of India. Falling income, mounting debts and high interest rates on loans have driven most of them to daily wages for survival.

In Punjab, 35.4% of farm households fall in the category of small and marginal farmers (holding less than five acres of land), and 65.4% in Haryana. Further, Punjab’s 64.51% rural households are landless, compared to 55.91% in Haryana, against a national average of 56.41%.

Mounting debts in Punjab

Debts are endemic to these small and marginal farmers. “I remember my family being in debt, right from my grandfather’s time,” Harjinder Singh, a 30-year-old farmer who owns two acres of land in Gharachon village in the Bhawanigarh administrative block of Punjab’s Sangrur district, told VillageSquare.in.

He has a debt of Rs 8 lakh – Rs 3 lakh taken from Malwa Gramin Bank and Rs 5 lakh from an arhatiya, one of the commission agents at the mandi (wholesale market), where all crop procurement operations take place. Though the private lender charges 12% interest, and the banks an effective rate of 4% (government provides 3% interest subvention), he relies on the agent, since loan from formal institutions is limited to Rs 3 lakh.

Satwinder Singh, a 40-year-old farmer of Jhaneri village, owning three acres of land, has Rs 5.76 lakh loan from three different sources – a bank, a farmers’ cooperative and an agent. “On paper, the loans from the bank and cooperative are for farming, but these are actually for my children’s education and healthcare,” Satwinder Singh told VillageSquare.in. “In the absence of good government schools and hospitals, I have to rely only on private institutions.”

Outstanding loans in Haryana

In Haryana’s Kaithal district, it is no different for Nahar Singh, who owns two acres in Kharodi village of Guhla administrative block, or for Satnarayan Sharma from Peedal village who owns 0.75 acre.

Nahar Singh has a debt of Rs 7.5 lakh and Sharma a debt of Rs 9.5 lakh, taken from a commission agent, bank and farmers’ cooperative. Both the farmers and their sons work as daily wage laborers for most part of the year, to run their families of four and five respectively.

“My son studied up to class XII on my insistence, but found no jobs,” Sharma told VillageSquare.in. Seeing his brother’s plight, Sharma’s younger son shows no interest in studies and helps his father in his farm.

According to the National Sample Survey Office’s survey of 2013, the average outstanding loan against farm households in Punjab is Rs 119,500 (third highest in the country) and Haryana Rs 79,000 (seventh highest), while the national average is Rs 47,000. About 53.2% farm households in Punjab, and 42.3% in Haryana are in debt, as against the national average of 51.9%.

Inadequate farm income

Several farmers in both the blocks of Punjab and Haryana say that their farm income has fallen as the input costs – fertilizers, pesticides, insecticides, hiring cost of tractors and other farm implements – have grown disproportionately in the past few years.

Satwinder Singh, a small farmer of Jhaneri village in Punjab, grows paddy as government procures it at a minimum support price (Photo by Prasanna Mohanty)
Satwinder Singh, a small farmer of Jhaneri village in Punjab, grows paddy as government procures it at a minimum support price (Photo by Prasanna Mohanty)
“If we are growing paddy, which is not what Punjab farmers used to grow a few decades ago, it is because the government procures it at a fixed minimum support price (MSP) and we get an assured income,” Harjinder Singh told VillageSquare.in. “I admit that paddy made us rich, but only till the mid-90s, after which the input costs have gone up significantly while the MSP (minimum support price) has failed to keep pace. Now paddy is ruining us.” MSP is the price the government pays farmers to buy selected crops that are fed into the subsidized public distribution system.

In support of his claims, he said that the price of di-ammonium phosphate (DAP) has gone up from Rs 900 a quintal in 2015 to Rs 2,800; and Applaud, an insecticide that cost Rs 700 a liter a year ago, now costs Rs 1,000. But MSP for paddy has gone up from Rs 1,500 in 2015 to only Rs 1,770 a quintal this season.

Farmers turn wage workers

According to Sukhpal Singh of Punjab Agricultural University, the MSP of wheat and paddy increased at the rate of 2% per annum while the cost of cultivation increased at the rate of 7.9% in Punjab in the past 15 years.

It is true that Punjab and Haryana top the list in average farm household incomes in India. However, Sukhpal Singh pointed out in an article the Economic and Political Weekly that the annual net income of marginal and small farm households were Rs 72,000 and Rs 1.78 lakh, respectively. Their income is much lower than their debt burden of Rs 1.82 lakh and Rs 2.70 lakh, respectively, for 2016-17.

That such farmers are banking on daily wages for survival is evident from the SECC 2011 data, which shows that manual casual labor is the main source of income for 48.03% rural households in Punjab and 42.7% in Haryana. Though these percentages are a little less than the national average of 51.8%, it is a worrying development nonetheless.

Sukhpal Singh said that small farming in particular is no longer a viable occupation as incomes are not sufficient to meet the basic expenses of domestic consumption, healthcare and education.

Lack of policy action

“Neither Punjab nor Haryana has any policy for marginal and small farmers, except for providing free electricity, water and subsidies to buy farm implements,” said Sucha Singh Gill of the Centre for Research in Rural and Industrial Development (CRRID), Chandigarh.

Agriculture policies of both the states have no specific policy prescriptions for small and marginal farmers. Punjab’s 2013 policy lists future course of growth for farmers, particularly the small and marginal and also the agricultural laborers.

Haryana’s policy of 2014 acknowledges “the plight of farmers, particularly small and marginal” and says “a lot needs to be done” about land reforms but all it prescribes are: giving credit at low rate of interest and revisiting rules and procedures for land reforms.

Way forward

Gill pointed at the solutions that the Planning Commission had formulated – farm cooperatives, self-help groups and farmer producer organizations (FPOs) to help the small and marginal farmers in particular.

“The FPOs are in their infancy in Punjab and Haryana where National Bank for Agriculture and Rural Development (NABARD), entrusted with the task of promoting them, started working two years ago on a pilot basis,” said Gill.

According to him, an excellent short-term solution could have been the rural job guarantee scheme under Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) providing work to distressed farmers.

Gill said that the rich and influential farmers of the two states derailed the program, apparently to get cheap labor for their farms. “We conducted studies in Punjab and Haryana in 2010-11 and found that 50% of the villages didn’t have MGNREGA operations,” Gill told VillageSquare.in.

A visit to several villages in Bhawanigarh and Guhla blocks confirmed that MGNREGA works were few and far between. “There has been no MGNREGA work so far this year and very little last year,” Krishan Kumar Gujjar, village council chief of Jhaneri told VillageSquare.in.

In such scenario, there is little hope for the small and marginal farmers in the states that form the food basket of the country.

“Industrialization of rural areas is the answer and farming should become a part-time profession,” agriculture economist and chancellor of Punjab University Sardar Singh Johl told VillageSquare.in. Gill said that non-farm employment would be a major long- term solution but there is no such policy in view.

Sabarimala row: Who will discipline political parties for failing to uphold a Supreme Court verdict or the Constitution?

Firstpost
Nov 5, 2018

Once the Supreme Court allowed women of all ages entry into the Sabarimala temple citing the constitutional morality and values, one would have expected the political parties across the spectrum to honour it and lend their support to the Kerala government in implementing it. But the two main political parties – the BJP and Congress – are opposing it and there are organised protests, violence and violation of the order. This is shocking to say the least.

Sub-section 5 of Section 29A of the Representation of the People Act (RP Act), 1951, which governs registration of political parties, very specifically asks political parties to given an undertaking declaring their “true faith and allegiance to the Constitution of India as by law established, and to the principles of socialism, secularism and democracy, and would uphold the sovereignty, unity and integrity of India”.

But the conduct of the BJP and Congress is quite the contrary. The BJP has not only galvanised its cadre to prevent women’s entry into the temple, it has announced a six-day rath yatra against the verdict which would be led by its state president PS Sreedharan Pillai. The Congress, too, has taken a stand against the court verdict and no less than its national president has said that he backs the Kerala PCC’s stand opposing the verdict.


The Supreme Court verdict had, among other things, cited its own earlier judgement to drive home why it placed so much reliance on the Constitution of India: “When a country is endowed with a Constitution, there is an accompanying promise which stipulates that every member of the country right from its citizens to the high constitutional functionaries must idolize the constitutional fundamentals. This duty imposed by the Constitution stems from the fact that the Constitution is the indispensable foundational base that functions as the guiding force to protect and ensure that the democratic setup promised to the citizenry remains unperturbed”. (emphasis added)

While the onus to honour the constitutional morality and values is on all the citizens and institutions, the political parties have a far greater and more critical role to play and hence, the subject of this article. This role can be summed up in what a Law Commission of India report of 1999 on Reforms of the Electoral Laws said: “It is the political parties that form the government, man the Parliament and run the governance of the country”. Eminent academic Pratap Bhanu Mehta once elaborated on the significance of political parties in these words: “Democracy performs its most salient functions through (political) parties. The selection of candidates, the mobilization of the electorate, the formulation of agendas, the passing of legislation – is all conducted through (political) parties. (Political) Parties are, in short, the mechanisms through which power is exercised in a democracy”. Need one say more?

The irony is nobody is even approaching the Election Commission of India (ECI) to seek de-registration of these political parties for violating their oath of allegiance to the Constitution – which is a logical course or at least issue show cause notices to explain their behaviour. Why so?

Well, the answer is even more ironical: While the ECI has the power to register a political party, it does not have the power to de-register it. Ironies of irony, the Supreme Court said this in a judgement in 2002, without even stating who does or seeking such a provision. While denying the right to the ECI, its order had this to say about the ECI’s powers: “The Election Commission while exercising its power to register a political party under Section 29A of the (RP) Act, acts quasi-judicially and decision rendered by it is a quasi-judicial order and once a political party is registered, no power of review having conferred on the Election Commission, it has no power to review the order registering a political party for having violated the provisions of the Constitution or for having committed breach of undertaking given to the Election Commission at the time of registration”.

The order provided the following three exceptions though: (a) when registration was obtained by fraud or forgery (b) when nomenclature of association, rules and regulations amended abrogating their conforming to the section 29A or (c) a party is declared unlawful.

Since 1998, the ECI has been asking the Government of India for power to de-register political parties for many valid reasons but all in vain. Its last attempt was in February this year when it asked the Supreme Court to give it the power since the political parties and the Parliament are reluctant to do so and nobody has the power to de-register if not for the three exceptions the Supreme Court had provided in its 2002 judgement.

The ECI’s plea has been foregrounded with several such recommendations by the Law Commission, National Commission to Review the Working of the Constitution and the Ministry of Law at various points in time, which, among others, specifically mentions that declaration to adherence to democratic values and norms of the Constitution in their inner party organisations should form a part of the rules and bylaws of the parties seeking registration.

The Government of India did make an attempt in 1994 by introducing a Bill to amend the RP Act, which proposed to introduce Section 29-B in the RP Act whereunder a complaint to be made to the High Court within whose jurisdiction the main office of a political party is situated for cancelling the registration of the party on grounds including violation of section 29A (5) but it lapsed on the dissolution of the Lok Sabha in 1996. Nothing more has been heard of it.

Now, it is for the Supreme Court to step in and expand its 2002 order to include the failure to honour and uphold the Constitution as a ground for de-registration as well. Who does it give the power to – the ECI or a High Court – is for its fine sense of judgement to decide, but decide it must, for no such power has meant that the political parties make a mockery of the Constitution or the Supreme Court’s judgement itself, as is the case with the Sabarimala episode now.

World Bank ease of doing business ranking: Higher FDI inflows is okay, but why is it not boosting economic growth?

Firstpost
Nov 1, 2018

For the second year running, India has dramatically improved its ranking in the World Bank’s doing business index (DBI) – from 130 in 2016 to 77 in 2018 – and is gaining on China (ranking 46) and Russia (ranking 31). While this improvement is worth celebrating, how it is impacting India’s economy is a poorly studied area and needs urgent attention.

But before that, a caveat is in order.

DBI is based on 10 parameters that measure “business regulation” – like starting a business, construction permits, getting credit etc. (It also measured labour market regulation separately but did not consider it for the ranking.)

What it does not cover are: “macroeconomic stability, development of the financial system, quality of labour force, incidence of bribery and corruption, market size and lack of security”. Thus, DBI is only one of the indicators of economic perspectives of a country.

India has been seeking to improve its DBI ranking primarily to attract foreign direct investments (FDI) and make ‘Make in India’ a success. The World Bank too promotes the concept that better business regulations (that is better DBI ranking) are associated with higher FDI inflows. Interestingly, India has witnessed a dramatic and steady rise in FDI inflows since 2014 – from $36 billion in 2013-14 to $45.15 billion in 2014-15, $55.56 billion in 2015-16, $60.22 billion in 2016-17 and $61.96 billion in 2017-18.

But the critical question is: Has higher FDI inflows led to higher GDP growth, higher capital formation (investment) or higher industrial output and capacity utilisation (relevant to ‘Make in India’ programme)? The answers are a clear ‘No’. And thereby hangs a tale.

The growth rate of GDP has been falling since 2015-16. According to the Economic Survey of 2017-18, the growth rate (at constant price and base year of 2011-12) was 7.5 percent in 2014-15, which went up to 8 percent in 2015-16 and then declined to 7.1 percent in 2016-17 and 6.5 percent in 2017-18.

Gross fixed capital formation (GFCF), which is an indicator of investment in the economy, has also been going down steadily – from 34.31 percent of GDP in 2011-12 to 28.5 percent in 2017-18 (at current price).

The Index of industrial production (IIP) growth remains low and fluctuating. The growth rate in eight core sectors (coal, crude oil, steel, cement etc.) went down from 4.9 percent in 2014-15 to 3 percent in 2015-16, went up to 4.8 percent in 2016-17 and fell to 4.2 percent in 2017-18. Capacity utilisation of manufacturing companies has been fluctuating since 2014-15 and the first quarter of 2018-19 witnessed a sharp decline.

One is tempted to ask: Why is FDI going up when the relevant macroeconomic indicators are going down? What exactly is FDI doing to the Indian economy?

First, World Bank says that though worldwide studies have shown that better business regulation (reflected in DBI ranking) is “associated with higher levels of FDI”, yet this association “does not imply causation” and that there is no evidence of such association for ‘developing countries’.

A 2016 IIM Bangalore working paper says that DBI ranking has “limited macroeconomic usefulness and relevance”, explaining that this ranking is a de jure measure that does not capture the de facto practices that are used to get around the law to get business done: personal connections, jugaad solutions. Besides, it says there is a distinction between the ease of doing business and the cost of doing business and that in large unorganised economies (like India), the cost of business is low (since much activity escapes tax net) even if starting a business is difficult and DBI rank is low.

This disconnect is captured in Ruchir Sharma’s 2016 book The Rise and Fall of Nations: Ten Rules of Change in the Post-crisis World. It talks of Vladimir Putin improving Russia’s ranking from 120 to 51 between 2012 and 2015 – more than 30 places ahead of China and 60 places ahead of Brazil and India – and yet nobody was doing business with Moscow. Why? He explained: “Moscow in 2015 is increasingly hostile to and isolated from international business, far more so than China, Brazil or India. To the extent possible, I try to avoid relying on numbers that are vulnerable to political manipulation and marketing.”

In India, it is a matter of study as to why higher FDI inflow has not led to higher growth indicators. Prof R Nagaraj of Indira Gandhi Institute of Development Research has one explanation. In his 2017 paper Is FDI the New Engine of Growth?, he writes that this is because, “Currently FDI does not come from leading global producers of goods and services, but from shadow banking entities such as private equity (PE) funds”. He says in 2014-15, PE accounted for 60 percent of total foreign inflows and the top recipients (Flipkart, Paytm and Snapdeal) were retail trade of mostly imported consumer goods. PE firms do not commit to fresh capital formation or invest in technology as expected, he adds.

‘Round-tripping’ – channelling local funds abroad, which subsequently return to the local economy in the form of direct investment – is another issue that needs probing. Mauritius has emerged as the top FDI source for India by contributing a maximum of 33 percent of inflow (the second being Singapore with 19 percent) since 2016-17. Here is what Exim Bank’s 2014 working paper Outward Direct Investment from India: Trends, Objectives and Policy Perspectives says on round-tripping: “Round-tripping can take many formats like under-invoicing and over-invoicing of exports and imports. Round-tripping involves getting the money out of India to, say, Mauritius, and then bringing it back to India as FDI or FII investment. Round-tripping is a major reason for Mauritius being a source as well as destination for FDI.”  

Amitabh Kant, CEO of Niti Aayog, was right when he said last year (soon after India’s DBI ranking was announced to be 100) that India’s next goal was to improve domestic investment – which has hit a new low. India is facing twin-balance sheet (TBS) challenge, as former CEA Arvind Subramanian kept reminding – over-indebtedness in the corporate sector, depressing demand for investment and growing NPAs reducing supply of credit.

Around the same time last year, CMIE had said in its October 2017 report that India had registered “the lowest level of intention to invest seen in any quarter during the tenure of the Modi government” in the quarter ending September 2017 – even lower than June 2014 quarter “when investments had come to a halt for all practical purposes in the face of political uncertainty”.

In its October 2018 report, it says new investment proposals in the quarter ending September 2018 “belie hope” of a revival in investment sentiment and “fail to live up to the small promise held out during the past few months.”


Therefore, it may be more useful for India to focus on strategies to revive investment and ask a few relevant questions regarding the FDI inflow.

Hurting freedom of press will hurt India

I wrote in June 2017 after attack on NDTV

A free press constitutes an instrument of development in the same way as education or investment

Nation builders build institutions – independent and robust institutions. A free press is one such institutions which has been nurtured and cherished in democracies world over. It not only informs citizens, a prerequisite for the society to be responsible and powerful, it acts as a watchdog of democracy, alerting people in time to possible wrongdoing or misuse of power by the government of the day.

Thomas Jefferson, one of the founding fathers of America, put the relation between free press and democratic government in perspective: “The basis of our government being the opinion of the people, the very first object should be to keep that right…And were it left to me to decide whether we should have a government without newspapers, or newspapers without a government, I should not hesitate a moment to prefer the latter…” (Emphasis added)

But the import of a free press goes far beyond this. Free press is a powerful tool of development too. A multinational study covering more than 150 countries, published by UNESCO in 2008 (Press Freedom and Development), examined the co-relation between the free press and different dimensions of development (including GDP, health and education), poverty, governance and conflict/violence by using econometrics and concluded that there indeed existed a “good co-relation” and a “positive influence”.

The study said, among other things: Countries with higher per capita GDP had freer press, barring some exceptions; where there is no press freedom, the share of GDP spent on health is low; countries with press freedom have high rates of primary and secondary enrolment; countries that do not have press freedom suffer from governance problems; free press is positively co-related with low level of military expenditure and military personnel; free press creates a business-enabling environment and so forth.

It rests its case with a compelling observation: “A free press constitutes an instrument of development as such, in the same way as education or investment.” (Emphasis added)

What a free press seems to be doing is, the study observes, to expand participation in the political decision-making process, provide access to a whole variety of different ideas, opinions and information, make governments more accountable and allow policy implementation and the practices of those in power (corruption, for example) to be monitored.

The co-relation between free press and corruption is well known. A 2004 study of 97 countries (for period 1995-2002), found that reduction in free press restrictions by 1% led to a 5.1% improvement in the Corruption Perception Index (CPI). There have been many other studies showing evidence of a catalytic role played by free press in influencing opinion leading to social change.

Free press, thus, plays a dual role – a source of information about people’s need for the government and also force the government to intervene by arousing public opinion. Amartya Sen had famously observed that there had never been a famine in a democratic society, or even in India since independence. He thought that famine was not even possible when the press is free because it would expose any shortage in time for the corrective measures to be taken.

After analysing data for 50 countries, a study (Press Freedom and Jump in Stock Market, 2016) found that stock markets in countries with free press saw higher volatility, higher jump risk, and lesser information asymmetry. With a free press, those countries were better at processing economic information and suppression of bad news was less, and hence markets were fair and transparent giving better price discovery.

It is in these lights that the egregious attack on NDTV has to be seen. Not only because the justification issued by CBI is specious – a presumptuous loss of interest to a private bank which didn’t even complain – the raid and the events prior to that lead one to belief of an assault on press freedom the way NDTV was singled out for being critical of the government.

Apart from the media, the raid has sent a danger signal to the beleaguered banking sector too, which is fighting to survive a humongous NPA mess, for it makes even a haircut in interest (as in the case of NDTV), not the principal amount, a criminal activity. Banks do make sacrifices in the case of stressed assets to salvage whatever they can.

There are more reasons to worry. The news of the raid on NDTV has been splashed all over the world – from BBC and New York Times to Al Jazeera. A headline like ‘Raids in India Target Founders of News Outlet Critical of Government’ in the New York Times for example, does not go unnoticed or do any good to the investors’ sentiments as sentiments play a key role in determining investment destination.

Suppression of the press indicates poor governance and low transparency. In the composition of AT Kearney’s FDI Index, transparency of government in regulations is a key factor and any decline in that affects our ability to consistently draw overseas investment. For a government that claims to go by the dictum of “minimum government and maximum governance”, freedom of press is a necessary oversight and safety mechanism. Hurting that freedom will hurt India’s development, both economic and social, as well as democracy. That is a price we wouldn’t like to pay.

North India chokes as farmers set stubble ablaze

India Climate Dialogue
Oct 24, 2018

The burning of crop residue in Punjab and Haryana, responsible for severe air pollution in Delhi and northern India, is declining but farmers need cheap and effective alternatives for it to stop altogether


In the afternoon of October 20, a 40-year-old farmer in Sangrur district of Punjab torched his four-acre field covered with paddy stubble even as the Central Pollution Control Board warned of serious air pollution. The pollution watchdog said in its daily air quality index (AQI) bulletin that air quality was very poor and severe in the national capital region (NCR), with values ranging between 300 and 500. The AQI needs to be below 50 to be termed as good. Sangrur is close to the NCR.

Both the farmer and his 70-year-old father, who supervised the operation, know that crop residue burning (CRB) causes air pollution and attracts fines between INR 2,500 and INR 15,000 (USD 34-205) but brush aside the concerns, saying that it is their majboori (Hindi for compulsion).

The father says he has been burning residue ever since he started growing rice 30 years ago “at the prodding of the government”. He says even if he uses Rotavator, a farm implement to mix crop residue and prepare the seedbed that he bought last year, the paddy residue still needs to be burnt. See: From bread basket to basket case

Ready for prison

Other implements for on-site residue management, such as Super-Straw Management System (Mulcher), which cuts the stubble and spreads it; or Happy Seeder, which sows wheat without burning the residue, are not available for hiring at the Custom Hiring Centres (CHCs) in the area. While the father says he is ready to go to jail, the son says he is scared but is helpless, as using implements for stubble management will raise his cost by INR 10,000 to INR 20,000 per acre.

In the neighbouring Kaithal district of Haryana state, which witnesses the most CRB incidents in India’s breadbasket, a rich farmer owning 21 acre land declares defiantly, “I will burn the residue on my 10-acre plot this evening. No, I will not pay the fine. Why does the government not ban rice mills belching fumes 24 hours a day (pointing at one)? There are 55 to 60 such mills running in our area. Don’t they pollute the environment?”

Another farmer expresses his helplessness, saying that it takes one-and-half months for the stubble to decompose, by which time the wheat-sowing season will be over.

Climate impact of residue burning

The burning of crop stubble is a matter of serious concern because it is a significant source of atmospheric particulate matters and greenhouses gases such as carbon dioxide, carbon monoxide, nitrous oxide and methane, which have short and long term impacts on global climate systems, according to a NASA report on biomass burning.

The government of India’s 2018 operational guidelines for on-site farm residue management for Punjab, Haryana and Uttar Pradesh, which are collectively known as the country breadbasket, says that an estimated 23 million tonnes of paddy straw is burnt in these states every year, shooting up the levels of carbon dioxide by 70%, carbon monoxide by 7% and nitrogen dioxide by 2.1%.

It also says that burning of one tonne of rice straw releases 3 kg of particulate matter, 60 kg of carbon monoxide, 1,460 kg of carbon dioxide, 199 kg of ash and 2 kg of sulphur dioxide.

Impacting all of India

The residue burning started in the 1980s for both wheat and rice stalks with mechanisation of harvesting. Harvesting machines leave taller stubbles of 1-2 ft compared with less than 6 inches when the crops are manually harvested.


Tall paddy stubble left on the field after mechanised harvesting by a farmer in Punjab (Photo by Prasanna Mohanty)

Although the current concern of policymakers and the media over air pollution due to the annual burning in autumn is focussed on New Delhi and the NCR, a study released in June 2018 says the threat is spreading to other parts of India as well.

Using NASA images and evidence on the ground, the study says there’s “an increasing impact of CRB over the eastern parts of the Indo-Gangetic Basin and also over parts of central and southern India.” The increasing trends of finer black carbon particles and greenhouse gases have also accelerated since 2010, it said. See: Air quality worsens in India, Delhi improves

Farmers in Punjab and Haryana say that on-site residue management doesn’t work for paddy. Contrary to the government policy of promoting management of residue in the farm itself, conversations with farmers in half-a-dozen villages in Sangrur in Punjab and Kaithal in Haryana revealed that they think otherwise.

They point to three shortcomings — one, paddy residue takes a long time (more than a month) to decompose and mix with soil; two, paddy residue provides ideal breeding grounds for termites and rats; and three, wheat germination and plant growth is significantly impacted, reducing yield by 30-40%.

Therefore, they argue, providing incentives for on-site residue management systems such as Happy Seeder, Zero-till, Rotavator, Super-SMS or Mulcher are of little use in case of paddy despite the government providing financial incentives. These range from 50% to individuals to 80% to farmer groups and cooperatives.

One farmer in Sangrur said he had inquired from those who had used Happy Seeder and was told that crop yield reduced by half.

These farmers also dismiss that residue burning harms the soil or reduces yield. “In my 15 years of experience (of stubble burning), I have not found any harm to my land. If at all, negative impact is very little”, said a Sangrur farmer who declared that he would be burning the residues this year too.

He says the topsoil may heat up for a while but it cools down soon and the ashes gel well with soil. Besides, farmers say, burning kills brown plant hoppers and mosquitoes that spread malaria and dengue.

Eminent agriculture economist Sardar Singh Johl, however, differs. He blamed this attitude on lack of awareness among the farmers and a higher emphasis on maximising rather than optimising yield. Farmers were wasting organic matter (stubble) and harming the soil by burning residue while cheaper alternatives were available with agriculture universities, he told indiaclimatedialogue.net.

No alternatives

Interactions with farmers also reveal that they are aware of environmental concerns and the government’s carrot-and-stick policies, but their problem is multi-faceted. The on-site residue management systems are expensive — costing from a few thousand to several lakh rupees — and are useful just for a day or two in a year.

Many farmers claimed that they bought one of these implements in the past two years, applied for the subsidy but haven’t got it yet. Non-availability of such implements for hiring at the CHCs or farmers’ cooperatives in these areas is another constraint.

The farmers talk of other solutions. The state government could arrange for collecting, transporting and utilising crop residue, and setting up industries that could use it, such as paper, waste energy, packing and cement plants and so on. See: Easy solution to India’s air pollution problem

One farmer pointed out that the Hay Baler machine that compresses the crop residue into bales could be useful in such a scenario, but is prohibitively costly. Composting stubble — about which there is incessant radio commercials in the two states — has little resonance on the ground.

Burning is declining

However, official data, anecdotal evidence and ground-level feedback all point to the fact that CRB is going down. Crop burning incidents had gone down substantially, from 11,179 in 2016 to 7,613 in 2017 and 2,589 in 2018 during the period between September 27 and October 21, Punjab Pollution Control Board chairman K.S. Pannu told indiaclimatedialogue.net.

In Haryana, member secretary of the state pollution control board S. Narayanan said CRB had gone down by 35-40% so far. As on October 21, about 2,600 cases have been recorded, as against about 4,000 by this day in 2017. There were 12,600 CRB incidents in the state during the entire season of 2017.

The two states have adopted different approaches. Punjab is more lenient, with the chief minister seeking a compensation of INR 100 per quintal from the central government. It also has a strong farmers’ organisation, which is very vocal and openly supportive of CRB, even live streaming the incident of October 20 mentioned earlier.

Haryana has been tough with daily field visits to identify and impose fines. Fear of being found out is real on the ground in Kaithal. So far, 750 farmers have been fined to the tune of INR 470,000 in the state. No such data is available for Punjab, revealing its milder approach.


It’s however evident that creating awareness and providing cheap and effective alternatives to crop residue burning are more likely to produce better results.