January 2017 Archives

RTI Application Results in Belated Triumph as Air India Gets Paid For PM’s Flights

Rs 119.70 crore was owed to Air India by the Prime Minister’s Office for the use of chartered flights by Prime Minister Narendra Modi.

Prime Minster Narendra Modi walks out of the airplane as he arrives at JFK airport in New York September 26, 2014, a day before his appearance at the United Nations General Assembly. REUTERS/Mohammed Jaffer-SnapsIndia

Prime Minster Narendra Modi walks out of the airplane as he arrives at JFK airport in New York September 26, 2014. Credit: Reuters/Files

New Delhi: After much delay, a bill of Rs 119.70 crore raised by Air India for eight chartered flights undertaken by Prime Minister Narendra Modi has finally been paid. This has now been revealed by the Prime Minister’s Office (PMO) on its official website.

This bill has been paid nearly a year after the last bill of Rs 147.90 crore, which covered four flights each undertaken in 2013-14 and 2014-15 by former Prime Minister Manmohan Singh and his successor Modi, was cleared.

According to RTI activist, Commodore (Retd.) Lokesh K. Batra, who had filed RTI applications, it was on January 30 that Air-India finally received the sum of Rs 119.70 crore as payment for eight chartered flights taken by the prime ministers.

Batra had filed the RTI application on August 14, 2015, asking for details of expenses incurred on air travel during foreign visits made by Prime Minister Modi and former prime ministers. Additionally, he had sought the details for the filing of ‘flight returns’, the raising of bills or invoices, clearing of bills on completion of the visit and the copy of bills.

Batra had stated that the case involved substantive public interest as the bailout amount – which reportedly was in thousands of crores – being given to Air India was drawn out of the government exchequer and was the money of the taxpayers.

In his petition, Batra had also reflected on how such delays were impacting the balance sheets and operations of Air India stating that, “the airline reported an operating loss of Rs 2,636.10 crore in 2014-15 and lags behind in the targeted financial parameters laid down in the turnaround plan drawn up in 2012 when it got a bailout package of Rs 30,000 crore.”

He had also noted that there was a need to bring reforms to achieve more transparency in settling bills from the prime minister’s foreign visits as large amounts of tax-payers money was involved in it.

In its order in the matter though, Chief Information Commissioner R.K. Mathur had earlier in January 2017 ruled that the procedure involved in calculating the cost of foreign travel by the prime minister need not be disclosed due to “important security concerns.”

However, the commission agreed that “the appellant’s motive is to improve the governance and transparency in settling the bills of the PM’s foreign/domestic visits as public money is involved. The loss of public money can add to the burden of tax-payers.”

It had also observed that “the appellant has repeatedly stressed on timely payment of bills and the institution of suitable internal guidelines to facilitate payments. He has stated that this is in public interest. The respondents have taken note of this”.

Batra said on September 12, 2016, the PMO website had uploaded information that eight bills had been paid but later changed their status saying they were still “under process”.

He hoped that finally the public authorities will “institute suitable norms and guidelines to facilitate expeditious clearance of chartered flights bills as the issue is directly concerned to tax-payers money.”

Arnab Goswami Changes the Name of His Upcoming Channel

After Subramaniam Swamy’s objection to the name, ‘Republic’, Goswami was forced to change the name to ‘Republic TV’.

Arnab Goswami has changed the name of his upcoming channel. Credit: India Today/Twitter

Noted television news anchor Arnab Goswami has decided to change the name of his upcoming channel from ‘Republic’ to ‘Republic TV’. Legal experts believe that not much should be made out of this as long as the channel does not portray itself to be the ‘official medium’ of the Indian government.

Goswami, as managing director and editor-in-chief of ARG Outlier Media, sent a letter to the under-secretary of the ministry of information and broadcasting on January 28, stating that the name of his news channel was being changed. In the letter, he mentioned that he was also submitting a “self certified copy of the acknowledgement slip evidencing the trademark application filed with the Trade Marks Registry in respect of ‘Republic TV’; a self certified coloured copy of the logo of ‘Republic TV’ and fresh affidavits in Form 1A and 1B for uplinking and downlinking applications in terms of the policy guidelines for uplinking and downlinking of television channels from India.”

Stating that the affidavits now reflect Republic TV as the name of the channel, Goswami urged that all reference to Republic in his applications be construed as references to Republic TV henceforth.

Goswami was forced to change the name of his channel after senior BJP leader and MP Subramanian Swamy raised the issue, complaining against the use of the word ‘republic’ and even wrote a letter on January 13 to the information and broadcasting ministry contending that this was “contrary to law” and amounted to “direct breach” of the Emblems and Names (Prevention of Improper Use) Act, 1950.

Swamy had told a news agency that he would move court if the government did not take action. In the letter, which Swamy also posted on his twitter account, he mentioned, “It may be noticed that certain names and emblems are prohibited from being used under [the] Act for professional and commercial purposes. As per the schedule, accompanying the statute, under item 6, there is express prohibition from using the phrase ‘republic’.”

Prior to this Goswami, who had resigned from Times Now to launch his own channel, had given specific reasons as to why he wanted to name his channel Republic. Speaking at a function of a Hindi national daily at Jaipur, he had said, “There is a reason why we have named our venture ‘Republic’. It means ‘for the people’… undiluted and direct to the hearts of our people. If we are true, I know you will not let down my faith in you.”

Talking about the change effected by Goswami, senior advocate Raju Ramachandran said the issue does not merit the controversy it has. “A few years ago there was a frozen meats outlet which opened by the name of Republic of Chicken. Then we have a DGIR Botanical Garden of Indian Republic in Noida. So such names do not make for such weighty objection. In Pakistan you have a paper called The Nation. So I honestly do not think it is such a big issue.”

However, he said, Swamy had a point and the Emblems and Names Act should not be done away with. “It should only be used more selectively.”

Pointing out that in India, “we also have India TV” and several ‘national’ colleges, he said, the problem arises if by acquiring a name, an organisation is perceived as an official or government medium.

Kashmiri Sportspersons Denied US Visa Due to ‘Current Policies’

Till the time of publication, the Ministry of External Affairs has not yet protested the US visa denial

“For privacy reasons, we cannot talk about specific visa cases. However, we emphasise that Indian citizens are not affected by the recent executive order”, the US embassy said.

Tanveer Hussain, a Kashmiri athlete denied a US visa to take part in a New York international championship. Credit: ANI

New Delhi: Two sportspersons from Jammu and Kashmir were denied visas to visit the United States, in a development that speaks to the snowballing ramifications of US President Donald Trump’s so-called Muslim ban.

Abid Hussain Khan and Tanvir Hussain, who were set to take part in the world snowshoe championship in New York state were told by the local US consular official here that their visas were rejected due to “current policies”

Hussain, a 24-year-old athlete from Srinagar, along with Khan, general secretary of the Snow Shoe Federation of India, had applied for visa to attend the World Snowshoe Championships at Saranc Lake, New York on February 24-26.

An example of snowshoe running. Credit: World Snowshoe Federation

Hussain had travelled to Italy for the world championship in 2016 as the Indian representative, where his performance had led to his qualification for the 2017 edition.

Speaking to The Wire, Khan said that they had gone to the US embassy for their scheduled visa interview on Monday. “I had explained to the lady visa officer that Hussain is a famous athlete in our region, so she asked for media reports. She went inside with our press clippings, but on return, she said that the visa had been denied,” he said.

Dejected, Khan asked for a reason. “She told us that visa had been denied due to current policies,” he added.

Hussain told that The Wire that the term used for denial – “current policies” – made it seem that the rebuff was due to the latest visa policy change issued by President Trump. “When I applied for an Italian visa last year, they had said that there was some more documents required and I had then resubmitted my application. So, they could have told me if there was any problem with the documents,” he said.

Similarly, Khan is also convinced that Trump administration’s executive order may have been the reason. “Whoever we have consulted after our visa application was refused have told us that the phrase, ‘due to current policy’, is unusual,” he said.

On its part, the US embassy in New Delhi denied the denial was linked to the new Trump order. “For privacy reasons, we cannot talk about specific visa cases. However, we emphasise that Indian citizens are not affected by the recent executive order”, a US embassy spokesperson said.

Since the duo were invited for the world championship at Saranc lake, Khan had also informed the organisers, including the Mayor Clyde Rubindeau about their unsuccessful visa application.

Rubindea, a democrat Mayor of the New York state village, even posted the private communication with the duo to show his disappointment at the denial of visa.

When contacted, Rubindeau said that he has asked US federal authorities “to look into this matter right away”. “I know of no reason these two athletes who I befriended in Italy at last year’s world championships should be denied visas to the USA,” he asserted.

Asked if the denial was related to new visa policy signed off by President Trump, the Saranc Lake city mayor told The Wire, “I truly hope there is no relationship to the recent presidential order, but it is difficult not to consider it”.

Last week, the US president signed an executive order which suspended all refugee admissions for 120 days and barred citizens from seven Muslim-majority countries from entering the US for 90 days. There has, however, been confusion about the interpretation of the order, which had led to even green card holders from those countries being detained at US airports.

There had been widespread protests against the executive order in US cities, but the Trump administration has doubled down on the new rule, denying that it was a de-facto restriction on entry of Muslim travellers.

Though many countries around the world have criticised the latest US restrictions, India has so far kept silent.

Till the time of publication, the Ministry of External Affairs – which routinely protests the denial of Chinese visas to sportspersons from the Indian states of Jammu and Kashmir and Arunachal Pradesh – has not issued a public statement on the US visa denial to the two Kashmiri sportspersons.

Indian Tech Companies Get Jittery About Trump’s New Visa Cuts Plan

The Indian government has conveyed its concerns to the Trump administration about a proposed new policy on H1B visas

File picture of Indian tech workers. Credit: PTI

New Delhi: With a proposed Executive order and three bills introduced in US Congress, India has conveyed New Delhi’s “interests and concerns” to Washington, even as it braces for a cut in the number of H1B visas for foreign technology workers.

US media has reported that the executive order, which will take the axe to visas for foreign workers, is the next in line. Three bills were introduced in the US congress in the last three weeks which also seek to do the same – but Indian officials are more sanguine about the congressional development as the legislative process is much more slower.

In a statement issued on Tuesday, the ministry of external affairs spokesperson Vikas Swarup said, “India’s interests and concerns have been conveyed both to the US Administration and the US Congress at senior levels”.

This came after the White House spokesperson Sean Spicer confirmed on Monday that the draft executive order was imminent.

“I think with respect to H1Bs and other visa is part of a larger immigration reform effort that the President will continue to talk about through executive order and through working with Congress,” Spicer told reporters.

He added that there was an “overall need” to look at all visa programs. “You’ll see both through executive action and through comprehensive measures a way to address immigration as a whole and the visa programme,” he added. According to leaks in the US media, the draft executive order will take aim at a wide swathe of visas, including H1B visas under which thousands of Indian techies move to the US for work.

“Visa programs for foreign workers … should be administered in a manner that protects the civil rights of American workers and current lawful residents, and that prioritizes the protection of American workers — our forgotten working people — and the jobs they hold,” state the draft order, as per Bloomberg.

The draft proposal, however, does not have any specific new rules for H1B visas, but it calls for a report within 90 days on how to make the program more efficient. Currently, H-1B visas are doled out by lottery and are capped at 65,000 a year.

US Senators and Congressmen have also introduced three bills, which seek to make changes to the H-1B program so that IT firms find it more difficult to hire foreign workers.

Indian IT stocks on Tuesday reacted sharply to these new reports. The Tech Mahindra share lost 9.5 percent, Infosys 4.5 percent, TCS 5.5 percent and Wipro, which saw its largest fall of 4.1 percent in nine months. The firms recovered and erased a bit of their losses. At the end of the day, Infosys closed down 2.01%, TCS shares fell by 4.47%, Tech Mahindra fell by 4.23%, and Wipro Ltd by 1.62%.

Silicon valley IT firms had been lined up against Donald Trump during the presidential campaign, except for Palantir’s Peter Thiel. They had also strongly criticised Trump’s recent presidential executive order which stops all refugee admissions for 90 days and reviews intake of foreign nationals from seven Muslim-majority countries. Trump is unlikely to hesitate in signing the executive order, which would buttress his slogan of “Buy American, Hire American”.

In a statement, Nasscom president and head of Cognizant India, R Chandrasekhar said, “Inspections and investigations in the past have shown no cases of wrongdoing by Indian IT services companies, which have always been fully compliant with the law”. He said that the industry is open to any kind of checks in the system, but they should not cause any hindrance to the smooth operation of companies. “We continue to hold that skilled immigration is what benefits the global economy, and diversity and inclusion have actually made Silicon Valley the magnet for global talent,” he said.

India’s chief economic advisor, Arvind Subramanian said that the medium-term political outlook for globalisation and in particular for the world’s “political carrying capacity for globalisation” may have changed in the wake of recent developments. “In the short run a strong dollar and declining competitiveness might exacerbate the lure of protectionist policies,” he said.

Supreme Court Refuses Stay on Tamil Nadu Law Permitting Jallikattu

Taking exception to the widespread protests across the state in support of Jallikattu, the Supreme Court observed that such things cannot be permitted in a country governed by the rule of law.

The Supreme Court has said that the protests in favour of Jallikattu violates the rule of law. Credit: Reuters/Files

New Delhi: Tamil Nadu government got a reprieve on January 31, with the Supreme Court refusing to stay, at this stage, the Tamil Nadu government’s law permitting Jallikattu in the state as a harvest festival during Pongal.

A bench of justices Dipak Misra and Rohinton Nariman took exception to the widespread protests across the state in support of Jallikattu and observed that such things cannot be permitted in a country governed by the rule of law.

The court, however allowed the Centre to withdraw its January 7, 2016 notification permitting Jallikattu with certain conditions and as a result of which there will not be any verdict challenging this notification. The court which had stayed the notification had reserved judgment on December 7, 2016.

The Bench also agreed to hear a batch of petitions challenging the validity of the new law enacted by the Tamil Nadu government. The Bench issued notice to Tamil Nadu seeking its response to the petition in six weeks. The Bench questioned the Tamil Nadu government for allowing people to protest and defy its order on Jallikattu and for failing to maintain law and order in the state.

Justice Misra told senior counsel K. Parasaran and senior counsel Rakesh Diwedi appearing for the state “tell your government that law and order holds primacy in civilised society and we can’t tolerate such incidents. Convey this to your executive to maintain law and order. We passed a stay order one year ago. Why these protests now [on the Marina Beach in Chennai and other parts of the state]. These kind of things should not happen. Violence was committed in sheer defiance of the 2014 judgment banning Jallikattu.”

Parasaran, maintained that the protests were peaceful and was an evocation of the public’s wish for a new Jallikattu law. The whole thing was peaceful, suddenly something happened.” To this, Justice Misra said “Mr Parasaran, we are now governed by the concept of rule of law. Something like this suddenly does not happen and should not happen. When the Supreme Court, the final arbiter of the constitution, is seized of the matter, there should be complete obeisance and compliance.”

Justice Nariman observed “To say you want to protest peacefully is one thing, but to come out openly in defiance of a Supreme Court judgment is quite another. We are only concerned about preserving the honour of the Supreme Court… and, mind you, there are no ‘ifs’ and ‘buts’ about that.”

Diwedi, said there was no breach of the ‘2014 Nagaraja judgment’ on Jallikattu. He pointed out that no Jallikattu event was held until the ordinance was passed on January 23. “Don’t the people have any right to protest. People were saying amend the law. The legislature could not have turned a deaf ear to public wish,” he said.

Appearing for bull breed owners, senior counsel C.S. Vaidyanathan asked the court whether people don’t have the right to protest peacefully.

When Justice Misra pointed out that four people had died in Jallikattu events, Attorney General Mukul Rohatgi replied, “People die in every game. A cricketer died in Delhi, that does not mean we stop cricket.”

BJP MP Subramanian Swamy refuted the state’s contention that there was no violence and said a police station was burnt and in Pudukottai, Jallikattu events were held in defiance of the Supreme Court ban and two people were killed and 84 sustained injuries.

The bench told Tamil Nadu counsel “the question to be addressed is that whether Jallikattu can be allowed under the protection granted to certain tradition. The question whether the sport or the festival of Jallikattu and subsequent amendment to the Prevention of Cruelty to Animals Act, 1960 takes away the basis of the 2014 judgment needs to be addressed by the state. Besides, the Animal Welfare Board, the Federation of Indian Animal Protection Organisations (FIAPO) and Compassion Unlimited Plus Action (CUPA) filed the present petitions.”

On behalf of the petitioners senior counsel Anand Grover, Krishnan Venugopal, Ganesh and Siddharth Luthra submitted that the amendment to the Prevention of Cruelty to Animals Act, 1960 dated January 23, 2017 passed by the state of Tamil Nadu is ultra vires the Prevention of Cruelty to Animals Act,1960 and the constitution of India.

The petitioners said this amendment is nothing but a surreptitious method of circumventing the law laid down by this court, without addressing the legal basis of the 2014 judgment banning Jallikattu. The amendment dated January 1, has amended various sections of the Prevention of Cruelty to Animals Act, 1960 and the conduct of Jallikattu is allowed and to be governed by the rules framed by the state of Tamil Nadu.

The petitioners pointed out that only the central government is vested with the power to frame rules and hence the rules framed under Section 3(2) of the Tamil Nadu Act are invalid and therefore inapplicable. It is clear that by bringing the amendment, the state of Tamil Nadu sought to overcome or circumvent the 2014 judgment. It was argued that a binding judgment cannot be rendered ineffective by the enactment of legislation that substantially overrules the intended effect of the judgment.

By bringing a law, the state is attempting to circumvent the protection from cruelty granted to bulls under the Prevention of Cruelty to Animals Act. The state amendment states that Jallikattu is vital to the preservation of the cultural and traditional practice in Tamil Nadu. Refuting this the petitioners contended that Jallikattu does not have any religious significance and in the opinion of this court, it was also not supported by Tamil tradition and culture.

The very basis of Jallikattu was found to be cruel and ultra vires the Prevention of Cruelty to Animals Act, 1960, and for the state of Tamil Nadu to now propose that the event takes place in order to ensure the preservation of bull species is absurd, arbitrary and not tenable.

The amendment does not change the fact that Jallikattu is still a form of entertainment or sport and as such falls foul of Section 11 of the PCA Act. It is therefore unconstitutional, illegal and invalid on the grounds that it directly contravenes central legislation in myriad ways, they argued and prayed for an interim stay of the law passed by the state till the disposal of the present petitions.

Till Now, the BCCI Has Really Been a Board for Creating Confusion in Indian Cricket

While corruption and fraud within the BCCI has tainted cricket in the country, the Supreme Court’s latest move is a welcome step towards cleaning up the sport.

A policeman walks past a logo of the Board of Control for Cricket in India (BCCI) during a governing council meeting of the Indian Premier League (IPL) at BCCI headquarters in Mumbai April 26, 2010. Credit: Arko Datta/Reuters/Files

The Supreme Court has dealt a severe blow to the senior management of the Board of Control for Cricket in India (BCCI). The top court has entrusted the task of overseeing Indian cricket to Vinod Rai, the former comptroller and auditor general (CAG), who will now head a four-member body of administrators that will together run the BCCI. The Supreme Court has also appointed the former women’s cricket team captain, Diana Edulji, historian Ramachandra Guha and IDFC managing director, Vikram Limaye to the committee. This will surely initiate the much-needed cleaning that Indian cricket requires.

The latest development is a logical outcome of the court’s final judgement in the BCCI vs CAB case – pronounced on July 18, 2016 – and the further clarificatory orders given on January 2 this year. The BCCI leadership spread confusion at every stage, leading the Supreme Court to strongly disapprove of their conduct. Even now, as past-masters in double speak, those who regard India cricket as their jagir, or fief, have not accepted defeat.

It is significant that in recent hearings, the attorney general, Mukul Rohatgi, has also jumped into the fray. While declaring that the government has no love for the BCCI, he has seemingly come out in defence of three government bodies – the railways, universities and services – who have been relegated to associate status. While speaking for restoring the votes of the three entities, the AG suddenly started batting for BCCI, stating that India’s image has taken a battering by the court’s adverse judgment in this case. He also argued that the Delhi & District Cricket Association (DDCA) – already charged with grave misconduct, malfeasance and financial fraud – was a company under Section 25 of the Companies Act and that remedies against it were enforceable only under the Companies Act.

What the AG conveniently forgot to mention was that the DDCA president, under whose watch all the loot and plunder took place, is currently the union minister in charge of finance as well as corporate affairs. When 200 letters, messages, meetings and repeated pleading were not acted upon by him at that time, can one have any expectations from him in his current role as minister? The AG does not even talk about the hundreds of crores that have been ferreted out through sham companies for bogus work. The Delhi police and the Central Bureau of Investigation, despite having all the evidence, are simply trying to push all alleged criminal activities in DDCA under the carpet. To make matters worse, the Delhi police commissioner, who sat on all investigations for eight months, has now been made director of the CBI.

Another senior advocate and a former UPA minister, Kapil Sibal, does not know whom he is representing. One day he represents the BCCI, another day he represents the Baroda Cricket Association, and on some other day, he speaks on behalf of another cricket association. In the end, however, he only keeps speaking for the BCCI and for it to be given the power it had before. In effect, all these big lawyers keep trying to prove to the Supreme Court that a grave miscarriage of justice has been done to a handful of administrators who have given their lives to running and developing cricket in India. To prove their point, they even allude to sacrifices made by these administrators who gave up their successful businesses in tailoring, stationery shops, draper shops, retail shops etc.

Also, each of the office bearers of BCCI and state units says aloud – ‘We respect the Supreme Court verdict. But, there are practical difficulties in implementing them.’ They hold their meetings and decide not to implement the court’s judgment, and get an expensive lawyer to list excuses before the court. The BCCI arrays the most expensive counsel to keep implementation of the judgment at bay. They have a vice-like grip on state associations, yet they keep expressing helplessness in bringing the state units around to accepting the court’s judgment. The president of the BCCI lies through his teeth and wants the ICC to help them by objecting to a part of the judgment, whereas the secretary makes every effort to puncture England’s programme by requesting the English Cricketing Board chairman to call off the ongoing tour.

The sad part is not that the most adversely impacted freeloaders will have to make way for more professionals and well-meaning cricketers in the BCCI – the sadder part is that their defiance is continuing. If only some of these administrators are jailed for contempt of court, sanity might return to the proceedings.

A former Indian captain has asked for reforms like those recommended by the Lodha panel in all sports federations. What has led to this awakening? And why was he then opposing these very reforms earlier? Some people squeeze the system for their own aggrandisement. When they are confronted with certain loss of face, they start singing an altogether different tune. Ambivalence or sitting on the fence is not an uncommon trait in most humans. We tend to wait to take the final call till the very last minute, only after we see the winner. Switching towards the winning side is a common failing.

To suggest taking away the extra votes which have played havoc with the balance in the BCCI will lead to falling standards in the Ranji Trophy is like clutching at straws. New states carved out of bigger states are doing fairly well. Assam, Jharkhand and Himachal Pradesh are all doing fine and are making a real impact in domestic cricket. I will not be surprised to see Nagaland, Assam, Sikkim or Bihar winning the Ranji Trophy in the next few years if they are given a chance. Why should we assume that there will be progress only under the current dispensation which gives primacy to a few states? Is it because it is easier to control the BCCI by just lining up the three government votes behind whomsoever the government of the day wants to support.

If a player helps the opposite team, he is called a match fixer. We have already seen several cricketers being hauled up for match fixing – at least there is some social disgrace they have to eventually face. But the administrators, lawyers and even government legal luminaries are not bothered about social grace and are trying to repeat the same defence over and over again. The BCCI has already paid hundreds of crores in legal fees, trying to defend an indefensible case and are holding on to their chairs in hope, more than conviction.

Three office bearers who have already spent a major part of their lives ‘serving’ cricket, are still waiting to occupy the BCCI’s presidential chair. These office bearers are also waiting to be nominated as India’s representatives to the ICC’s meeting on February 2, despite being clearly ineligible under the Lodha guidelines. They are aware that except India, all other countries are represented by their respective CEOs.

Four years back, I had asked a question in Lok Sabha about the multiple cases of fraud happening within the BCCI and the DDCA. The ministry of corporate affairs assured me that they have asked the ministry of sports to draft a separate law on sports. They were also to ask all sports bodies to uniformly register under one authority. Four years on, despite my repeated letters and reminders, no law is in the offing.

Even the committee that has been formed by the sports ministry with 25 Olympians and internationals including myself, is not likely to lead anywhere. For one, it is not tasked with discussing the Lodha guidelines. Secondly, the committee contains some names who have been against the current Lodha recommendations regarding age and tenure guidelines in the past.

But, my struggle has certainly been vindicated. While I continue to face several defamation cases instituted by vested interests, I have full confidence in the top court to ensure transparency and fairness in the running of sports in India. These personal fiefdoms and family pocket boroughs will have to be wound up. The earlier these guys understand this basic principle, the better it will be for them, as well as, all sports federations.

For now, let us thank the Supreme Court for upholding the people’s faith in justice. But the struggle to clean up cricket and sports in India must go on till the time people of integrity are in charge of running all sports.

Kirti Azad, a former cricketer, is a BJP MP.

Can the Indian Economy Recover From the Shock of Demonetisation?

The government must announce fiscal measures to stimulate demand if it wishes to repair some of the damage it has willfully wreaked upon the economy via demonetisation.

The impact of demonetisation on the Indian economy is not likely to lead to a revival soon. Representational image. Credit: Reuters/Files

The update to the IMF’s World Economic Outlook paints a mixed outlook for India. On the one hand, GDP growth is poised to take an immediate hit, with growth projected to slow down to 6.6% for 2016-17 – a whole percentage point lower than its earlier estimate of 7.6%. This reduction is largely due to the negative shock experienced due to demonetisation. The reduction in growth rates is expected to persist into 2017-18, with growth set to reduce to 7.2% against an estimate of 7.6%. However, the situation is set to return to normal by 2018, when the negative effects of demonetisation are supposed to peter out.

There are two problems with regard to these forecasts. Firstly, the notion that the current negative shock to the economy brought about due to demonetisation will not result in a permanent fall in growth rates rests on certain key assumptions – that consumption will rebound in the medium term and that more firms will shift into the formal sector as a result of the government’s measures to demonetise high-value notes, leading to a boost in growth. Both these assumptions are problematic.

Secondly, even if the economy grows at the same rate as it was forecast to in the absence of demonetisation, the level of unemployment would be permanently higher, due to the negative demand shock. The return of economic growth to trend does not invalidate the necessity for additional measures like a demand stimulus to reduce unemployment.

The revival of growth

The explanation for why growth will return to normal in the medium-term is as follows – as a result of demonetisation, individuals decided to put off purchases of certain consumption items and durables such as consumer electronics etc. This can be evidenced in the reduction of sales in the auto industry and of products like scooters, motorcycles etc. This led to a short-term contraction in output and employment. However, as the cash situation in banks and ATMs returns to normal and as more consumers decide to shift to cashless means of payment, economic activity would rebound and return to normal as people begin to spend on those purchases that they had put off due to the cash crunch. The only variable in question would be the time taken for the economy to reach back to its optimal position.

This reading assumes that short-run shocks do not have any long-run effects on the economy. Consider a worker who wishes to purchase a motorcycle. As a result of demonetisation, she loses her job and is unable to make this purchase. Even if the cash situation returns to normal, as long as she remains unemployed, she will not be able to purchase the motorcycle and hence demand in the economy is permanently lowered.

To assume that the economy will return to normal is to assume that the increase in unemployment has no effect on the ability of consumers to make purchases. It is implicitly stating that there is no reason to expect unemployment and incomes to remain low in the future, without ever providing a reason as to why that might occur.

Some versions suggest that the move towards digitisation will benefit the economy and bring about greater growth rates. The increase in taxation of ill-gotten wealth would increase revenue for the government, which they could use for a fiscal stimulus. Moreover, demonetisation has helped – some claim – move firms from the informal to the formal sector, thereby allowing for a more efficient economy.

These arguments do not hold. For one, the ability of the government to use increased revenues for a stimulus is bound by its adherence to the fiscal deficit rules. The under-estimation of the possible negative effects of demonetisation indicate that the fiscal deficit target – expressed as a percentage of GDP – would rise for any given increase in the absolute deficit, since GDP would have decreased by a significant amount. The ability of the government to implement a fiscal boost depends on whether it would be willing to loosen its adherence to the Fiscal Responsibility and Budget Management targets – there is no indication that the current government would be willing to do so.

Furthermore, the link between demonetisation and greater formalisation of the economy is tenuous. What demonetisation might lead to is the taxing of illegal wealth – this has nothing to do with the notion of the formal and informal economy, which has more to do with the structure of production. Manufacturing enterprises are classified as belonging to the informal sector if they do not fall within the ambit of the Companies Act, which applies only to those firms that operate with more than ten employees. It is unclear, therefore, how taxation of the firm owner’s ill-gotten wealth will lead to her increasing the size of her firm.

All these explanations do not address a central question. What are the motivations to induce investment? Investment is a forward-looking activity and will be carried out if business-owners are confident of the prospect of profits in the future. To assume that growth will rebound in the medium-term is to assume that investors will be willing to carry out investment regardless of the short-term demand contraction. This amounts to asserting that the economy will face no problems of demand in the future because investors foresee no problems of demand in the future. But this begs the question as to why would investors be so confident in the first place, given the current reductions in output and employment.

The future of growth

Let us assume that investment revives in the economy and the normal pattern of growth is resumed. This does not necessarily imply that the loss of employment would be made good.

Assume an economy that is currently experiencing no unemployment. Let the number of those seeking employment each year grow at 3% – this is labour supply. Let output per worker – or worker productivity – grow at 5%. The rate of growth of labour demanded by firms is equal to the rate of growth of output minus the rate of growth of productivity. In this instance, if the economy grows at 8%, then labour demand (8% – 5%) equals labour supply, and there would be no unemployment.

Now assume that the economy faces a temporary demand shock that is forecast to last only one period. Let the economy now grow at only 6%, with productivity growth unchanged at 5%. The rate of growth of employment is now only 1% (6% – 5%), short of the 3% growth in labour supply. This implies an increase in unemployment in this period.

In the next period, the economy regains its growth momentum and continues to grow at 8%, ensuring that all new entrants to the labour force – which grows at 3% – are able to find jobs. But this implies that those workers who have lost employment during the period of the demand shock will remain unemployed through all periods in the future, because the economy has not generated enough jobs for them. For an unchanged rate of productivity growth, the economy will have to grow by more than 8% for a few periods, to provide employment for the new job-seekers as well as those who were rendered unemployed due to the demand shock. The unemployment rate has been permanently increased even though the slowdown in growth is temporary.

The economy could grow at the same rate as before (8%) while generating and maintaining full employment if the rate of productivity growth were to reduce. But since the level of national income depends on productivity and technology growth, it amounts to saying that the economy must sacrifice some income growth in order to maintain full employment. This is not an illegitimate demand to make, if wealth could be distributed from the rich to the poor during this period of slowing income growth. It is hard, however, to expect the BJP to steer the economy down this route.

Furthermore, capitalists all wish to reduce their costs of production so as to increase profits and hence strive to make use of the very latest technology. There is no reason to expect them to shift to lower levels of technology of their own volition, for their main aim is to increase profits, not provide employment. Since globalisation allows Indian companies access to the latest technology of the developed world, the rate of productivity growth would continue to increase, given the rapid changes in technology currently being experienced. This would imply falling labour demand even though aggregate growth rates remain unchanged.

Attention has now shifted towards the budget and the policy measures to be announced in the aftermath of demonetisation. Some caution against fiscal stimulus, citing the fact that growth is forecast to return to trend. Stimulating demand in such a context, the argument goes, risks exacerbating inflationary pressures. These arguments are untenable. It is imperative that the government announces fiscal measures to stimulate demand if it wishes to repair some of the damage it has wilfully wreaked upon the economy.

Rahul Menon is a professor of economics at St. Xavier’s College.

Government ‘Hiding Behind GDP Numbers’, Says Congress Report

The economy is “not in good shape,” said former Prime Minister Manmohan Singh.

Manmohan Singh. Credit: PTI

New Delhi: Former Prime Minister Manmohan Singh painted a bleak picture of the Indian economy on Monday, insisting “it is not in good shape”, while former finance minister P. Chidambaram said the government is “hiding behind” GDP numbers that are being challenged.

Releasing the “Real State of Economy 2017”, a document prepared by the Congress research cell at the party headquarters here, Singh said it speaks about the state of India’s economy, its many issues and where it is heading. “That the Indian economy is not in a good state is obvious. Even IMF has downgraded our GDP growth and it will not be 7.6% but less than 6.6%,” he said.

Chidambaram said the state of the economy “is not something that we can be happy about” and expressed concern over the low credit growth which he claimed is at 5%, the “lowest in several decades”.

“BJP is hiding behind a GDP number which is being challenged. People are not dazzled by it, but are asking where are the jobs? NDA government tends to believe exaggerated version of economy, this research document is closer to truth than what government will say tomorrow,” he said.

Chidambaram said every government must be optimistic, but optimism must stem from a realistic assessment of situation. “Yet, if government presents tomorrow a rosy picture of the economy, people of India are entitled to question that. There are no jobs, capital formation is declining, credit growth is the lowest in several decades,” he said.

Chidambaram wanted the government to focus on fiscal consolidation and said, “there are serious question marks on this government’s ability to follow fiscal prudence”.

He dismissed suggestions that the 2008 farm loan waiver was a populist measure, saying, “It was based on the response to a demand from the farming community and was a very wise decision.”

“This was especially so as the international financial crisis hit in September 2008, which crippled even major economies but did not affect India much,” he said.

He claimed that while there are no jobs, new capital investment and no credit growth, the document released “candidly, truthfully” assesses the state of India’s economy, supported by hard research and data.

Hoping that government will not cut social sector spending, the former finance minister claimed that the MNREGA was the lone scheme that provided some succour to poor by way of jobs. “There is a 60% spurt in demand for MNREGS jobs. If they are cut, then it would be a very cruel cut. This demand is because of loss of jobs and. I sincerely hope that this government will not make this cardinal mistake of cutting expenditure,” he said.

Congress spokesperson Rajiv Gowda said, “The slowdown in the Indian economy in the wake of demonetisation will last four to five years.” He told the government that it should not use the issue of universal basic income tax an excuse to attack social safety net.

Economic Survey Takes a Dig at Rating Agency Methods

The factors used by rating agencies do not cover the entire picture, the Economic Survey has said, and it does not look like the same criteria are used for different countries.

The factors used by rating agencies such as S&P do not cover the entire picture, the Economic Survey has said, and it does not look like the same criteria are used for different countries.

Arvind Subramanian. Credit: Reuters/Anindito Mukherjee/Files

New Delhi: In this year’s Economic Survey, chief economic advisor Arvind Subramanian has devoted a special orange box to question the methodology employed by rating agencies. This is particularly visible, the survey claims, not only from crisis periods like the US financial crisis (stemmed by rating agencies certifying as AAA “bundles of mortgage-backed securities that had toxic underlying assets”), but also in more regular, non-crisis situations – like not changing India’s credit rating.

The survey singles out Standard & Poor’s, which ruled out any ratings upgrade for India for a considerable period, mainly on the grounds of its low per capita GDP and relatively high fiscal deficit. But the methodology for arriving at ratings, the survey argues, is clearly more complex – and the factors highlighted by Standard & Poor’s may not be the right ones to evaluate whether India is at risk of credit default.

Why? “Consider first per capita GDP,” the survey says. “It is a very slow moving variable. Lower middle income countries experienced an average growth of 2.45 percent of GDP per capita (constant 2010 dollars) between 1970 and 2015. At this rate, the poorest of the lower middle income countries would take about 57 years to reach upper middle income status. So if this variable is really key to ratings, poorer countries might be provoked into saying, “Please don’t bother this year, come back to assess us after half a century.”

Even on fiscal variables, it is questionable that China’s rating has been upgraded while India’s hasn’t, the survey suggests.

Source: Economic Survey

“How did Standard and Poor’s react to this ominous scissors pattern, which has universally been acknowledged as posing serious risks to China and indeed the world? In December 2010, it increased China’s rating from A+ to AA- and it has never adjusted it since, even as the credit boom has unfolded and growth has experienced a secular decline. In contrast, India’s ratings have remained stuck at the much lower level of BBB-, despite the country’s dramatic improvement in growth and macro-economic stability since 2014. These contrasting experiences raise a question: can they really be explained by an economically sound methodology?” the survey argues.

There are other factors that these agencies are ignoring, Subramanian argues, that make India capable of carrying more debt than other countries; it has an extremely high “willingness to pay”, for instance.

Ratings agency Moody’s has given India the lowest possible rating, something the Narendra Modi government reportedly lobbied hard against but was unable to change. Correspondence between the agency and the government, revealed by Reuters, showed the rating agency saying they were unconvinced by the government’s rosy picture of its debt situation.

Whatever the government’s reasons may be, methods employed by rating agencies have come under scrutiny from economists across the board, particularly after the 2008 US financial crisis.

Colombia’s FARC Rebels March One Last Time, to Demobilisation Camps

Just under 4,400 FARC fighters are currently making their way to more than two dozen rural camps scattered around the country, accompanied by officials from the UN and the government.

Leftist rebels of the Revolutionary Armed Forces of Colombia (FARC) patrol a roadway near to San Vicente de Caguan, January 1999. REUTERS/Jose Gomez

Leftist rebels of the Revolutionary Armed Forces of Colombia (FARC) patrol a roadway near to San Vicente de Caguan, January 1999. Credit: Reuters/Jose Gomez/File Photo

Bogota: Colombia’s Marxist FARC (Revolutionary Armed Forces of Colombia) rebels are on the move one final time, travelling by boat, road and on foot across jungle and mountains to demobilisation camps, as part of a deal to end more than 50 years of war, guerrillas and the government said.

Just under 4,400 Revolutionary Armed Forces of Colombia (FARC) fighters are currently making their way to more than two dozen rural camps scattered around the country, accompanied by officials from the UN and the government.

The remainder of an estimated 6,000 to 7,000 FARC fighters are already at or near the demobilisation sites, where UN personnel are responsible for collecting weapons from the guerrillas.

UN officials are also assisting Colombian authorities with special justice proceedings against rebels accused of crimes against humanity, as well as reintegration and victim reparation efforts.

“They set out this weekend, guns over their shoulders, ready to trade for a life lived in legality, in democracy, a different life that will contribute to building peace,” the government’s peace commission said in a statement on Monday.

The group’s demobilisation will mark an end to more than 52 years of bloodshed in the Andean nation by the FARC. Founded in 1964 to fight for rural reform and income equality, the rebels once had a presence in nearly half of Colombia’s territory.

The FARC, which decries state and paramilitary violence against the poor and minorities, was once notorious for high-profile kidnappings and fierce ambushes of government troops.

The conflict between the government troops, rebel groups and paramilitaries has killed more than 220,000 people.

A spokesman for the FARC‘s Southern Front unit shared photos with journalists of dozens of rebels boarding motorised river canoes on their way to the camps.

“From the day it was signed, we’ve held up our part of the deal and we will continue to do so,” the Southern Front said in a statement that accompanied the photos.

The rebels and government of President Juan Manuel Santos hammered out a more than 300-page peace deal over nearly four years of negotiations in Havana, Cuba.

The original deal was rejected by voters in a referendum in October 2016, but a revised version was passed by congress late last year.

The UN, government and rebels are working together to build infrastructure in the camps, including housing, medical facilities and sanitation.