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False hopes on economy

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By Yogi Aggarwal

The GST was controversial because of the high and multiple rates imposed on the businesses and the consumers, but the hope was that it would make tax collection easier and evasion more difficult.

The GST was controversial because of the high and multiple rates imposed on the businesses and the consumers, but the hope was that it would make tax collection easier and evasion more difficult.

Many of the steps taken by the government to give the impression that it has stabilised the economy, in fact, show its desperation to conceal its weaknesses. Its implementation of GST is flawed and has led to an increase in cash transaction and fall in government income. The government has proposed that the LIC take over the IDBI bank, (having huge bad loans) to help keep the fiscal deficit down. The ONGC has bought government’s entire stake in oil refiner HPCL, to help meet disinvestment targets. A massive flow of money into the stock market by domestic mutual funds at the pressure of the administration to give an optimistic view of the economy has created a bubble that could crash at any time. How far these factors have led to the abrupt resignation of chief economic adviser Arvind Subramaniam will only be known later. The government’s actions are around creating a feel good tactic rather than a serious economic effort. It normally wins the approval of international aid agencies because it is pursuing their strategy of more privatisation of public resources.

The GST was controversial because of the high and multiple rates imposed on the businesses and the consumers, but the hope was that it would make tax collection easier and evasion more difficult.

British brokerage HSBC said in a recent report that the glitches in the tax have increased the demand for cash. “The GST regime was originally associated with formality. But so far, in our view, it has not been able to live up to that promise. It has not brought down the demand for cash which has, in fact, only gone up,” the report said.

The RBI, in its latest “money supply” data puts the “currency with the public” at over Rs 18.5 lakh crore as on May 25, 2018 — up 31 per cent from the year-ago level. The World Bank, which was earlier supportive of the GST, has been revising its stand. A recent report put out by the World Bank noted “India’s GST is among the most complex taxation systems in the world. India has the highest tax rates in Asia and also largest number of tax slabs”.

While the GST was an attempt to put into practice a major economic policy that would change the way the country would be administered and taxed, other recent measures have more limited goals. Take for instance the selling of the IDBI Bank to LIC. The IDBI is one of the worst performing banks in the country with bad debts or non-performing assets of Rs 55,000 crore.

Last year, the government had put on Rs 10,600 crore to reapitalise the bank but it clearly wasn’t enough. The LIC already has a 10.6 per cent share in the equity of the IDBI Bank like it does in many others and will have to put in another Rs 12,000 crore to get a majority stake as an investor.

This will put LIC policy holders at greater risk as the LIC is being made to take over a bank it cannot hope to turn around. The risk will increase manifold if they are made to open accounts there as has been suggested.

The government is clearly evading its responsibility in an effort to cut down its fiscal deficit by making a profitable enterprise like LIC take on a loss-making one. The price will, of course, be paid by the policy holders who will get lower returns, and will have to pay the for the government’s incompetence.

 

Another takeover, though not as shameful as the one involving LIC and IDBI Bank, is the proposed takeover of petroleum refiner HPCL by the oil exploration giant ONGC. This has been touted as the amalgamation of two companies to form a larger one. Earlier this year, the state-owned ONGC bought government’s entire majority stake in oil refiner HPCL for Rs 36,915 crore.

They are both profitable companies, and the sale does not have any financial bearing, other than help the government meet its disinvestment target without having to go through the political minefield of finding an external buyer. Yet the step can only be understood by seeing it as a ploy to meet its difficult disinvestment target by making an existing public sector company pay for it. The existing work cultures at the ONGC and the HPCL are different, much like Air India and Indian Airlines, which led to a disastrous merger. At the same time the merger will deplete funds available to the ONGC to increase production.

The government is also encouraging Indian mutual funds to push up the stock market to unsustainable levels. This is happening against a more realistic view of the Indian stocks by foreign funds. Since the beginning of the year, foreign investors have pulled out Rs 65,787 crore (roughly $10 billion) from the Indian stocks. At the same time, Indian mutual funds have put in Rs 659,267 crore (roughly $100billion) into the stock market causing it to go up 12.9 per cent in the past year with price/earnings ratio of over 24.

This points to a bubble in the stock market that could burst any time, once the mutual funds decide they can no longer bear the risk. It must be remembered that the stock market has been rising continuously for over four years, an unprecedented factor in financial history if not followed by a fall.

The government is building up a false sense of hope to show the economy is doing well. If one follows a sense of reality rather than believe in fables such as this government propagates, it is not difficult to see the mess we are in.

 

 

 


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Opinion

Imran Khan-Batting for Peace

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By K. K. Shahid

In his victory speech the day after the July 25 elections, in which the Pakistan Tehreek-e-Insaf (PTI) won by a convincing margin, Imran Khan underlined a willingness to take up a progressive brand of diplomacy. This was punctuated by an exhibit of the proverbial open arms towards India, with Khan saying that “if India took one step forward, we would take two.”
Consequently, it was surprising that a detailed sketch of the diplomatic strategy was missing from his inaugural address as the Prime Minister of Pakistan on August 19, triggering fears of pressure being exerted by the military leadership, which has historically enjoyed hegemony over diplomacy and veto power over the India policy.
As Khan takes over the reins of government, Pakistan faces a wide range of diplomatic challenges in which India features heavily. These challenges, in turn, are linked to the state’s security and economic policies, over which the PTI-led government is making significant noises.
But while PTI’s economic vision is a continuation of its pre-election narrative, it is on the diplomatic front that Khan has made a U-turn.
“One must differentiate what is said during election campaigns from what happens when a political party or leader comes into power,” says Husain Haqqani, former ambassador to the US and author of India vs Pakistan: Why Can’t We Just Be Friends? “Every Pakistani civilian prime minister, irrespective of what he or she said during an election campaign, has understood the need to improve relations with India.”
Haqqani adds: “If Pakistan wants to prosper economically and grow, then the only way is to improve relations with one of the fastest growing economies in the world, India. For Pakistan to stabilise politically and rid itself of the menace of terrorism, again what it needs is better relations with India and changes in the policy of sponsoring jihad.”
The view in India with regards to Imran Khan’s win has been particularly pessimistic with the media underscoring him as the ‘Army’s man.’ Khan addressed this in his victory speech as well, calling out the Indian media for portraying him as a ‘Bollywood villain.’
“From Benazir Bhutto to Nawaz Sharif to Gen. Pervez Musharraf to Imran Khan, all political leaders or quasi-politicians in Pakistan have employed the rhetoric of peace and dialogue with India only to be followed by something sinister,” says Aarti Tikoo Singh, Senior Assistant Editor at The Times of India.
“While Prime Minister Rajiv Gandhi was talking peace with Benazir Bhutto, she and the Pakistani Army were sending hordes of terrorists to Kashmir. Similarly, while Atal Bihari Vajpayee signed the Lahore declaration with Nawaz Sharif, Gen. Musharraf was quietly launching a war against India in Kargil. “So Imran Khan’s post-election change of heart is nothing but good optics to impress the West. Only a naive leadership in the world would trust Imran Khan’s rhetoric.”
A major reason why scepticism prevails with regards to Imran Khan playing a role in improving relations with India is a combination of the army’s influence in helping him become the premier, and the military leadership’s security policy.
It is this security policy that Nawaz Sharif had vowed to challenge in what eventually became the Dawn Leaks scandal. And considering that the army leadership propped up groups affiliated with Hafiz Saeed – the man that the civilian leadership has had to account for around the world – it became evident that the military does not plan to switch any gears on that front.
This further handicaps Khan’s diplomatic ambitions, should they exist, as he portrayed in his victory speech. For it isn’t New Delhi alone that points fingers at Islamabad for providing safe havens to militants; similar allegations have been levelled by each country that borders Pakistan.
Afghanistan maintains that a majority of the attacks on its territory originate in Pakistan – an allegation that Islamabad reciprocates – while Iran and China have maintained that jihadism has spilled over from Pakistani soil into theirs.
Last year Tehran said it was ready to strike militant ‘safe havens’ in Pakistan when 10 Iranian border guards were killed by groups based in Pakistan. China says jihadists based in Pakistan enter Xinjiang to participate in the East Turkestan Islamic Movement.
Professor Shameem Akhtar, a former Dean at the International Relations Department at Karachi University, says Khan is saying the right things to address allegations of cross-border militancy. “He wants open borders with Afghanistan, to promote people-to-people contact. This undercuts misunderstandings and has a positive influence on the psychology of the states. For if there’s no tension between the masses, why should states be hostile towards each other?” he says.
“Also, since the US is ready to talk to the Taliban in Afghanistan, it would need Pakistan. And a Pakistan under Imran Khan would be best placed to negotiate with the Taliban.”
Professor Shameem Akhtar says Imran Khan might even be able to finally fulfil Pakistan’s long-held ambition of mediating between Iran and Saudi Arabia.
“We have traditionally been the agents of Saudi Arabia, especially under Nawaz Sharif, who was indebted to the al-Saud family. Imran Khan is in a more neutral position and he might be able to fulfil Pakistan’s desire of being the reconciliatory force between Saudi Arabia and Iran,” he says.
While Islamabad’s diplomacy is intrinsically linked to its security, Pakistan’s economic woes have also created foreign policy challenges. The most prominent among these has put Islamabad in the middle of an economic warfare spearheaded by the US and China in the region, with Pakistan’s need for a bailout from the International Monetary Fund (IMF) providing the latest battleground.
US Secretary of State, Mike Pompeo, has asked the IMF not to bail out Islamabad. “Make no mistake. We will be watching what the IMF does. There’s no rationale for IMF tax dollars, and associated with that, American dollars that are part of the IMF funding, to go to bail out Chinese bondholders or China itself,” he said.
With the IMF set to ask Islamabad to ensure transparency of transactions pertaining to the China-Pakistan Economic Corridor (CPEC) as a precondition for the expected bailout, Pakistan finds itself in a tough spot. “Pakistan is in the middle of the fight between China and the US, and considering our economic vulnerabilities it will naturally face tough diplomatic choices,” says economic theorist and political analyst Farrukh Saleem. “Unfortunately, given the fact that we’re carrying a begging bowl, it makes it harder for us to take decisive action, and it is more likely that things would be imposed on us.”
While the battle between Beijing and Washington poses an external challenge for PM Imran Khan, domestically he faces the risk of alienating his heretofore backers in the military leadership, if he were to attempt to uphold civilian supremacy.
“Offering talks, shaking hands and meeting their Indian counterparts is the easy part. The challenge every Pakistani civilian prime minister faces arises when he or she tries to actually change policy,” says Husain Haqqani.
“Will Imran Khan dare to confront the military and intelligence services that helped him win? Or is the military leadership looking to normalise ties with India and will encourage Imran Khan to take steps they prevented his predecessors from taking? The answers to these questions will determine the path ahead.”

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Opinion

Of Lions and Dogs

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By D. Raja

The RSS has sought to engage with the civil society and political formations without substantially altering its sectarian, divisive, communal and fascist outlook. Its diabolic adherence to the unconstitutional proposition of Hindu Rashtra was best manifested in the pronouncements of the RSS sarsanghchalak, Mohan Bhagwat, at an event in Chicago organised to commemorate the 125th anniversary of Swami Vivekananda’s historic address. While calling for Hindu unity and consolidation, Bhagwat disparagingly said: “If a lion is alone, wild dogs can invade and destroy it.”How can any outreach be based on such a disdainful attitude and approach to a substantial section of society? It is ironic — and tragic — that in Chicago, where Vivekananda, in his mesmerising lecture delivered on 9/11, 1893, outlined the defining aspects of Hinduism in terms of tolerance, acceptance and interpretation of truth in a variety of ways, the RSS chief negated whatever the swami stood for.
If the RSS chief had cared to read the speeches of Vivekananda, he would have found that the swami had used the word lion in the context of the awakening of consciousness among all human beings. It was to remind people that they are not weak and fragile and they are children of pure nectar born to tune in with infinity, even while leading life in the finite spheres and dimensions. He explained the idealism guiding human destiny based on the ideals enshrined in the Upanishads, which are at the core of Vedanta.
In Chicago, Vivekananda rejected the description of human beings as sinners and invoked the Upanishads to call them children of immortal bliss. He boldly stated that “the Hindu refuses to call you sinners” and added, “Come up, O lions, and shake off the delusion that you are sheep; you are souls immortal, spirits free, blest and eternal; ye are not matter, ye are not bodies; matter is your servant, not you the servant of matter.” Such assertions highlighting the positive aspects of all beings irrespective of their faith became the defining feature of Vivekananda’s expositions on spirituality. He also said that “religion is not the crying necessity of India”.
He turned the searchlight inwards when he wrote to a disciple that, “No religion on earth preaches the dignity of humanity in such a lofty strain as Hinduism and no religion on earth treads upon the necks of the poor and the low in such a fashion as Hindusim”. The RSS and its chief must learn from the life and work of Vivekananda, who described himself as a socialist and interrogated Hinduism with honesty.
Vivekananda proclaimed his self-esteem and pride as a Hindu because as he said, it was Hindus who built mosques for Muslims and churches for Christians. On December 6, 1992, the BJP and RSS mobilised people to demolish the Babri Masjid in the name of Hindusim. This was contrary to the vision of Vivekananda and ethos of the freedom struggle. No wonder that the then chairman of Rajya Sabha, K R Narayanan, said on the floor of the House that the demolition of the Babri Masjid was the worst tragedy India faced after the assassination of Mahatma Gandhi.
The Dravidian movement since its inception has been fighting caste domination. An editorial in the 1920s in Justice, the organ of Justice Party, recalled Vivekananda’s words that the chief goal of spirituality is to put an end to all privileges even as differences remained. Justice also quoted Vivekananda as saying Lord Buddha was the chief destroyer of all caste privileges. That legacy deeply inspired the movement for equality and equal opportunity to all.
Vivekananda went to America to find remedies for the poverty and inequality in India. He, therefore, needs to be understood not only in terms of his exposition of Hinduism and spirituality but also in terms of his explanation of social and economic problems. He famously spoke of Islam as a mighty force for equality and brotherhood and held that as the reason why many “untouchables” embraced Islam. He said India needed the Vedantic brain and Islamic body.

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Opinion

Death: an inevitable reality?

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By Ishtiaq Ahmed

A few days ago, a student wrote to me, recommending that I discuss death: something we all know is a reality which nobody can deny. Let me define death, as the termination of metabolism in the human body so that it ceases to function. The heart stops beating, the brain stops working and all normal processes of life come to standstill.
The question philosophers, founders of religions, kings and emperors, businessmen, sportsmen, workers — all pose to themselves from time to time is the following: is there a purpose of life and what happens when we die? As far as we know, only human beings reflect about the purpose of life and about death. Other living creatures are too concerned about their survival. The survival instinct is inherent in all forms of life, but for human beings who can think and reason and remember the past and so on, death has always been the ultimate challenge to their intelligence and power.
The biggest appeal of religion is that in one way or another, it offers hope of an existence beyond physical death. That is why a belief in God or some Supreme Spirit or Supreme intelligence is common to all cultures. Some societies are obsessed with such concerns and strive to their utmost to connect salvation in the hereafter with life on earth.
When I was young, I thought death is something for others, something which will happen to me far away in time. Now at 71, I do think about it more often, but I am not afraid death. Or so I believe. I would like to live to be over a 100 years old, like my paternal grandparents, but would prefer to die quickly instead of suffering a slow, painful death.
What I know for certain is that in the last 100 years or so, longevity has increased dramatically. People live longer, healthier lives, more babies survive and thus the world population has been increasing, which in the long run can be a big problem.
All this has been possible because of improvement in healthcare, better medicines and improving diet and lifestyles. Have miracles or religious mantras made any difference except in some psychological sense? That can be discussed and should be discussed because without proper information, no contribution to knowledge is possible.
However, how long will I live is not in my control — more or less, though some people want to decide to finish a painful and meaningless existence, and I think that is their choice. The prevailing ethical thrust is that life should be preserved at all costs and not destroyed. That limits individual choice on this matter.
Of course, one would like never to break the link with people one loves and cares. All the friends and other wonderful people one has come across make life enriching and rewarding. The fact however is that, one day that linkage is going to break and nothing can prevent that from happening. That is the saddest aspect of death. When one wants to live it is because of all the associations which one cherishes and treasures.
The most central question people seek an answer to is whether there is life after death or not. Frankly speaking, only religion can answer that question. Science, experience and observation do not verify that conclusively. It has to remain a matter of belief and faith.
Before writing this op-ed, I watched some videos about people claiming reincarnation happens. Panels of doctors, scientists and academics gave examples of it happening. How reliable are their studies, mostly done in the United States? One can always be wonder. What they seemed to say was that such things happen to very few people and it is not a general experience or claim.
The above discussion on death is based on historical evidence and contemporary experience. However, things may change in the future. I also watch videos of projections about advances in science and technology for the year 2050. I learnt that by that time, the length of life would extend to 120. Cancer will be eradicated and many other fatal diseases as well.
Not only that, but it will be possible to save memory, and thus death would become obsolete and meaningless. However, reproducing a body which will never decompose may take much longer. If that were to happen, death in the sense of memory being disrupted would not only be overcome but it will continue in a body which may also be renewable and thus forever.
By 2050, robots will be taking over many tasks now performed by human beings. The amusing thing and good news are that people will partner with robots instead of only human beings. Just as same-sex marriage is now getting acceptance in parts of the world, a relationship with a robot will initially be a novelty but then become simply another choice. That would transform sexuality and increase infinitely freedom of choice. There is of course, the danger that robots may become too intelligent and start defining and determining the lives of human beings.
Alas for people like me, that future is too far away, but children born now may come to live in a very different world. All this would be possible if, as we say in science, ‘All other things remaining the same’. By that I mean, if human beings do not destroy one another in wars of religion, sect and nationalism using nuclear weapons and other instruments of mass destruction. Ultimately, it all depends on how human beings use their intelligence.
For many of us reading this, it is sad that we will not be around in 2050. Death is a reality and for us, the story will be over sooner or later. However, we should not fear death because when we are dead we would be free from the worries of the living.

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