GST countdown (The Hindu - 5 June 2017)

     There is still no clarity whether the loose ends can be tied up in time for the July 1 deadline

     The Goods and Services Tax Council has finalised the rates at which tax will be levied for almost all products and services under the tax regime, just four weeks before the July 1 deadline for rollout. The decisions amount to a balancing act between competing demands. The Council has set the tax rate on gold, silver, diamonds and other jewellery at 3%, while uncut diamonds will attract a ‘notional’ duty of 0.25%; a credit can be claimed for exports of such diamonds after they are polished and cut in India’s gem clusters. Footwear and readymade textiles will have differential tax slabs based on sale price (with a concessional 5% for footwear below ₹500 and clothes below ₹1,000). But oddly, no such distinction has been made for mass consumption items such as glucose biscuits. Textiles, leather, diamonds and food processing already are, or have the potential to be, India’s biggest employment engines, and repercussions of tax structure anomalies can be felt hard and fast in a competitive global market. Though the low rates on gold and diamond can dampen smuggling opportunities, they introduce two more rates to an already complex GST structure of five rate slabs plus a variable cess on ‘sin’ goods. Taken together, with the exemptions for critical sectors such as real estate, electricity, petroleum and alcohol, GST in its current form is far from the ‘One Nation, One Tax’ it purports to be.

     Not surprisingly, fresh demands for differential tax treatment have begun already, including for bidis. States and sections of industry want a review of rates finalised earlier for products ranging from biogas, fertilizers and tractors to agarbathis, human hair and cashew. Actor Kamal Haasan has threatened to quit cinema as it has been included in the 28% ‘sin’ category, and States have backed the demand that regional cinema be treated differently. The Council is slated to meet again on June 11 to discuss these demands while taking a call on a few pending items such as lotteries, and finalise rules pertaining to accounting and e-way bills (to be generated to transport goods). An assurance of input credit on existing stocks with dealers and simpler rules for filing returns should help industry gear up for the transition. But in the absence of final accounting rules or clarity on the anti-profiteering framework, there is concern whether all the loose ends can be tied up this month. The government is sticking to the July 1 deadline despite reservations about the readiness of the administration and the GST Network that would have to manage billions of invoices. The Council must take a realistic and honest stock of ground realities at its next meeting. A sub-optimal GST design can be corrected over time, but a hasty beginning could prove costly.

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European variation (The Hindu - 5 June 2017)

     With global politics in a flux, India must make a careful choice of coalitions it forges

      Prime Minister Narendra Modi’s visit to Germany, Spain, Russia and France brings into sharp focus the shared dilemma India and Europe face with America’s shifting policies, and the resultant flux on the world stage. Mr. Modi’s first stop in Germany came a day after Chancellor Angela Merkel’s strong comments aimed at President Donald Trump, that Europe could no longer ‘depend’ on traditional partners. Europe’s disappointment with Mr. Trump at the G-7 and NATO summits was three-fold: his refusal to reaffirm NATO’s Article 5 on ‘collective defence’; his warning on the trade deficit with Europe; and his expected decision to pull America out of commitments in the Paris Agreement on climate change. For the past few months India has faced a similar disappointment as the U.S. has forged closer ties with China, indicating what Mr. Modi called a loosening of the world order, while the U.S. has targeted Indian professionals and businesses to protect American jobs. Another blow came from Mr. Trump’s comments on the Paris Accord when he blamed India and China for what he called an unfair deal. Mr. Modi’s meetings with Ms. Merkel and subsequently Spanish Prime Minister Mariano Rajoy and French President Emmanuel Macron saw those issues raised one way or another, as they tried to explore new ways to cooperate on multilateral issues, including terror, trade and climate change. In particular, Mr. Modi’s assurance in Berlin that the suspended India-EU free trade talks for the Broadbased Trade and Investment Agreement would resume soon has raised the hope that progress will be made before the EU-India summit in Delhi this year.

      However, while the EU and India have a clear convergence in many areas, a dependable alliance can only come from a concurrent worldview. It cannot be ignored, for example, that Chinese Premier Li Keqiang’s visit to Berlin and Brussels, also last week, saw the EU repose much more faith in Beijing than New Delhi would be comfortable with, given the current Sino-Indian tensions. European leaders praised President Xi Jinping’s leadership on connectivity and climate change. Europe perceives its single largest threat to be from Moscow, not Beijing. Mr. Modi’s attendance at the St. Petersburg International Economic Forum to unveil a new India-Russia vision statement for the 21st century along with President Vladimir Putin could cause similar discomfort in European capitals. This divergent worldview may be further highlighted this week as Mr. Modi travels to Kazakhstan to formalise India’s membership of the Shanghai Cooperation Organisation, seen as a counter-NATO coalition of Russia, China and Central Asian states. Standing at a crossroads few had expected at this stage, India will have to consider its options carefully as it decides which coalitions to forge as the U.S. overturns traditional ties in favour of transactionalism. The Centre must undertake a full review of India’s priorities and interests before Mr. Modi heads to Washington for a meeting with Mr. Trump at the end of June.

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Coaching blues: Indian cricket team faces a tough off-field challenge at the Champions Trophy (The Times of India - 5 June 2017)

     Team India took to the field against Pakistan to defend its ICC Champions Trophy title amidst a raging controversy – over reported differences between captain Virat Kohli and coach Anil Kumble. Though Kohli has denied these reports, it must be distracting for the team how BCCI invited applications for the post of head coach just as it landed in England to play a prestigious tournament. Until then Kumble’s one-year contract was widely expected to be renewed given the team’s impressive performance under him, with five Test series wins in a row.

     This controversy raises fundamental questions about continuing lack of professionalism in cricket governance. Why did the Committee of Administrators (CoA) leave such an important decision to be made at the very end of Kumble’s tenure (which concludes with the Champions Trophy)? Perhaps the captain has expressed concerns only at this juncture but if his view is so important, he should anyway have been consulted earlier instead of creating a situation that adversely affects team morale during a very competitive overseas tournament.

     This is disappointing especially as expectations ran high from the Supreme Court appointed CoA which took over running BCCI affairs from January 30. CoA member Ramachandra Guha has resigned during this cricketing firestorm but not without raising more troublesome questions – about how CoA has been unable to resolve the sensitive issue of conflict of interest, which was critical to its replacing the established BCCI leadership. Too much of cricket administration continues to be person-specific rather than principle-based.

     Take the case of Rahul Dravid who is India A and India under-19 cricket coach who has been given a 10-month contract by BCCI. This allows him to double up as mentor of Delhi Daredevils during the remaining two months in IPL season. To secure his exclusive services BCCI would have to give him a longer-term contract and enhanced compensation, because today such services have a market that’s high-paying and global. Basically CoA needs to replace non-transparent loopholes with a holistic and impersonal approach to conflict of interest among coaching and support staff. Meanwhile, the likes of Virender Sehwag and Tom Moody have thrown their hat in the ring to replace Kumble. Competition as such is well and good. But as Justice Lodha points out, what’s unfortunate is how the atmosphere surrounding this coach selection has been vitiated.

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EVMs win: Politicians making wild allegations against EVMs totally fail to back these up (The Times of India - 5 June 2017)

     This weekend, a challenge issued by the Election Commission to doubters to prove that electronic voting machines could be tampered with ended predictably: no one took up the challenge. Thus parties like BSP and AAP whose leaders have loudly cried EVM tampering stand exposed as sore losers, who would do well to introspect rather than blame the machine post-elections.

     EVMs have been an important instrument in strengthening Indian democracy. The credit for their introduction should go to EC which successfully manages the monumental task of conducting elections in a country with about 850 million registered voters. Elections in the era prior to EVMs were often marred by booth capturing. On occasions, the number of invalid votes exceeded the margin between the first and second spots thereby vitiating the electoral process. These problems have been overcome by the introduction of EVMs. Electoral reforms are an ongoing process and we are on the threshold of the next big improvement. VVPAT, or voter verifiable paper audit trail, was used in some constituencies in the recent assembly elections. With NDA government ready to financially back this change, the next general election is expected to be conducted using VVPATs.

     India’s political parties have a responsibility to support EC efforts to enhance the integrity of the electoral process. Three general elections and numerous assembly elections have been conducted using EVMs. A reduction in the incidence of polling related violence has been one of the many benefits of this reform. Instead of trying to undermine this reform and campaigning for the resurrection of a paper based manual system, political parties should work with EC to bring about further reforms. A meaningful debate on electoral funding, for example, needs ideas from political parties.

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The black box (The Indian Express - 5 June 2017)

     Government must address EC’s concerns about recent amendments to laws that govern political finance. One of the main contentions of the EC has to do with a proviso that exempts political parties from disclosing donations received from electoral bonds.

     The Election Commission has flagged the recent amendments in the Representation of the People (RP) Act and the Companies Act, related to donations made to political parties. It has expressed concern that they militate against greater transparency in political finance. The government must urgently address the EC’s concerns.

One of the main contentions of the EC, articulated in its letter to the law secretary, has to do with a proviso that exempts political parties from disclosing donations received from electoral bonds. In the last budget session, the government had introduced the bonds, which a donor could make and gift to registered political parties. Simultaneously, it also banned cash donations over Rs 2,000. The plan, it seemed, was to shift from cash donations that were difficult to track towards cashless transactions. However, the radical edge of the proposal was undermined by the amendment that exempted political parties from disclosing donations received from bonds. The EC rightly wants the provision withdrawn. Its concern that “in a situation where the contributions received through electoral bonds are not reported on perusal of the contribution report of political parties, it cannot be ascertained whether the political party has taken any donation in violation of provision under Section 29(b) of the RP Act which prohibits the political parties from taking donations from government companies and foreign sources” is valid. Besides, the bonds allow anonymity to donors, who can channel large sums electronically to their party of preference. Earlier, political parties had to disclose details of the donors who made contributions above Rs 20,000. The provision made it possible to track the identity and volume of contributions received by every political party.

     These changes need to be seen in relation to amendments to the Companies Act. The Act has been diluted to lift the cap on corporate donations to political parties. Earlier, a company could not contribute more than 7.5 per cent of its net profit over the last three years to parties. The EC has warned that the change in the law “opens up the possibility of shell companies being set up for the sole purpose of making donations to political parties with no business of consequence”. The law in the previous form, the EC has argued, ensured that “only profitable companies with proven track record could provide donations to political parties”. The opacity of political finance has been a significant part of the story of political corruption in the country. In light of the EC’s note of caution, the government needs to revisit the changes it has made both in the RPA and the Companies Act.

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Engaging Europe (The Indian Express - 5 June 2017)

     PM Modi did well to reaffirm India’s strategic partnerships with Russia and France. The new global imperatives call for it.   

  

     As America enters an uncertain era and great power relations turn turbulent, India is eager to sustain two of its long-standing strategic partnerships with Russia and France. That was the main message from the second leg of Prime Minister Narendra Modi’s European sojourn last week. In the first part of the four-nation tour that took the PM to Germany and Spain, Modi’s emphasis was on exploring the new avenues of cooperation with Germany and other European nations that Delhi has long neglected. Just before Modi arrived in the old continent, President Donald Trump was there shocking America’s European allies with his boorish personal behaviour and anti-globalist worldview. Coupled with Trump’s warmth towards China and Russia, the unfolding Western divide has begun to complicate the assumptions of India’s international calculus since the end of the Cold War. Sharpening the case for a fresh Indian look at its external environment was Trump’s rant against India in announcing the decision to quit the 2015 Paris accord on climate change after his return to Washington.

     Amidst this new international fluidity, Delhi appreciates the need to minimise the emerging friction in the old partnership with Moscow. That India has been anxious about Russia’s drift towards China and Pakistan has not been a secret. Modi’s talks with President Putin did not end the differences on assessing the regional situation. For Putin sidestepped questions on Kashmir and signaled that Russia will continue to improve ties with Pakistan. Modi’s focus in Moscow was on limiting political differences with Putin and revitalising the stagnant commercial engagement with Russia. If Modi turned on his personal charm to reboot the trust-based relationship with Putin, his mission to Paris about establishing rapport with President Emmanuel Macron who has just taken charge of France. Paris has always been an exception to India’s ambivalent relationship with the West, and Modi appears to have won Macron’s commitment to build on the special relationship with France in the areas of high technology and defence and extend it to counter terrorism.

     Macron’s decision to accompany Modi to a memorial for Indian soldiers who fought in France during the First World War is an acknowledgement not just of Delhi’s past contribution to European geopolitics, but its future role in ordering this vital region. In aligning with Europe on mitigating climate change amidst US pull out of the Paris Accord and navigating the current divisions between Russia on the one hand and Germany and France on the other, Modi has shown some diplomatic finesse. But to play the long game in these tumultuous times, the PM must get his domestic economic and security decision-making upto speed with the new global imperatives.

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क्या पेरिस संधि से हटेगा अमेरिका? (Rajasthan Patrika - 5 June 2017)

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अलगाववादियों को फ़ंडिंग के रास्ते हों बंद (Rajasthan Patrika - 5 June 2017)

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सार्वजनिक क्षेत्र की कंपनियां बेचने से आएगा सुशासन (Dainik Bhaskar - 5 June 2017)

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सपना न हो तो जीवन में कुछ नहीं मिल सकता (Dainik Bhaskar - 5 June 2017)

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