By M H Ahssan
The New year festival or Ugadi comes close on the heels of Holi. While the strong colors of Holi start fading away, the freshness of spring lingers on with sprightliness all around. The flame of the forest (trees with bright red flowers that blossom during holi) are in full bloom signifying an affluent season.It is believed that the creator of the Hindu pantheon Lord Brahma started creation on this day - Chaitra suddha padhyami or the Ugadi day. Also the great Indian Mathematician Bhaskaracharya's calculations proclaimed the Ugadi day from the sunrise on as the beginning of the new year, new month and new day.
The onset of spring also marks a beginning of new life with plants (barren until now) acquiring new life, shoots and leaves. Spring is considered the first season of the year hence also heralding a new year and a new beginning. The vibrancy of life and verdent fields, meadows full of colorful blossoms signifies growth, prosperity and well-being.
With the coming of Ugadi, the naturally perfumed jasmines (mallepulu) spread a sweet fragrance which is perhaps unmatched by any other in nature's own creation! While large garlands of jasmine are offered to Gods in homes and temples, jasmine flowers woven in clusters adorn the braids of women.
Predictions of the Year: Ugadi marks the beginning of a new Hindu lunar calendar with a change in the moon's orbit. It is a day when mantras are chanted and predictions made for the new year. Traditionally, the panchangasravanam or listening to the yearly calendar was done at the temples or at the Town square but with the onset of modern technology, one can get to hear the priest-scholar on television sets right in one's living room.
It is a season for raw mangoes spreading its aroma in the air and the fully blossomed neem tree that makes the air healthy. Also, jaggery made with fresh crop of sugarcane adds a renewed flavor to the typical dishes associated with Ugadi. "Ugadi pachchadi" is one such dish that has become synonymous with Ugadi. It is made of new jaggery, raw mango pieces and neem flowers and new tanarind which truly reflect life - a combination of sweet, sour and bitter tastes!
Preparing for the Occasion: Preparations for the festival begin a week ahead. Houses are given a thorough wash. Shopping for new clothes and buying other items that go with the requirements of the festival are done with a lot of excitement.
Ugadi is celebrated with festive fervor in Maharashtra, Karnataka and Andhra Pradesh. While it is called Ugadi in A.P. and Karnataka, in Maharashtra it is known as "Gudipadava". On Ugadi day, people wake up before the break of dawn and take a head bath after which they decorate the entrance of their houses with fresh mango leaves. The significance of tying mango leaves relates to a legend. It is said that Kartik (or Subramanya or Kumara Swamy) and Ganesha, the two sons of Lord Siva and Parvathi were very fond of mangoes. As the legend goes Kartik exhorted people to tie green mango leaves to the doorway signifying a good crop and general well-being.
It is noteworthy that we use mango leaves and coconuts (as in a Kalasam, to initiate any pooja) only on auspicious occasions to propitiate gods. People also splash fresh cow dung water on the ground in front of their house and draw colorful floral designs. This is a common sight in every household. People perform the ritualistic worship to God invoking his blessings before they start off with the new year. They pray for their health, wealth and prosperity and success in business too. Ugadi is also the most auspicious time to start new ventures.
The celebration of Ugadi is marked by religious zeal and social merriment. Special dishes are prepared for the occasion. In Andhra Pradesh, eatables such as "pulihora", "bobbatlu" and preparations made with raw mango go well with the occasion. In Karnataka too, similar preparations are made but called "puliogure" and "holige". The Maharashtrians make "puran poli" or sweet rotis.
Season For Pickles: With the raw mango available in abundance only during the two months (of April/May), people in Andhra Pradesh make good use of mangoes to last them until the next season. They pickle the mangoes with salt, powdered mustard and powdered dry red chilli and a lot of oil to float over the mangoes. This preparation is called "avakai" and lasts for a whole year.
Mangoes and summer season go hand in hand. Ugadi thus marks the beginning of the hot season which coincides with the school vacations. For the young ones, therefore, Ugadi is characterised by new clothes, sumptuous food and revelling. The air is filled with joy, enthusiasm and gaiety. Some people participate in social community gatherings and enjoy a tranquil evening with devotional songs (bhajans).
Thursday, March 26, 2009
Varun Gandhi: A pox on both his houses
By M H Ahssan
There's something in the Gandhi name. On the occasions it is invoked these days, it invariably raises deep, and sometimes extreme, emotions - both in the bearers of the hallowed surname and the world they come in contact with.
And there has been some commotion of late, all of a sudden, in the cool, placid waters of Gandhiana. First, the senseless commodification of the original Mahatma Gandhi in a petty, publicity seeking New York auction; then the appearance of his benign visage on African National Congress poll posters to woo Indian voters in South Africa. But if that was travesty, what followed must count as high treason, enough to send shivers down the spine of those who remember the man who gave the world the doctrine of non-violence.
A podgy, 28-year-old called Varun Gandhi - a fourth generation recipient of the Mahatma's name, but not by blood ties - has run an election campaign so vitriolic that it momentarily stunned even his hyperbolic, right-wing party. A sting video of his speeches at a rally in a remote north Indian constituency caught him threatening Muslims of the area in a language so derogatory and violent that it's difficult to be uttered in a civilized environment.
Suffice it to say that the audiovisual clip showed up references to circumcision, al-Qaeda leader Osama bin Laden and a call for saza-e-maut - capital punishment - to be delivered wholesale. All this from a young great grandson of Jawaharlal Nehru, India's first prime minister from 1947 to 1964, and an icon of genteel liberalism.
First, a little background. Varun Gandhi comes from a branch estranged from the main line of the Nehru-Gandhi family - how the two names came to be a compound surname is itself testimony to the family's sure touch with big-ticket symbolism. Nehru's daughter, the redoubtable Indira who was premier from 1967 to 1977 and 1980 to 1984, had married a Parsi lawyer-politician named Feroze Shah Ghandy, no relation to the Mahatma. In an unlit passage of events illumined now only by arcane biographies, the name became identical with that of the genuine article. The story is that Gandhi was Indira's godfather, and he adopted and lent his name to the young lawyer to facilitate the inter-religious marriage.
This re-christening was at the core of the strange pull Indira Gandhi exerted over the rural Indian populace in her time. In the decades after independence, Mahatma Gandhi had been stripped of any real political value, to become a harmless canonized figure, the smiling Father of the Nation. And by tacit, magical implication - without it ever being stated - Indira became the Daughter of India, appropriating the value for her lineage for all time to come. The lineup includes her son Rajiv Gandhi, prime minister from 1984 to 1989, his Italian-born widow and current regent of the Congress party Sonia Gandhi, and their son Rahul Gandhi, now 38 and in apprenticeship for the top job.
Varun is Rahul's first cousin, born to Indira's other son Sanjay, who had a brief, meteoric political career in the 1970s. Before dying in a glider accident (some say it was no accident), Sanjay Gandhi had earned no mean notoriety with a brattish, swashbuckling and violent approach, especially during the infamous Emergency, and is generally credited with the "thuggification" of Indian politics.
It is this hugely flawed legacy of muscle-driven street politics, updated with Hindutva rhetoric, that the son - by playing, in part rabble-rouser, juvenile delinquent and ingenue - is seeking to reclaim. It's almost like a vile cartoon version of Korak, son of Tarzan, except that it could be very dangerous before a general election next month being fought on razor-thin margins.
A perturbed Election Commission (EC) of India agreed with that view. After Varun Gandhi's atrocious campaign video surfaced on television channels, with the chopping of hands as the refrain of his speech, the EC put aside its pressing poll duties to first get criminal cases registered against him and then severely censured him.
Worried that the hatespeak could inspire similar unbridled campaigning and kick up a spiral of communal violence between the Hindu and Muslim communities in the volatile state of Uttar Pradesh and elsewhere, it took the unprecedented step of advising the opposition Bharatiya Janata Party (BJP) not to nominate him for the elections. "He does not deserve to be a candidate," the three-member poll panel noted.
This has now sparked another row on the legality of the EC's intervention. The BJP is challenging the commission's right to mentor it on who could and who could not be its candidate. To be sure, the EC cannot directly debar a candidate from elections unless he or she has been convicted of a certain grade of crime. Varun's case tests the limits of the EC's jurisdiction.
For one, the video is still technically in the realm of allegation - Varun has from the beginning stoutly defended himself, saying it has been tampered with. Anyway, prima facie, it can be said to violate only the model code of conduct, a quasi-legal directive. Serious action under this, like the countermanding of an election, is a rarity and a last resort - and the EC certainly is in a legal grey area if it takes recourse to moral blandishments to tell a party to drop a candidate.
Now, the Muslim vote matters even to the BJP - keen as it is to position itself in the "center" - and certainly to its many allies. A marauding speechmaker is hardly the recipe for a party mainstreaming itself. Appropriately, the BJP took some time to recover from its initial, nervous flip-flop, but has now decided not to flinch from backing Varun, deploying its legal expertise to fight back.
Emboldened, Varun countered the EC decision, "They have acted in haste, displaying a political bias," he said, implying the hand of the ruling Congress in the EC's censure. Also, he was not allowed to defend himself, Varun added, calling himself the victim of a pre-judged verdict. He claims the video has been "doctored, distorted and morphed". Sources close to him say he and his lawyers have detected 16 editing cuts. However, the EC is having none of this. Even with the alleged interpolations, the video has enough to prove Varun was on a Hindutva high, rousing his audience with communally surcharged slogans and crude innuendo.
To politically complicate matters, Varun's charismatic cousin Priyanka Gandhi virtually called Varun a blot on the Gandhi name - sneaking in a bit of Hindu symbolism herself. In the midst of electioneering for her mother Sonia and brother Rahul's constituencies in Uttar Pradesh, she strategically placed herself before a temple with a garland of red hibiscus (used in prayers for Kali, the goddess of fearsome aspect), she advised her "misguided" younger cousin to read the Bhagavad Gita instead of using the Hindu philosophical text to invoke hatred among communities.
Varun, getting it from all sides, staunchly upholds his Hindu identity (the irony is, he is half-Sikh and a quarter Parsi), leaving little doubt about his indoctrination by the right-wing party he joined out of sheer compulsion. Varun's side of the family has long been disowned by the Congress - to cut a long story short, his mother Maneka "walked out" on Indira with tiny Varun in tow after her husband's glider-crash death. It was political ambition that drove a wedge in the family. Although controversial, Sanjay Gandhi was known to be Indira's favorite, but after his untimely death she chose to project the apolitical Rajiv - not Sanjay's widow - as her successor.
Having lost his father, Varun was fully delinked from the family holdings - especially the Congress party - after Maneka literally forced him to hobnob with the ideological opposite pole, the BJP. It was the party Maneka aligned with in her attempt to chart out a separate political identity, distinct from the Nehru-Gandhis. The consequences could not have been more ironical - Varun is now steeped in a political view that sustains itself by negating the idea of India as conceived by Mahatma Gandhi and shaped by, among others, his own great grandfather Nehru.
If Gandhi had adopted Varun's Parsi grandfather Feroze Shah to help him marry Nehru's young and beautiful daughter Indira, Nehru had adopted secularism with a near-religious fervor so as to refute arch-rival Mohammed Ali Jinnah's two-nation theory. Nearly 75 years later, Varun seems to have made a mockery of both.
From calling his nearest rival in the Pilibhit constituency (where a defiant BJP has retained him as the candidate) "Osama Bin Laden", threatening to chop off the hands of Muslims and making jokes out of their names, Varun has ran amok. In his debutante's eagerness to win from a constituency he has inherited from his mother Maneka, he has blurred the distinctions between what is constitutionally acceptable and what is not. Political observers say he could have won the seat on the strength of the work his mother has done in Pilibhit without denigrating himself and Indian elections in the process.
For many who know Varun from his days in the London School of Economics and later as a budding poet, this appears to be a Kafkaesque metamorphosis. A close friend of his insists the soft-spoken, thin-voiced boy is incapable of uttering such crude language befitting a seasoned right-wing rabble-rouser. But, something fits: Varun seems to have consciously lifted portions from a controversial speech of his father Sanjay Gandhi, which had made the front pages during the Emergency in the mid-1970s, around the time he became known for undertaking forceful sterilization of Muslim men as a method of family planning. Varun, in one of the tapes submitted to the Election Commission, repeats the sterilization threat.
Much like the pathetic Oswald Alving in Henrik Ibsen's 1881 play Ghosts, the 28-year-old Varun seems to be weighed down by the burden of inheritance - coping with the worst possible self-inflicted wound, and half loving the attention. As Ibsen's play had shown, the ghosts of history have strange ways of catching up with you.
Now that he has decisively "outed' in his enthusiasm to make it to parliament, Google registers over 1,00,000 hits on Varun and Sanjay Gandhi, with everyone - from new-age blogger to age-old political analyst - making the father-son comparison. The less-than-palatable legacy of the Emergency, to which ironically BJP leaders then stood steadfastly opposed, stands revived.
Clearly, Varun's trips to the Nagpur HQ of the Rashtriya Swayamsevak Sangh - the BJP's mother organization - have had its impact on the young mind. The BJP's careful, qualified endorsement of his concocted communal rage suggests he may not be entirely without godfathers in the saffron fold. For one who gave the impression of being a hopelessly lost young man, spending much of the past four years praising his powerful, estranged aunt Sonia and banging his head at the BJP headquarters for a ticket to parliament, the script is crackling into life. His "arrival" also comes with a certificate from another extreme right-wing leader, Bal Thackeray of the Shiv Sena.
"Varun has spoken the truth. We like this Gandhi," Thackeray wrote in his party's mouthpiece, Saamna. This leaves no scope for escape for the young Varun - politically, he has been "framed" in a certain cast. If the BJP tapped the young mind, Thackeray has trapped him in his past. "In Varun," he gushingly wrote, "one gets an impression that Sanjay Gandhi has had a rebirth. When Varun speaks, we get an impression that Sanjay Gandhi is speaking." Thackeray has been barred from contesting elections for inciting communal passions in a similar manner in the 1990s.
It was said the induction of new-age candidates in the political fray would bring an end to all the ills afflicting the Indian political system. From the day the elections were announced, reams have been written on the 170 million young voters and the young politicos who together will determine the fate of the polity and restore pristine values.
Alas, all this muck has hit the fan thanks to the alleged indiscretion of one of the young candidates. And a Gandhi to boot.
There's something in the Gandhi name. On the occasions it is invoked these days, it invariably raises deep, and sometimes extreme, emotions - both in the bearers of the hallowed surname and the world they come in contact with.
And there has been some commotion of late, all of a sudden, in the cool, placid waters of Gandhiana. First, the senseless commodification of the original Mahatma Gandhi in a petty, publicity seeking New York auction; then the appearance of his benign visage on African National Congress poll posters to woo Indian voters in South Africa. But if that was travesty, what followed must count as high treason, enough to send shivers down the spine of those who remember the man who gave the world the doctrine of non-violence.
A podgy, 28-year-old called Varun Gandhi - a fourth generation recipient of the Mahatma's name, but not by blood ties - has run an election campaign so vitriolic that it momentarily stunned even his hyperbolic, right-wing party. A sting video of his speeches at a rally in a remote north Indian constituency caught him threatening Muslims of the area in a language so derogatory and violent that it's difficult to be uttered in a civilized environment.
Suffice it to say that the audiovisual clip showed up references to circumcision, al-Qaeda leader Osama bin Laden and a call for saza-e-maut - capital punishment - to be delivered wholesale. All this from a young great grandson of Jawaharlal Nehru, India's first prime minister from 1947 to 1964, and an icon of genteel liberalism.
First, a little background. Varun Gandhi comes from a branch estranged from the main line of the Nehru-Gandhi family - how the two names came to be a compound surname is itself testimony to the family's sure touch with big-ticket symbolism. Nehru's daughter, the redoubtable Indira who was premier from 1967 to 1977 and 1980 to 1984, had married a Parsi lawyer-politician named Feroze Shah Ghandy, no relation to the Mahatma. In an unlit passage of events illumined now only by arcane biographies, the name became identical with that of the genuine article. The story is that Gandhi was Indira's godfather, and he adopted and lent his name to the young lawyer to facilitate the inter-religious marriage.
This re-christening was at the core of the strange pull Indira Gandhi exerted over the rural Indian populace in her time. In the decades after independence, Mahatma Gandhi had been stripped of any real political value, to become a harmless canonized figure, the smiling Father of the Nation. And by tacit, magical implication - without it ever being stated - Indira became the Daughter of India, appropriating the value for her lineage for all time to come. The lineup includes her son Rajiv Gandhi, prime minister from 1984 to 1989, his Italian-born widow and current regent of the Congress party Sonia Gandhi, and their son Rahul Gandhi, now 38 and in apprenticeship for the top job.
Varun is Rahul's first cousin, born to Indira's other son Sanjay, who had a brief, meteoric political career in the 1970s. Before dying in a glider accident (some say it was no accident), Sanjay Gandhi had earned no mean notoriety with a brattish, swashbuckling and violent approach, especially during the infamous Emergency, and is generally credited with the "thuggification" of Indian politics.
It is this hugely flawed legacy of muscle-driven street politics, updated with Hindutva rhetoric, that the son - by playing, in part rabble-rouser, juvenile delinquent and ingenue - is seeking to reclaim. It's almost like a vile cartoon version of Korak, son of Tarzan, except that it could be very dangerous before a general election next month being fought on razor-thin margins.
A perturbed Election Commission (EC) of India agreed with that view. After Varun Gandhi's atrocious campaign video surfaced on television channels, with the chopping of hands as the refrain of his speech, the EC put aside its pressing poll duties to first get criminal cases registered against him and then severely censured him.
Worried that the hatespeak could inspire similar unbridled campaigning and kick up a spiral of communal violence between the Hindu and Muslim communities in the volatile state of Uttar Pradesh and elsewhere, it took the unprecedented step of advising the opposition Bharatiya Janata Party (BJP) not to nominate him for the elections. "He does not deserve to be a candidate," the three-member poll panel noted.
This has now sparked another row on the legality of the EC's intervention. The BJP is challenging the commission's right to mentor it on who could and who could not be its candidate. To be sure, the EC cannot directly debar a candidate from elections unless he or she has been convicted of a certain grade of crime. Varun's case tests the limits of the EC's jurisdiction.
For one, the video is still technically in the realm of allegation - Varun has from the beginning stoutly defended himself, saying it has been tampered with. Anyway, prima facie, it can be said to violate only the model code of conduct, a quasi-legal directive. Serious action under this, like the countermanding of an election, is a rarity and a last resort - and the EC certainly is in a legal grey area if it takes recourse to moral blandishments to tell a party to drop a candidate.
Now, the Muslim vote matters even to the BJP - keen as it is to position itself in the "center" - and certainly to its many allies. A marauding speechmaker is hardly the recipe for a party mainstreaming itself. Appropriately, the BJP took some time to recover from its initial, nervous flip-flop, but has now decided not to flinch from backing Varun, deploying its legal expertise to fight back.
Emboldened, Varun countered the EC decision, "They have acted in haste, displaying a political bias," he said, implying the hand of the ruling Congress in the EC's censure. Also, he was not allowed to defend himself, Varun added, calling himself the victim of a pre-judged verdict. He claims the video has been "doctored, distorted and morphed". Sources close to him say he and his lawyers have detected 16 editing cuts. However, the EC is having none of this. Even with the alleged interpolations, the video has enough to prove Varun was on a Hindutva high, rousing his audience with communally surcharged slogans and crude innuendo.
To politically complicate matters, Varun's charismatic cousin Priyanka Gandhi virtually called Varun a blot on the Gandhi name - sneaking in a bit of Hindu symbolism herself. In the midst of electioneering for her mother Sonia and brother Rahul's constituencies in Uttar Pradesh, she strategically placed herself before a temple with a garland of red hibiscus (used in prayers for Kali, the goddess of fearsome aspect), she advised her "misguided" younger cousin to read the Bhagavad Gita instead of using the Hindu philosophical text to invoke hatred among communities.
Varun, getting it from all sides, staunchly upholds his Hindu identity (the irony is, he is half-Sikh and a quarter Parsi), leaving little doubt about his indoctrination by the right-wing party he joined out of sheer compulsion. Varun's side of the family has long been disowned by the Congress - to cut a long story short, his mother Maneka "walked out" on Indira with tiny Varun in tow after her husband's glider-crash death. It was political ambition that drove a wedge in the family. Although controversial, Sanjay Gandhi was known to be Indira's favorite, but after his untimely death she chose to project the apolitical Rajiv - not Sanjay's widow - as her successor.
Having lost his father, Varun was fully delinked from the family holdings - especially the Congress party - after Maneka literally forced him to hobnob with the ideological opposite pole, the BJP. It was the party Maneka aligned with in her attempt to chart out a separate political identity, distinct from the Nehru-Gandhis. The consequences could not have been more ironical - Varun is now steeped in a political view that sustains itself by negating the idea of India as conceived by Mahatma Gandhi and shaped by, among others, his own great grandfather Nehru.
If Gandhi had adopted Varun's Parsi grandfather Feroze Shah to help him marry Nehru's young and beautiful daughter Indira, Nehru had adopted secularism with a near-religious fervor so as to refute arch-rival Mohammed Ali Jinnah's two-nation theory. Nearly 75 years later, Varun seems to have made a mockery of both.
From calling his nearest rival in the Pilibhit constituency (where a defiant BJP has retained him as the candidate) "Osama Bin Laden", threatening to chop off the hands of Muslims and making jokes out of their names, Varun has ran amok. In his debutante's eagerness to win from a constituency he has inherited from his mother Maneka, he has blurred the distinctions between what is constitutionally acceptable and what is not. Political observers say he could have won the seat on the strength of the work his mother has done in Pilibhit without denigrating himself and Indian elections in the process.
For many who know Varun from his days in the London School of Economics and later as a budding poet, this appears to be a Kafkaesque metamorphosis. A close friend of his insists the soft-spoken, thin-voiced boy is incapable of uttering such crude language befitting a seasoned right-wing rabble-rouser. But, something fits: Varun seems to have consciously lifted portions from a controversial speech of his father Sanjay Gandhi, which had made the front pages during the Emergency in the mid-1970s, around the time he became known for undertaking forceful sterilization of Muslim men as a method of family planning. Varun, in one of the tapes submitted to the Election Commission, repeats the sterilization threat.
Much like the pathetic Oswald Alving in Henrik Ibsen's 1881 play Ghosts, the 28-year-old Varun seems to be weighed down by the burden of inheritance - coping with the worst possible self-inflicted wound, and half loving the attention. As Ibsen's play had shown, the ghosts of history have strange ways of catching up with you.
Now that he has decisively "outed' in his enthusiasm to make it to parliament, Google registers over 1,00,000 hits on Varun and Sanjay Gandhi, with everyone - from new-age blogger to age-old political analyst - making the father-son comparison. The less-than-palatable legacy of the Emergency, to which ironically BJP leaders then stood steadfastly opposed, stands revived.
Clearly, Varun's trips to the Nagpur HQ of the Rashtriya Swayamsevak Sangh - the BJP's mother organization - have had its impact on the young mind. The BJP's careful, qualified endorsement of his concocted communal rage suggests he may not be entirely without godfathers in the saffron fold. For one who gave the impression of being a hopelessly lost young man, spending much of the past four years praising his powerful, estranged aunt Sonia and banging his head at the BJP headquarters for a ticket to parliament, the script is crackling into life. His "arrival" also comes with a certificate from another extreme right-wing leader, Bal Thackeray of the Shiv Sena.
"Varun has spoken the truth. We like this Gandhi," Thackeray wrote in his party's mouthpiece, Saamna. This leaves no scope for escape for the young Varun - politically, he has been "framed" in a certain cast. If the BJP tapped the young mind, Thackeray has trapped him in his past. "In Varun," he gushingly wrote, "one gets an impression that Sanjay Gandhi has had a rebirth. When Varun speaks, we get an impression that Sanjay Gandhi is speaking." Thackeray has been barred from contesting elections for inciting communal passions in a similar manner in the 1990s.
It was said the induction of new-age candidates in the political fray would bring an end to all the ills afflicting the Indian political system. From the day the elections were announced, reams have been written on the 170 million young voters and the young politicos who together will determine the fate of the polity and restore pristine values.
Alas, all this muck has hit the fan thanks to the alleged indiscretion of one of the young candidates. And a Gandhi to boot.
Exclusive: IN SEARCH OF SILICON VALLEY
By M H Ahssan
The state IT sector seems to hold promise of a better future provided the Govt pulls its acts together and private players survive the downturn
The year 2008 has not been a particularly good year for West Bengal. In addition to losing the Nano car project there have been postponements of several publicised ventures, shelving of hospital and education projects, and uncertainty in the fate of the huge Jindal Steel project. Power cuts have again surfaced, roads have started deteriorating, pollution levels continue unabated and bandhs/traffic dislocations have become common.
Amidst this rather gloomy backdrop the IT/ITeS sector in West Bengal seems to hold promise of a better future, provided the Government pulls its acts together and private players survive the downturn to move forward. The state had planned to climb up the national IT pecking order to the third rank from the current eighth position. The IT minister had announced a broad range of incentives and visualized progress through huge growth in exports, expansion of existing ventures, setting up of new projects, starting IT-hubs in satellite towns along with incubation centres and finishing schools, as well as vigorous participation in e-governance projects. Unfortunately, the sub-prime crisis hit the global economy and the moot question today is how much of that IT vision will become reality and how many of the IT/ITEs players will survive and grow in the state.
The players in this sector number around 500 and closely follow Pareto’s law – less than 20 per cent are large units that account for more than 80 per cent of total business and employment. Bengal has a collection of very prominent large players that includes IBM, TCS, Cognizant, Wipro, Cap Gemini, PwC etc. Discussions with them reveal that the economic downturn has indeed affected them seriously, although most have prepared elaborate plans for countering the problem and overcoming it. Currently 70 per cent of business comes from the US, and the dearth of new projects as well as cancellation of existing projects from the US has hit this segment badly.
Cost-cutting is taking various shapes such as cutting down on executive benefits, restructuring of salary by reducing fixed component and increasing the variable part (linked to performance),and as a last resort reduction of overall headcount in the organization. Since the most important market verticals – banking, finance and insurance – have been affected, there is a concerted effort to explore and develop other verticals. Geographic diversity is also being pursued by looking at markets other than the US, while senior managers have put on their thinking caps to innovate and add new value to their offers to customers.
It is the smaller units that are facing big-time crisis. Many of these units were set up during the good old days of high IT growth and were essentially opportunistic in nature, with little to offer other than low costs. As their customers try to survive, many of these vendors who are not seen as critical, are getting dropped. Consequently, it is a period of trial by fire for these units, and those who can innovate and develop something uniquely valuable to customers will manage to survive. It is also a period of reckoning for the real stars of the future. Around 10 per cent of the SME units are companies that have been built on strong technological foundation, who typically own a few patents, possess specialized offerings and operate in highly exclusive market domains. It is a period of growth for these organizations and they are taking the initiative to scale up operations by building complementary capabilities — either through executive recruitments or partnerships with large multi-locational organizations.
The overall picture that emerges from the IT/ITeS sector is that existing large players will consolidate operations and cut down internal inefficiencies, with business volumes stagnating in the short term. The long term view for these global players fortunately remains positive, and as their renewal strategies hold fruit, they are expected to continue in their growth path. Many of the smaller units are, however, headed for trouble and will either face an uncertain future or partner with organizations that can give them survival strength. From this chaotic background we will also see a few bright stars that will become national players rather than local, and emerge as great companies of the future.
As far as new IT ventures are concerned, the biggest impediment appears to be the negative perception that has gained ground after the original euphoria, and there is a case for drastic improvement of the IT ecosystem in the state. An analysis of the success of Silicon Valley, Boston Belt, Cambridge Valley or our own Bangalore shows that growth happened there because young people found those areas to be physically inviting and intellectually liberal, which was complemented and supported by the advanced infrastructure of education and financial sector. Ask young executives based outside the state where they would consider relocation – and while Delhi, Mumbai or Bangalore would be regularly mentioned, Kolkata would be extremely rare. In spite of various official claims to the contrary, Kolkata has very high level of pollution, transport is cheap but chaotic, unscheduled power cuts are common and the city is anything but pleasant to the eyes.
On the ‘ease of doing business index’ West Bengal is ranked quite low, way below the southern and western states. Availability of engineering graduates in West Bengal is 1/3 to 1/6 of that in Andhra Pradesh, Tamil Nadu, Karnataka or Maharashtra, while the state continues to be the front runner in industrial disputes. A big selling point of the state ‘ low cost of living’ is certainly great for retired people, but hardly an incentive for ambitious and growth-oriented people.
Lowering costs
The path to Silicon Valley from Sector 5 therefore lies in building a strong and creative partnership between private players and the Government. It is safe to predict that the overall IT/ITES sector in India will remain in a leadership position and grow, and there will be increasing competition from front running states to take a greater share of the pie. At the unit level most unfit players will be eliminated, while the fitter ones will prosper by achieving higher operational efficiencies, focussing on new verticals and new geographical areas, penetrating the domestic market, and participating in e-governance schemes. But marketing the state in the face of strong competitors will remain the biggest challenge for attracting new ventures and more investments into the state.
The IT/ITES industry is predominantly populated and led by youth, the engine of growth being the passion, creativity and innovativeness of trained young minds. Convincing aged industry leaders in chambers of commerce by statistics and presentations will have marginal effect in the long run—instead the attempt should be to create and sell the state to the youth as a ‘cool’ place, physically beautiful and intellectually stimulating. In the IT/ITES industry it is the young who lead the way; the old have no option but to follow.
The state IT sector seems to hold promise of a better future provided the Govt pulls its acts together and private players survive the downturn
The year 2008 has not been a particularly good year for West Bengal. In addition to losing the Nano car project there have been postponements of several publicised ventures, shelving of hospital and education projects, and uncertainty in the fate of the huge Jindal Steel project. Power cuts have again surfaced, roads have started deteriorating, pollution levels continue unabated and bandhs/traffic dislocations have become common.
Amidst this rather gloomy backdrop the IT/ITeS sector in West Bengal seems to hold promise of a better future, provided the Government pulls its acts together and private players survive the downturn to move forward. The state had planned to climb up the national IT pecking order to the third rank from the current eighth position. The IT minister had announced a broad range of incentives and visualized progress through huge growth in exports, expansion of existing ventures, setting up of new projects, starting IT-hubs in satellite towns along with incubation centres and finishing schools, as well as vigorous participation in e-governance projects. Unfortunately, the sub-prime crisis hit the global economy and the moot question today is how much of that IT vision will become reality and how many of the IT/ITEs players will survive and grow in the state.
The players in this sector number around 500 and closely follow Pareto’s law – less than 20 per cent are large units that account for more than 80 per cent of total business and employment. Bengal has a collection of very prominent large players that includes IBM, TCS, Cognizant, Wipro, Cap Gemini, PwC etc. Discussions with them reveal that the economic downturn has indeed affected them seriously, although most have prepared elaborate plans for countering the problem and overcoming it. Currently 70 per cent of business comes from the US, and the dearth of new projects as well as cancellation of existing projects from the US has hit this segment badly.
Cost-cutting is taking various shapes such as cutting down on executive benefits, restructuring of salary by reducing fixed component and increasing the variable part (linked to performance),and as a last resort reduction of overall headcount in the organization. Since the most important market verticals – banking, finance and insurance – have been affected, there is a concerted effort to explore and develop other verticals. Geographic diversity is also being pursued by looking at markets other than the US, while senior managers have put on their thinking caps to innovate and add new value to their offers to customers.
It is the smaller units that are facing big-time crisis. Many of these units were set up during the good old days of high IT growth and were essentially opportunistic in nature, with little to offer other than low costs. As their customers try to survive, many of these vendors who are not seen as critical, are getting dropped. Consequently, it is a period of trial by fire for these units, and those who can innovate and develop something uniquely valuable to customers will manage to survive. It is also a period of reckoning for the real stars of the future. Around 10 per cent of the SME units are companies that have been built on strong technological foundation, who typically own a few patents, possess specialized offerings and operate in highly exclusive market domains. It is a period of growth for these organizations and they are taking the initiative to scale up operations by building complementary capabilities — either through executive recruitments or partnerships with large multi-locational organizations.
The overall picture that emerges from the IT/ITeS sector is that existing large players will consolidate operations and cut down internal inefficiencies, with business volumes stagnating in the short term. The long term view for these global players fortunately remains positive, and as their renewal strategies hold fruit, they are expected to continue in their growth path. Many of the smaller units are, however, headed for trouble and will either face an uncertain future or partner with organizations that can give them survival strength. From this chaotic background we will also see a few bright stars that will become national players rather than local, and emerge as great companies of the future.
As far as new IT ventures are concerned, the biggest impediment appears to be the negative perception that has gained ground after the original euphoria, and there is a case for drastic improvement of the IT ecosystem in the state. An analysis of the success of Silicon Valley, Boston Belt, Cambridge Valley or our own Bangalore shows that growth happened there because young people found those areas to be physically inviting and intellectually liberal, which was complemented and supported by the advanced infrastructure of education and financial sector. Ask young executives based outside the state where they would consider relocation – and while Delhi, Mumbai or Bangalore would be regularly mentioned, Kolkata would be extremely rare. In spite of various official claims to the contrary, Kolkata has very high level of pollution, transport is cheap but chaotic, unscheduled power cuts are common and the city is anything but pleasant to the eyes.
On the ‘ease of doing business index’ West Bengal is ranked quite low, way below the southern and western states. Availability of engineering graduates in West Bengal is 1/3 to 1/6 of that in Andhra Pradesh, Tamil Nadu, Karnataka or Maharashtra, while the state continues to be the front runner in industrial disputes. A big selling point of the state ‘ low cost of living’ is certainly great for retired people, but hardly an incentive for ambitious and growth-oriented people.
Lowering costs
The path to Silicon Valley from Sector 5 therefore lies in building a strong and creative partnership between private players and the Government. It is safe to predict that the overall IT/ITES sector in India will remain in a leadership position and grow, and there will be increasing competition from front running states to take a greater share of the pie. At the unit level most unfit players will be eliminated, while the fitter ones will prosper by achieving higher operational efficiencies, focussing on new verticals and new geographical areas, penetrating the domestic market, and participating in e-governance schemes. But marketing the state in the face of strong competitors will remain the biggest challenge for attracting new ventures and more investments into the state.
The IT/ITES industry is predominantly populated and led by youth, the engine of growth being the passion, creativity and innovativeness of trained young minds. Convincing aged industry leaders in chambers of commerce by statistics and presentations will have marginal effect in the long run—instead the attempt should be to create and sell the state to the youth as a ‘cool’ place, physically beautiful and intellectually stimulating. In the IT/ITES industry it is the young who lead the way; the old have no option but to follow.
Practice of law and its regulation
By M H Ahssan
Does the Best Friends agreement allow back-door entry to foreign lawyers? It perhaps does, but it is all the more important to recognise legal services as business rather than a noble profession.
Earlier this year, one of the largest global law firm Clifford Chance (CC) announced a “best friend” relationship with AZB & Partners. And sure enough, sections of the legal fraternity saw red when the announcement was made.
But CC is not the first magic circle law firm from the UK to enter such arrangements in India with domestic firms. Last year, another magic circle firm Allen & Overy (A&O) forged a similar relationship with Trilegal, a firm set up by a group of young lawyers. Linklaters, which belongs to the same league, precedes both CC and A&O in India. The firm has been working with Mumbai-based Talwar Thakore & Associates for about two years now and last August it tied up with Dhall Law Chambers, an outfit floated by former Competition Commission member Vinod Dhall.
There are several similar arrangements in existence between foreign and domestic law firms, a few in niche areas such as insurance laws. Legal circles are abuzz with stories of a few other large foreign law firms that have relocated partners of Indian origin from offices in London to India, helped them set up firms in their individual names and even bankrolled their operations. Such firms are said to be a front for the foreign firm, in a country where only its citizens, holding law degree from recognised colleges and universities, and enrolled with a bar council of a state, can practice.
There is ambiguity whether “best friends” agreement or exclusive referral relationships are allowed between domestic firms and foreign law firms. Sections of the legal circle, particularly those favouring liberalisation of legal services, contend that there is nothing in the Advocates Act, 1961 read with the Bar Council of India (BCI) rules to prevent such cooperations between firms. That is because such agreements are clean in legal terms—there is no joint venture or sharing of profits or fees for cross referrals and the Indian firms have standalone balance sheet. Besides, most of the best friends/referral relationship are non-exclusive in nature, ie, notwithstanding an arrangement between a domestic and a foreign firm, neither are necessarily bound to refer their clients to each other for cross border transactions.
On the other hand, those opposed to such arrangements, which includes many top commercial law firms, argue that these arrangements facilitate foreign legal firms backdoor entry into India. The Society for India Law Firms (SILF) in a statement issued after a late February meeting—incidentally just a month after CC-AZB relationship was announced—said: “SILF is strongly opposed to the entry of foreign law firms into India, by any means, direct or indirect, implicit or explicit, surrogate or otherwise by whatever name called including but not limited to referral arrangements, co-operation agreements, best friend arrangements or the like.”
The BCI too is opposed to permitting foreign lawyers to practice in India (The council regulates only individual lawyers and not firms). And, it has made its stand clear in an affidavit before Mumbai High Court in an ongoing case filed by Lawyers’ Collective (originally in 1995) opposing entry of foreign firms. Sure enough, SILF and the BCI are opposing entry of foreign lawyers and law firms for different reasons. The BCI’s opposition arises primarily from regulatory and disciplinary concerns while that of SILF comes from fears of losing clients and talent to the large foreign firms.
“It will be a battle of unequals,” states Kochhar & Co chairman and managing partner Rohit Kochhar, adding, “The Indian firms do not have deep pockets and cannot compete with its foreign counterparts on recruitment, marketing strategy and sophistication of business development.”
Pro-liberalisation lawyers such as Fox-Mandal Little managing partner Som Mandal, however, interpret extant regulations to say that any foreign law firm can open 100% consultancy and confine themselves to practice of foreign law. “But it is wrong when these firms hire Indian lawyers to advice on Indian laws.” Anyway, the Mumbai High Court is due to set to give its verdict on entry of foreign law firms soon.
Further, even if the verdict favours foreign law firms, India is unlikely to liberalise legal services immediately, although some easing is likely in due course. Informal relationships such as cross referral/best friends agreements benefits both parties as well as clients. In particular, young firms stand to gain the most from such associations. “Rather than learning the ropes by a hit-and-trial method, which would mean we take about 30-40 years to get to any degree of sophistication, such relationships help us avoid reinventing the wheel,” says Trilegal partner Anand Prasad. His firm has gained in the form of inputs on technology deployment, training and administration since the relationship was forged. Young lawyers from Trilegal are sent on secondment to A&O offices for 3-6 months to upgrade their legal skills, much of which otherwise is picked up on the job. But these relationships do have their flip side. Some competitors of A&O, who have referred work to Trilegal, have become chary doing so now. But that was bound to happen, even when agreements are non-exclusive.
Some of the opposition to liberalisation will get watered down if the BCI were to amend its rules. One of the grouse of Indian law firms is that they are not allowed to advertise, have marketing material, brochures or business development group. The restriction on hosting a website was lifted only last year, but there too, the council is behind the curve. As the council recognises and regulates only individuals and not firms, individuals are allowed to have website where only basic information can be published.
Limitation on size of partnership is another matter—The Indian Partnership Act, 1932, allows a firm to have only 20 partners. The Limited Liability Act, 2008, should provide some respite on that although BCI has some reservation. The BCI chairman Suraj Narain Prasad Sihna felt that LLP will allow back door entry to foreign lawyers. Nevertheless, the BCI has planned to meet after the general elections to consider demands for liberalisation of the service, take a view on referral agreements and spell out what is allowed within the definition of practice of law, Sihna said.
But, a real change in regulation and liberalisation of legal service can happen only when the profession is also recognised as a business instead of just a noble profession.
Does the Best Friends agreement allow back-door entry to foreign lawyers? It perhaps does, but it is all the more important to recognise legal services as business rather than a noble profession.
Earlier this year, one of the largest global law firm Clifford Chance (CC) announced a “best friend” relationship with AZB & Partners. And sure enough, sections of the legal fraternity saw red when the announcement was made.
But CC is not the first magic circle law firm from the UK to enter such arrangements in India with domestic firms. Last year, another magic circle firm Allen & Overy (A&O) forged a similar relationship with Trilegal, a firm set up by a group of young lawyers. Linklaters, which belongs to the same league, precedes both CC and A&O in India. The firm has been working with Mumbai-based Talwar Thakore & Associates for about two years now and last August it tied up with Dhall Law Chambers, an outfit floated by former Competition Commission member Vinod Dhall.
There are several similar arrangements in existence between foreign and domestic law firms, a few in niche areas such as insurance laws. Legal circles are abuzz with stories of a few other large foreign law firms that have relocated partners of Indian origin from offices in London to India, helped them set up firms in their individual names and even bankrolled their operations. Such firms are said to be a front for the foreign firm, in a country where only its citizens, holding law degree from recognised colleges and universities, and enrolled with a bar council of a state, can practice.
There is ambiguity whether “best friends” agreement or exclusive referral relationships are allowed between domestic firms and foreign law firms. Sections of the legal circle, particularly those favouring liberalisation of legal services, contend that there is nothing in the Advocates Act, 1961 read with the Bar Council of India (BCI) rules to prevent such cooperations between firms. That is because such agreements are clean in legal terms—there is no joint venture or sharing of profits or fees for cross referrals and the Indian firms have standalone balance sheet. Besides, most of the best friends/referral relationship are non-exclusive in nature, ie, notwithstanding an arrangement between a domestic and a foreign firm, neither are necessarily bound to refer their clients to each other for cross border transactions.
On the other hand, those opposed to such arrangements, which includes many top commercial law firms, argue that these arrangements facilitate foreign legal firms backdoor entry into India. The Society for India Law Firms (SILF) in a statement issued after a late February meeting—incidentally just a month after CC-AZB relationship was announced—said: “SILF is strongly opposed to the entry of foreign law firms into India, by any means, direct or indirect, implicit or explicit, surrogate or otherwise by whatever name called including but not limited to referral arrangements, co-operation agreements, best friend arrangements or the like.”
The BCI too is opposed to permitting foreign lawyers to practice in India (The council regulates only individual lawyers and not firms). And, it has made its stand clear in an affidavit before Mumbai High Court in an ongoing case filed by Lawyers’ Collective (originally in 1995) opposing entry of foreign firms. Sure enough, SILF and the BCI are opposing entry of foreign lawyers and law firms for different reasons. The BCI’s opposition arises primarily from regulatory and disciplinary concerns while that of SILF comes from fears of losing clients and talent to the large foreign firms.
“It will be a battle of unequals,” states Kochhar & Co chairman and managing partner Rohit Kochhar, adding, “The Indian firms do not have deep pockets and cannot compete with its foreign counterparts on recruitment, marketing strategy and sophistication of business development.”
Pro-liberalisation lawyers such as Fox-Mandal Little managing partner Som Mandal, however, interpret extant regulations to say that any foreign law firm can open 100% consultancy and confine themselves to practice of foreign law. “But it is wrong when these firms hire Indian lawyers to advice on Indian laws.” Anyway, the Mumbai High Court is due to set to give its verdict on entry of foreign law firms soon.
Further, even if the verdict favours foreign law firms, India is unlikely to liberalise legal services immediately, although some easing is likely in due course. Informal relationships such as cross referral/best friends agreements benefits both parties as well as clients. In particular, young firms stand to gain the most from such associations. “Rather than learning the ropes by a hit-and-trial method, which would mean we take about 30-40 years to get to any degree of sophistication, such relationships help us avoid reinventing the wheel,” says Trilegal partner Anand Prasad. His firm has gained in the form of inputs on technology deployment, training and administration since the relationship was forged. Young lawyers from Trilegal are sent on secondment to A&O offices for 3-6 months to upgrade their legal skills, much of which otherwise is picked up on the job. But these relationships do have their flip side. Some competitors of A&O, who have referred work to Trilegal, have become chary doing so now. But that was bound to happen, even when agreements are non-exclusive.
Some of the opposition to liberalisation will get watered down if the BCI were to amend its rules. One of the grouse of Indian law firms is that they are not allowed to advertise, have marketing material, brochures or business development group. The restriction on hosting a website was lifted only last year, but there too, the council is behind the curve. As the council recognises and regulates only individuals and not firms, individuals are allowed to have website where only basic information can be published.
Limitation on size of partnership is another matter—The Indian Partnership Act, 1932, allows a firm to have only 20 partners. The Limited Liability Act, 2008, should provide some respite on that although BCI has some reservation. The BCI chairman Suraj Narain Prasad Sihna felt that LLP will allow back door entry to foreign lawyers. Nevertheless, the BCI has planned to meet after the general elections to consider demands for liberalisation of the service, take a view on referral agreements and spell out what is allowed within the definition of practice of law, Sihna said.
But, a real change in regulation and liberalisation of legal service can happen only when the profession is also recognised as a business instead of just a noble profession.
Do direct taxes counteract fiscal stimulus?
By M H Ahssan
The rate of growth of advance (direct) tax collection this fiscal has been almost at par with that in 2007-08, despite a drop in GDP growth of 2.5 percentage points or so. As per figures up to mid-March, the year-on-year growth in advance tax payments stood at 17.5% this fiscal, as compared to 18.5% in the corresponding period of the previous year. Till the second quarter of this fiscal, the payments had indeed been robust but a slippage was visible in the third quarter. However, revenue officials claim that the trend thus far in the current quarter denotes a ‘slight improvement’.
Corporate taxpayers must have over-estimated their likely income flows in the year as is evident from the growth in advance tax payments during the initial two quarters of this fiscal, but those who pay personal income tax (PIT) had been more prognostic. While advance tax payments of corporation tax showed an year-on-year growth of 17% at Rs 1.23 lakh crore as on March 17 this year, such payments from individual taxpayers were just Rs 21,415 crore during the period, 20% lower than the amount paid by this category of taxpayers in the year-ago period. Advance FBT (fringe benefit tax) payments partly compensated for the decline in personal income tax with an year-on-year growth of over 30%. Interestingly, through TDS (tax deducted at source) in which the share of PIT is larger than that of corporation tax, the revenue department collected Rs 64,800 crore till March 17, up 17% over the year ago period.
Another feature of the direct tax collection trend is that the Revenue has apparently turned wary of allowing refunds. Despite a 15% growth in gross direct tax collection up to March 17, at Rs 3.43 lakh crore, the total refund to all categories of taxpayers stood at Rs 32,484 crore in the period, down about 10% from Rs 35,990 crore in the corresponding period a year ago. This has helped the Revenue to keep the net collection rather impressive at about Rs 3.2 lakh crore (inclusive of the ‘central TDS’), as against Rs 2.6 lakh crore in the year ago period, which represents a 23% growth. Less refunds would mean less disposable income in the hands of the taxpayer—a factor that limits fiscal expansion, the government’s stated policy at this juncture, albeit marginally. One can say that while the government has tinkered with the rates of indirect taxes for giving fiscal stimuli to the economy, the direct taxes were a tool in its hands to calibrate the stimulation, if not counteract it.
Revenue officials say they are confident of ‘meeting’ this year’s RE (revised estimate) of Rs 3.48 lakh crore as far as net collection is concerned. This will be 13% higher than last year’s net collection of Rs 3.09 crore.
They are relying on the ‘slight improvement’ in tax payments since the third quarter and an augmented collection drive. But a CBDT official told ET that faster accounting enabled by e-payments must also have contributed to what is being perceived as a slowing of the declining trend in collection. It is likely that companies that had over-paid their taxes in the initial months of this fiscal through the advance tax window must actually scale down payments in the last quarter. So the traditional flurry in the last two weeks of the fiscal might be of much less intensity this time around. Yet, the RE could be met.
However, the budget estimate of Rs 3.8 lakh crore for next fiscal (2009-01) as stated in the UPA government’s interim Budget appears over-ambitious, given the state of the economy. When economy grew at 9% over a similar growth base, the direct tax collection had risen by about 35%, as was seen in 2007-08. As the economic growth slipped from there to 6.5% or so (which is a 27% decline), the growth in direct tax collection seems to decline steeper—from a growth of 35% to just 13%, which is a 62% fall.
So, if the economic growth declines further to 5-6% in the next fiscal as many economists now predict, the growth in direct tax collection could be almost flat if not negative. It would be near impossible to achieve a net collection of Rs 3.8 lakh crore next fiscal as it demands a 10% growth. It is very likely that the Revenue, in its enthusiasm to prevent collection growth from falling too much, will turn more and more stingy with regard to refund pleas.
The rate of growth of advance (direct) tax collection this fiscal has been almost at par with that in 2007-08, despite a drop in GDP growth of 2.5 percentage points or so. As per figures up to mid-March, the year-on-year growth in advance tax payments stood at 17.5% this fiscal, as compared to 18.5% in the corresponding period of the previous year. Till the second quarter of this fiscal, the payments had indeed been robust but a slippage was visible in the third quarter. However, revenue officials claim that the trend thus far in the current quarter denotes a ‘slight improvement’.
Corporate taxpayers must have over-estimated their likely income flows in the year as is evident from the growth in advance tax payments during the initial two quarters of this fiscal, but those who pay personal income tax (PIT) had been more prognostic. While advance tax payments of corporation tax showed an year-on-year growth of 17% at Rs 1.23 lakh crore as on March 17 this year, such payments from individual taxpayers were just Rs 21,415 crore during the period, 20% lower than the amount paid by this category of taxpayers in the year-ago period. Advance FBT (fringe benefit tax) payments partly compensated for the decline in personal income tax with an year-on-year growth of over 30%. Interestingly, through TDS (tax deducted at source) in which the share of PIT is larger than that of corporation tax, the revenue department collected Rs 64,800 crore till March 17, up 17% over the year ago period.
Another feature of the direct tax collection trend is that the Revenue has apparently turned wary of allowing refunds. Despite a 15% growth in gross direct tax collection up to March 17, at Rs 3.43 lakh crore, the total refund to all categories of taxpayers stood at Rs 32,484 crore in the period, down about 10% from Rs 35,990 crore in the corresponding period a year ago. This has helped the Revenue to keep the net collection rather impressive at about Rs 3.2 lakh crore (inclusive of the ‘central TDS’), as against Rs 2.6 lakh crore in the year ago period, which represents a 23% growth. Less refunds would mean less disposable income in the hands of the taxpayer—a factor that limits fiscal expansion, the government’s stated policy at this juncture, albeit marginally. One can say that while the government has tinkered with the rates of indirect taxes for giving fiscal stimuli to the economy, the direct taxes were a tool in its hands to calibrate the stimulation, if not counteract it.
Revenue officials say they are confident of ‘meeting’ this year’s RE (revised estimate) of Rs 3.48 lakh crore as far as net collection is concerned. This will be 13% higher than last year’s net collection of Rs 3.09 crore.
They are relying on the ‘slight improvement’ in tax payments since the third quarter and an augmented collection drive. But a CBDT official told ET that faster accounting enabled by e-payments must also have contributed to what is being perceived as a slowing of the declining trend in collection. It is likely that companies that had over-paid their taxes in the initial months of this fiscal through the advance tax window must actually scale down payments in the last quarter. So the traditional flurry in the last two weeks of the fiscal might be of much less intensity this time around. Yet, the RE could be met.
However, the budget estimate of Rs 3.8 lakh crore for next fiscal (2009-01) as stated in the UPA government’s interim Budget appears over-ambitious, given the state of the economy. When economy grew at 9% over a similar growth base, the direct tax collection had risen by about 35%, as was seen in 2007-08. As the economic growth slipped from there to 6.5% or so (which is a 27% decline), the growth in direct tax collection seems to decline steeper—from a growth of 35% to just 13%, which is a 62% fall.
So, if the economic growth declines further to 5-6% in the next fiscal as many economists now predict, the growth in direct tax collection could be almost flat if not negative. It would be near impossible to achieve a net collection of Rs 3.8 lakh crore next fiscal as it demands a 10% growth. It is very likely that the Revenue, in its enthusiasm to prevent collection growth from falling too much, will turn more and more stingy with regard to refund pleas.
Why disinflation doesn’t militate against an investment binge?
By M H Ahssan
It’s a myth that inflation is good for stepping up investment. In fact, given the disinflationary price situation, it makes sense to fastforward capital investments now.
It's generally the case that money can’t buy everything—for instance, what it did ten years ago! Price inflation can and does queer the pitch. It is notable that the inflation rate as measured by the wholesale price index (WPI), has dropped to 0.44% in early March (over the like period last year). It implies that producer prices are now just about flat, year on year.
The drop in the inflation rate has implications for policy formulation, and for investment and consumption behaviour quite across the board. Besides, the price index needs updating too.
The falling inflation rate means that we are in a disinflationary scenario, what with the rate of inflation coming down quite dramatically year-on-year. The sharp drop in global crude oil prices in the past one year seems to have much affected domestic WPI figures. It is true that during the period, retail prices of the main oil products like diesel and petrol have remained rather sticky.
But the lack of sustained price revision—despite record imported costs of crude—appear to have built up inflationary expectations, and which have now thoroughly abated it would seem. In any case, oil price changes do affect—in various degrees—most sectors of the economy. For instance, crude prices heavily impact other commodities in myriad ways, including of metals and chemicals. It is only a fact that the latter two sectors have the most weightage in the basket of commodities that make up the WPI (base year 1993-94). Hence the steep fall in the y-o-y WPI inflation rate. It implies that weighted average producer prices, on the whole, are little changed from last year.
However, there are sectoral differences in price behaviour within the WPI, with food prices, for example, buoyant. So we’re not in a price environment that can be labelled deflationary—characterised by falling prices and output. Yet the drop in the inflation rate, or a regime of disinflation, would change relative prices. For instance, producers may want to decelerate output given the weak trend in prices. The way ahead for policy is to estimate the “sacrifice ratio,” the quantity of output effectively “lost” for each percentage point reduction in the inflation rate.
The ratio actually measures the sum of the differences between the logs of trend and actual output divided by the change in trend inflation, in a given episode of disinflation. It can be deemed as the output loss (read cost) of reducing inflation. Note, though, that it’s not a true cost.
The sacrifice ratio seems to be much in evidence in the high-income mature economies. Hence the call for low, steady inflation rates to incentivise output, efficiency improvement and keep the economic engine well oiled, as it were.
But it is worth finding out whether the sacrifice ratio is indeed a fact in India, and if so, to what extent. The fact remains that since the nineteen nineties, the average inflation rate has considerably declined even as output has surged.
But then, it’s a myth that inflation is good for stepping up investment and therefore for revving up the economic growth momentum. Actually, the opposite seems to be the case as price stability does appear to boost the very process of capital formation. The negative effects of inflation on wage-good prices, savings and investment is a fact. Just as important, disinflation can well accelerate capital formation, by significantly improving the tax treatment of productive equipment by way of increasing the present value of depreciation benefits.
Note that the effective tax rate on new investments in a corporate setting is a function of the present value of depreciation schedules, which, in turn depends on the nominal discount rate. And the prevailing discount rates would willy-nilly fall point for point with the inflation rate.
It would result in the increase in the present value of depreciation deductions on plant and machinery. In recent years there’s been much discussions in policy circles here to step up investment and the coagulation of funds by way of proactive tax incentives and the like. But the point is that disinflation would achieve much the same result!
So, given the disinflationary price situation, it actually makes sense to fastforward capital investments. The Centre has ownership and controlling stake in several large companies and it would make policy sense to boost capital investments in the public sector. It would result in a multiplier effect economy-wide and generally increase productive capacity as well. Besides, the Indian economy is now more globalised than ever, and a domestic disinflation scenario would add to our competitive advantage.
It is true that inflation does transfer real assets from creditors to debtors read borrowers, as the latter need to pay back less in inflation-adjusted terms. And to the extent that disinflation reverses the process, it has its costs.
Whatever its merits in the short run, inflation can hardly be viewed as a desirable long-term instrument of redistribution or of investment and growth. Meanwhile, the base year for the WPI needs to be revised and made up-to-date, and the included range of goods enlarged.
It’s a myth that inflation is good for stepping up investment. In fact, given the disinflationary price situation, it makes sense to fastforward capital investments now.
It's generally the case that money can’t buy everything—for instance, what it did ten years ago! Price inflation can and does queer the pitch. It is notable that the inflation rate as measured by the wholesale price index (WPI), has dropped to 0.44% in early March (over the like period last year). It implies that producer prices are now just about flat, year on year.
The drop in the inflation rate has implications for policy formulation, and for investment and consumption behaviour quite across the board. Besides, the price index needs updating too.
The falling inflation rate means that we are in a disinflationary scenario, what with the rate of inflation coming down quite dramatically year-on-year. The sharp drop in global crude oil prices in the past one year seems to have much affected domestic WPI figures. It is true that during the period, retail prices of the main oil products like diesel and petrol have remained rather sticky.
But the lack of sustained price revision—despite record imported costs of crude—appear to have built up inflationary expectations, and which have now thoroughly abated it would seem. In any case, oil price changes do affect—in various degrees—most sectors of the economy. For instance, crude prices heavily impact other commodities in myriad ways, including of metals and chemicals. It is only a fact that the latter two sectors have the most weightage in the basket of commodities that make up the WPI (base year 1993-94). Hence the steep fall in the y-o-y WPI inflation rate. It implies that weighted average producer prices, on the whole, are little changed from last year.
However, there are sectoral differences in price behaviour within the WPI, with food prices, for example, buoyant. So we’re not in a price environment that can be labelled deflationary—characterised by falling prices and output. Yet the drop in the inflation rate, or a regime of disinflation, would change relative prices. For instance, producers may want to decelerate output given the weak trend in prices. The way ahead for policy is to estimate the “sacrifice ratio,” the quantity of output effectively “lost” for each percentage point reduction in the inflation rate.
The ratio actually measures the sum of the differences between the logs of trend and actual output divided by the change in trend inflation, in a given episode of disinflation. It can be deemed as the output loss (read cost) of reducing inflation. Note, though, that it’s not a true cost.
The sacrifice ratio seems to be much in evidence in the high-income mature economies. Hence the call for low, steady inflation rates to incentivise output, efficiency improvement and keep the economic engine well oiled, as it were.
But it is worth finding out whether the sacrifice ratio is indeed a fact in India, and if so, to what extent. The fact remains that since the nineteen nineties, the average inflation rate has considerably declined even as output has surged.
But then, it’s a myth that inflation is good for stepping up investment and therefore for revving up the economic growth momentum. Actually, the opposite seems to be the case as price stability does appear to boost the very process of capital formation. The negative effects of inflation on wage-good prices, savings and investment is a fact. Just as important, disinflation can well accelerate capital formation, by significantly improving the tax treatment of productive equipment by way of increasing the present value of depreciation benefits.
Note that the effective tax rate on new investments in a corporate setting is a function of the present value of depreciation schedules, which, in turn depends on the nominal discount rate. And the prevailing discount rates would willy-nilly fall point for point with the inflation rate.
It would result in the increase in the present value of depreciation deductions on plant and machinery. In recent years there’s been much discussions in policy circles here to step up investment and the coagulation of funds by way of proactive tax incentives and the like. But the point is that disinflation would achieve much the same result!
So, given the disinflationary price situation, it actually makes sense to fastforward capital investments. The Centre has ownership and controlling stake in several large companies and it would make policy sense to boost capital investments in the public sector. It would result in a multiplier effect economy-wide and generally increase productive capacity as well. Besides, the Indian economy is now more globalised than ever, and a domestic disinflation scenario would add to our competitive advantage.
It is true that inflation does transfer real assets from creditors to debtors read borrowers, as the latter need to pay back less in inflation-adjusted terms. And to the extent that disinflation reverses the process, it has its costs.
Whatever its merits in the short run, inflation can hardly be viewed as a desirable long-term instrument of redistribution or of investment and growth. Meanwhile, the base year for the WPI needs to be revised and made up-to-date, and the included range of goods enlarged.
Editorial: The fall of the holy trinity
By M H Ahssan
The UPA government arguably had the best economic team, raising the hope that it will go ahead with economic reforms. However, the ‘holy trinity of reformers’ failed to live up to expectations.
Future historians will, no doubt, applaud Dr Manmohan Singh for his contributions to building a modern economy as finance minister and to freeing India of nuclear apartheid as prime minister. But they will also record the setback to reforms during his tenure as prime minister.
The National Democratic Alliance (NDA) had contested the general election in May 2004 on a pro-reform platform. Therefore, many in the Congress interpreted its defeat as the rejection of reforms by voters. Prospects for reforms under the incoming Congress-led United Progressive Alliance (UPA) looked bleak.
Yet, when Mrs Sonia Gandhi decided to step aside in favour of Dr Manmohan Singh as prime minister, reform advocates saw a ray hope. As finance minister under Prime Minister Narasimha Rao, Dr Singh had earned the title of the chief architect of India’s economic reforms. The appointments of Messrs P Chidambaram and Montek Ahluwalia as finance Minister and deputy chairman, Planning Commission, respectively, completed what many came to call the “holy trinity” of reformers.
Sadly, however, reforms did not takeoff. The Common Minimum Programme (CMP) the UPA negotiated with its allies ruled out key labour-market reforms at the outset. As for many other reforms, Mrs Sonia Gandhi held back Dr Singh’s hand. She had him appoint the National Advisory Council (NAC) under her chairmanship with statutory powers to oversee the implementation of the CMP. Mrs Gandhi also ran the NAC from a location outside of the Prime Minister’s Office, making it easier for the anti-reform lobby within the Congress, which had lost out to Dr Singh’s reforms in the early 1990s, to regroup. The Left Front parties also found it convenient to work with Mrs Gandhi rather than Dr Singh. The National Rural Employment Guarantee (NREG) Scheme, UPA’s flagship policy initiative, was crafted entirely in the NAC. The legislation on special economic zones, another important UPA accomplishment, was stripped of its key labour-market reforms embedded in the original NDA Bill.
For his part, early in the term, former finance minister Chidambaram made the completion of the ongoing pension reform a high priority. Five years later, the Pension Fund Regulatory and Development Authority Bill still awaits passage in Parliament. Further opening of the insurance sector, another item on the finance minister’s list of reforms from the outset, has suffered the same fate. The minister’s main reform successes have been trimming the small-scale industries reservation list and moving trade liberalisation forward but these reforms too have come to a standstill in the last two budgets.
The greatest disappointment from the UPA has come in the area of infrastructure (except civil aviation and railways, which are both led by dynamic ministers). The need for building the country’s roads, ports and airports at an accelerated pace had been well recognised when the UPA came to power; undertaking this task did not require any controversial legislation; and the UPA had the unusual opportunity to build on the success the NDA had already achieved.
Thus, in December 2000, the NDA had launched the process of building up the country’s highway system through Phase I of the National Highway Development Programme (NHDP). In less than 15 months, it managed to award all but one contract to convert 5,846 km of Golden Quadrilateral highway into four lanes. By November 30, 2004, less than six months after the NDA left office, work on 4,203 km had been completed. The NHDP I also included the conversion of 981 km of a total of 7,498 km of road on North-South and East-West (NSEW) highways to four lanes. By March 31, 2004, work had been completed on 588 km and was under implementation on another several hundred kilometres.
Therefore, when the UPA came to power in May 2004, it had a solid base on which to build. By all indications, the UPA was keen to seize this opportunity. It moved swiftly to appoint the Committee on Infrastructure on August 31, 2004 under the chairmanship of the PM with its secretariat at the Planning Commission.
But sadly, through Committee on Infrastructure, the Planning Commission became a major obstacle to progress. Notwithstanding the fact that the NDA had given out hundreds of successful contracts for work on thousands of kilometres of road and that even UPA had issued 33 contracts for work on 2,000 kilometres of roads in its first few months using the documents it inherited from the NDA, beginning in early 2005, the Planning Commission forbid the National Highway Authority of India from issuing new contracts until the Committee on Infrastructure came up with its new “Model Concession Agreement” (MCA).
As Mamuni Das noted in an excellent recent article, it was not until late 2006 that the Committee on Infrastructure came out with its new MCA. Even then the contracting process could not move smoothly forward. In mid-2007, a new model Request for Qualifications document — another key document necessary to complete contracting process — was introduced. Road developers found the new model document objectionable and took the matter to the court.
The delays by the Planning Commission were compounded by a whimsical road transport and highways minister who frequently meddled in the affairs of the National Highway Authority of India, appointing as many as five chairmen to it in half as many years. Sadly, Prime Minister Singh seems not to have intervened to resolve the conflicts. This was unlike Prime Minister Vajpayee who often used his authority to settle conflicts among feuding arms of his government.
In June 2004, economist Shankar Acharya wrote about “good men” in the UPA Cabinet — Dr Singh, Mr Chidambaram and Mr Ahluwalia — arguing ‘it would be difficult, perhaps impossible, to conceive a stronger economic top team.’ Four years later, in September 2008, when he returned to the theme of “a few good men” assisting god look after India, his list had shrunken: this time around, it only included Dr Singh from the original list for securing the nuclear deal against all odds plus the newcomer Dr Y V Reddy who had served with great distinction as the governor of the Reserve Bank of India.
The UPA government arguably had the best economic team, raising the hope that it will go ahead with economic reforms. However, the ‘holy trinity of reformers’ failed to live up to expectations.
Future historians will, no doubt, applaud Dr Manmohan Singh for his contributions to building a modern economy as finance minister and to freeing India of nuclear apartheid as prime minister. But they will also record the setback to reforms during his tenure as prime minister.
The National Democratic Alliance (NDA) had contested the general election in May 2004 on a pro-reform platform. Therefore, many in the Congress interpreted its defeat as the rejection of reforms by voters. Prospects for reforms under the incoming Congress-led United Progressive Alliance (UPA) looked bleak.
Yet, when Mrs Sonia Gandhi decided to step aside in favour of Dr Manmohan Singh as prime minister, reform advocates saw a ray hope. As finance minister under Prime Minister Narasimha Rao, Dr Singh had earned the title of the chief architect of India’s economic reforms. The appointments of Messrs P Chidambaram and Montek Ahluwalia as finance Minister and deputy chairman, Planning Commission, respectively, completed what many came to call the “holy trinity” of reformers.
Sadly, however, reforms did not takeoff. The Common Minimum Programme (CMP) the UPA negotiated with its allies ruled out key labour-market reforms at the outset. As for many other reforms, Mrs Sonia Gandhi held back Dr Singh’s hand. She had him appoint the National Advisory Council (NAC) under her chairmanship with statutory powers to oversee the implementation of the CMP. Mrs Gandhi also ran the NAC from a location outside of the Prime Minister’s Office, making it easier for the anti-reform lobby within the Congress, which had lost out to Dr Singh’s reforms in the early 1990s, to regroup. The Left Front parties also found it convenient to work with Mrs Gandhi rather than Dr Singh. The National Rural Employment Guarantee (NREG) Scheme, UPA’s flagship policy initiative, was crafted entirely in the NAC. The legislation on special economic zones, another important UPA accomplishment, was stripped of its key labour-market reforms embedded in the original NDA Bill.
For his part, early in the term, former finance minister Chidambaram made the completion of the ongoing pension reform a high priority. Five years later, the Pension Fund Regulatory and Development Authority Bill still awaits passage in Parliament. Further opening of the insurance sector, another item on the finance minister’s list of reforms from the outset, has suffered the same fate. The minister’s main reform successes have been trimming the small-scale industries reservation list and moving trade liberalisation forward but these reforms too have come to a standstill in the last two budgets.
The greatest disappointment from the UPA has come in the area of infrastructure (except civil aviation and railways, which are both led by dynamic ministers). The need for building the country’s roads, ports and airports at an accelerated pace had been well recognised when the UPA came to power; undertaking this task did not require any controversial legislation; and the UPA had the unusual opportunity to build on the success the NDA had already achieved.
Thus, in December 2000, the NDA had launched the process of building up the country’s highway system through Phase I of the National Highway Development Programme (NHDP). In less than 15 months, it managed to award all but one contract to convert 5,846 km of Golden Quadrilateral highway into four lanes. By November 30, 2004, less than six months after the NDA left office, work on 4,203 km had been completed. The NHDP I also included the conversion of 981 km of a total of 7,498 km of road on North-South and East-West (NSEW) highways to four lanes. By March 31, 2004, work had been completed on 588 km and was under implementation on another several hundred kilometres.
Therefore, when the UPA came to power in May 2004, it had a solid base on which to build. By all indications, the UPA was keen to seize this opportunity. It moved swiftly to appoint the Committee on Infrastructure on August 31, 2004 under the chairmanship of the PM with its secretariat at the Planning Commission.
But sadly, through Committee on Infrastructure, the Planning Commission became a major obstacle to progress. Notwithstanding the fact that the NDA had given out hundreds of successful contracts for work on thousands of kilometres of road and that even UPA had issued 33 contracts for work on 2,000 kilometres of roads in its first few months using the documents it inherited from the NDA, beginning in early 2005, the Planning Commission forbid the National Highway Authority of India from issuing new contracts until the Committee on Infrastructure came up with its new “Model Concession Agreement” (MCA).
As Mamuni Das noted in an excellent recent article, it was not until late 2006 that the Committee on Infrastructure came out with its new MCA. Even then the contracting process could not move smoothly forward. In mid-2007, a new model Request for Qualifications document — another key document necessary to complete contracting process — was introduced. Road developers found the new model document objectionable and took the matter to the court.
The delays by the Planning Commission were compounded by a whimsical road transport and highways minister who frequently meddled in the affairs of the National Highway Authority of India, appointing as many as five chairmen to it in half as many years. Sadly, Prime Minister Singh seems not to have intervened to resolve the conflicts. This was unlike Prime Minister Vajpayee who often used his authority to settle conflicts among feuding arms of his government.
In June 2004, economist Shankar Acharya wrote about “good men” in the UPA Cabinet — Dr Singh, Mr Chidambaram and Mr Ahluwalia — arguing ‘it would be difficult, perhaps impossible, to conceive a stronger economic top team.’ Four years later, in September 2008, when he returned to the theme of “a few good men” assisting god look after India, his list had shrunken: this time around, it only included Dr Singh from the original list for securing the nuclear deal against all odds plus the newcomer Dr Y V Reddy who had served with great distinction as the governor of the Reserve Bank of India.
CONGRESS LACKS ALLIANCE SENSE
By M H Ahssan
Party general secretary Rahul Gandhi ignites a fresh confrontation by saying that tie-ups in UP and Bihar were detrimental
LALU LABELS GRAND OLD PARTY AS SPENT FORCE IN COW BELT
With the congress alliance built around a shared view of secularism now in disarray, the grand old party and its ‘allies’ are engaged in a political trapeze to pull down each other. While Lalu Prasad Yadav, the ‘secular icon’ in the UPA, has been labelling the Congress as a spent force in the cow belt, Congress general secretary Rahul Gandhi on Wednesday ignited a fresh confrontation by saying that the alliances in UP and Bihar were detrimental to his party’s interests. In the process, the Congress, which is in need of regional crutches to retain power at the Centre, demonstrated that alliance politics is still not in its DNA.
To be fair to Mr Gandhi, he was stating a political truth — that regional players will not allow any intervention into the space occupied by them. It was the disintegration of the Congress’ rainbow coalition that led to the surge of the subaltern in the cow belt. The response for the Congress’s demand for a bigger electoral pie from the allies show their anxiety to zealously guard their respective votebanks. In any case, there has been no meaningul enagagement between the Congress and the voters of the cow belt in the past few years — something that is required to force the electorate to opt for the Congress as a political option.
But terming the alliance ‘detrimental’ to the interests of the Congress on the election eve does not make much political sense as the road to South Block passes through Uttar Pradesh, Bihar and other important states that are under the sway of regional parties.
The Congress, which was successful in networking with these forces, now does not have important allies in many states. While the Tamil Nadu alliance that helped the Congress’ Delhi power project in 2004 is in tatters, its existing allies — the NCP and the Trinamool Congress — are determined to undercut the Congress’ influence. If a coalition is a coperative relationship based on mutual respect and confidence, the UPA in its present form does not fit the bill.
What can complicate things further for the Congress is the fact that “pique” has replaced a cogent political strategy to deal with the allies. The Congress spokesman, who lashed out at Mr Yadav on Wednesday, said the blame for a split in the “secular votes” will fall at the RJD’s footsteps. Mr yadav retaliated by saying
that the Congress will experience its real worth in the Hindi heartland after the elections. “I do not blame Sonia Gandhi. But her party is run by Munshis and managers,” he said hinting that political content was missing in its decision-making.
But the splintering of the UPA could lead to the revival of anti-Congressism that looked politically irrelevant after the UPA experminent and the enthuisiastic engagement between the Congress and the regional parties. Although the chief regional players are claiming that they will aid the formation of a government under Manmohan Singh, these public expressions of solidarity have more to do with preventing the possibility of any split in the Muslim votes. The goings on in the Capital clearly suggest that leaders like Mulayam Singh Yadav, Amar Singh and Sharad Pawar are working on a political realignment after the elections that would essentially lead to a diminished role for the Congress.
Mr Singh on Wednesday said that the two Yadavs — Lalu and Mulayam — would come together to take on those who want to challenge their political authrity in the cow belt. Parties like the Trinamool Congress are also willing allies in this exercise. Congress leaders themselves admit that there is lack of cohension in the Congress-Trinamool alliance in West Bengal.
Party general secretary Rahul Gandhi ignites a fresh confrontation by saying that tie-ups in UP and Bihar were detrimental
LALU LABELS GRAND OLD PARTY AS SPENT FORCE IN COW BELT
With the congress alliance built around a shared view of secularism now in disarray, the grand old party and its ‘allies’ are engaged in a political trapeze to pull down each other. While Lalu Prasad Yadav, the ‘secular icon’ in the UPA, has been labelling the Congress as a spent force in the cow belt, Congress general secretary Rahul Gandhi on Wednesday ignited a fresh confrontation by saying that the alliances in UP and Bihar were detrimental to his party’s interests. In the process, the Congress, which is in need of regional crutches to retain power at the Centre, demonstrated that alliance politics is still not in its DNA.
To be fair to Mr Gandhi, he was stating a political truth — that regional players will not allow any intervention into the space occupied by them. It was the disintegration of the Congress’ rainbow coalition that led to the surge of the subaltern in the cow belt. The response for the Congress’s demand for a bigger electoral pie from the allies show their anxiety to zealously guard their respective votebanks. In any case, there has been no meaningul enagagement between the Congress and the voters of the cow belt in the past few years — something that is required to force the electorate to opt for the Congress as a political option.
But terming the alliance ‘detrimental’ to the interests of the Congress on the election eve does not make much political sense as the road to South Block passes through Uttar Pradesh, Bihar and other important states that are under the sway of regional parties.
The Congress, which was successful in networking with these forces, now does not have important allies in many states. While the Tamil Nadu alliance that helped the Congress’ Delhi power project in 2004 is in tatters, its existing allies — the NCP and the Trinamool Congress — are determined to undercut the Congress’ influence. If a coalition is a coperative relationship based on mutual respect and confidence, the UPA in its present form does not fit the bill.
What can complicate things further for the Congress is the fact that “pique” has replaced a cogent political strategy to deal with the allies. The Congress spokesman, who lashed out at Mr Yadav on Wednesday, said the blame for a split in the “secular votes” will fall at the RJD’s footsteps. Mr yadav retaliated by saying
that the Congress will experience its real worth in the Hindi heartland after the elections. “I do not blame Sonia Gandhi. But her party is run by Munshis and managers,” he said hinting that political content was missing in its decision-making.
But the splintering of the UPA could lead to the revival of anti-Congressism that looked politically irrelevant after the UPA experminent and the enthuisiastic engagement between the Congress and the regional parties. Although the chief regional players are claiming that they will aid the formation of a government under Manmohan Singh, these public expressions of solidarity have more to do with preventing the possibility of any split in the Muslim votes. The goings on in the Capital clearly suggest that leaders like Mulayam Singh Yadav, Amar Singh and Sharad Pawar are working on a political realignment after the elections that would essentially lead to a diminished role for the Congress.
Mr Singh on Wednesday said that the two Yadavs — Lalu and Mulayam — would come together to take on those who want to challenge their political authrity in the cow belt. Parties like the Trinamool Congress are also willing allies in this exercise. Congress leaders themselves admit that there is lack of cohension in the Congress-Trinamool alliance in West Bengal.
Subscribe to:
Comments (Atom)