Prem Shankar Jha

Despite his advanced age of 74, and the complete absence of any material or verbal evidence that he was involved in any of his son’s affairs, the Delhi high court and Supreme Court have refused to grant bail to Chidambaram.

The ED, CBI Role is Unsurprising in Bail Denial to P. Chidambaram, Not So the Courts
Former finance minister P. Chidambaram after leaving the CBI court in New Delhi on August 22, 2019. Photo: PTI/Ravi Choudhury

On November 15, a single judge bench of the Delhi high court once again refused to grant bail to former finance and home minister P. Chidambaram in the INX Media money laundering case.

This is the fifth time, between them, that the Delhi high court and Supreme Court have refused to grant bail to a 74-year-old man whose health has deteriorated dangerously while in prison, and who is therefore even less of a “flight risk” than the prosecution tirelessly alleges him to be.

Not only did the judge, Justice Suresh Kumar Kait, refuse bail, but his verbal opinion, delivered in court and reported in the Hindu, convicted Chidambaram of a variety of crimes even before the CBI and the Enforcement Directorate had framed a case against him.

The Hindu reported that the bench

“was of the opinion that the prima facie allegations against Chidambaram are serious in nature and that he played a key and active role in the case. While declining the bail plea … the judge said granting relief to such offenders would send a wrong message”.

Please examine the phrases italicised above and reflect on the fact that this was a bail hearing, not a sentencing. Chidambaram was not “an offender”. That had yet to be proved. Nor had the government adduced, or in the mass of conjecture it had released to the media, voiced anything but a suspicion that Chidambaram may have “influenced” the Foreign Investment Promotion Board (FIPB) to overlook certain “irregularities” in the INX Media case.

Chidambaram has a legal and constitutional right to be treated as innocent until proven guilty. But the bench seemed not even to be aware of any such right.

The right is habeas corpus – in plain language, the right to freedom. The law allows this to be curtailed in exceptional circumstances. These are when the court has reason to suspect that the defendant will flee the country and escape its jurisdiction, and when there are solid grounds for believing that if left free he has the capacity to tamper with the evidence by bribing, intimidating, or killing  the prosecution’s witnesses.

What the law does not allow the prosecution to do is incarcerate a suspect before it has collected even prima facie evidence of his or her possible guilt. Even less does the law allow a government to imprison a suspect in order to give itself time to find, concoct, or coerce ‘witnesses’ into providing the evidence that it does not have.

Habeas corpus was, admittedly, a much abused right even before Modi came to power. But never before had it been used by a government to pick out and target specific political rivals, with the express purpose of wiping out all democratic opposition to itself. Yet that is exactly what the courts have made themselves a party to doing.

An examination of Justice Kait’s finding on the merits of Chidambaram’s request for bail shows that he has lifted paragraph after paragraph of the ED’s submission opposing the grant of bail, and presented them as his “Findings on the Merit,” on Chidambaram’s bail application. To say that he did not apply his mind would therefore be an understatement.

Sadly, the practice of simply allowing the ED or another prosecuting agency to,  in effect, write the decision of the high court is far from uncommon. Another Delhi high court judge did exactly the same thing in Rohit Tandon vs. The Enforcement Directorate in 2018.

The sole difference with what Justice Kait has done is that in the Rohit Tandon case, the judge copied the ED’s accusation into her judgment, which was perhaps more egregious than what Justice Kait did, which was to use it in his bail ruling.

Chidambaram is only  one  of hundreds, and if we include Kashmir , thousands,  of political leaders  and civil rights activists who are  languishing in jail without trial as the police, the CBI, or the ED search for evidence of real or imagined wrongdoing, with which to bring them to heel.

Their appeals for bail come up regularly before one high court or special judge, or another, and are routinely rejected. Is it possible that this egregious dereliction of duty is now universal in the Indian judiciary? The very thought is chilling, and its implications for democracy, and the future of our benighted country, dire.

Chidambaram’s case, however, stands out boldly even against this grim background. He was arrested by the CBI on August 21, just 16 days after the government turned Kashmir into an open-air prison, and, as of today has been in prison for nearly 100 days without any charge having been framed against him.

India’s former finance minister P. Chidambaram looks on as he leaves a court after a hearing following his arrest, in New Delhi, August 22, 2019. Photo: Reuters/Anushree Fadnavis

He is being kept in jail to give the CBI, and the Enforcement Directorate – both now complete puppets of the ruling government – time to find the evidence  that might make it possible for them to secure a conviction.

The charge levelled against him  by the CBI and the ED is that in 2007 and 2008, he allowed his son Karti Chidambaram to use his  name to persuade the Foreign Investment Promotion board to regularise a clandestine infusion of Rs 305 crore worth of foreign investment into INX Media Private Ltd. For this, he is alleged to have accepted bribes amounting to $3 million.

So much has been written about this case for so long and with so much deliberate misinformation, that it is now virtually impossible to make sense of the allegations against father and son without going back to the very beginning of the alleged scam, which was perpetrated by Peter and Indrani Mukherjea in 2007.

Here, to the best of my understanding, is what happened and how the case against them has been concocted.

In March 2007, at the height of India’s eight year economic boom, INX Media applied for permission from the Foreign Investment Promotion Board, to sell Rs 4.62 million equity and preference shares with  a face value of Rs 10 each to foreign investors . The Mukherjeas also applied for permission to invest a part of the proceeds in buying a controlling stake in a second company they wanted to establish called INX News Ltd.

In May 2007, the FIPB gave them permission to sell the 4.62 million  shares but told them that they needed to make  a separate, application for permission to create INX News. But by then, the Mukherjeas  had put the new shares on the market, so the sale proceeds had begun to flow in. But what came in was not Rs. 4.62 crore, the figure that the government and the media have been endlessly harping  upon today, but a whopping Rs. 305 crores.

The money came in through three companies based in Mauritius. Mauritius has been a thorn in the Income Tax department’s side since the 1990s, because after economic liberalisation, tax concessions given to citizens of Mauritius had made the island a tax haven for foreign companies wishing to invest in India. So, not surprisingly, this inflow caught the attention of the Financial Intelligence Unit of the Ministry of Finance.

In January 2008, therefore, it alerted the Income tax department to the large inflow of funds into INX Media. This is the genesis of the money laundering charge that the Mukherjeas are facing, and of which Indrani Mukherjea has now been pardoned in exchange for testifying that both the Chidambarams had accepted bribes for regularising it.

There was, however, nothing inherently illegal about the inflow because in May 2007 the Indian economy was at the height of its explosive growth, and the market price of INX Media’s existing shares was Rs 862 per share . The inflow of only Rs 305 crore therefore suggests that the new share issue had fetched an average of Rs 660 per share.

This was a perfectly reasonable price because it fully discounted the likely fall in INX Media’s share price when such a large volume of new shares entered the market. But it left the managers of the share issue abroad with a large sum of money that could not be invested in the new company. It is possible, therefore, that this was chanelled back to INX Media through three companies headquartered in Mauritius.

The Mukerjeas got their second permission in May 2008. But by then, Lehman Brothers had declared bankruptcy and the global financial crash had begun. In India, the Sensex was nosediving from a peak of 20,000 in January 2008 to 9,000 by August. Advertisers stopped paying their bills, and the INX media group found itself headed for bankruptcy.

The Mukherjeas therefore sold INX Media in 2009 for whatever they could get for it and resigned from their posts in the group. By then, an audit of the company by Temasek holdings had raised the suspicion that they had siphoned Rs 150 crore out of the company, before jumping ship.

Nothing more was therefore heard of the INX media “scam” till 2017, a full nine years later. How did it get revived in 2017, and why was the target no longer Karti, but also his father? There is a single answer to this question: in 2015 Indrani Mukherjea and her husband Peter Mukherjea were arrested for the murder, in 2012, of Sheena Bora, her daughter by a previous marriage.

The police allowed it to be known that a financial dispute between mother and daughter was the cause of the murder. But for many in Mumbai, this confirmed a widely held belief that the Mukherjeas had parked the money they had allegedly siphoned off in an offshore account in Sheena Bora’s name.

Indrani Mukherjea may have come to the BJP’s notice in December 2016 when, at a trial hearing in Mumbai, she asked the court for permission to publish 700 verses from the Bhagavad Gita that she had translated from Sanskrit into English, and followed it up with a letter requesting this permission from the Patiala House court in February.

Whether this was so or nor, the fact remains that the CBI registered an FIR, alleging irregularities in Foreign Investment Promotion Board clearance given to INX Media for receiving overseas funds to the tune of Rs 305 crore in 2007 and accusing Chidambaram of using his influence as Union finance minister in May 2017 only three months later.

Both the Chidambarams have strongly disputed this allegation. Karti claims that he was never hired by the Mukherjeas to represent them. FIPB officials of the time have also deposed that they never even met Karti.

Karti was interrogated intensively by the CBI, arrested on February 28, 2018 and he spent 24 days in CBI custody before getting bail from the Madras high court and the Supreme court. In May this year, he was elected to parliament from Tamil Nadu, and remains, technically, a free man.

But his father has not been so lucky.

Despite his advanced age of 74, and the complete absence of any material or verbal evidence that he was involved in any of his son’s affairs, Chidambaram has been denied bail in anticipation, then bail by the CBI’s special judge Ajay Kumar Kuhar, then bail by Justice Sunil Gaur of the Delhi high court (who was tipped to be appointed as the chairman of the Appellate Tribunal under the Prevention of Money Laundering Act, but no formal announcement has been made public yet), then most surprisingly by the Supreme Court, and most recently by Justice Kait of the high court. 

Today, based on the sole and so far completely unsubstantiated accusation by a woman accused of murdering her own daughter, and who would say or do anything to avoid life imprisonment, if not the death penalty, the CBI and the Enforcement Directorate are coercively interviewing every friend and associate of Karti Chidambaram to establish how $3 million – the sum that Indrani Mukherjea claims to have paid to him and his father – have been siphoned away abroad through a dozen different shell companies. It is doing so in spite of the fact that Peter Mukherjea has categorically refuted Indrani’s allegation.

This blatant witchhunt has made a mockery of the rule of law. But what is worse, it has exposed just how seriously hollowed out not only the CBI and ED are, but also the judiciary, the last remaining pillar of India’s tottering democracy.

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In their blind pursuit of a model of nationhood that stands discredited, Messrs Modi and Shah have brought India and Kashmir to the edge of a precipice.

Kashmiri men gather around the body of Nasir Ahmad, a suspected militant, during his funeral after he was killed in a gun battle with Indian soldiers, in Arwani village in south Kashmir’s Anantnag district, October 16, 2019. Photo: Reuters/Danish Ismail


Do the learned judges of the Supreme Court – who will soon begin to hear the petitions against the way in which the Narendra Modi government hollowed out Article 370 of the constitution and dissolved a state – fully appreciate the gravity of the responsibility that a desperate civil society has placed on their shoulders?

One suspects they do, but view it with distaste because it will force them even further out of their zone of comfort as the court of final appeal on legal issues into becoming the court of final appeal in a seemingly constitutional, but in reality intensely political, issue where no one can foretell what the outcome of their decision will be. 

In this invidious circumstance, the temptation to concentrate on the letter of the constitution and leave the safeguarding of its spirit to parliament must be overwhelming. But that is precisely why their lordships must resist it and, taking courage form the judgment given by the Justice J.S. Khehar-led bench upholding appeals against the National Judicial Accountability Act, reaffirm that Indian democracy has not yet attained the maturity at which its constituent parts can be relied upon not to act in a manner that endangers the structure of the whole. 

In Kashmir, that danger is not merely present but palpable. Prime Minister Modi would like us to believe that eliminating Article 370, even though done by sleight of hand, would ultimately be welcomed by Kashmiris. Because apparently it will free them from the clutches of a handful of powerful and corrupt families, open the gates for investment to flood into the valley, and bring them the employment and prosperity that has so far eluded them.

He would like the court to believe that his government laid siege to eight million people and robbed them of the rights and freedoms that define their humanity for more than two months only for their own good. This is a plea that would make any civilised government squirm with shame because it implies that Kashmiris are little different from cats and dogs whom one has to discipline. 

Kashmiris have begun to show that they cannot be turned into household pets within days of the government beginning to relax its iron grip upon the Valley. They are doing this by resorting increasingly to the sole mode of protest left open to them: that is non-cooperation or, to use a word all of us should be familiar with, satyagraha.

Schools and colleges are nominally open but have few teachers and fewer students; despite the lifting of curfew, shops remain closed except for the few hours permitted by militants. There has been little overt violence so far. Barring a few acts of grenade throwing and stone pelting at security forces, and the killing of a Punjabi truck driver who, in his innocence, was transporting apples from Shopian to the market in Jammu, the Valley is relatively calm.

But this is the electrically-charged calm that precedes a storm.

Among middle class Kashmiris, there is relief that their post-paid mobile telephones are working, and that they can once again communicate with their relatives, especially with those working, or studying, in the rest of India. 

There is relief also among parents of school-going children, as hope revives that they may still be able to make up the time they have lost and sit for their board examinations without being at a severe handicap.

There may also have been initial relief among traders and shopkeepers as hopes of making at least limited sales in the few weeks left before the end of the festive season revived. But with only a few days left for Diwali, the tourist season and the Amarnath Yatra cut short, and the imminent shift of the Durbar to Jammu for the winter, that fugitive hope is also turning into despair.

Women protest on the streets in Kashmir. Photo: Avani Rai

As winter sets in, Kashmiris will begin to add up not only the economic, but the psychological and emotional cost of the lost summer: the lost fruit crop; lost revenues from the abrupt end of the tourist season and the Amarnath Yatra; the chasing away of thousands of migrant workers who brought revenue to the Valley; and the total absence of the Durga Puja and Dussehra rush of tourists from Bengal.

Parents will fret for the rest of the school year over the lost school time of their children; traders and shopkeepers will stare at godowns and shelves still packed with unsold goods, and wonder how they will meet their debt and the often extortionate interest they have to pay on it. Ghoda wallahs, houseboat and shikara owners , hoteliers and restaurateurs, taxi owners and drivers, and the young men from the villages who come into Srinagar, Pahalgam, Gulmarg and such places to work for them during the tourist season, will be wondering how they will subsist during the long winter that lies ahead.

So, as the nights grow longer, the power cuts become more prolonged, and the deepening cold bites into their bones, the Kashmiris’ sense of abandonment will grow stronger. Among the old, it will bring despair; among the youth, a mounting rage that, sooner or later, will break through all remaining restraints and burst out in unpredictable ways.

It is the youth whom the Modi government needs to fear. When he came to power, there were only a few Burhan Wanis among them. By the Kashmir police’s own estimates, in 2014, there were only 86 young Kashmiris in the new group of militants being nurtured jointly by the Hizbul Mujahideen, Jaish-e-Muhammad and the Lashkar-e Taiba in south Kashmir. After Modi initiated his ‘zero tolerance for terrorism’ policy, by January 2019, the security forces had killed 813 militants, of whom 235 were killed in 2018 alone. But despite, or more precisely, because of that, the number of active militants had grown to more than 300.

To those unfamiliar with the morphology of insurgency, this may sound like a small number. But readers would do well to remember that in the Khalistani insurgency of the 1980s in Punjab, there were never more than 500 ‘A’ grade, i.e gun-using militants. But they were backed by about 15,000 persons categorised as B-high, B and C grade supporters, who sympathised with, and sheltered them. That insurgency lasted for ten years and took more than 41,000 lives, and only died out when Sikh ex-servicemen living in the villages took up arms against them.

In Kashmir, the August 5 shut down and scrapping of Article 370 has come after 30 years of harsh military rule, and five years of a merciless pursuit of young Kashmiri militants who have grown up within that repressive and violent world, and have therefore no knowledge of peace. 

An explosion is therefore as certain as tomorrow’s sunrise. All we do not know is what will trigger it and, given a relative paucity of firearms with the militants, what form the renewed attacks will take.

Today, all of Kashmir is watching the Supreme Court with an anxiety that borders panic. Few expect a court that has shown no sense of urgency in dealing with the petitions against the president’s order, to strike it down. But all are living in fear of another crackdown on the entire population as the date of judgment draws near. This time there will be no surprise. The people of Kashmir will be prepared for the worst, but so, unfortunately, will be the militants. 

Try as I might, I see no way therefore of avoiding a return to violence. And despite Pakistani Prime Minister Imran Khan’s professed determination to keep his people out of Kashmir in order not to give Modi a chance to blame it upon Pakistani terrorists, it is difficult to see how long he will be able to keep his countrymen out of it. What will follow is anyone’s guess, but there can be no doubt that Modi has taken India into dangerous territory and that he does not know how to find a way out of.

Their Lordships’ travails will not end there. The abrogation of Article 370 is only one of the issues the constitution bench will have to pass judgment on . The other is the dissolution of a state of the Indian Union, and its subjugation to direct rule by the central government.

Law is made as much by judicial precedent as parliamentary enactment. Their lordships must therefore bear in mind that if they uphold the president’s order on this occasion, then this, or any future government in Delhi, will be able to dissolve the statehood of any other state, group of states, or even all the states of the Union, especially if it has the parliamentary majority to do it through article 368 of the Constitution. 

That will open the road to turning India into a unitary nation state on the European model and realising V.D. Savarkar’s dream of creating a ‘Hindu Rashtra’. Under Article 371 of the constitution, 10 other states enjoy protections that other states do not have – a situation the government said was intolerable in the case of Jammu and Kashmir.

One has only to remember the agitations that preceded the formation of Andhra Pradesh, Tamil Nadu , Meghalaya, Nagaland, Manipur Tripura, Mizoram, Punjab, and even Gujarat, to know that any such attempt will be resisted as strongly by them as the Kashmiris are resisting it today.

In sum, if the Supreme Court allows the abrogation of Article 370 through the dissolution of the State of Jammu and Kashmir to stand, it will open the way for the future weakening and perhaps even disintegration of the Indian Union.

This is not meant to be an alarmist prediction: From the Mauryan empire after the edicts of Ashoka, till the 1857 revolt, that followed Lord Dalhousie’s promulgation of the Doctrine of Lapse, Indian history is replete with examples of attempts to centralise power beyond a point leading to the disintegration of empires.

In their blind pursuit of a model of nationhood that now stands discredited, and even despised, in Europe where it was born, Messrs Modi and Shah have brought India to the edge of this precipice. Only the Supreme Court can stop them from pushing us over it.

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The BJP government has swiftly hacked away at all the reflections of democracy in an India it claims to cherish.

India: A Future in Peril

The Modi 2.0 government has further cemented policies which threaten to disintegrate the Indian union. Photo: Reuters


This month, the Sangh Parivar has been in celebration mode. The occasion has been its stocktaking of Prime Minister Narendra Modi’s achievements during the first 100 days of his second term in office.

The Parivar is convinced that, with his characteristic decisiveness, Modi has set India firmly on the road to greatness. The prime minister is anything but bashful about his achievements: “In the first hundred days we have given a clear picture of what is to come in the next five years,” he said at a Mahana Desh (‘great India’) function at Nashik.

He has “solved” the Kashmir problem, is getting rid of illegal immigrants in Assam and plans to “cleanse” the rest of India of  “these termites,” as his Home Minister Amit Shah called them. And he will make India a $5 trillion economy by 2025.

In reality, these first 100 days have been a catastrophe.

Far from building a Mahana Desh, the policy initiatives that the government has taken can, if not reversed very soon, lead to turmoil, insurrection, repression and, just possibly, the disintegration of the Indian union.

All the three strands of policy that the government is weaving together – the reading down of Article 370 and the dissolution of the statehood of Jammu and Kashmir; the bid to create a National Register of Citizens in Assam; and the systematic abuse of the law enforcement agencies, the police and a complaisant judiciary, to destroy every existing or potential focus of opposition in the country, are leading to this end.

Nowhere is the gap between what it is professing and what it is doing, more glaring than in its policy on Kashmir.

“We had promised that we would make fresh attempts to resolve the issues affecting Jammu, Kashmir and Ladakh…We have to once again build a paradise…I can happily say today that the country is working towards fulfilling those dreams,” Modi declaimed at Nashik.

He said this at a time when Amit Shah had just announced  that the lockdown of Kashmir would continue for another 25 days,  had turned the Centaur Hotel, built beside the Dal Lake by Air India in a bygone age of peace, into a prison to house virtually the entire political leadership of Kashmir, and when his government had been forced to postpone indefinitely a global convention of investors scheduled for October, that was to turn Kashmir into an earthly paradise, because no one was coming.

So, how, prime minister, did you intend to “hug each Kashmiri” and turn Kashmir “into the earthly paradise it once was”?

A Kashmiri woman walks past a bus used as a road block by jawans in Srinagar, on August 11. Photo: Reuters/Danish Siddiqui


By robbing Kashmiris of their voice, by destroying their capacity to communicate and fraternise, by treating them as a farmer treats his cattle?

These are admittedly strong words, but I am compelled to use them because no others fit the description of what the government has done to Kashmiris in the valley. Like chimpanzees, our nearest genetic cousins, we humans  are a necessarily gregarious species. Like them, we live in groups. And like them we constantly reassert our essential nature by communicating ceaselessly with each other.

Modi’s government has robbed Kashmiri’s of this defining capability, and in so doing, it  has robbed them of their humanity. This is something that, like any other human community, no Kashmiri will be able to bear for long, or ever forget.

The debate in India about Kashmir has been side-tracked into a controversy over the extent to which the government has robbed the Kashmiris of their freedom. This has allowed the government to swamp the media with its version of facts,  and simultaneously accuse those who disagree with it, of being anti-national and, unbelievably, pro-Pakistan.

Civil society has responded by presenting steadily mounting anecdotal evidence of empty schools, shuttered shops, early morning raids on peoples’ homes and summary arrests of young boys; of panic attacks among ordinary youth living in constant fear, and of the sick being denied essential medical care.

But horrifying as all this is, it is dwarfed by the cardinal sin of robbing Kashmiris of their status as human beings.

By doing this, Modi has broken the most fundamental link that binds Kashmir to India, their humanity and ours. If his government  persists in this folly, it will achieve what was, till just the other day, considered inconceivable: it will unite every single Kashmiri in a growing determination to break free of India, no matter what it costs and how long it takes.

This government’s second major policy thrust is also one that is leading the country towards a situation that it will not be able to handle.

This is its determination to expel all illegal immigrants from India. It is no one’s case that a country should turn a blind eye to illegal immigration from other countries. Equally, no one will deny that Assam has seen a massive inflow of immigrants, not only from Bangladesh, but also Bengal and Nepal, during the past 70 years. This was tolerated by successive Congress regimes till it triggered a revolt that only prime minister Rajiv Gandhi’s sagacity prevented from becoming unmanageable.

Activists of the Hindu Yuba-Chattra Parishad burn copies of NRC list, in Guwahati on Saturday, August 31. Photo: PTI


But the key issue that has bedevilled all governments faced with this problem cannot be solved by the NRC.

This is: what to do with the immigrants who have already got in and built new lives for themselves in your country? In the US, a succession of governments have legalised illegal immigrants after placing various conditions upon them, and till President Trump, none have even thought of denying children born in the US from availing of the same education and employment rights as other Americans.

This was the problem that Indra Gandhi tried to resolve by passing the Illegal Migrant Detection Act in 1983. That had corrected a gross anomaly in the law, by shifting the burden of proof back from the accused to the accuser. It had also placed other strictures to prevent large scale victimisation of this category of immigrants, by limiting the power to accuse to people living within three kilometres of the  accused, and had allowed the latter to prove legality by producing a ration card.

This act was, somewhat surprisingly, struck down by the Supreme Court in 2012 upon the plea of none other than Sarbanand Sonowal, the present BJP chief minister of Assam. In the following year, the court also ordered that the NRC, first compiled in 1951, be updated. Armed with these, the Modi government ordered the NRC to be updated in Assam first.

The method it chose has proved disastrous.

With the 1983 Act struck down, the government fell back upon the Foreigners’ Act of 1946, a British enactment made before India was partitioned, to deal with the flood that the creation of Bangladesh had let loose. The Foreigners’ Act had placed the burden of proof of legality upon the accused. As a result, 33 million Assamese had to furnish one or more documents to prove that they were not illegal residents of the state.

What has followed has been trauma for half or more of the population of the state. The first draft of the NRC in Assam, which came out in 2014, showed that 13 out of  32 million – two out of five persons were not on the list. For these 13 million, the last four years have been pure torture involving anxious, frantic searches for documents that may have got lost or perished, enormous expense and months of anxiety.

The final Register only brought the number down to four million, still one in eight of  Assam’s population.

Last year this was whittled down through appeals to 1.9 million. The stress this long drawn out process has put, particularly on the poor of Assam,  is too frightful to contemplate. It has led to depression and more than a dozen suicides among those who have been left out.

Deporting such a large number of people from India became impossible after Bangladesh flatly refused to have them back. At that point any responsible government would have taken a second look at the law governing the determination of citizenship to see if it could be amended to make the exercise both just and feasible.

But the Modi government’s response has been the exact opposite. Instead of seeking a way back to the 1983 Act, albeit with improvements, the new home minister Amit Shah, apparently decided to extend the updating of the NRC to the rest of India, for one of his very first acts was to direct collectors in all districts of the country to chalk out sites for detention camps to be built in the future.

With this he has let a particularly dangerous cat out of the bag. For while  the BJP may have seized upon the NRC as a way of ridding Assam of a part of its Muslim population, other states have grievances against ethnic minorities from other parts of India.

What will Mr Shah do if the Kannadigas demand an NRC in order evict  people from the northeast who have captured a large share of the jobs in the IT, BPO and other service industries in Bengaluru?

What will he do if the Shiv Sena revives its demand to evict people from Uttar Pradesh and Bihar from Mumbai. Only those with no knowledge of the  history of Europe’s self-destruction in the 20th century could have thought that ethnic cleansing, once started, can be contained.

Shiv Sena founder Bal Thackeray. Photo: PTI


The two strands of policy-making described above are alarming enough but when they are combined with the third, they make an explosive mix that could easily blow the country apart. This is the Modi government’s brazen disregard for the Rule of Law and citizens’ fundamental rights.

From almost the first day he came to power in 2014, Modi has been systematically gutting all the institutions of democracy – the legislature, the executive and the judiciary, to destroy all possible opposition to the Sangh Parivar. In this he has been no different from Mohammed Morsi and the Muslim Brotherhood in Egypt before they were thwarted by the army coup that brought Abdul Fattah Sisi to power.

A key element of his government’s strategy has been to exploit the weak points of Indian democracy – especially the ubiquity of corruption – to attack its political opponents. It did this without success to Arvind Kejriwal and the Aam Aadmi Party, but met with greater success when it attacked the Trinamool Congress in Bengal and the Congress in Assam where it secured the defection of key ministers to the BJP by threatening them with exposure and prosecution.

To render the AAP government impotent it secured a judgment, from a single judge bench of the Delhi high court, abolishing Delhi’s (and in passing Pondicherry’s), special status as Union Territories with elected governments, that took the Supreme Court three years to reverse.

During its first five years the Modi government also destroyed the limited, but very real independence the CBI had enjoyed earlier. This had been buttressed in 1997 by a Supreme Court order fixing the CBI director’s term at a minimum of two years, and disallowing his transfer without the clearance of a special committee that included the Central Vigilance Commissioner.

Dr Manmohan Singh had further buttressed its independence by giving the power to appoint to a committee consisting of the prime minister, the Chief Justice and the leader of the opposition. Modi trashed both these safeguards and gave the power to appoint to the appointments committee of the cabinet, i.e to himself.

In the same vein, during the first 100 days, the second Modi government has gutted the Right To Information Act by ending  the statutory independence of the Central Information Commissioner through an act of parliament, passed a law making almost any criticism of the government a seditious act. It has also amended the Unlawful Activities  Prevention Act (UAPA) to enable the National Investigating Agency (NIA) to designate almost any individual as a terrorist and put him or her behind bars for two years. Whereas this power previously rested with only the senior most officers of the NIA it has now been given to any agent of the rank of inspector and above.

A view of the Parliament building. Photo: Nimrod Bar/Flickr (CC BY-SA 2.0)


This government is consistently using the vast powers of arrest and detention given to the police, the long delays in the administration of justice and the readiness of lower court judges to remand the accused to judicial custody for as long as the government  desires, to target key members of the opposition drag them before the courts, get complaisant judges to deny them anticipatory bail, sequester their property, and keep them in jail for months at a time – all this in the full glare of the audiovisual media who then beam their disgrace to a billion people around the country .

This has destroyed habeas corpus, the single most fundamental right of a citizen in a democracy, the Right to Freedom until convicted of a crime. Habeas corpus now exists only on paper.

The purpose is not to uphold the law but to shame, defame and discredit and intimidate those who have stood in Hindutva’s way. The government is fully aware that most of these cases will not stand up in court, for the conviction rate in criminal cases of this nature has been a bare half  percent. The government, of course, knows this.

Three out of more than a score of examples stand out: In 2013, Tarun Tejpal, the founder-editor of Tehelka, who was accused of attempted rape, sexual harassment and associated offences, spent seven months in jail before finally securing bail from the Supreme Court.

From the BJP’s point of view Tejpal’s crime was that it was the video-ed sting operations carried out by his reporters that had led to the conviction of a round dozen of the Bajrang Dal assassins who had led the killing of more than three score Muslims in the Naroda Patiya massacre in Ahmedabad in 2002.

Unlike Tejpal, Prannoy and Radhika Roy , founder-owners of NDTV have been out on bail for more then three years on a charge of money laundering, with their property sequestered by the Enforcement Directorate, but not yet brought to trial because the government’s lawyers have obtained 21 adjournments of the case from complaisant judges while they scramble to find evidence against them.

Finally, and most egregiously, former home minister P. Chidambaram has not only been indicted of money laundering on the flimsiest of pretexts, but denied anticipatory bail and sent to Tihar jail by a Delhi high court judge Sunil Gaur, two days before he retired. A mere five days after he retired, the Modi government appointed him chairman of the Prevention of Money Laundering Tribunal.

In this, it was only following a well set precedent. For in 2014, breaking all constitutional norms, Modi had appointed the retiring Chief Justice of the Supreme Court, P. Sathasivam, governor of the state of Kerala.

Three years later he appointed R.K. Raghavan, the chairman of the Supreme Court appointed Special Investigation Team on the Ahmedabad riots who completely exonerated Modi of any dereliction of duty in dealing with the riots, as India’s ambassador to Cyprusonly weeks after he resigned from the SIT.

Justice Gaur also had a long history of having delivered judgements in the lower courts against the Congress party and its newspaper, the National Herald, before he got picked to be the high court judge who would hear Chidambaram’s bail application. Chidambaram has now been behind bars at Tihar jail for a full month

Irshad Khan, 24, holds a picture of his late father Pehlu Khan, 55, in Jaisinghpur, India, June 2, 2017. Irshad survived an attack by cow vigilantes when transporting cattle which left his father dead and friends badly beaten. Photo: Reuters/Cathal McNaughton/Files


Contrast these with the fact that not a single person has been convicted, or even brought to trial yet, for the 72 lynchings of Muslims by so-called gau rakshaks that took place during Modi 1.0.

That many, like Vipin, one of the self confessed killers of Pehlu Khan, have been acquitted because the police deliberately withheld crucial evidence, and that all the members of ‘Abhinav Bharat’ who had been indicted for the Samhjhauta Express bomb blast, have walked free for the same reason, and it becomes undeniable that the rule of law has no place in Modi’s India.

While the BJP may not have actively connived in creating the lawless state that India has become, there can be no doubt that the ideology it has so relentlessly propagated, and Modi’s refusal to condemn the crimes committed in its name, have created oppressive, lawless country that India has become today.

History, not least that of the 20th century,  has shown that countries that lose their moorings in justice, humanity and the rule of law, seldom last long.

Some, like Germany, immolate themselves in a Valhalla-like funeral pyre of war and destruction; others go out in revolution; and still others, like the Soviet Union, simply fall apart.

In India we still have a fourth option — the revival of democracy. But for that the BJP must first realise that its policy of repressing all opposition to it, will not only harm it, but also destroy the nation it claims to cherish.

this article appeared in The Wire

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Nine out of nine exit polls have predicted an outright  victory for the BJP with close to 300 seats. This prediction flies in the face of prepoll opinion surveys which had concluded that the BJP would do better than its opponents hoped, but would not come near an absolute majority in the Lok Sabha. It  also dismisses the profound discontent of the electorate  — of farmers over the deepening agricultural crisis, youth over the complete absence of jobs,  workers over the loss of existing jobs,  and small manufacturers and traders forced into bankruptcy  by a combination of industrial stagnation, demonetisation, and the GST.

Can Modi’s single plank election appeal to hyper- nationalism, attacking Pakistan,  killing Kashmiri militant youth  and terrorising Indian Muslims have been sufficient  to overcome  this extensively documented collapse of confidence? If the exit polls are even close to accurate, then this would have to be the only explanation.. But can we believe the  exit polls?  Have they been accurate in the past?  The answer is that some exit polls have been reasonably accurate; others have been  wrong but within acceptable limits, while still others have been wildly wrong.  A closer examination of  past exit polls is therefore necessary to determine which category he current predictions are likely to fall into.

Let us start with past Lok Sabha polls:  In the 2004  elections pollsters gave the Vajpayee-led NDA 230 to275 seats. But it  won only 187 seats and was pushed out of power. The 2009 exit polls they gave the UPA 199 seats and doubted whether it could stay in power. Instead it got 262 seats and did. In the 2014 elections, however, the exit poll preditions were  borne out..

Since these results give a very mixed picture  lets look at exit poll predictions for Vidhan Sabhaelections. In the 2015  Bihar elections the pollsters had predicted that the BJP would get between 93 and 155 seats with a median prediction of 108 seats, and comfortably form the government.  Instead they won a mere 53 seats. Similarly, in the UP 2017 vidhan sabha elections the exit polls gave the BJP 161 to 170 seats and 228 to 230 seats to the SP and BSP combined. In fact the BJP won a spectacular 312 seats.

By contrast,  in Karnataka 2018 the exit pollsters got it almost right, for the average of their estimates, the so-called ‘poll of polls’, gave the Congress 80 seats, the BJP 104, and the Janata Dal ( secular) of Deve Gowda  38 seats, In practice the Congress got 86, the BJP 103 and the JD(S)  37.

Similarly in the three other major state elections in 2018, the exit polls got it more or less right in two , but spectacularly wrong in the third: in Madhya Pradesh 6 exit polls gave widely varying estimates for the two main parties, but their average came close to the mark. This was 111 for the Congress and 108 for the BJP. In Rajasthan  they predicted 108 for the Congress which ended with 110. But in Chhattisgarh, exit polls predicted 40 for the BJP and 44 for the Congress, but the BJP won only 15 seats while the Congress won 68.

What can we learn from these results that will help us to make sense of the exit poll results described above? It needs to be remembered that the essential premise of an exit poll is that the people tell the truth when they come out of the polling booth, because once they have  voted they have nothing to gain from hiding their choice. This, of course, is never entirely true, so opinion polls taken at leisure try to filter out a ‘lying factor’ by asking intersecting  questions. But there is no time for this in an exit poll. So the accuracy of answers hinges entirely upon the respondents’ sense of security.

This is highest when conditions are “ normal”, the rule of law more or less prevails, and the conventions of democracy are respected. These conditions usually exist  when the state or country enjoys a stable party system in which both or all parties have been in and out of power several times and do not fear being voted out. In the polls described above Rajasthan , Madhya Pradesh, and Karnataka meet these pre-conditions.

A second condition in which people are likely to speak the truth is when  there is an overwhelming popular consensus on issues. Respondents then draw their sense of security from being part of a large group.  This pre-condition was fulfilled before the Lok Sabha elections of 2014  by Modi’s promises of reviving growth and creating two core jobs a year. With ‘Vibrant Gujarat’ behind him, and  a benign party and prime minister who did not target political opponents, people had no hesitation in talking about how they have voted.

A third pre-condition  for exit poll accuracy is that no new factor of compelling importance should have come into play, that disturbs the equilibrium described above. The Bihar 2015 predictions went wrong because exit pollsters were unable to take fully into account the impact of the formation of the Mahagatbandhanin the state, when converting votes  into seats. This is the single biggest stumbling block in predicting the results of any election based upon the simple majority voting system.

The pollsters got UP wrong for the same reason – they were unable to take the impact of the division of the vote between the SP and BSP fully into account while converting votes into seats. That bitter fight,  and the way it divided the Muslim vote while consolidating the upper caste hindu vote turned the exit poll results into a farce.  The results showed that the BSP-SP vote division had given the BJP 228 out of its 312 seats.

The SP had won all the  18 bye-elections in the state before the 2017 vidhan sabha poll, because the BSP had not fielded a candidate. As a result five sixths of the BSP vote had gone to the Samajwadi party. In this election if the BSP and SP have retained their shares of the 2017 vote, their combination alone will cost the BJP 46 out of its present 73 seats.

The other new factor that the pollsters have not even remotely taken into account  is the way in which Modi’s policies have unintentionally, but rapidly,  sharpened the class division in Indian politics to the point where the politics of caste and creed is gradually being transformed ito the politics of class.  It is not just that  industry has stalled and  jobs have been lost by the million when Modi had promised the opposite.   It is that every law passed by his government, and every bit of rope he has given to the VHP and other outcroppings of the RSS to enforce enactments such as the ban on cow slaughter; the unleashing of Gau Rakshaksupon cattle traders;  the invasion by aged cattle of the already crisis-ridden farmers’ fields;  the collapse of the cattle market, which has destroyed the prime mode of saving of the landless poor, and the systemic oppression and lynching of Muslims has brought in class into Indian politics in a way that could barely have been imagined five years ago.

All the economically and politically oppressed  in the country are poor. All of them are, to varying degrees, living lives of fear. Therefore very few of them are willing to tell the truth about how will they vote to strangers. But the vast majority  of them are behind the various raggle-taggle gatbandhansthat have been formed across the country to fight the BJP. This is why the exit poll predictions this time need to be taken with more than a pinch of salt.




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An awful cancer has invaded the soul of India. This is the country where Gautam Buddha,  the greatest saint humanity has known, was born. This is the country where Bhakti and Sufi  poets and saints stripped Brahminical Hinduism and orthodox Islam of ritual, idol worship and clerical control,  and preached union with the almighty through  love and submission,

This is the country of Swami Vivekananda, who electrified the World Conference of Religions at Chicago in 1893, by telling the delegates that Hinduism did not merely tolerate other religions but accepted them,   because the great religions are  like rivers that have carved out  different paths but end in the same sea; like paths up a mountain that end at the same peak.

This is the country that produced  Mahatma Gandhi, who drove  the British out of India without  firing a shot at them. But today this same country is in the grip of a blood lust in which the only issue being discussed ad nauseamis ‘how many terrorists/ Pakistanis/ Muslims did “we” kill in Balakot?

Nowhere is the new bloodlust more visible than on Indian television,  which is being watched abroad with growing horror on Youtube. A report in the Washington Posthas summed up its irresponsibility with damning precision:

“More than two weeks after the (Pulwama) attack, our analysis finds that no news site had rectified the errors in their reporting, leaving these misleading facts as a matter of public record. Instead, the Indian media has ascribed to itself the role of an amplifier of the government propaganda that took two nuclear states to the brink of war. Many TV newsrooms were transformed into caricatures of military command centers, with anchors assessing military technology and strategy (sometimes incorrectly). Some even dressed for the occasion in combat gear. Speculation and conjecture were repeated ad infinitum, and several journalists even took to Twitter to encourage the Indian army”[1].

If blame can be ascribed to any single individual, it has to be Prime minister Narendra Modi, who is willing to stop at nothing  to win the next election. But why have the media , that pride themselves on being the Fourth Estate of democracy (“The Nation wants to know”)  joined in so enthusiastically? The short answer is that the audience to whom it panders is not the India that has existed for ages, but a  new India being created mainly in the urban areas today.

That India and its proponent, the RSS, are products of modernity and the rupture it creates with the past. For this India  religion begins and ends with the robotic performance of ritual,  poojato idols, pilgrimages to Vaishno Devi and Amar Nath, and ‘purifying’ baths during the  Kumbh Mela at the confluence of  the  stinking Ganges and Yamuna rivers that they have not the slightest intention of either reviving or cleaning up.

This new India is still very small. Even in 2014, barely 31 percent of the electorate voted for Modi. So why are there no defenders of the old India out there? While many factors are responsible, in the political sphere the answer seems to lie in the cultural vacuum at the core of the Congress, the largest party in the opposition. The leader  of the Congress is a lady born in Italy and raised a Catholic. The President of the party is only one quarter Hindu by blood, and not Hindu at all by nurture or education. Neither of them has a gut  understanding of the core values of Hindu society; its syncretic, accepting, pluralism; its willingness to adapt, live and let live. So neither of them is able to  feel the anger that the  degradation of Hinduism, and  perversion of  its core values by the RSS has created in caste hindus of the old India, and the fear it has inspired in the Dalits, some of the backward classes and the Muslims.

This emotional vacuum at the top has led the Congress into the trap of trying to compete with the BJP by peddling ‘soft Hinduism’, instead of opposing  the ‘hard Hindutwa’ of the RSS, tooth and nail. Before the Gujarat elections Rahul Gandhi visited temple after temple, came out of them with a teekaon his forehead and proclaimed that “I am a Hindu” in much the same way as a convert to Islam or Christianity would proclaim that he or she is now a Muslim or Christian.

This “soft”  Hindutwa explains why he was so quick to accept Pakistan’s culpability  in the attack, why he   described it almost sentimentally as  “an attack on India’s soul” and,  without prior discussion, committed not only the Congress but the entire opposition to “fully supporting  the government and the security forces” in their actions. By doing this he legalized in advance every action that Modi has taken against Pakistan.

“Soft Hindutwa” also explains many of his subsequent silences and omissions, such as why he did not point out that Pakistan was only indirectly to blame because the suicide bomber was a Kashmiri youth; why he did not immediately condemn Modi’s dangerous brinkmanship in launching a pre-emptive attack on a Jaish-e-Mohammad madrassa and training camp  at Balakot, and why he did not immediately condemn Modi’s calculated silence  over the expulsion of thousands of Kashmiris from apartments, rooms and hostels by frenzied mobs across north India. To the minorities, as well as to the Hindus of the ‘old’ India , it conveyed the disheartening news that for the Congress too political expediency trumped the rule of law. So why bother to vote for it?

This lack of courage  has allowed Modi to turn the tables on the opposition. Whereas it is he who is playing a dangerous game of brinkmanship in a desperate effort to win an election he was almost  certain to lose,  with the help of the ever-subservient media he has been able to  portray  the opposition as unprincipled, opportunistic politicians who care two hoots about India’s security and standing in south Asia and the world, and are only intent upon ousting the BJP from power at any cost.

As a result, Modi has been able to make a significant part of the population of the country forget, at least for the moment, the collapse of the economy, the crisis in agriculture, the stagnation of industry, the  11 million jobs lost by it over the past five years, and the hollowness of  the grandiose promises he made to them when he came to power. Whether Modi  will be able to make their amnesia last till the general elections remains to be seen. But Rahul Gandhi’s silence on this front too is not going to shorten it.

Unfortunately this is not the end of India’s misfortune for, having made one major mistake, Rahul Gandhi seems intent on making another, even bigger one. This is not to understand the imperative need to avoid fracturing the anti-BJP vote at any cost. Instead through his lack of experience and his want of leadership qualities, he is doing the exact opposite: in state after state he is  allowing the shortsightedness and greed of his  party rank and file to make him demand far more seats in than the Congress’ share of the vote merits, and thereby  disrupt the building of a common front against the BJP.

In Delhi the Congress has flatly refused  to make any  seat-sharing agreement with the Aam Admi Party, and has decided to fight all the seven seats by itself, despite the fact that it does not stand a snowball in Hell’s  chance of winning even a single seat,  and can only divide the vote in favour of the BJP. This has been made abundantly clear by an opinion poll based on  a mammoth 18,750 person sample has  shown that while the AAP still holds 52 percent of the vote, the Congress share is a paltry 5.5 percent.

In the crucial state of UP the Congress has already published the names of 11 candidates and intends to fight many more seats in spite of  having won only 2 seats out of 80 in 2014 and commanding barely 11 percent of the vote. In UP  too whatever little chance the Congress had of cutting into the BJP vote to win some seats has been destroyed by its tame acceptance of Modi’s leadership in dealing with the aftermath of Pulwama. Today, all that the Congress can do is to increase the number of seats that the BJP will win.

As if these setbacks are not enough, if reports in some newspapers are accurate, relations between  the Congress and Tejaswi Yadav’s JDU are also becoming strained in Bihar.

How costly Rahul Gandhi’s immaturity , and lack of leadership qualities,  can prove was  shown by the results of the Gujarat state assembly elections in December 2017. Long before  he turned on Mani Shankar Aiyar, the most eloquent speaker in  his  own party, when Aiyar defended  the Gandhi family against an unprovoked slur by Modi  by calling him  a neech kism ka admi, (which Gandhi misunderstood as a neech jaat ka admi) ,  he had already  ensured a BJP victory by spurning the  Aam admi party as well.

Well before the election,  Arvind Kejriwal had made three attempts to contact Rahul Gandhi in order to forge an alliance with the Congress in Gujarat. Kejriwal had understood that  while the AAP could not win any seats on its own, it did command a sizeable  share of the vote in Gujarat. He was therefore willing to put up AAP candidates in seats selected by the Congress, where the AAP had the greatest capacity to cut into the BJP’s vote.  Rahul Gandhi did not even bother to reply to his a phone calls. So  BJP came back to power by the skin of its teeth, winning 18 seats with a margin of 5,000 or fewer votes and nine with a margin of less than 2,000 !

Today the Indian nation is facing a crisis whose seriousness almost no one in the Congress party understands ( and the few who do dare not to speak). Thanks to Rahul Gandhi’s inexperience and indecisiveness  there is now a distinct possibility that the BJP will emerge as the largest single party after the next elections and be able to  form a government with disillusioned elements of the Mahagatbandhan.Should that happen, the dwindling but still substantial number of Kashmiris who   want azadiwithout losing their links with India  will lose all hope and  start backing those who  want to secede from India. India will  have lost  Kashmir forever. Worse still, a future BJP government’s  attempt to hold on to it by force alone, as Modi has done for the last five years,  will almost certainly precipitate a war with Pakistan.

In the Indian heartland democrats and dissidents will be silenced through a wholesale use of the sedition laws.  First the High courts and then  the Supreme Court will collapse under the burden of the cases that the victims will file. Vigilante rule targeting Muslims and Dalits will  gather momentum. As faith in the police and the judiciary dwindles first a few, and then more  Muslim youth will  conclude that it is better to die fighting than live in fear forever, and swing to terrorism  as hundreds , if not thousands,  of Kashmiri youth have done in the past five years. The police repression that will inevitably follow will destroy the last vestiges of democracy and the rule of law.

State governments not under BJP rule will not take this lying down. Their attempts to protect their democratic systems will lead to the splintering, and then disintegration, of India. The portents of disintegration are already visible: Modi has not held a single meeting of the National Development Council since he came to power, and questioned the very need for its existence in January 2015.

And the first signs of rebellion by state governments against arbitrary rule by the Centre have already appeared. Between November 2018 and January 2019 three states – Seemandhra, West Bengal, and Chhattisgarh, have withdrawn their ‘general consent’ to Central enforcement agencies, to operate in their territory  without prior, specific permission, under the Delhi Special Police Establishment Act.

The portents are unambiguous: if the BJP of the Modi era (not to be confused with the BJP of the Vajpayee era)  is returned to power  it is not only its democracy but its unity, and its syncretic culture that will be in mortal danger.



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While such electoral promises may garner votes, taxpayer money meant to safeguard India’s future is instead spent on an ever-expanding web of social welfare programmes that don’t really enable the poor.

As BJP, Congress Race to Promise the Earth to the Poor, Who Will Foot the Bill?Credit: Reuters

The approach of the next general election has reminded political leaders of the existence of the poor in India. This has set off a rash of competing promises to the electorate.

On January 28, three days before the budget, Congress president Rahul Gandhi announced that his party would guarantee a minimum income to every poor family in the country.

As of now neither Rahul, nor anyone else in Congress, has clarified precisely who will benefit from this scheme, but the cost will be prohibitive: At the prevailing minimum wage of Rs 321 a day (Rs 9,630 a month), covering 25% of the families of the country will cost the exchequer a whopping Rs 700,000 crore a year.

How the beneficiaries will be chosen is still unclear. The actual number could be much smaller – perhaps no more than 18% – if we count only those whom the National Sample Survey has placed in its residual category of ‘casual’ workers. But even casual workers make up 18% of the work force. So guaranteeing at least a minimum income will add Rs 500,000 crore to the central government’s expenditures.

The situation in Wazirpur is indicative of the plight of unorganised workers across Delhi. Credit: Amit Kumar

Not to be outdone, three days later, Piyush Goel – Prime Minister Narendra Modi’s acting finance minister – announced in his budget speech that the BJP-led government would introduce an immediate income subsidy of Rs 6,000 a year to all farm families with less than two hectares of land. The government has estimated that 12 crore farmers operate on less than two hectares of land. This will therefore add Rs 72,000 crore to the Centre’s annual expenditure.

Goyal also unveiled an insurance scheme for unorganised workers in which the government will match the contributions of Rs 55 to Rs 100 a month of contributors starting from the age of 18, and guarantee them a pension of Rs 3,000 a month after they reach the age of superannuation. On the surface, this looks like a ‘pay as you go’ insurance scheme of the kind that continental European countries have adopted (but the UK and India have not). But it too bears the marks of haste and lack of study.

In ‘pay as you go’ schemes, the annual payout by the insurance company is met by the interest earned on accumulated pension contributions, supplemented by current premium inflows.

If such a scheme is open to anyone who is prepared to pay the required premium, a lock-in period of five to six years before contributors become eligible for its benefits is usually sufficient to make it solvent, without the need for any annual subvention from the exchequer.

But the imposition of a Rs 15,000 ceiling on eligibility for benefits will almost certainly pervert its purpose. For it will provide the employers with a big stick with which to dissuade workers who want a pay hike beyond Rs 15,000: “Stay below it or face the loss of half your pension when you retire”. 

Unwittingly, therefore, Goyal has made a similar mistake to what the Speenhamland Act made in England in 1795, when it promised to supplement private wages with a ‘filler’ to raise workers’ living standards to the minimum acceptable level. All that the Act succeeded in doing was to allow employers to lower their wage rates as far as the Speenhamland commissioners would tolerate .

The ‘Speenhamland Effect’ will also ensure that the total number of beneficiaries will far exceed the 10 crore that to the Modi government expects. There are more than 36 crore non-agricultural employees in the unorganised sector. Is there any good reason not to expect 30 crore among them to take out old age pension policies? 

If, or rather when, that happens, the government’s outgo on the scheme will rise to Rs 36,000 crore. If one adds to these two schemes the tax, and interest rebates that the interim finance minister has promised, this budget will increase budget spending by Rs 100-125,000 crore in a full year.

A woman tests LED bulbs after installing them onto a grid to make indicator lights inside an electrical manufacturing unit in Mumbai, March 22, 2018. Credit: Reuters/Francis Mascarenhas

A broke government

Where will this money come from? Neither the Congress nor the BJP has said a word about how it will raise it, so one must conclude that they expect the annual increase in the government’s tax and non-tax revenues to cover the extra spending. 

But even a cursory look at the government’s finances will show that while this can happen when the economy is growing at 8-10% a year and industry at 9-12%, as it did between 2003 and 2011, it cannot when industrial growth is stuck at 3-4% a year. 

The harsh truth is that the government is broke. To balance its budget in 2017-18, it had to borrow money to meet close to 29% of its expenditure by borrowing money from the public through the sale of bonds by the Reserve Bank of India. The preliminary estimate for 2018-19 is only marginally lower. 

Had the borrowed money been going into the creation of infrastructure, as it did in from the ’50s to the ‘70s, it would have given no cause for concern because the additional assets it created would have generated more money and more jobs. 

But in 2017-18, very little of the borrowing is being done for investment. Of Rs 5,91,000 crore in 2017-18, Rs 529,000 crore was used to pay the interest on past loans. This is thus a self-contained circle that comes into being in which fresh debt is incurred to meet the cost of servicing past debt.

In short, the government is running the largest Ponzi scheme of all time.

The budget does contain a small allocation Rs 263,000 crore for its capital account. But this money does not create new fixed assets. Most of it goes into the maintenance of the fixed assets – roads, bridges, power stations and the like that were built in the past. 

In sum, very little of the money that the government now raises from taxpayers is intended to safeguard the future of the country by creating more and better infrastructure. Nearly all of it is being spent upon salaries and pensions of a bloated bureaucracy whose income is adjusted every five years for inflation, come rain or shine.

What little remains is being spent on an ever-expanding web of social welfare programmes that create immediate relief and garner votes in the next election, but do nothing that will enable the poor to stand on their own feet.

That security comes only with the acquisition of stable, permanent jobs. Neither Rahul Gandhi’s minimum income programme, nor Mr Modi’s Rs 6,000 a year to the superannuated farmer will assure his or her son, daughter or grandchildren a job. To revert to economists’ jargon, every rupee that the government spends on boosting consumption instead of investment, denies someone a job on some date in the not too distant future.

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The tragedy of the crisis in West Bengal is that it pits the political freedom of regional parties against the mandate of the state to punish corruption and political pillage.

We Are Witnessing the Death of the CBI. Will Indian Democracy Follow?Mamata Banerjee at her dharna site in Kolkata. Credit: PTI

Seventy years after India gained its freedom, the Ashoka Chakra has become a symbol of national unity – one that every child in the country is familiar with. But there is a darker side to the unity that Ashoka created, which few care to remember.

Beginning in the 14th year of his reign, Ashoka attempted to make his subjects change their traditional customs to bring them in line with dhamma – the Buddhist ‘right path’. To oversee this, he appointed a socio-religious police, the dhamma mahamattas. Initially the dhamma mahamattas used persuasion, but as Ashoka grew more introverted later in life, they began to abuse their power and use coercion.

As the historian Romila Thapar has noted, their high-handedness created a wave of discontent. After Ashoka’s death, first the outlying and then the inner principalities began to ignore central edicts. In less than half a century, the Mauryan empire passed into history.

What happened then has been repeated many times since. It happened when Aurangzeb tried to re-establish Muslim pre-eminence in the Mughal empire and alienated the Rajput princes who supplied his army with most of its soldiers.

It happened when Achyuta Raya, the weak and self-centred son of Krishnadeva Raya, the greatest of the Vijayanagar kings, tried to hold together his father’s far-flung empire through the use of threats and force.

It almost happened to the British Raj, when Lord Dalhousie imposed the doctrine of lapse upon the princes who had entered into subsidiary alliance with the East India Company.

India is on another such fateful cusp today. Since the 1994 Bommai judgment of the Supreme Court, which practically ruled out the use of president’s rule to keep state governments in line, executive power has been shifting steadily from the Centre to the states.

Most of this shift has taken place in a spirit of cooperation, to the end of improving governance and strengthening democracy. But on February 3, that cooperation gave way to open conflict between the Central government and the state of West Bengal.

The CBI’s record in West Bengal

A fortnight earlier, the Central Bureau of Investigation (CBI) had accused the Kolkata police commissioner, Rajeev Kumar, of ‘deliberately delaying and diluting an SIT [investigation] of two notorious chit fund Ponzi schemes,’ the Sarada and Rose Valley scams. It said he was ‘absconding’, a clear warning that his arrest was imminent.

The CBI’s accusation was strongly refuted the very next morning. Javed Shamim, the additional commissioner of Kolkata police, pointed out that Kumar had been in office every day, including on weekends. Chief minister Mamata Banerjee accused the Modi government of resuming its campaign to bring the Trinamool Congress to its knees before the general election.

Mamata had good reason to believe this. In 2014, the CBI had come to Kolkata in a similar manner and arrested two Trinamool MPs, as well as the state’s minister for transport and sports, and the state director-general of police. They were subjected to intense cross-examination on charges of collusion in the chit-fund scams.

Thirty months later, on April 17, 2017, the CBI registered a first information report (FIR) against 13 persons – including 12 top Trinamool leaders – who were allegedly caught accepting cash on camera in a sting operation carried out by the news portal Narada News. The sting was carried out just before the 2014 Lok Sabha elections and was made public in 2016, just days ahead of the Bengal assembly elections.

When the investigators are suspect

The West Bengal police had therefore been seething at the high-handedness of the CBI and the Enforcement Directorate for some time. So on Sunday evening, when a team of CBI officers arrived unannounced at the commissioner’s house, and asked to be let in for “official work”, the police at the bungalow asked them to wait.

Word spread through Kolkata police stations that the CBI was about to arrest their chief. In no time, the CBI officers were besieged by hundreds of state police. They had to call in the CRPF to be rescued.

Mamata went straight to the police commissioner’s bungalow, accused the CBI of being Modi’s political tools and began a dharna, claiming that this had become necessary “to save democracy, the Constitution and the country.”

Commenting on the confrontation, a senior official of the Kolkata police said, “The CBI and ED have always acted as agencies above law. There are certain rules which all agencies need to follow while investigating. If they look for cooperation from us, they too need to cooperate with us.”

Protection for new partymen

Narendra Modi’s misuse of the CBI and other agencies had also been exposed when the CBI dropped its investigations against the former Trinamool railway minister Mukul Roy, and Assam minister Himanta Biswa Sarma, after they joined the BJP in November 2017.

While the evidence then was inferential, fresh evidence seems to have emerged that both Roy and Biswas struck explicit deals with the BJP to get the West Bengal and Assam police off their backs.

In a taped conversation apparently with the BJP’s general secretary for West Bengal, Kailash Vijayvargiya, Roy is heard asking him to ‘fix’ four West Bengal police officers who were creating trouble for him. Vijayvargiya denounced the recording as a forgery, but Roy has so far only accused the police of illegally taping his conversations – stopping short of challenging their veracity.

The TMC also claims that Sudipto Sen, the promoter of the Sarada chit fund, actually wrote to the CBI office in-charge in Kolkata to complain that Himanta Biswa Sarma took Rs 3 crore from him to facilitate the spread of his chit fund in Assam, and did not keep his promise.

Assam finance minister Himanta Biswa Sarma. Credit: TwitterAssam finance minister Himanta Biswa Sarma. Credit: Twitter

Crushing the CBI’s autonomy

The conflict between Delhi and Kolkata widened into a more general conflict between the Centre and states only after the Modi government broke with all precedent and summarily removed Alok Verma from the post of CBI director in October 2018.

Verma was removed because he had locked horns with Rakesh Asthana, a “special director” chosen from the Gujarat police cadre. Asthana is known to be close to Modi, who almost certainly brought him in to be his eyes and ears in the CBI.

The sordid accusations that Verma and Asthana levelled against each other led to both being sent on leave. Verma’s place was taken by M. Nageswara Rao, whose first act as interim CBI director was to transfer 13 officials – many of whom were investigating a 2011 bribery allegation against Asthana.

A week later, the CBI cleared the former Madhya Pradesh education minister, Lakshmi Kant Sharma, of complicity in the Vyapam scandal, in which 42 persons mentioned in the police records had met accidental, or inexplicable, deaths. The CBI had also declared that there had been no conspiracy behind those deaths.

In the 77 days that followed Nageswara Rao’s appointment, and the 23 days for which he was brought back after Modi sacked Verma for good (on January 10, 2019), his decisions made it clear that the CBI would not stand in the way of Modi’s vendetta against political rivals.

Modi’s cynical vendetta Raj

Modi had already shown the lengths he would go in his sustained assault on Arvind Kejriwal and the Aam Aadmi Party in Delhi, as on Mamata and the TMC in Bengal. (And earlier, too, by threatening to expose Nitish Kumar’s sources of funds, and forcing him back into the BJP’s fold.)

In November, sensing that he might be next on the list, M. Chandrababu Naidu took the fateful step of withdrawing Andhra Pradesh’s ‘general consent’ to Central enforcement agencies, to operate in Andhra without prior, specific permission, under the Delhi Special Police Establishment Act.

Days later, the West Bengal government did the same. On January 11, a day after Modi sacked Verma for the second time, the newly-elected Chhattisgarh government also followed suit.

This withdrawal of permission was not unprecedented: Deve Gowda had done it in Karnataka. But this is the first time that the Central government has faced three states doing so at the same time, with others ready to follow. In this moment, the Indian state confronts the rebellion that Ashoka, Aurangzeb and the British faced in the past.

The tragic cost of banishing the CBI

The tragedy of Indian democracy today is that the opposition’s battle to protect political freedom will simultaneously destroy the little capacity the state has left to prevent and punish crime.

This is demonstrated by the timing of Andhra’s withdrawal, only days before the CBI was to spring a trap to capture a ring of central government employees who were accepting bribes for permissions and favours.

When the CBI asked for specific permission to lay the trap, and asked the state to keep its plans secret, the state home ministry instead informed its own Anti-Corruption Bureau. What followed is not clear – but rather than capturing the entire ring, the CBI could make only one arrest. Its bitterness at the failure made it go public with a detailed statement about the cause.

The banner of resistance that Mamata has raised in Bengal will shelter an entire system for siphoning money from the poorest into the pockets of politicians and their henchmen – for there are at least 60 other ponzi schemes in Bengal alone, which have collected an estimated Rs 30,000 crore from around 1.7 million investors.

As the Cobrapost exposé of the Dewan Housing and Financial Scheme has shown, non-banking financial corporations are lending tens of thousands of crores to shell companies that finance political parties, among their other “investments”, but have directors with few, if any, assets. This means nothing can be recovered from them when these companies go broke.

Nearly all the major political parties joined Mamata’s protest against Modi, and reaffirmed their determination to put up a united front against the BJP in the coming elections. If they stay united, they will push the BJP out of power.

But if they do not follow up their victory by creating an election financing system that frees parties from the need to plunder money – as happened through the Sarada scam – then they will give the BJP a powerful platform fight from in 2024. And if the BJP resumes its attempt to create a monolithic Hindu rashtra, then India’s descent into the age of the later Mughals will be swift.

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By Going Solo in UP, Congress Demonstrates Its Penchant for Suicide

Rahul Gandhi. Credit: Twitter/@INCIndia

Apart from the two Nehru family bastions of Amethi and Rae Bareli, the Congress is unlikely to win any seats in the Lok Sabha polls.


Until a month ago, I had firmly believed that the BJP’s days in power were numbered. The threat it posed to the future of not only the nation but to rival political parties whose leaders it has been hounding since the day it came to power, had been recognised.

I believed therefore that gradually but unmistakably, the outlines of a ‘grand coalition’ to save democracy had begun to emerge from the mists of the future. Other than pushing the BJP out, the coalition had no clear programme of action. It also had no leader whom it could pit against Modi on the billboards as the election approached. Most importantly, the distribution of constituencies between them still lay in the future. But one thing was beyond doubt: if it survived, the sheer weight of its numbers would push the BJP to an epic defeat.

That defeat has begun to look distinctly less likely today. The reason is not second thoughts among the smaller parties, but the revival of overweening ambition within the Congress. The obvious sign is its January 13 decision to fight both the BJP and the SP-BSP coalition in UP.

The Congress has presented this as a reaction to being shut out of UP altogether by the BSP-SP combine, which did not offer it a single seat. In reality, the BSP and SP’s action the previous day emerged from a failure to bridge the wide gap between the ten seats in UP that the Congress had initially demanded and the seven it was willing to settle for, and the two that the SP-BSP were prepared to give it – the traditional Nehru dynasty seats of Rae Bareilly and Amethi.

Bringing new dynamism

To breathe new life into the state party unit, Rahul Gandhi promised to bring new dynamism – what he described as a “440-volt jolt” – to the party’s organisation in UP. His secret weapon has turned out to be his sister, Priyanka Gandhi, whom he has appointed the general secretary for eastern UP. She will have the final say in the choice of candidates for eastern UP and will campaign vigorously for the party in that part of the state at the very least.

Rahul will be relying upon her palpable honesty and commitment to the nation, her physical resemblance to her grandmother Indira-amma and her appeal to women voters, to turn the tide in the Congress’ favour.

All these factors will undoubtedly play some role in the choices of the voters. But will they suffice to restore the grand old party’s pre-eminence in UP? To have a chance of taking a majority of the seats away from the BJP and SP-BSP combine, the Congress needs not only to raise its share of the vote from 7.53% in 2014 to at least 35%, but to take it equally from the BJP and the SP-BSP combine. One look at the voting pattern in eight statewide elections over the last twenty years, four for the Lok Sabha and four for the vidhan sabha, shows that the task is not well-nigh, but absolutely impossible.

Let us take the BJP first. Its vote jumped from 17.5% in the 2009 Lok Sabha elections to 42.6% in 2014, and from 15% in the 2012 vidhan Sabha elections to 39.7% in the 2017 elections. These colossal increases were a product of the ‘Modi wave’, which was made up in equal parts of disappointment with the Congress during the last three years of UPA rule and belief in the grandiose promises that Modi was making. This wave has now visibly declined.

Since almost 11 points of the 25% increase in its share of the vote in 2014 came from the Congress, Rahul and his advisors obviously believe that this can be brought back to the party. But one look at the BJP’s share of the vote in the 2017 vidhan sabha elections shows that this would be wishful thinking. For despite losing every single bye-election to the vidhan Sabha to the Samajwadi party between 2014 and 2017, and despite the shock of demonetisation, the BJP still held on to 39.7% of the vote in 2017, less than 3% fewer than in 2014, capturing 312 out of UP’s 404 vidhan sabha seats.

The reason for the anomalous result was that since Mayawati did not contest any of the bye-elections to the vidhan sabha in this period, nearly all the BSP vote went to the SP. But Mayawati came back into the fray in 2017 determined to defeat not only the BJP but also the SP, all on her own, and fought the SP for every seat.

To make matters worse she specifically tried to woo away the Muslim vote, by putting up 100 Muslim candidates. Akhilesh Yadav was forced to follow suit with a somewhat fewer number. This played into Amit Shah’s hands: all he had to repeat tirelessly throughout the campaign was that if the caste Hindus did not stand solidly behind the BJP, the Muslims (backed by Dalits or OBCs), would come to power.

The coming together of the SP and BSP will harden this sentiment in UP. So it would be folly to expect any further decline in the BJP’s vote. But if the BJP’s vote is unshakeable, what about the SP and the BSP? The answer is that shaking this bastion of caste sentiment is even more difficult than shaking that of the BJP. The combined share of the two parties has ranged from 44-56% in the vidhan sabha and 42-51.5% in the Lok Sabha over the past 20 years.

It is also worth noting that even during the Modi hurricane of 2014, the combined vote of the two parties was less than half a percent short of that of the BJP. In the 2017 state elections, despite being routed in the number of seats they gained, their share was 5.5% higher than the BJP’s. With Dalit votes having gone consistently to the Samajwadi party or the Rashtriya Lok Dal in bye-elections between 2014 and 2018, it is a safe bet that these votes simply aren’t transferable to any other party.

BSP supremo Mayawati and Samajwadi Party chief Akhilesh Yadav. Credit: PTI


Two questions

Two other questions remain: Whom can Congress reach out to in UP with any hope of gaining their support and how strong is the Priyanka factor likely to be?

As to the first, one group that may still not have made up its mind is the twenty-odd million young voters who will be voting for the first time this year. After eight years of jobless growth, demonetisation and the bungled GST, and after Modi has failed to fulfill any of the promises he made to the electorate in 2014, it would be surprising indeed if these were not looking for a new party with a different and credible programme for reviving the economy, restoring the rule of law, cleansing politics and making the state accountable to the people, to which they can anchor themselves.

But even if Rahul Gandhi has such plans , he has not taken the people into his confidence so far and with the elections only months away, the time for doing so is all but lost.

As for the second, bringing in Priyanka only months before the next elections is an admission of despair. Is the collective memory of the Congress so short that it does not remember what happened when it tried to do exactly the same thing with Rahul Gandhi in the 2007 vidhan sabha elections?

On that occasion, Rahul had at least worked in UP as the secretary of the youth wing of the party and tried specifically to induct youth into the Congress. The Congress had convinced itself then too, that Rahul would work the miracle of reviving the Congress in Uttar Pradesh. Instead, the party’s vote share went down from 8.96% in 2002 to 8.61% in 2007.

So what will fighting all the seats alone actually achieve for the Congress? The answer is brief and depressing – nothing. The most that it will get is the two seats it already holds and the SP-BSP combine was willing to offer it – Amethi and Rae Bareli. What then is it risking by going it alone? Again the answer is depressing – the very future of the congress party.

In 2014, the size of the victory in both constituencies, but in Amethi in particular, was assured for the Congress by the Samajwadi party not putting up a candidate for either seat. If it and BSP jointly field a candidate now, there is a possibility that the BJP, which made a strong showing in Amethi in 2014, could walk away with the seat. Rahul Gandhi is therefore risking his own seat and the political future of his family, which means also of the Congress party, in the one state where he has the least chance of winning.

Would even the most addicted and reckless gambler in a casino risk his money against such odds?

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The central bank and the finance ministry must be able to have a mature discussion on how much of the RBI’s reserves can be handed over to the government.

After Urjit Patel Drama, RBI Must Turn Its Attention to How It Can Help India's Economy

Arun Jaitley and Urjit Patel. Credit: PTI/Files

By resigning as the Reserve Bank of India’s governor without a shadow of warning, Urjit Patel has delivered a coup de grace to India’s tottering economy.

One does not have to be a psychic to divine what made Patel take this drastic action now. He was almost certainly instructed to transfer some of the central bank’s reserves to the finance ministry to meet its expenditure commitments. He had already refused point blank during the marathon board meeting of November 19. He must have suspected, or been warned, that if he did not agree, he would be directed to do so under Section 7 of the RBI Act.

The forerunners of the deluge that Patel has let loose have not taken long to appear. On Tuesday morning, the rupee was trading 112 paise lower and on Wednesday morning, it opened 0.33% down from Tuesday’s close of 71.87.

More falls are certain because most investors will conclude that, sensing the need to compensate for the losses in the current round of state elections, the BJP will use the central bank’s reserves to  go on a spending spree to recover ground before the general elections next year.

This may well be true. But even if, by a miracle, Patel’s resignation makes the government pause before raiding some of the RBI’s reserves, this is unlikely to save the Indian economy from the major problems that now stares it in the face.

The trouble ahead is writ large in the Rs 1,140,000 crore worth of stalled and abandoned projects, in the Rs 1,00,000 crore worth of irretrievable bank debt, in the more than 200 large firms struggling desperately to stave off bankruptcy, in the country’s struggling small and medium industry, in the falling rupee, not to mention India’s stagnant employment growth.

The resignation could not have come at a worse time. If there was a right moment for him to have registered his protest, it should have been on November 8, 2016, when Prime Minister Narendra Modi announced his controversial decision to demonetise Rs 500 and Rs 1,000 notes. But Patel has chosen to quit now, when two more years of suicidal economic policies have left the Indian economy in tatters and confidence abroad in the stability of the Indian rupee is at an all time low.

High interest rates

The inescapable fact is that the Indian economy has been hurt over the past decade by the intolerably high interest rates inflicted upon it. Inflicted by a central bank so single-mindedly focused on curbing an inflation that was not caused by an excess of demand in the domestic economy. That futile exercise led to a crash in demand for housing and consumer durables, and pushed up the interest burden and cost of infrastructure projects till investors simply left them incomplete and walked away.

Had anyone in the Modi government studied the experience of other countries  it might have been able to find an antidote to India’s epidemic of bankruptcies  long ago.

Today, only one narrow avenue remains open.

The first step is to lower commercial bank lending rates on medium and long term loans, of longer than three years to today’s core rate of inflation of 4%. Also, allow borrowers to refinance their existing debt at the new low rate and balance this by lowering interest paid on term deposits in the banks by 1 to 1.25%, in order to avoid a further constriction of bank revenues.

Readers may wonder how a 1 to 1.25% average reduction in interest paid out by banks to depositors will reduce outflows by enough to offset the fall in revenue from a 6% cut in lending rates. There are three reasons: first, only 37% of the commercial bank loans by public sector banks is for three years or more.

Second, most of the longer term loans within this category are now non-performing and therefore yield nothing. Finally, since even a 1% reduction in deposit rates will make some savings shift from the banks to the equity and bond markets, there will be a further reduction in the servicing cost of the PSB’s debt.

An examination of the balance sheets of several companies that are now facing bankruptcy proceedings before the National Company Law Tribunal shows that while many will be able to start meeting their liabilities if they are allowed to refinance their loans, a substantial number, including some of the biggest investors in infrastructure, will still remain in the red.

The Barack Obama model

To salvage the most important projects among these, the government will need to follow the example set by Barack Obama in the US in 2009, when he asked the Federal Reserve to buy a controlling share in General Motors and Chrysler, to save them from bankruptcy and bring in new management to turn them around. Not only did he succeed, but the Federal Reserve was able to resell its shares in the market at a profit within four years.

The second essential step, therefore, is  to persuade the RBI to transfer some of the reserves it holds within the central bank to a Special Facility that will buy controlling  shares in the most important and least severely indebted of the remaining companies.

Contrary to the impression created by the recent controversy between it and the ministry of finance, the RBI not only has the funds to do the buying, but the need for credibility abroad will ensure that it deploys the funds responsibly, chooses companies to buy into that are really capable of being revived, and not succumb to political pressure in making its choices.

It has the funds to do this because its two principal reserves, the Currency and Gold Revaluation Reserve (CGRR) and the Contingency Fund far exceed the maximum that any RBI committee has recommended. While the Subrahmanyam committee in 1997 had suggested 12% of total assets in each fund, the Usha Thorat committee had recommended 12.26% for the CGRR and 5% for the Contingency reserve.\

Today the CGRR  stands at 19.11%, and the Contingency Fund at 6.41%. The two together are therefore 1.52% above the limit prescribed by the Subrahmanyam committee and 10.4% above the Thorat recommendations.

If the RBI brings the CGRR down to Thorat’s 12.26% but simultaneously raises the Contingency Fund to 9%, it will be able to create a Special Investment Facility (SIF) with the remaining 5.5% and invest in the shares of companies in dire need of recapitalisation, without damaging confidence abroad in the RBI. The surplus amounted to Rs.198,967 crores in 2017-18.

This facility can be further enlarged by discontinuing, temporarily, the practice begun in 2014 of transferring all of the RBI’s annual profits to the government to help finance its budget, and transferring it for two years into the SIF. The net surplus in 2017-18 was Rs 50,004 crores. So this would add another Rs 100,000 crores to this facility by March 2020.

Asking the RBI to create the SIF will force it to take responsibility for reviving economic growth, something it has adamantly refused to do, even while it controls the one instrument that spells life or death for the economy. It will also have to understand the challenges industries faces both at home and abroad.

It will be forced to bring top flight industrial managers, past and present, onto its board and perhaps also look abroad for talent and ideas. Over time, this will end the poisonous dichotomy that exists today, without any need for strong arm measures by the government.

A Reserve Bank of India (RBI) logo is seen at the gate of its office in New Delhi, November 9, 2018. Credit: REUTERS/Altaf Hussain

The RBI can invest in the shares of companies in dire need of recapitalisation, without damaging confidence abroad in the bank. Credit: REUTERS/Altaf Hussain

Commercial and public sector banks

Two more bridges will still remain to be crossed. The first is how to make the commercial banks actually pass through the RBI’s cuts in policy rates to their borrowers. They have now enjoyed autonomy in setting their minimum lending rates (subject to guidelines set by the RBI) for several years, and may therefore drag their feet in doing so, as they did two years ago. The second is that the RBI lacks any experience of running an industrial or infrastructure enterprise, so may baulk at taking the responsibility for doing so.

These are real challenges that will have to be met with circumspection, but they cannot be allowed to block the reforms altogether. As to the first, the fact that the bad loans are almost entirely concentrated in the public sector may prove a blessing in disguise, because these are more likely to fall in line with the government’s wishes. Among them, the most stressed banks will do so first, because they will have the least to lose. After that, competition for business will make the rest fall in line.

As to the second, the RBI will have to hire retired professional managers from the private and public sectors to sit on their boards and bring in internationally renowned consultants to assist them. This will start a learning process within the bank that will end the dyarchy that has developed between it and the ministry of finance.

This learning process will take time, but the alternative, of allowing the present bankruptcy procedures to continue, will take much more.

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What Pakistan has essentially done at Kartarpur is to ask for India’s help in ending its own impossible predicament.

 A view of the Sikh shrine in Kartarpur. Credit: PTI

When opportunity comes knocking, unbidden, to one’s door, a wise person does not let it slip away. India has done this twice in the past 70 years: First when it shooed away American companies that came to Asia in search of a cheap labour platform to manufacture goods for the world market, and sent them on to southeast Asia.

It did this a second time when risk averse advisors in both India and Pakistan succeeded in delaying the fleshing out of the Manmohan Singh-Pervez Musharraf framework agreement to end the Kashmir dispute signed in Delhi in 2005, till Musharraf lost his power to push it through the Pakistan national assembly in 2008.

The monumental silence with which Prime Minister Narendra Modi greeted Pakistan’s offer three months ago, the curt reassertion last week by foreign minister Sushma Swaraj that India would not attend the SAARC summit in Pakistan, and the Congress leadership’s tepid reaction to the initiative, has made it likely that we will send it away yet again.

Also read: After Kartarpur, Mehbooba, Congress Leaders Bat for Sharada Peeth Cross-LoC Route

The reason for the Modi government’s lack of enthusiasm is written in saffron across the sky: having wrecked the economy, failed to create any jobs and alienated each and every one of India’s neighbours, it has nothing left to fall back upon in its bid to win the 2019 general elections except the whipping up of paranoia towards Muslims, towards Pakistan and towards China.

But how does one explain the ambivalence of the Congress? For was it not Prime Minister Manmohan Singh who said in 2007 that his dream was to be able to have breakfast in Delhi, lunch in Islamabad and dinner in Kabul on the same day? Was it also not Singh who fashioned the Delhi Framework Agreement? If these initiatives were not popular, why did the Congress win the 2009 election with a near-majority of its own?

An opportunity with a difference

The opportunity created by Kartarpur Sahib must not be allowed to slip away, for it is born of radically different and deeply enduring roots. While previous peace initiatives originated in the corridors of Islamabad and New Delhi, this one has originated in a small village close to the India-Pakistan border. While previous negotiations have been carefully planned and orchestrated, this one is unplanned, disorderly and very largely spontaneous. Finally while all previous initiatives have started at the top of the social and political pyramid, this one has been born out a yearning among the poorest people on both sides of the Punjab border for peace and reconciliation.

The gurudwara at Kartarpur Sahib was established by Guru Nanak in 1522. It was there that he lived for 18 years, wrote the Guru Granth Sahib and, in all probability, died. It is therefore the second holiest shrine in the Sikh religion.

Partition forced the Sikhs of Punjab to one side of the newly created border, but left Kartarpur Sahib a bare three km on its other side. As a result, for 70 years Sikhs have been going in their hundreds of thousands to the closest point on the border, from where they can see the domes of the gurudwara, to pray.

Also read: Five Questions that the Modi Government’s Latest U-Turn on Pak Talks Raises

The idea of a visa-free corridor from the border to Kartarpur Sahib was first mooted by Prime Minister Atal Bihari Vajpayee during his bus journey to Lahore in February 1999. Despite the Kargil War, the Nawaz Sharif government responded positively the next year, but the Pakistan Army, which was smarting from its defeat in Kargil, was in no mood for compromise. The spate of ISI-backed terrorist attacks on high value targets in India that followed and eventually triggered Operation Parakram, and the ISI’s reckless use of mujahideen in Kashmir put an end to any further discussion of the subject.

The possibility of a corridor was raised by Navjot Singh Sidhu three months ago when he attended Imran Khan’s swearing in as prime minister. Sidhu had gone in his personal capacity, as one of the three Indian cricketers whom Khan had invited. According to his account of what followed, not only did Khan leap at his suggestion but General Bajwa, the Pakistan Army chief, who was present at the function, immediately offered to build a barricaded corridor from the border to the gurudwara. This would prevent any actual contact between the pilgrims and people in the intervening area. It was this spontaneous offer that made Sidhu give Bajwa a Punjabi jhappi.

The Pakistan Army’s enthusiasm

Was the offer from Khan and Bajwa really a spur of the moment reaction to Sidhu’s suggestion? It might have been had only Khan made it, for he has been saying from the day of his inauguration, “If India takes one step forward, then we will take two steps forward toward friendship.”

But why should General Bajwa have gone that step further? A knee-jerk assessment would be that he saw it as a propaganda opportunity and, in case Delhi reacted negatively, a chance to rekindle disaffection in Punjab. But Khan made it crystal clear in his speech and press conference that he and the army are “all on one page” in wanting to mend ties with India.

Is such a radical change of heart in the Pakistan Army really possible? The answer, with suitable caveats, is ‘yes’, because seven decades after independence, its policy of jumping from the back of one circus-horse to another, while keeping its gaze locked firmly on Kashmir, has reached its pre-destined end – there are no more horses left to ride.

Thirty-five years ago, General Zia-ul-Haq felt that he could afford to adopt a forward policy because Pakistan’s GDP had been growing at 5-6% percent per annum for three decades; it was an indispensable ally of the US in the latter’s proxy war against the Soviet Union in Afghanistan, and therefore had no dearth of foreign exchange to buy military toys.

The Lahore-Delhi bus at the Attari Wagah border on November 26. Credit: PTI

Today’s Pakistan could not be more different. It has been chastened by its failure to spark secession in Punjab and Kashmir: Despite every pain that India has inflicted on Kashmir, a 2009 Chatham House poll in the Valley showed that while a majority of its people wanted a radical change in Kashmir’s relationship with India, only 2.5% to 7.5% wanted to join Pakistan.

Not only has it lost the patronage of the US, but the Donald Trump administration, and most of the world, considers Pakistan to be a dangerous and unpredictable breeding ground for terrorists, and the principal threat to Pax Americana in Afghanistan.

Islamabad has attempted to replace the US with China and Saudi Arabia as its political, military and economic sponsors, but China has been far less tolerant towards its use of terrorism to realise its regional aspirations than Washington was three decades ago.

This is because, contrary to the prevailing impression in India, Beijing’s huge investment in the Karakoram-Gwadar transit corridor is, like other projects of its Belt-Road Initiative, more defensive than offensive. It is primarily intended to create one of several backdoors for its trade with Asia, Europe and Africa to pass through in case the US and its allies decide to block the sea lanes through which most of its imports and exports currently pass.

Its fear of the US’s naval power is understandable, because its dependence upon trade for economic growth is the highest for a large industrial economy that the world has ever known. China’s dependence on trade to generate employment is even greater. So from the early days of its investment in Pakistan, Beijing has been putting a quiet but unrelenting pressure on Pakistan to crack down on terrorist groups and maintain peace with India, especially in the Karakoram region.

Till the end of February this pressure was private and bilateral. Then, on February 23, China stopped shielding Pakistan and agreed to put it on the “grey list” of the Financial Action Task Force, a global body created to monitor the financing of terrorist organisations all over the world. Pakistan was put on the list in June. It now has till June 30, 2019 year to show that it has taken decisive action against organisations in the country that are sponsoring terrorist activities.

This withdrawal of support could not have come at a worse time for Pakistan, for it is facing its worst economic crisis in a decade. In 2017-18, it recorded a $19 billion balance of payments deficit, amounting to 5.7% of its GDP. The Pakistani rupee has depreciated by 20% in less than a year and its foreign exchange reserves have fallen to under $10 billion.

Till now, Islamabad has relied upon loans from China and Saudi Arabia to remain solvent, but Saudi Arabia too agreed to put Pakistan on the grey list last February. Pakistan has therefore been left with no option but to go to the International Monetary Fund for another – its 13th – bailout. That loan will now almost certainly come with conditionalities that will cross the border between economics and politics.

Also read: The Real Googly: More than Imran, the Pakistan Army Wants Peace With India

Finally, the Pakistan Army has been locked in a civil war for more than a decade. It has managed to establish a semblance of peace in the tribal areas by denuding its Indian border of troops. But insurgency and sectarian killings have continued to grow in other parts of the country. It would be surprising indeed if it had not begun to look for a way out of the morass.

To the army high command too, therefore, peace with India must have begun to look like the silver bullet that can end most of its miseries. The is almost certainly why General Bajwa seized the olive branch that Sidhu innocently extended at Khan’s swearing in with such alacrity.

What Pakistan has essentially done at Kartarpur, therefore, is to ask for India’s help in ending its own impossible predicament. Peace with India will remove the very ground on which much of the Islamist extremism which has spawned terrorism feeds in Pakistan. Since these groups gain legitimacy by posing as the champions of the oppressed in Kashmir, finding a solution to the dispute that Islamabad can present to its own people as a fulfilment of its commitment to them is the best way forward.

It would therefore be folly for India not to seize the opening that Kartarpur Sahib has created to end the Cain versus Abel conflict that has held both countries back, while the rest of Asia has raced ahead. An immediate cease fire along the Line of Control in Kashmir, the resumption of talks, involving Kashmiri leaders in the deliberations, and an agreement to review the Manmohan-Musharraf framework agreement will get the ball rolling towards peace.

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