Team Anna launched a frontal assault on the UPA government on May 26 and leveled serious corruption charges against Prime Minister Manmohan Singh himself and 14 of his top ministers, four of them from Maharashtra – Sharad Pawar, Vilasrao Deshmukh, Sushil Kumar Shinde and Prafful Patel. Team Anna has prepared a 79-page report, largely based on reports of the Comptroller and Auditor General (CAG), and has written to the Prime Minister demanding that a Special Investigation Team be set up to probe the graft charges and has even named six judges for conducting the probe. “I have written to PM for a special investigative team to investigate into the charges of corruption into these ministers,” Team Anna member Prashant Bhushan said at a press conference here. “The CAG report on the coal scam is the basis for alleging corruption; the Prime Minister was the Coal Minister between 2006 and 2009. Then coal blocks were given away at throw away prices. There were repeated efforts by the coal secretary to suggest that auctioning was the best way out,” Bhushan said.Apart from the Prime Minister and the four union ministers named above, the other ministers targeted by Team Anna are: P Chidambaram, Pranab Mukherjee, SM Krishna, Kamal Nath, Virbhadra Singh, Kapil Sibal, Salman Khurshid, GK Vasan, Farooq Abdullah and MK Alagiri. While Team Anna has accused the Prime Minister of corruption in the alleged coal scam, Pranab Mukherjee has been accused of corrupt practices in the Scorpene submarine deal during his stint as Defence Minister and Chidambaram has been accused of figuring in five corruption cases, including 2G scam and Vodafone clearance. It said Pranab Mukherjee was the Defence Minister when four per cent commission was received on the Scorpene submarine deal.
o Manmohan Singh’s interventions as in-charge of the coal ministry: 24 blocks were allocated in 2005, 53 in 2006, 52 in 2007, 24 in 2008 and 16 in 2009. Interestingly, only one coal block was allocated in 2010, and not even one in 2011.o Under his watch a major coal allocation scam took place which allowed private firms to make windfall gains, as is clear from the facts that are now out in the public domain and the report of the CAG. The average allotment of coal blocks was 3-4 per year until a few years back. But this number shot up drastically to 22-24 during 2006-09 when Singh was in charge, raising questions about the manner in which these allotments were made. o All the allotments were made without transparency, without protecting the interest of public exchequer, and without any competitive process.o A comprehensive note on competitive bidding for the allocation of coal blocks was given by the Coal Secretary to the Minister of State for Coal on16 July 2004. It noted the substantial difference between the price of coal supplied by Coal India Limited (CIL) and the cost of coal produced through captive mining. This ensured a “windfall gain” to the party which was allocated a captive block.
Unjustified Petrol price hike
The Central Government announced an unprecedented hike of 7½ rupees in petrol prices with effect from May 24, 2012. The government could not have chosen a better time to announce the fuel price hike: A birthday gift for the aam aadmi on the completion of three years of UPA-II. When a government compounds bad economics with worse politics, it isn’t very difficult to predict what might happen over the next few days. The Central Government will direct states to cut taxes on petrol. Congress-ruled states will readily agree to the proposal. States ruled by the opposition parties will resist the proposal. The Congress will go to town proclaiming itself as the most genuine defender of the common man. Allies of the Congress will blow hot and cold but to no avail. The economics behind the fuel price hike can be traced in part at least to international crude prices, a rupee which seems to have fallen into an abyss, a massive cobweb of taxes levied on crude products and a regime of subsidies which has been unfairly represented as serving no purpose other than to decrease profits among oil marketing companies (OMCs). The government’s problems begin with its failure to identify and resolve these issues collectively and correspondingly, with its propensity to engage in knee-jerk policymaking. This government has been accused of “policy paralysis” for weeks. With policy announcements such as the latest fuel price hike, they make it too easy for critics! Admittedly, the economic issues surrounding the fuel hike are complex and deserve to be understood through a considerable amount of reading. For now, it is proposed to merely put these issues in context with a view to offer a quick perspective of how this government has wrecked the Indian economy. The rupee has depreciated significantly against most major currencies and notably against the dollar. The immediate implication for fuel prices is that since crude oil is purchased in dollars, the price (in rupees) per barrel of oil would increase. Given that crude oil is purchased in dollars, the government might have calculated that an increase in petrol prices would deter domestic consumption and thereby result in fewer dollars being spent to procure the supply necessary to meet domestic demand. It is true that appreciating the rupee (against the dollar) would have favourably influenced domestic petrol prices. It is however laughable that the Union Government could presume to significantly influence exchange rates through a petrol price hike. The reason for this is that a currency’s exchange rate is a function of a number of factors including volume of foreign investment and balance of trade (net imports/exports). India has a trade deficit. In other words, it is a net importing economy. Under the circumstances, India will spend more dollars on imports than it earns through exports (notwithstanding that a weaker rupee means that Indian commodities are comparatively less expensive in international markets). India thus looks to other sources of foreign exchange. One of these sources is foreign investment. The trouble is that when foreign institutional investors (FIIs) spot a trend where the rupee is continuously weakening against the dollar, they become apprehensive that they will earn fewer dollars when they book profits and are thus eager to withdraw their investments.The RBI did try and defend the rupee against the dollar. But owing to depleted foreign exchange reserves, even these efforts were not sufficient to reverse the slide of the rupee. In 2006, noted commentator, S. Gurumurthy, made a convincing case for a deliberate appreciation of the rupee. (“Petrol at Rs. 30 a litre? Possible, but …” The New Indian Express. 22.6.2006). But let’s put aside a major policy rethink on the currency regime for now. This government is clearly incapable of any positive revision. The real shocker is that the steepest hike in domestic petrol price history comes at a time when international crude prices have fallen! Why then would this government announce a price hike?Government and Congress spokespersons tell us that oil marketing companies (OMCs) have been selling petroleum products at a loss for a long time. “Loss” is really a deception employed by the government to refer to what is known among OMCs as “under recovery”. An under-recovery refers to the difference between the retail price of petroleum products and the trade-parity price which includes a number of unincurred and inflated costs. The fact is that both the retail price and the trade-parity price are nothing but facades which conceal innumerable taxes levied by the Centre and the States including excise duty, additional duty, cess, additional cess and sales tax. Now, this is where governance gives way to naked politics.Last year, when diesel prices were hiked, the Centre directed states to cut taxes on diesel. Congress-ruled states happily complied. This time, the Congress has directed state governments run by the party to cut taxes. Kerala and Uttarakhand have already complied. In states where the Congress is not in power, such as Madhya Pradesh, the Ajay Singhs and the Kantilal Bhurias will cry hoarse on how the BJP government is anti-poor and responsible for price rise. This is hogwash! Cutting taxes is not a bad idea at all. But it needs to be seen in the context of state-specific economics, state government schemes, Central Government grants and sources of revenue. Last year, Organiser Weekly explained how the directive issued by the Central Government to cut taxes on fuel products was misplaced in the context of Madhya Pradesh. (‘Fuel Price Hike Bad Economics, Worse Politics’. Organiser. 31.07.2011). We demonstrated how the majority of revenue at Madhya Pradesh’s disposal was generated by Madhya Pradesh itself! We further explained that cutting taxes would impair the state government’s ability to undertake hugely popular schemes such as the Ladli Laxmi Yojana.Nothing has changed since last year. The same state Congress leaders will demand that the BJP government must reduce taxes on fuel products, knowing full well that the Congress-led Central Government does not offer a sufficient share of the tax revenue to Madhya Pradesh and that cutting state taxes would result in lesser funds for social empowerment schemes. But the UPA government at the Centre cannot even think of cutting taxes on fuel products because that would mean that there will be fewer funds to spend on schemes such as NREGA, RTE and possibly the Food Security Act. So the Congress in the Centre is allowed to retain taxes on petroleum. But all state governments are expected to cut taxes. Consequently, the Congress in the Centre can indulge in massive social spending. But the BJP governments (and even humble state Congress governments) must not be allowed to undertake any social spending at the state level!This is a gross violation of the spirit of federalism at two levels. First, the Centre has no business in telling States how to manage its finances, especially when the Centre’s recommendations pertain to revenue generated out of constitutionally-prescribed state taxes. Second, it is unethical for the Centre to refrain from cutting central taxes on fuel so that it can fund its expensive flagship schemes but expect the state governments to cut state taxes on fuel, thereby impairing the state’s ability to engage in social welfare schemes. This is exactly the kind of attitude that irritates independent regional leaders such as Jayalalithaa and Naveen Patnaik as well as UPA allies such as Mamata Bannerji, besides BJP leaders such as Narendra Modi who have staunchly defended federalism.Whenever the argument is made that the Central Government ought to cut taxes on fuel products before asking states to do the same, the Centre is quick to hide under the cloak of subsidies. According to this defence, while both the Centre and the States impose taxes on fuel products, it is only the Centre which has to foot the subsidy burden and thus it is unreasonable to expect the Centre to cut taxes. But how does this explain the skewed distribution of Central tax revenue among states? And how does this explain the uncontrolled weakening of the rupee under the Central Government’s watch? Under the present constitutional framework, where the Centre has far greater avenues of revenue than the states, distribution of tax revenues to the States must be fair and equitable, failing which, the States will be hard-pressed to raise its own revenues. There are some important lessons for the BJP which is the principal national opposition. On 31 May, 2012, the NDA organised a large-scale protests against the petrol price hike across the country. The magnitude of the hike as well as the general public disenchantment with the UPA government the protests received a good response all over India. The question then will be whether the BJP will seize the opportunity and demonstrate to the public that it is not only a rallying point for people who have been affected by the ill-fated policies of the UPA but also the rallying point for workable solutions to solve the problems created by the UPA. Will BJP leaders sit down and deliberate upon the economics of the fuel price crisis? Will they evolve an economic policy that will offer a comprehensive solution to not only the fuel price crisis but also the weakening rupee and the deterioration of economic federalism in this country? On May 31, the multitude of citizens supporting the NDA protest re-assured that the principal opposition has determined a method to solve the problem that they are protesting against.As far as the Congress-led Central Government is concerned, the less said the better. With each passing day, the ill-effects of the economic disaster produced by the UPA frustrate new sections of the populace. Each passing day begins to expose the myth of “inclusive growth”. The people of India have begun to understand how the promise of “inclusive development” is inherently flawed by the high-tax, high-spend regime of the UPA. The regret has set in. It will soon be followed by anger. In a democracy, regret combined with anger can only have one logical conclusion. Does Manmohan Singh see the writing on the wall?
Defence Minister AK Antony on May 28 gave his ‘in principle’ approval to a three-fold hike in the delegation of financial powers to Service Headquarters – from the current Rs.50 crores to Rs.150 crores – with the sole objective of accelerating the process of procurement for the armed forces. The decision was taken after Antony had a meeting here with the three Service Chiefs – Admiral Nirmal Verma, General VK Singh, Air Chief Marshal NAK Browne — and Defence Secretary Shashikant Sharma. A detailed review of the security situation was also made at the meeting, Sitanshu Kar, the chief spokesperson of the Ministry of Defence, said. Antony directed the three Service Chiefs to explore more avenues for giving permanent commission to women in the Armed Forces. Antony also had a one-on-one meeting on May 28, morning with the Chief of Army Staff General Singh, who is retiring on May 31. The meeting lasted 15 minutes.(FOC)
They are Afraid of Fighting Election in West Bengal
Asim Kumar Mitra
Recently Ms. Mamata Banerjee had threatened the central government saying the Lok Sabha poll may take place earlier than its scheduled time in 2014. The Communist Party of India (Marxist) was, at the outset, very much enthusiastic about it. But now, when it looked at its own organisational set up in the state it has become apprehensive of such an early poll of Lok Sabha for the simple reason that organisationally CPI(M) is now in total disarray. So called number of acclaimed leaders of the party has gone against the party and once acclaimed to be a most well-knit organisation in the whole of India is now afraid of taking any disciplinary action against leaders. In different districts leaders like Sushanta Ghosh (former minister of the state, he was in jail for seven months till he got bail and now he is facing number of murder cases), Lakshman Sett (former MP and known to be ‘uncrowned king’ of Midnapore district is now passing his days in jail while his bail petitions are continuously rejected by the honourable court), Anil Bose, (a seven time elected MP of the party had been rejected by the people in the last Lok Sabha election. This person has got a special knack of abusing opposition leaders in filthy language—even he called Mamata a “prostitute”—, was suspended from the party. He has dared the state party secretary Biman Bose to sue against him, a defamation case against him, which is going to happen for the first time in the history of CPI(M). The party is very much perturbed with this kind of development.), Amitabh Nandi of North 24 Parganas district has been dropped from the party secretariat, Nirupam Sen alias Khokan Sen alleged to be the master mind behind the ghastly murder of members of Sainbari in the late sixties in Barddhaman district and former Industry Minister of the state is passing his days in agony as anything can happen on any day, Kanti Ganguly, another former minister of the state and alleged to be the mastermind behind the murder of Ananda Margis in the open daylight on the streets of Kolkata, Bangsa Gopal Chowdhury, former MP and minister of the state had minted money from the colliery areas of the state is passing sleepless nights etc. There are many such names and at the top of all such names the name of the former Chief Minister Buddhadeb Bhattacharjee is there. Naming all those is unnecessary. But the fact remains that first people of West Bengal had rejected them in the last Assembly elections and now the party members are deserting them in thousands and lakhs.Hence the party has become extremely shaky to face any election—small or big. Rezzak Mollah one of the former ministers of the Left Front government has openly charged his party CPI(M) for being ‘autocratic’ and ‘high handedness in dealing with issues of public interest. But the party is afraid of taking any action against him because he is still in high estimation of party cadres, although it is a fact that he has been dropped from the state committee of the party.Over and above, these days Left front partners have come out with open voice of rebellion. These days they are just questioning the logic of every decision that has been taken. In a recent meeting of the Left Front Kshiti Goswami of RSP and Manjukumar of CPI had criticised the front secretary Biman Bose like anything which was not even dreamt in their hay days. The “Big Brother” attitude of CPI(M) is being challenged on every step which was unimaginable even few days ago. Under these circumstances when Mamata Banerjee had thrown the idea of early Lok Sabha election, CPI (M) thought that this is a good tactics of Mamata Banerjee to pressurise the Central government for getting their economic demands materialised. But soon after, when they looked after their own party position they became apprehensive. They simply could not solicit any faith in the maximum number of cadres of their party. So being afraid of election has a logical end to it. On the other hand, if Lok Sabha poll is advanced by two years, what would be their performance? If not nil, there would be great decline of their number of members. In the present Lok Sabha Communists have 24 members in total among whom Bengal Left Front account for 15 members and among them also 5 members belong to different left front partners. CPI(M) has got only 10 members in Lok Sabha from Bengal. In contrast to this TMC (Trinamool Congress) has got 27 Members in Lok Sabha and 7 in Rajya Sabha. In the event of immediate Lok Sabha election, CPI(M) would at best get 2 or 3 seats. This is their moderate estimate.Even at this stage when Mamata has developed a very strange relationship with Congress, the political Pundits are of the opinion that ultimately in the event of election of President and in other elections TMC and Congress will fight jointly. TMC do not want to take any risk. At the same time they will pursue with their ‘blow hot and blow cold’ policy. Although the perception of the state Congress leadership is that the TMC will gobble them up. But at the same time there are certain compulsions with the Congress at the national level politics. They just cannot do away with it. They are simply engulfed with ‘catch 22 situation’. In this context two interesting developments had taken place. Honourable Justice Katju, Chairman of Press Council visited Kolkata last week and said that the media in Bengal is unnecessarily bothering the Chief Minister of the state. His opinion about Mamata is, ‘she is doing well’. Another interesting comment about the Mamata-government came from the BJP-national leader Rajnath Singh. He said that their party is ready to extend support to Mamata Banerjee at the central level for getting financial demands of West Bengal. This is in contrast with the belligerent attitude of the state BJP and its leadership. Nevertheless Rajnath Singh’s statement was well taken in the political circle of West Bengal.