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Showing posts with label India. Show all posts
Showing posts with label India. Show all posts

Friday, June 12, 2020

From Meluha to Hindustan, the many names of India and Bharat

Several nomenclatures have been applied across different points in time, and from multiple socio-political points of view, to describe the geographical entity or parts of it that we now know as India.

“Often, as I wandered from meeting to meeting, I spoke to my audiences of this India of ours, of Hindustan and of Bharata, the old Sanskrit name derived from the mythical founders of the race.”
These words were written by Pandit Jawaharlal Nehru in ‘The discovery of India’, which he penned down as a tribute to the rich cultural heritage of the country that was just at the brink of being freed from the clutches of British rule. Nehru is believed to have consciously taken note of the different names that went into describing the idea of India, and the unity of its people that superseded all of them. Four years after the book was published, the Constitution of an Independent India came into force, its first Article, dropped one of the three names that Nehru had identified with the country, as it read- “India, that is Bharat, shall be a union of states’.
More than seven decades later, the nomenclature of the country, has once again become a topic of debate as a petition filed by a Delhi-based businessman, seeks to amend Article 1 of the Constitution, arguing that “The removal of the English name though appears symbolic, will instill a sense of pride in “In fact, the word India being replaced with Bharat would justify the hard fought freedom by our ancestors,” claims the petition.
“The politics of naming is part of the social production of the nation. Its processes are shaped by broad socio-political conditions and can be studied from several angles.,” writes social scientist Catherine ClĂ©mentin-Ojha, in her article, ‘‘India, that is Bharat…’: One Country, Two Names’. For that matter, apart from the three most common names — India, Bharat, and Hindustan — used to designate the South Asian subcontinent, there are several other nomenclatures applied across different points in time, and from multiple socio-political points of view, to describe the geographical entity or parts of it that we now know as India. Consequently, when the Constitution of the country was being prepared, a heated argument had ensued with regard to the naming of the country in a way that would be most suitable to the sentiments of its multicultural, vivacious population.

The many names of India

It is important to note that in geographical terms, the space that is today referred to as India, was never a constant entity in the preceding centuries. However, scholars have often pointed out that one of the oldest names used in association with the Indian subcontinent was Meluha that was mentioned in the texts of ancient Mesopotamia in the third millennium BCE, to refer to the Indus Valley Civilisation.our own nationality, especially for the future generations to come”.
“Meluha, it is now generally agreed, was the name by which the Indus civilisation was known to the Mesopotamians: Meluha was the most distant of the trio of foreign lands, and the imports from Meluha mentioned in Sumerian and Akkadian texts, such as timbers, carnelian, and ivory, match the resources of the Harappan realms,” writes archaeologist Jane R. McIntosh in her book, ‘The ancient Indus Valley: New perspectives.’
But Meluha, of course, had lost currency way before modern political systems developed in the region. The earliest recorded name that continues to be debated is believed to be ‘Bharat’, ‘Bharata’, or ‘Bharatvarsha’, that is also one of the two names prescribed by the Indian constitution. While its roots are traced to Puranic literature, and to the Hindu epic, Mahabharata, the name’s popularity in modern times is also due to its sustained usage during the freedom struggle in slogans such as ‘Bharat mata ki jai’.
Bharata, writes Ojha, refers to the “supraregional and subcontinental territory where the Brahmanical system of society prevails”. Geographically, the Puranas mentioned Bharata to be situated between the ‘sea in the south and the abode of snow in the north’. Its shape and dimensions varied across different ancient texts. In that sense, Bharata, as explained by Ojha, was more of a religious and socio-cultural entity, rather than a political or a geographical one. Yet, on another note, Bharata is also believed to be the mythical founder of the race.
Apart from Bharat though, there are few other names associated with the country as well that trace their roots to Vedic literature. For instance, ‘Aryavarta’, as mentioned in the Manusmriti, referred to the land occupied by the Indo-Aryans in the space between the Himalayas in the north and the Vindhya mountain ranges in the south. The name ‘Jambudvipa’ or the ‘land of the Jamun trees’ has also appeared in several Vedic texts, and is still used in a few Southeast Asian countries to describe the Indian subcontinent.
Jain literature on the other hand, also lays claim to the name Bharat, but believes that the country was called ‘Nabhivarsa’ before. “King Nabhi was the father of Rishabhanatha (the first tirthankara) and grandfather of Bharata,” writes geographer Anu Kapur in her book, ‘Mapping place names of India’.
The name ‘Hindustan’ was the first instance of a nomenclature having political undertones. It was first used when the Persians occupied the Indus valley in the seventh century BCE. Hindu was the Persianised version of the Sanskrit Sindhu, or the Indus river, and was used to identify the lower Indus basin. From the first century of the Christian era, the Persian suffix, ‘stan’ was applied to form the name ‘Hindustan’.
At the same time, the Greeks who had acquired knowledge of ‘Hind’ from the Persians, transliterated it as ‘Indus’, and by the time the Macedonian ruler Alexander invaded India in the third century BCE, ‘India’ had come to be identified with the region beyond the Indus.
By the 16th century, the name ‘Hindustan’ was used by most South Asians to describe their homeland. Historian Ian J. Barrow in his article, ‘From Hindustan to India: Naming change in changing names’, writes that “in the mid-to-late eighteenth century, Hindustan often referred to the territories of the Mughal emperor, which comprised much of South Asia.” However, from the late 18th century onwards, British maps increasingly began using the term ‘India’, and ‘Hindustan’ started to lose its association with all of South Asia.
“Part of the appeal of the term India may have been its Graeco-Roman associations, its long history of use in Europe, and its adoption by scientific and bureaucratic organisations such as the Survey of India,” writes Barrow. “The adoption of India suggests how colonial nomenclature signalled changes in perspectives and helped to usher in an understanding of the subcontinent as a single, bounded and British political territory,” he adds.

The debate to name an Independent India

After the Independence of the country, the Constituent Assembly set up a drafting committee under the chairmanship of B R Ambedkar on August 29, 1947. However, the section, ‘name and territory of the Union’ was taken up for discussion only on September 17, 1949. Right from the moment the first article was read out as ‘India, that is Bharat shall be a union of states’, a division arose among the delegates.
Hari Vishnu Kamath, a member of the Forward Bloc suggested that the first article be replaced as ‘Bharat, or in the English language, India, shall be and such.’ Seth Govind Das, representing the Central Provinces and Berar, on the other hand, proposed: “Bharat known as India also in foreign countries”. Hargovind Pant, who represented the hill districts of the United Provinces, made it clear that Pant made his argument in the following words: “So far as the word ‘India’ is concerned, the Members seem to have, and really I fail to understand why, some attachment for it. We must know that this name was given to our country by foreigners who, having heard of the riches of this land, were tempted towards it and had robbed us of our freedom in order to acquire the wealth of our country. If we, even then, cling to the word ‘India’, it would only show that we are not ashamed of having this insulting word which has been imposed on us by alien rulers.”
None of the suggestions were accepted by the committee. However, as Ojha, points out in her article, they “illustrated contrasting visions of the budding nation’.
It is worth noting though, that ‘Hindustan’ was hardly a contender in the debates. “Hindustan received different treatments during the constituent assembly,” writes Ojha. She adds that “three names had been at the start of the race, but at the end two had been placed on equal footing and one dropped.”the people of Northern India, ‘wanted Bharatvarsha and nothing else’.
The dispute over the naming of the country has come up several times after the adoption of the constitution as well. In 2005, for instance, a retired member of the IAS and a freelance journalist named V. Sundaram published an article asking to do away with the name ‘India’ and use ‘Bharat’ instead. “According to V. Sundaram, it is because ‘Bharat’ was thought to be too Hindu by the drafters of the Constitution that they introduced ‘India’ as a guarantee to the minorities that they would not be Hinduized. But, he argued, this was a misconception: the word Bharat carries no communalist overtones and therefore it should be the sole official name of the country,” writes Ojha.
In 2012, Shantaram Naik of the Indian National Congress proposed a bill in the Rajya Sabha with a similar suggestion. “”India” denotes a territorial concept, whereas “Bharat” signifies much more than the mere territories of India. When we praise our country we say, “Bharat Mata Ki Jai” and not “India ki Jai”,” he argued.
The most recent petition for the name change, has once again been rejected by the Supreme Court, stating that they cannot do it since “India is already called Bharat in the Constitution itself’. The court though, has suggested the petitioner to file his plea to the Centre instead.
Whether the government goes on to make a choice between ‘India’ and ‘Bharat’, we are yet to see. What is certain though, is that they both might have very well been the most debated names in the Constituent Assembly, but were hardly the only ones representing the wide variety of ideas that have gone into nurturing and shaping India.
Further reading
Source: Indian Express, 7/06/2020


Thursday, September 26, 2019

Imagining a new India

It’s a nation where all citizens have an equal shot at pursuit of their own happiness


Indulging one of my hobbies of listening to great speeches, I turned the other day to Martin Luther King’s immortal “I have a dream” speech, where he talked of the “fierce urgency of now” to address the tribulations suffered by the “negro seared in the flames of withering injustice”. I feel “the tranquilising drug of gradualism” is not good enough to allow Indians a fair chance if we do not address five major crises enveloping India. My own dream for India is one where it has addressed the crises in:
Water: The government has undertaken a multi-faceted mission mode approach that has three parts to it — revitalising rivers and fresh water lakes, harvesting rain water and changing the incentives in agriculture. A nationwide mission has been undertaken to restore our rivers ravaged by widespread encroachment and interference in their natural flows. Measures have been taken to address the colossal scale of sewage polluting the rivers. City sewage systems have been revamped and a big focus has been put on increasing the number and maintenance of sewage treatment plants in every city. At the same time, urgent measures have been taken to ensure rain water is better harvested during the monsoon so that ground water levels are managed up. Indian urban conglomerations that have become like plastic sheets and do not absorb rain water have taken firm steps to address this.
Finally, the plea of Ashok Gulati and others has been heard and agriculture has been freed from misdirected intervention. There has been a stop to the supply of free intermittent power that led to water pumps pulling out and wasting ground water and allowing for perverse cropping patterns to get established. Minimum support prices have been replaced by direct benefit transfers to farmers and the export of water (T N Ninan’s evocative phrase for rice and sugar exports from water-starved regions) has stopped. A more sustainable framework for water has led to a palpable increase in ground water and rivers have become cleaner and flow stronger.
Smart cities: One hundred smart cities have come up to absorb the out migration from the rural areas in UP and Bihar. These cities have affordable houses, piped water, power supply and toilets linked to the city sewage systems with well-developed waste sites. The cities minimise travel between residences and work places because work places are in close proximity to residential colonies. All work places have charging stations for electric vehicles and streets are lined with trees and broad walking pavements and cycle lanes. Taxes have been imposed on private car use in city centres to prevent congestion. Public toilets are plentiful as are trash bins so public areas stay clean. Training facilities have been established for training poorly educated people for low-skill service industries. The population of metros like Mumbai and Delhi are not growing. There are reports of out-migration from large metro aggregations to newer smart cities.
Digital apartheid: All Indians are provided with smartphones and cyber clinics have been funded to encourage ease with a digital environment. Citizen convenience has become a government mantra and most services can be accessed digitally. Services like police verification, getting an election card, obtaining a driving licence, making payments to government can be done remotely and all applications can be submitted through a digital interface. India has also joined the group of cyber-capable nations that can defend the country from cyber attacks and has the capability to inflict damage to other countries in the same way.
Health: All health records in India are digitised and are centrally stored. Privacy laws have been established and patient’s records can only be accessed with individual consent. People anywhere in India can call in to centres that deal with common concerns with ease. The primary health centres have all been transformed, digitised and linked to 30 specialist health centres for diagnosis and care. The PHCs are staffed by qualified nurses who engage with specialist’s centres by video and advise their patients. Patient visits have reduced and convenience has increased. The district hospitals are not crowded and it is easy to access the specialised hospitals in smart cities.
Education: The government has introduced a school voucher system where municipal schools are run by the private sector. All Indian children are enrolled in school. A strong accreditation council has been set up by government that maintains and publishes school outcomes widely. Parents can use their school vouchers to choose to send their children to schools within five km of their residences. Paid fully, private schools are fully residential and located out of the cities. Teacher training institutes have been set up and all teachers need to spend one week a year learning from each other on teaching methodologies and new course work. The ratio of teachers to students in primary schools has come down from 46 to 25. All schools are equipped with TVs, computers and phones and powered by renewable sources of energy. Digital penetration in education in India has taken off and a variety of models are being used — instructors joining over phone with the material presented via computer, over video conference or just by providing digital access on computers with drop down menus for further inquiry and more advanced learning. Teaching outcomes are better and the productivity of the Indian economy is showing improvement.
Yes, I have a dream that kids will be judged by the “content of their character”, not denied opportunities due to the lack of basic services. I dream that as a nation we have realised that “now is the time to make justice for all of God’s children” a reality. Yes, I have a dream that all Indians have an equal shot at pursuit of their own happiness.
The writer is chairman, Boston Consulting Group, India. Views are personal
Source: Indian Express, 26/09/2019

Monday, August 19, 2019

The Idea of India’ is failing


he middle class that led India’s nation-building project has now embraced a nationalism that has no place for diversity

The “Idea of India” has always been grander in promise than in fulfilment. At Independence, the dream was that the people of a country of so much diversity — in language, religion, and tradition — would enjoy constitutionally guaranteed rights and through democratic means, build a just society. A cornerstone of this dream was respect for diversity that was written into the Constitution. It has been a mixed record, with as many failures as achievements. The events of the past two weeks, however, signal to us that the “Idea of India” is in danger of collapsing. We may soon have to accept the “New India” which places no value on pluralism, fraternity and autonomy.
Everything about why and how the constitutional arrangements of Jammu and Kashmir (J&K) have been so radically changed violates the “Idea of India”.

A worrisome move

The processes used to modify the “Holy Book” that is the Constitution are as important as the content of the amendments. Yet, as many lawyers and constitutional experts have already pointed out, the manner in which the Narendra Modi government has withdrawn the rights J&K enjoyed under Article 370 can only be described as abusing the spirit of the Constitution. Now that the Government has tasted success, it should be confident about using the same kind of skulduggery to aggressively alter the Constitution to further its agenda. Only the courts stand in the way and there the Government of India must be feeling that its own actions will pass muster.
We also have the disappearance of J&K as a State. It is hard to think of anything more insulting to a people than to inform them one morning that their State has been turned into two Union Territories, effectively ruled from New Delhi. This is real “tukde tukde” work.
Since the early 1950s, States have been periodically divided and new ones created. Consultation of some form or the other has always been an integral part of the process. Nothing like the sudden disappearance of the State of J&K has happened before. In a supposedly federal system, the Centre has been able to ram through the necessary legislative changes while keeping 8 million people cut off from the rest of the world and without allowing them to express their views. In the past five years, we have undoubtedly had the most centralised government since the time of Mrs. Indira Gandhi. Should we or shouldn’t we be worried about what more is in store for us? Was it short-sightedness or fear that made all the regional parties — the Dravida Munnetra Kazhagam being the only major exception — endorse the break up of J&K into two Union Territories?

Spirit behind special rights

There are legitimate reasons why in our diverse society, the Constitution has ordained special rights, for instance, for Dalits and Adivasis; for Manipur, Mizoram, Nagaland and Sikkim (under Article 371); and so too for J&K until now under Article 370. A uniformity of rights across the nation and all classes does not necessarily make for a cohesive society. In fact, the opposite is the case in a country of vast diversity. Special rights for specific communities and regions enable them to feel a “oneness” in a large country that has so many kinds of differences. Here, the guarantees promised to J&K were especially important because of the circumstances surrounding the State’s accession to India.
The autonomy offered by Article 370 has been contentious for two reasons. One, it was enjoyed by a State that remained divided between India and Pakistan. Two, the constitutional provision applied to India’s only Muslim majority State. These two features should have made it all the more important to preserve the guarantees contained in Article 370. However, for the Rashtriya Swayamsevak Sangh and the Jan Sangh/Bharatiya Janata Party, for whom uniformity has always come first, abolition of Article 370 has been a core demand.
Contentious Article 370 always was, but it was never adhered to in any measure. In this, there have been no saints in either New Delhi or Srinagar. If one systematically emptied the promise of autonomy right from the 1950s onwards with a series of presidential notifications, the other used it as a bargaining chip to feather its nest. Though emptied of content, Article 370 has retained an important symbolic value for the people of J&K as recognition of its unique character.
It has been argued that whatever the merits of the Modi government’s actions, the “Kashmir situation” of the old was no longer sustainable. But we must remember that the iron glove of this government has only made matters worse since 2014: every year since then has seen an increase in violence — of incidents of terrorism, security personnel killed and innocents murdered. When the lockdown in J&K is finally lifted, New Delhi will find that it will be dealing with a sullen population that feels its land has been occupied. We must fear a surge in violence for months and perhaps years, with or without a spurt in terrorism from across the border.

Dismissing pluralism

The middle and upper classes in the rest of India have welcomed the decisions of early August. This is not surprising. The long-running violence in J&K first made them weary, and then indifferent. So they now endorse “firm” actions that will put Kashmiris in their place. We talk about Kashmir not being integrated with the rest of India, when, truth be told, the rest of India has never integrated itself with Kashmir. Before the violence, Kashmir was only a place of natural beauty that was worth a brief holiday or one where film stars pranced on hillsides. We never saw Kashmiris as fellow citizens with the same dreams as all of us. We only saw them as residents of a State that Pakistan coveted, a people whose allegiance to the nation we thought was suspect and a State that was the cause of so much armed conflict and terrorism.
The same middle class that seeded the freedom movement, which gave the ideas for a modern Constitution and then led the nation-building project around “The Idea of India”, has now embraced an aggressive nationalism that dismisses the pluralism of India. We now do not seem to care one bit about what the people of Kashmir feel. We have been the least concerned the past fortnight about the lockdown they have been placed under. We openly talk about the possibility of buying up land in Kashmir. Lawmakers speak without being reprimanded about men from the rest of the country marrying “fair” Kashmiri women. And we look forward to effecting a demographic transformation in the Valley. How far we have travelled from when India drew up its Constitution.
There have been three days in the Republic’s history on which “The Idea of India” has been shaken to its roots. The first was June 25, 1975 when an Emergency was declared and many of our Fundamental Rights were suspended. The people’s vote rescued India at the time. The next was December 6, 1992 when the Babri Masjid was destroyed. We managed to limp away, though with neither atonement nor punishment. Now we have August 5, 2019, when the Constitution was subverted in spirit if not in letter, when federalism was shoved aside and the rights of the people of a member of the Union were stamped on.
It is difficult to see “The Idea of India” recovering from this latest body blow.
C. Rammanohar Reddy is Editor of ‘The India Forum’
Source: The Hindu, 19/08/2019

Wednesday, January 30, 2019

India climbs 3 spots on global anti-graft index


India has improved its ranking on Transparency International’s global corruption index in 2018, while China lagged far behind. India rose by three points to 78 in the list of 180 countries on the annual Corruption Perception Index released by the anti-graft watchdog on Tuesday, while China ranked 87 and Pakistan 117 in 2018. “As India gears up for its elections, we see little significant movement in its CPI score, which moved from 40 in 2017 to 41 in 2018,” the global watchdog said. It added that despite spectacular public mobilisation in 2011, “where citizens demanded that the government take action against corruption... these efforts ultimately fizzled and fell flat, with little to no movement on the ground”. Denmark and New Zealand topped the list, while Somalia, Syria and South Sudan were at the bottom.

Source: Times of India, 30/01/2019

Tuesday, January 01, 2019

Imagining 2019: The system isn’t warped, the system is us

Some of us have always lived in dystopias. Inclusiveness, empathy and hope are the brickwork of the future.

Imagining things like the future is the trick of the trade of us science fiction and fantasy (SFF) writers. But in a way we are also interpreters of history. Whether we’re writing futures or different worlds, aliens or dragons or magical humans, we build our worlds based on the societies we know, add a speculative element (or a few), and make stories out of the difference. And this is where things get murky.
Too many people don’t like history or politics in their visions of the future. History and politics are divisive and controversial, while the future is supposed to be for all of humanity. Usually, for such people, humanity refers to able-bodied men from majority social groups, raised in comfort and with access to education. We say man has walked on the moon; we don’t say 12 highly-trained, white, male US-citizen astronauts from NASA have walked on the moon through space missions that cost millions of dollars. I don’t see myself walking on the moon anytime soon. Do you?
Dystopia is another one of those vague speculative words that get thrown around as if they mean the same for everyone. The dystopia trope is simple: Life was innocent and wholesome in the past, and now everything is bad. Does that trope work similarly for those whose lives were never innocent or wholesome?
A word like dystopia sounds hollow when describing the Broken Earth trilogy by NK Jemisin, in which the protagonist comes from a culture for which the worst has always been normal. When the world breaks further, she isn’t stunned by grief, but braced for survival. The Broken Earth trilogy is a dark and ruthless, but it’s propelled by hope.
The most important development in SFF in the recent decades has been the emergence of authors and readers who are not exclusively from the majority social groups. History works differently for the dispossessed, as do visions of the future. The 21st century is not an unimaginable dystopia for an author like Jemisin, whose ancestors survived slavery. Is it a dystopia for me, considering that my ancestors were fully untouchable even a century ago? Should I wish I was living in the time of my parents’ youth, when things were cheaper but there was much more casteism, and they definitely did not get invited to write articles in the Hindustan Times about it? Is the future darker than the past for me?
So what visions of the future do we offer to a world in which not everyone shares the same nostalgia about an idyllic past, and not everyone will have similar access to any potential change? Positivity, empathy and building together are having an upsurge as themes in SFF stories today, and this is not a false positivity like the puerile nostalgia for a wholesome past that could only exist by erasing or silencing those whose lives never fit that narrative. These stories have a structure that’s the exact opposite of dystopia: We are given a world where everything has already gone wrong, so we survive by making it better.
This is also the future I want to see in the real world. I want us to realise that the world wasn’t simpler or sweeter when we were children—it only seemed so to the lucky few of us with the privilege of a sheltered childhood. But then, I also want us to realise we are the adult citizens of a democratic country—the system isn’t dysfunctional; the system is us.
I want us not to turn away from the horror or the people who endure it, but actually take lessons from their resilience, because those are the people who have stared dystopia in the eye, cracked a joke and got on with life. Is there anything left worth hoping for? Ask the queer people who have lived every day expecting hatred and even death, but still loved and had relationships. Ask the Dalits who have been shunned, beaten, murdered, driven out of spaces for centuries, and continued to work, raise children, study, write stories, win Hugo nominations and so on. Ask the disabled people who only manage to participate marginally in systems that are not conducive to them, but do it every day. What is the smallest unit of hope, the faintest spark that gets one out of bed in the morning? Those people will have your answers.
Dystopias are old; some of us have always lived in dystopias. Inclusiveness, empathy and hope are the brickwork of the future.
Mimi Mondal is a speculative fiction writer and editor, and the first Hugo Award nominee from India
Source: Hindustan Times, 1/1/2019

Wednesday, December 05, 2018

Lost opportunity

India missed the chance to usher in second generation reforms and free up private enterprise

Legend has it that a governor in 18th century Russia tried to impress Empress Catherine during her tour of Crimea by building facades of impressive villages along the way. These facades would be dismantled as soon as she passed them and reassembled further along her path. The recent schizophrenic commentary on the state of health of the Indian economy cannot but raise questions on the true state: Is India doing really well or are we just seeing a sequence of Potemkin villages?
After averaging an annual GDP growth rate of 6.4 per cent (yoy) during 2012-14, growth in India increased to 7.3 per cent during 2015-17. Indeed, the growth rate for the latest available quarter was 8.2 per cent. And all of this despite the collective headwinds created by the demonetisation of November 2016 and introduction of the Goods and Service Tax (GST) last year. Simultaneously, the inflation rate has declined from 8.6 per cent during 2012-14 to 4.4 per cent during 2015-17.
Ordinarily, this growth and inflation record combined with improvement in indices like the “Ease of Doing Business” would end all debate about the health of the economy. Yet, we are treated to the spectacle of the same government that cites the positive growth and inflation statistics also claiming an imminent collapse of small and medium enterprises (SMEs), an implosion of the economy due to the absence of liquidity, a huge credit squeeze due to regulatory restrictions on banks, export weakness due to the rupee being too strong, rupee weakness due to interest rates not being raised enough, etc! How can all of these be simultaneously true?
To form a better understanding of the story, it is instructive to start by noting that world oil prices (WTI price) fell from $91 to $44 per barrel between July 2014 and July 2017. Given our daily imports of 5 million barrels of oil, this represented a cumulated saving of around $228 billion, or approximately $76 billion annually (around 3 per cent of annual GDP). The fall in oil prices did not, however, translate into a reduction in pump prices for consumers in India. Rather, it turned into a gigantic increase in government revenues to the tune of 3 per cent of GDP annually through an incipient increase in the excise tax on fuel.
This increase in revenue could potentially have been used to reduce the consolidated fiscal deficit, which had been running at an average of 6.7 per cent during 2012-14. However, the combined fiscal deficit of the Centre and states during 2014-17 actually increased to 6.9 per cent of GDP. In effect, government spending during this period grew by over 3 per cent of GDP annually. A different way of summarising this is that the growth pick-up in India over the past 3-4 years has come almost entirely out of this huge increase in government spending.
The oil party unfortunately has now ended. Over the past year prices have risen by around $20 per barrel. The choices have become stark. Either pump prices have to be raised in order to protect the tax revenues of the government. But this becomes politically unpalatable quite quickly. Alternatively, government spending has to be reduced to absorb the fall in oil tax revenues. But cutting government spending is problematic since it has been the main source of growth for the past few years.
How does one solve this political-economic conundrum? One option is to find alternative sources of fiscal revenues. The current attempts at extracting $50 billion from the RBI’s capital reserves are one possibility. There are two problems with this. First, two-thirds of the RBI capital base of $145 billion are actually revaluation funds, which are only accounting entities rather than reflecting earned income. Moreover, the optics of raiding the central bank’s capital in order to fund a fiscal deficit is so fraught with institutional degradation of the RBI that markets might react negatively to such a move.
The second option is to get non-governmental agencies like scheduled commercial banks to open up the spending tap by lending much more. But this is problematic since a bunch of them are rife with non-performing assets and whose balance sheets are undergoing significant restructuring under the direction of the RBI. The increasingly shrill demands to weaken the Prompt Corrective Action (PCA) norms as well as the demand to ease up liquidity for SMEs are ways of squaring this circle. Unfortunately, forcing the RBI to relax existing regulatory norms has the rather big downside of the government owning responsibility for any subsequent banking sector problems.
The last option is to somehow convince the RBI to lower real rates by cutting the policy rate. This runs the risk of undoing the gains on inflation that have been achieved over the past few years. Those who ignore this risk need only think back to the years between 2008 and 2012 when the RBI accommodated booming growth by delivering negative real interest rates for most of that period. The cost was that inflation ticked along at double digit rates.
The story of the Indian economic turnaround after 1992 was one of large productivity gains induced by removal of industrial and trade policy restrictions. Those reforms worked mainly through a better allocation of resources across different sectors of the economy. But that was a one-shot gain. The country now needs a second generation of reforms wherein factor markets including land and labour are liberalised. The last four years blessed India with a wonderful external climate along with widespread domestic support for reforms to free up private enterprise. Having missed that opportunity we are now reduced to parading Potemkin villages.
Source: Indian Express, 5/12/2018