Access to justice

There is currently an interesting debate on in the Supreme Court about establishing more number of regional courts which would be the final court for appeal. One proposal says that the Supreme Court should establish more number of branches so that even people coming from far off need not worry about access to justice. The second proposal is, the Supreme Court cannot be split into various branches but we can have more regional courts which will be the final courts of appeal.

This comes in view of the high number of pending cases in the Supreme Court, in 1950 the pending cases before the Supreme Court were 680, as of September 2010 are 53,221. It is argued that one of the reasons behind this is that the appellate jurisdiction of the Supreme Court has been stretched too far. Whereas the constitution wanted the Supreme Court to be the apex court to decide matters of national importance and concerning public good. But it is believed by many that the Supreme Court has entertained too many appeals which should have been decided by the High Court itself.

But the flip side of these proposals are that if the Supreme Court only confines itself to issues of national importance then the injustice done to the citizens and which should rightly be placed before the Supreme Court if the High Court has mislead itself is necessary.

Access to Supreme Court is in a way is access to justice and if these doors are closed on the grounds that the issue at stake is not of national importance then it is a violation of the very principles of justice. Injustice done is injustice done whether at the local level or at a national level and it has to be given its due importance.

Inflation, government and the people

The current phase of inflation seems to have undone much of the good that the UPA government created for itself through a “revolutionary budget” as Sonia Gandhi put it. The ‘Times of India’ describes this whole process as ‘pollonomics’. The government obviously wanted to showcase itself as a magnanimous organizing body which was compassionate enough to call of all the money which was due from the farmers, which was actually anyway lost, but calling it of at the most propitious time when elections are due would have resulted in electoral and political gain for the government. But now all that ‘good work’ (of a few weeks!!) may not ultimately give the government the edge that it needed for the next election. The BJP and CPI (M) are already threatening a nation wide agitation in second week of April if prices are not under control by then.

Whether the government will still win the election or not is a different matter, let us look at the phenomena of inflation that we are facing at the moment. First of all it is a global phenomenon; there is a jump in the food prices in the world market. Let us compare our inflation rate with the country we always like getting compared with for every reason, China. Currently China is growing at 11.4% and the inflation has hit a 12 year high of 8.7%, now that’s something to scream about, “inflation nearing 9%” almost sounds like “I have put on 20 kgs in one month and I have to lose the same in 15 days!” There is no doubt that bringing down the inflation rate from such a high rate not only takes a little time but it also affects the growth rate. We have already seen a drop in our economic growth rate to 8.7% from the high of 9.4% in 2007. Basically there is a clash between these two objectives of growth and maintaining price stability, but with both these figures going to their worse end we might have to face stagflation. Stagflation was a term employed by the supply side economists in the 70s, to describe the then existing economic crisis, and moreover they(supply side economists) held that these crisis had resulted because of neglecting aggregate supply in the economy and only focusing and framing demand managed polices which were advocated by Keynes. However, stagflation is not a properly defined term in economics, we know that when there is negative growth in two quarters continuously it is called recession, but there is no so such barometer which you plan plug in an economy and determine whether stagflation exists or not.

Now let’s look at the measures taken by the government to tackle the problem of inflation. First and foremost it must be mentioned that this problem will not be short-lived, as the latest report of the Asian Development Bank says that inflation will be a regular problem with the Asian countries. But the government undoubtedly has to do something for two reasons:

a) To ensure the welfare of the people

b) To win the next election (I can’t stop talking about it!)

So lets see what the government has done, first it has banned the exports of various commodities including rice, next it has abolished import duties to increase imports and increase supply of goods in the domestic market, then it has banned forward trading and recently it was reported that it is also taking measures to control prices of cement along with food articles by importing cement from Pakistan at Rs150-175 for a bag of 50 kg (it is sold at 225-240 in the northern states). Now all of these measures consist the supply side polices, along with that there are some monetary and fiscal polices also that he government might undertake, like increasing interest rates (it’s actually done by the RBI) tight money supply to prevent demand pull inflation and appropriate fiscal management. Apart from this the government also considers increasing food subsidies to bring about temporary stability in prices. However, while all these policies are being implement it is interesting to note that currently many countries are facing the problem of inflation, therefore they are also implementing similar such policies if not identical, what happens then?? If our government decides to ban exports and abolish import duties to increase supply, it can happen that other countries are doing a similar thing; Saudi Arabia is already implementing these policies. So how then does the government proceed with this problem? Im not saying this is happening per se at the moment, but currently with many countries facing a similar problem this is a theoretical possibility.

It is needless to say that the above policies will affect growth and in turn the stock market but this is inevitable, controlling inflation at the moment is of utmost importance, all the national newspapers can wait for a few months to write their favorite headline “Growth back on track” and “Sensex like never before”.


Zone family……Education and Health

There has been an addition to the “zone” family in our country, now along with SEZ (special economic zone) EPZ (Export processing zone) the intended SAZ (Special agricultural zone, we will now have SDZ (Social development zone. The setting up of this zone comes as a response to the increasing questions and concerns about our educational and health systems. On the educational front, problems are present at every junction right from funding to quality of teachers to receptivity of students to infrastructure and many other things. Institutes of Higher learning have their own problems as well, as we recently read that IIT Bombay doesn’t have enough money to pay regular salaries to its professors and non teaching staff, they have requested for grants from the Central government of about 20 crores to meet all these expenses.

Apart from the IIT’s several other institutes for engineering also come under criticism from the HR managers of various firms, for example Infosys claims that till two years back they had to interview only 3 or 4 candidates everyday to find the correct profile for the job, today they have to interview nearly 14 to 15 people everyday. We all know that there has been a gap between the classroom and the industry, what is worrying is that this gap is now increasing at a faster pace.

Then comes the health sector, there are main parameters to judge the performance of this sector in our society. First, equitable access, low cost and good quality. The third factor is a requirement all over the world, but the first two are much more important in our country due to the increasing inequalities between people. Even in this case the problems exists in much severity at two different levels, the rural poor or for that matter even the urban poor have very little access to any proper medical treatment, infact their living conditions are so deplorable that they are duped by people who conduct the illegal business of selling kidneys by promising the donor a good amount of money in return.

At the higher level, it is estimated that in India all offices loose almost 14% of their working days on account of poor health of their employees. It was estimated by Indian council for research on International economic relations(ICRIER) that in 2006 India’s loss in GDP due to health hazards was almost $8.7 billion and if the existing situation persists then this loss can go up to $54 billion in 2015. Hence on recognizing these two major problems of education and health the government has come up with the SDZ as a tool to minimize this problem if not completely eliminate it. The details of this zone are not yet officially declared, let us wait and watch whether there is something in store for everybody!!

Roaring corporate sector and a booming economy!! But what about the last man standing on the street??

“20000 points on the sensex, the economy growing at 9% have a good weekend” wrote economic times on one Saturday. It is indeed great to have a booming sensex and it’s equally good to know that we are one of the fastest growing economies of the world. But does it end there?? Is a booming sensex and a roaring corporate sector all we want for our country, where millions of people still sleep on the road. In the history of our country this is truly one of the most important eras because on one hand we are the front runners in economic growth and global investments. In fact in the Presidential debate of 2004 between President Bush and Senator Kerry, Senator Kerry assured the people of America that if he becomes President then he will prevent American jobs from being “Bangalored” and sent to India where a booming IT sector awaits the best talent on the globe. On the other hand we are also known to be the front runners in mal nutrition and poverty and illiteracy. Do these people who are mal nourished and illiterate even know why their country is respected globally? They don’t, and why should they?? When the hyped growth and the boom that Economic Times raves about has not gone even remotely close to them.

Therefore the time has come when we need to make economic growth more inclusive. The current pattern of economic growth is only favoring specific sectors of the economy. And therefore people associated with those sectors are also benefiting. But the people who do not come under the purview of those sectors are experiencing stagnant growth. An article recently published in the Navbharat Times pointed out that the present government or for that matter any government has a tendency to start worrying about things only when a worrisome situation gets created. While the situation is gradually going from bad to worse they are indifferent. The economic policies being followed by the current government have undoubtedly increased foreign investment, boosted economic growth and made India one of the preferred destinations on the globe for any kind of business and financial activities. But at the same time as a result of all of this, the government is forced to reduce the fiscal deficit as per the terms and conditions of IMF and WTO. Reduction in fiscal deficit results in declining expenditure for essential services like health and education. According to the Kothari commission led by Dr Vijay Kothari in 1966 expenditure on education has to be minimum 6% of the GDP but for the last several years it has remained between 2.5% to 3.5%. In the eleventh plan it is estimated to be at around 4%. Recently it was reported the IITs don’t have enough funds to pay proper salaries to its professors. IIT Bombay made a request to the government to give a grant of 20000 crores, so it can look after its basic expenditure. This is one of the implications of reducing the fiscal deficit that even the premier institutes are down in the dumps. IMF tells our government to reduce the fiscal deficit to control inflation. According to an article on the Indian economy, when the government borrows money from the RBI it tends to increase the quantity of money and hence it results in inflation. This argument has two flaws one that the new quantity of money doesn’t chase the same goods conventionally perceived. While the quantity of money circulating in the economy increases the production and output also increases. But apart from these technical details and principles, it is important to note that if the government reduces its expenditures on health and education then any significant development for the masses is not achievable, and then it’s meaningless to merely float on the fact that sensex is on 20000 and economy is growing at whatever percent when it is of no consequence to majority of the population.

Retail sector in India and corporate houses

Entry of the corporate houses in the retail market or for that matter into any sector is popularly perceived to be a part of economic growth. The increasing participation of the private sector is considered as one of the instruments of economic growth and job creation. Economic growth by itself creates jobs says Lord Desai a professor of economics at the London school of economics. But this I reiterate is a popular perception, whether the entry of corporate houses into every market and field is justified or not is a different matter. In my view it is incorrect to make general statements about economic growth and job creation, one has to be very precise when dealing with this subject. Economic growth I agree does create jobs; it does push the economy to a more productive stage. As the economist Rosenstein Rodan has said in his theory the “Big push” that for a plane to take off it requires a certain minimum ground speed, anything less than that and the plane wont take off, similarly to pursue economic growth we need to mobilize a certain minimum amount of investment, anything less than that is inadequate. And investment mobilization happens through the corporate houses or the private sector. So Im not against the private sector per se, but for the government and people to jump to a conclusion that the corporate houses no matter what they do and where they go will bring beneficial results certainly comes under a cloud of suspicion. To prove that the entry of the corporate houses into the retail market is beneficial we would have to rely on the theory of trickle down effect, but the trickle down effect is simply another way of saying that what is good for the business houses is good for the country, which is obviously not true. Trickle down effect has been named the horse and sparrow theory by JK Galbraith “if you feed enough oats to the horse, some will pass through to feed the sparrows.” Unfortunately today the horse is the corporate sector and the sparrow is the working class.

When we speak of the retail market we are primarily dealing with a section of society where the people are not economically privileged. Retailers at the lower end, like the vegetable sellers, the fruit sellers basically are the underprivileged section of the society, and when the government permits the corporate houses to enter this field with their attractive pricing strategies the government is practically wiping these 4 crore middle men out. And the justification given is “growth will create jobs for them as well”. For people who say my question is can you give a guarantee that those very 4 crore people will get their jobs back. And they are 4 crore human beings not ants who can be trampled under the feet of men.

Entry of the corporate houses into the retail market is a part of the de licensing policy which was started in 70s. Before the 70s most of the industrial production was handled by the public sector. In the 70s it was realized that the participation of the corporate houses is also very essential if we have to be on par with the rest of the world in terms of technology and capital. For this reason the license policy was scrapped out. Only industries of national importance like defense, railways, atomic energy were to be kept in the control of the public sector. So the purpose of the de licensing policy was to increase productivity. Today in 2007 if we analyze the repercussions of this policy we find that the corporate houses have increased productivity no doubt, but have also increased the divide between rural areas and the urban areas, between the bourgeois and the proletariat. This divide has very unfavorable social consequences which need to be settled first than increasing productivity for only a certain class of society.


Sanjay Dutt’s sentencing

Equality before law and the rule of law was reinforced in the public mind when Sanjay Dutt was sentenced to six years rigorous imprisonment. His matter had come on the board of TADA court about six months back and the judge kept adjourning the matter, finally on 31 July the judge pronounced the verdict. From the legal point of view the verdict was quite satisfactory, since the minimum sentence for illegal possession of weapons is 5 years. The judge used his discretion and gave six. After the acquittal of Manu Sharma the son of an industrialist and the acquittal of the Chief Minister of Jharkand, there was a general feeling that the high and mighty always get away and that the law is systematically twisted from time to time to suit those in power. This view was dispelled when Sanjay was sentenced.

The judicial process in our country can be very predictable, as soon as Sanjay Dutt was sentenced to rigorous imprisonment he was immediately released on bail on the grounds that he did not receive a copy of the judgment, till he receives that copy he can remain on bail and after he receives it from TADA court he can apply for regular bail and thereafter the matter regarding his conviction. But explanation can there be for not giving the judgment?? The very fact Judge Kode has sentenced Sanjay implies that after hearing the matter he dictated a judgment, then why is a copy of it not given. It is not possible that the TADA court doesn’t have the printing machinery to take out a copy of the judgment. From the given circumstance it is quite clear that there is some element of manipulation involved with this issue otherwise there is no reasonable explanation for this delay.

Another aspect which must be dealt with is the public reaction to Sanjays sentencing or rather it should be called public sentiment due to its very nature. There are people who are writing blogs, saying that the sentencing is too harsh and “Munnabhai” must be dealt with some compassion and care. Here particularly I would like to quote the lines of a charted accountant who writes Column’s regularly on the website of CNN IBN.

Many will agree that Sanjay Dutt, though had a different image earlier, now, apparently, reflects a complete transformation as a human being. His apparent soft & humble gestures, the hand shakes, his statements in the court, the feeling of guilt, et al. are clearly the reflections of his makeover in the past years. Sanju Baba’s characters in his recent movies Munnabhai MBBS and the sequel Lago Raho Munnabhai carried mind-boggling touching messages which ended up leaving lost lasting & worth following impressions on several minds (I will say at least mine).

Tell me, what we are going to achieve by putting this person behind the bars. We will be seriously wasting 6 years of an amazing talent, which can be put to better use of spreading more Munnabhai messages around. But as we have to keep the punishment also in mind, so Sanju Baba can be let free to work for movies and other noble & social projects – but with the strict caveat that all the remuneration he receives from these projects should go to fund a specific social project, which can help lacs of ailing and poor families of our country by providing basic amenities of food, clothing & shelter. Besides, there can be other restrictions with respect to his moving out of country or doing or not doing certain acts or many such other things for which judiciary is more capable to decide.

Really, no one is going to achieve anything by imprisoning a worthwhile talent who is also capable of earning huge sums of money in a short period of time, which in turn can help countless deprived families in our nation. The case is set to be appealed and heard in the highest court of the country and, possibly, it is a rare chance for the judiciary to do something imaginative and create new benchmarks and examples for the years – rather generations to come.”

As soon as I read this post I wrote a comment on the website which was not published by CNN IBN, I said that im really surprised that educated people who are also regular columnists have the audacity to say this “His apparent soft & humble gestures, the hand shakes, his statements in the court, the feeling of guilt, et al. are clearly the reflections of his makeover in the past years” This Mr. Columnist of CNN IBN apparently does not know the rule of law, and the behavior of a person can hardly be judged from his films and his public appearances where he will put up his best behavior. The columnist further says “Tell me, what we are going to achieve by putting this person behind the bars. We will be seriously wasting 6 years of an amazing talent, which can be put to better use of spreading more Munnabhai messages around.” Just because a person is talented and spreads messages doesn’t mean he will be granted a lesser sentencing than what the statue prescribes, and if he does get lesser sentencing, it amounts to discrimination by the judiciary. The public reaction to this case is truly disappointing. People are not so vocal when it comes to fighting poverty a problem which we have had for decades, for those police officers who are dying in naxalite areas, for those farmers who are committing suicides for the last 100 years since 1907 (earlier it was due to British imperialism and today it is because of globalization). Had public sentiment acted for these issues we would have had a better place to live in today.







Should Indian students working abroad be taxed??….Yes why not

The subject and concept of taxation has existed since 3000 BC, early taxation has been described in the bible, in genesis ch 47 mentions that “when the crop comes in, give a fifth of it to Pharaoh the remaining you may keep for yourselves and your children” So fourth fifth becomes 20% and 20% tax was levied even in 3000 BC. The eminent jurist and economist Nani Palkhivala has said that taxes like water have a tendency to find the lowest level, almost all the taxes ultimately hit the common man. Now in 3000 BC a person earning even 5 rupees was expected to give 1 rupee as tax that time taxation was a new concept but today it is not the case, if the income of a person is below a certain level he is not required to pay any taxes. It so happens in our country that people from the lower social strata are exempt from taxes because they dont have the capacity and people from the higher social strata are given benefits under income tax act because they are contributing towards economic development or increasing exports, so eventually the entire burden of taxation comes on the common man. So this system needs a sea change where only a certain class of people are heavily taxed and the remaining are either above it or below it. Hence one of the effective methods to change this is to tax Indian studets working abroad. Through this three main objectives are achieved, one it increases revenue for the government. Because firms located in SEZs are exempted from taxes and the government has been denied revenue from the BPO’s according to the supreme court judgment in the Morgan stanley case all this has resulted in a significant loss of revenue for the government, which has lea to an increase in the fiscal deficit, hence taxing students abroad will bring in revenue and reduce the fiscal deficit. Secondly the elite institutions were established in the 60s by out ex prime minister Nehru to generate a pool of talent to furthur the technological development and eventually economic development of our country, but because of globalization and attractive job offers abroad majority of these students went abroad and continue to go abroad. So paying taxes can be a compensation for this, that they acquire world class education at a much lower price due to government subsidy and they dont give anything in return, so taxation revenue now can become the return. The third aspect is Indian students working abroad do have to pay certain taxes there, so in addition to that Indian taxes shouldn’t be very high they should be reasonable, but the very fact a tax is imposed will discourage many students from going there to “earn higher and save more” this is usually the objective. They will in fact be able to save more in India and hence a pool of talent can be retained in India it self which was the original objective of Nehru when establishing the elite institutions.

To conclude I would like to elaborate the four principles of paying taxes according to Adam Smith in his book wealth of nations, equity, convenience of tax payer, economy and certainty and clarity. If these factors are taken into account while imposing the tax then it would certainly be fair for the Indian tax payer abroad and beneficial for the common man in paying taxes in India.