BJP’s ‘Mission Bengal’: Book review and more

 Pratim Ranjan Bose

Over the last half a century, particularly since economic liberalization in 1991, India has changed a lot.

Chennai is now an auto-hub. Hyderabad is an IT city. Odisha and Chhattisgarh are top destinations for industrial investments. Sikkim is riding on the pharma boom. Extremism is replaced by peace and prosperity in Guwahati, in the North-East.

Only one major Indian State, West Bengal, remained out of this loop. Kolkata - which was the headquarters of majority index stocks, at Bombay Stock Exchange, till 1980’s - now barely has quality corporate jobs. 

While the age-mix is falling in other Indian metroes; Kolkata is ageing. It has the largest pool of senior citizens and the lowest share of 20 plus – a clear indication that the young and aspiring are giving the city a miss.

A major and definite reason behind this stagnation is the politics of isolation and conflict, introduced by the Left (1977-2011) and pursued with greater vengeance by the ruling Trinamool Congress of Mamata Banerjee (since 2011).

Jyoti Basu (1977-2000) government denied space to centrally-funded residential schools (Navodaya Vidyalaya) for the meritorious. Mamata rejected access of the poor and farmers to central welfare schemes.

Apologists argue that the regional nature of both Left and Trinamool prompted them to guard their territories. But that’s a half truth.

Regional politics was strong between 1977 and 2014 and still rules Odisha, Telengana, Andhra Pradesh, Tamil Nadu etc. None made it a religion to oppose the federal government at every single step.

This shouldn’t and didn’t benefit Bengalis. But State governments survived decades through violent use of State and/or party machinery to establish virtual one-party rule that limited democratic options to voters.

Ideology has been a cover to legitimize the illegitimate.  There was a lame-duck opposition during Left-rule. Mamata went one step ahead to make the State ‘Opposition-free’. 

‘Political killing’ is commonplace. Terms like ‘pre-poll violence’, ‘post-poll violence’ are Bengal’s gift to the nation. Hundreds die before or after local body elections, where Opposition fails to submit nomination in 30-40 percent seats.

"Mission Bengal"

The politics of territorial control and conflict is now under threat from Narendra Modi’s nationalist BJP. For the first time since the decline of Congress in 1977, a national party is knocking the doors of power, in West Bengal.

From barely two Parliamentary seats in the 2014 General Election; BJP upped their stake to 18 seats (out of 42) in 2019 and is now aspiring to overthrow Mamata from power, in the 2021 Assembly election.

Considering the 34-year Left rule and BJP’s past weakness in the State (got the first member in legislative assembly in a 2014 by-election) since inception in 1980; this is a major development.

Journalist Snigdhendu Bhattacharya’s “Mission Bengal: A Saffron experiment”, published by HarperCollins is an attempt to chronicle this juncture of history. As the first such work on the block, it deserves discussion.

The book is basically a diary of events, offering blow-by-blow account of the moves and counter-moves by Trinamool and BJP, in the run up of the dramatic change in political scenario, particularly since Trinamool’s emphatic win in the 2016 Assembly election.

Among the negatives, it offers mundane details of the local BJP leadership, none of whom are capable enough to generate a swing that is essential to script a victory. It was Modi versus Didi (as Mamata is known) in 2019 and would remain so in 2021.

Having said that the book offers important details on the deep inroads of RSS – the mother organization of BJP – in West Bengal and the opportunistic politics of Mamata who was a coalition partner of BJP till 2007.

Oppressive and undemocratic practices pursued by Trinamool, particularly to win the 2018 rural body election and; rising religious divide, as evident in the series of communal riots that the State had witnessed in the recent past – are identified as major fault lines.

Religious divide

The issue of communal divide is important.

West Bengal has 28 percent Muslim population, third largest after Jammu and Kashmir and Assam. In the past, these votes didn’t follow any strategic pattern. But the trend started changing since 1990’s and ended up playing a crucial role behind the rise of Mamata Banerjee to power.

Nationally, the communal divide has been rising since the 1980's due to three primary reasons. (1) The wave of Islamic brotherhood , coinciding Soviet-Afghan war (1979-89).

(2) Rajiv Gandhi government’s ill-conceived decision to yield to the Islamic resistance to the Supreme Court verdict against the practice of Triple Talaq, in 1985, leading to consolidation of Hindu sentiments. (3) The demolition of Babri Mosque in 1992.

In West Bengal this period coincided with rampant illegal immigration of Muslims from Bangladesh (formerly East Pakistan), which was parallel to migration of Hindu refugees to India in the face of religious-social oppression.

Unlike the Western border, where the flow of refugees more or less stopped in two years from the Partition in 1947; the flow of Hindus from East Pakistan and then Bangladesh never stopped.

The India government stopped keeping count of refugees from East Pakistan beginning 1958 and didn't recognize any such entry following the birth of Bangladesh in 1972. However, Hindus continued to face discrimination in Bangladesh, particularly during the Army rule (1975-1990) and the first BNP rule (1991-1996).

In the absence of any official recognition, Hindu refugees from Bangladesh quietly slipped in India. In the eyes of the law, their entry was as much illegal as that of the poor Muslims entering the country for better work opportunities.

Snigdhendu proves that immigration of Muslims was way larger than Hindus in the early 1990’s and the political administration was active in making them voters of the country through the backdoor.

This was also the time when Left’s traditional support base was waning due to long stay in power.  in 1984, Mamata Banerjee won from Hindu refugee dominated Jadavpur Parliamentary constituency, once considered a bastion of Left.

The communists focused their attention on Muslims, who started showing signs of voting in a block, creating ground for today’s trouble.

In another decade, Islamists will riot on the streets of Kolkata demanding the scalp of the exiled Bangladeshi writer Taslima Nasrin, who was then staying in the city. In a few more years, this vote would move to Trinamool inviting the fall of the Left.

In 2013, when Dhaka was witnessing a popular protest demanding capital punishment to prominent pro-Pakistani Liberation War criminals; Islamists in Kolkata were demanding the scalp of the Bangladeshi Prime Minister Sheikh Hasina.

 The anguish of the majority was rising. But there was no redressal to it in the absence of political resistance by the existing players - Left and Congress. It was at this juncture BJP entered the scene and got a record 17 percent votes – nearly three-fold rise from the previous average - in 2014.

It was time Mamata should have realized her mistakes. But she didn’t (as was epitomized by her 2019 statement - “the cow that gives milk, must not be wronged for throwing a few kicks” - with regard to allegations of appeasement politics) Riots followed in greater numbers.  Snigdhendu did a great job in chronicling such incidents.

BJP didn’t miss this opportunity. The Citizenship (Amendment) Act 2019 (CAA) proposed to grant automatic citizenship to Hindu (and other minorities) who entered India till 2014. This has also mitigated the concerns of Hindus over the anticipated updation of the citizenship roll.

 End of ‘Banglar Gorbo’?

Will BJP win the 2021 election in Bengal?

The book remained tentative. This is partly due to BJP’s organizational weaknesses in the State, and the Muslim vote riddle. The loss of BJP in three assembly by-elections in 2019, added to the lack of confidence.

The entry of high-profile election strategist Prashant Kishore or PK in the scene to support Trinamool’s cause further rattled the confidence of the author.

None of these, however, indicate recovery in Mamata’s popularity. By-elections are never the right indicator of the overall political mood. BJP lost important byelections in UP before sweeping the Parliamentary election in 2019.

In all fairness, Mamata and her strategist probably wants to create a perception of popularity to check the slide. But they themselves are not confident about the outcome as was evident in the postponement of urban body elections even before the COVID struck in March 2020.

Social media campaigns to project Mamata as the numero uno of Bengal politics fell flat on their face. The ‘Banglar Gorbo’ (pride of Bengal) campaign, launched during the pandemic, became a butt of the joke on the internet and was evidently discontinued.

 On a weak wicket

So what will happen to Mamata?

In my opinion, she is standing on a very weak wicket and the situation is steadily slipping out of her hand. Communal divide is just a part of the whole development. She is losing ground before smart politics by BJP and governance failures.

Mamata knows it too well. At a recent administrative meeting she complained that perhaps she did a bit too much for North Bengal, so people took her granted. This was a clear admission of her party’s weak fundamentals in the region.

BJP swept all seven Parliamentary seats in North Bengal in 2019. The region has over 50 Assembly segments and as things stand now, Trinamool’s seat-share may not reach double digit in North Bengal in 2021.

The tribal and forested parts of West Bengal bordering Jharkhand voted for BJP in 2019. Leave alone salvaging the situation, Trinamool’s organization in the area is now collapsing. The party strongman is on a collision course with Mamata.

Singur, in Hooghly district, in the outskirts of Kolkata, played a crucial role in creating Mamata myth. BJP was ahead in this assembly segment in 2019 Lok Sabha election and no one expected a reversal of fortune in 2021.

So, what went wrong for her? Many things. First and foremost, the all-pervasive corruption, and rent seeking by the political administration even in the face of worst calamities did hurt people.

During the pandemic, there have been sporadic protests even in areas where BJP barely exists, against alleged diversion of PDS foodgrain. The story was repeated over distribution of relief, after cyclone Amphan that ravaged the Muslim dominated districts of North and South 24 Parganas.

Add to this the high-handed attitude that suppresses every dissent. During the ruthlessly one-sided rural body election, BJP could put up some resistance in Purulia district. After the election, BJP activists were found hanging dead in public places. Probably they were celebrating success by committing suicide!

People are angry and they are taking BJP as an avenue to vent their frustration. Even a section of Muslims are participating in this trend. The CSDS-Lokniti post-poll survey in 2019 indicated doubling of BJP’s minuscule Muslim vote share in Bengal since 2014.  

 The third point is political. Mamata introduced identity politics in West Bengal, by garnering community specific support. Some of them - like lower caste Hindu refugees and Muslims – had traditional differences.

The gap was explored by Modi’s BJP which excelled in consolidating Hindu votes, breaching all caste barriers beginning 2014. If V P Singh was credited for disintegrating Hindu votes, through the famed Mandal Commission report. Modi would be known for breaking those barriers open to take BJP's popularity to historic high.

The expertise is now coming to use in West Bengal. BJP garnered substantial support of Hindu refugees in 2019. With CAA in place, the trend may consolidate in 2021.

A major attraction of BJP is its freshness and unique positioning in Bengal politics vis-à-vis Trinamool, Left and Congress. All three had a stay in power, have stake on the Muslim vote bank and all cast aspersions on BJP as a Hindutva party.

This gives rise to the perception that Left and/or Congress can join hands with Trinamool, if need be, to keep BJP out of power. BJP uses this to cement its position as the only option for every disgruntled voice that wants to replace Mamata. 

And, there are too many such voices. If some want an end to appeasement politics, some others want to take revenge for the political atrocities or rent seeking and, then there are young voters, who can no longer be fooled by this politics of isolation and jobs of civic volunteers.

Young voters were Modi’s biggest bet to come to power in Delhi in 2014 and they would be the prime movers of change, in Bengal, in the 2021 Assembly election.

 

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A practical guide for journalists in the times of media collapse

Pratim Ranjan Bose 

In 2014, addressed a seminar at a reputed management institute detailing news media as a sunset industry. This was not classified information. My presentation was backed by evidence.

Over the last few years, I saw values crumbling all around. The test of a man is how he behaves when under pressure. Media finances were crumbling because of wrong policies pursued by owners, managers, editors; and what they did in response is also before our eyes.

Digital or no digital, there is no trend correction at all. And, all evidence suggests the troubles should only intensify from this point. What was a rumbling has become a tornado, and a massive disruption is foretold. Once again this is no classified information and COVID is merely an excuse or a catalyst that fast-forwarded the destruction.  

Writing this because, I read the news of a senior news wire journalist committing suicide in Ranchi. Was he shortlisted for sacking? We do not know. Media tells about everyone else but not many talk about media. That’s not because, no one knows what’s happening there. It’s because everyone has a vested interest in maintaining the status-quo.

But, status quo is a utopian thought in today’s world. You bleed more to protect it. Look across the world, no business remains relevant for more than 10-15 years. In fact, averages are way lower. If some houses remain relevant for a longer period it's because of new businesses they invested in. Postal major became a logistics king. Polyester maker is now better known as a tech giant. Digital tech players are finding fresh prospects in renewable energy.

From this point of view, media houses were an exception to the general business environment. Apparently, they remained relevant for too long by selling the same product and without much change in sales methodology. Logic says, trouble was overdue.

 I have some idea, where they are heading and what are the options before them. But that’s a topic I would like to discuss on some other occasion. What concerns me more is the future of journalists. My understanding is journalists have a gala time ahead, provided they are investing in themselves and not guided by traditional career options.  

A journalist is basically an information professional. He must know theories but must not see the world through theories. He looks at the world from the perspective of ground realities, which are ever changing.  If he can challenge those theories and give solutions he reaches the next stage.

To put it in context, therefore, a journalist should be capable of connecting global and national views with the local perspective. Not an easy job at all. This is the most sought-after knowledge, particularly in a country like India, where social behaviour differ even within a district.

Drop your wallet on the pavements of Bodh Gaya in Bihar and come back after an hour, it will remain intact. Repeat the same experiment a few kilometres away at Gaya town and you may have a different result. The gap between the two is evident in selective success or failure of national projects.

There is another important factor in this conjecture. A journalist can see things due to two reasons 1) His mind is never cluttered by theories and perceptions and he is ready to watch everything with an open mind. 2) To achieve the first goal, he must maintain a degree of integrity. I am not talking from an idealistic standpoint.  I am a realist. I am merely asking journalists to not short-sell themselves.

A journalist sells knowledge. Assuming he has knowledge and is constantly sharpening it, he should work on skills necessary for selling the knowledge, which is crucial for his survival or success beyond media. You are blind if you do not see the writing on the wall. So, keep working on your future. Why die?  Why act in a haste and be on your knees? Why trust them who are not trustworthy?

Win the sentiment. Be recognized at your own merit. Do not carry the brand of your newspaper on your sleeves. Build your own brand while working as a journalist. I did that. It didn’t happen overnight. Neither, was there any concrete plan from the beginning. I simply went with the flow and the moment things crossed a limit, I set my goal.

Luckily, for me, the trigger came a year ago before COVID. So, when they took the excuse of COVID to shed jobs, during the lock down, I had already stepped into a new life. Mind you it's your life, do everything to achieve your goals. It is your priorities which matter. The rest is inconsequential. 

 

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Article 370, Pakistan's new map and the prospect of Kashmir chocolate exports!

Pratim Ranjan Bose

If India were China, someone would have manufactured Kashmir shaped chocolates, painted in green, with white crescent moon and a star pinned on it, and sold them to Pakistan via-some Arabic named company in Dubai.

Pakistani Prime Minister Imran Khan might have announced a government scheme to present each of its citizens with a piece of ‘Kashmir’ of their own. One of his corrupt aides, could have taken charge of packaging and distribution. “Kashmir-ka talluk Pakistan se hai,” the gift wrap would claim.

The kind of mental state that he is in since August 5, 2019 - when India tabled the bill for abrogation of Article 370 and 35A in the erstwhile Indian State of Jammu and Kashmir and dividing the State into two Union territories - everything is possible.

The fault doesn’t lie with Khan. He became Prime Minister in August 2018 with the support of staunch Islamists who see the world through glasses with a deep green tint. Yes, he also promised to take action against corruption and since then the country is abuzz with financial scandals - involving his aides, involving China and China Pakistan Economic Corridor.

Khan is now on a weak wicket. His popularity is waning and going by the history of the country, takeover of the administration by Pakistani Army cannot be ruled out, unless China comes to his rescue. And, the Indian Prime Minister Narendra Modi has to take full blame for his misery.

Having begun with the Balakot airstrike on February 26, 2019 that shook Pakistan, by virtue of sheer audacity of the mission, Modi destroyed the age-old political paradigm in Pakistan centering Kashmir and India.

Everyone, on either side of the border, who had a stake in that politics, suffered.

Pakistani Army lost a major plot. Pakistani politics can no longer blackmail India in global forums because there exists no State of Jammu and Kashmir. Ladakh has been demanding separation from Kashmir for decades. They finally got it.

Kashmiri politicians led by Late Sheikh Abdullah, who fooled India by converting a temporary piece of law (Article 370), created for the annexation of the princely State, into a near-permanent feature and enjoyed the benefits of a country-within-a-country, are ruined.  

They can no longer deny rights of minority Hindus and Buddhists, and convert the land that was ruled by a Hindu king, into a preserve of only one religious community. The Union Territory of Kashmir revived the secular character of Kashmir.

Over the last one year, some 20,000 Hindu and Sikh refugees from West Pakistan and nearly 10,000 sanitation workers got domicile status in Kashmir that includes not only voting rights but access to State welfare schemes. They were marginalised for 70 years.

Despite their complaint over prolonged lockdown or internet ban, common citizens are gaining. Simplification of and rules – in line with practices in other parts of India - saw beeline land registration bringing the Union Territory a record Rs 100 crore of revenue. The money came from Kashmiris only, they were waiting for years to register their property. 

Yes, many people have complaints. They lived in one political paradigm for seven decades. The restructuring will hurt them. But this is a temporary phenomenon. If the once-turbulent North East India can become peaceful, how long can Kashmir deny peace?

If the administration doesn’t support the ‘economy of stone-pelting’, as Kashmiri politics did so far, everything will change rapidly. And, that story has just begun. Pakistan can delay the process by letting loose those Hafiz Sayeeds, but not for too long.

The sword of FAFT (Financial Action Task Force) is hanging on their head. They took advantage of the geopolitics to get access to funds in the past. But the days have changed since then.

Geopolitics became complex but global finance became even more complex. It would be difficult for Pakistan to survive in today’s world, with a ‘Terrorist State’ stamp that too with such a weak domestic economy.

Support from China is not assured because they too are witnessing mounting pressure both from within and outside.

In the last few weeks alone six Chinese steel mills have closed down, as US and European markets are becoming inaccessible. India, the last big technology market, started closing doors to China. The impact will be felt.

After 31 years since the fall of the Berlin wall, global politics is set for a major churn and no one knows where it will end. Ofcourse, Khan must not think that long. He is suffering from tremendous mental agony since India changed the status of Kashmir in August 2019.

At one stroke, it erased the history of India’s past mistakes of taking the case to the UN. Pakistan enjoyed that handle for too long. Modi ended it by overnight change in the status and geography of the land.

Where will Imran Khan go now? How should he face those Islamists?  Dejected, he resorted to releasing a new map of Pakistan that includes Jammu and Kashmir and Ladakh, excluding the areas illegally occupied by China, and parts of Gujarat etc.

Not known if Khan is inspired by Nepal or their common support base China, which has a track record in releasing maps that includes areas from other countries. Indians enjoyed this comedy. The internet was at splits. 

 ***

Tweeter: @pratimbose

 (Pictures from net. 

 

 

 

“Servant of Sahibs” – A chronicle of life and politics on the Silk Routes during British India

Pratim Ranjan Bose

(The following was part of my presentation during a webinar on "Saga of Galwan" organised by Kolkata-based Institute of Social and Cultural Studies, on July 11) 

India had two major concerns – both originating in China - in the summer of 2020. The first one is a pandemic. The second one is a deadly border clash at the inhospitable geographies of Galwan river valley, bordering Beijing-controlled strategic Aksai Chin plateau, in the higher ridges of Himalayas in Ladakh.  India lost control over the plateau, in 1962.

More than the clash that caused deaths on either side, it was the brutal and blatant nature of the Chinese offensive that shook the nation. It pointed at the fragility of peace on the Northern border. Among the positives, the incident revived the memories of a forgotten Indian explorer, Ghulam Rassul Galwan, who chronicled hostilities of the Chinese way back in 1892, in his book “Servant of the Sahibs”.

Galwan, then a 14-year-old porter, was traveling with Charles Murray, the 7th Earl of Dunmore, and Major Roche, in the Pamirs – the junction of Central, South and East Asia. Those were the days when Tibet was yet to be prised open (1904) by the British and Leh was an important town on the silk routes connecting India with China, Central Asia and Russia.

From Leh, caravans used to move North - via-Nubra valley, Karakoram Pass, Sanju Pass etc - to reach Yarkand in present day Uyghur Autonomous Region in Xinjiang province of China. From here you could go in any direction. The movement was both ways and the early invaders to India took to this path to cross the mighty Himalayas.

Those were also the days of unending hostilities in the region. Tajiks had just lost Xinjiang to China’s Qing dynasty, which itself would collapse in another decade or two. Russia was pushing the boundaries across Central Asia and were picking up fights with the local warlords, including in Afghanistan, before invading Xinjiang in 1937. And, the British, who had already established control over South and South East Asia, was wary of Russian plans, particularly with respect to Tibet.

It was in those days, when Ladakh including Aksai Chin, Gilgit-Baltistan and entire Kashmir were ruled by the Maharaja of Jammu; Galwan used to accompany Sahibs on journeys lasting over months, on the silk routes. Most of these visitors– like Lieutenant colonel Sir Francis Younghusband, who would later lead a military offensive on Tibet, bringing forth the Anglo-Tibetan Treaty of 1904 – were on strategic-diplomatic missions; and some - like Major HH Godwin-Austen, the English topographer and geologist who determined the height of world’s tallest peak K2 –  were more interested in science, geography, anthropology etc.

Galwan not only accompanied those noteworthy travelers but he remembered those journeys almost to the last detail, with the burning desire to write a book.

How extraordinary was that? OK. He was born in a poor family in 1878. Raised by a single mother in abject poverty, as his father left for some other woman. His grandfather was a robber.  The word “Galwan” was used in Kashmir to refer to social outcastes and people of disrepute – inferior races or tribes^[i], robbers^[ii] etc. He was accompanying Sahibs to those harsh hilly tracks, riding above 18000 ft, from the age of nine. Formal education was out of his bounds. He was married at the age of 14 but before he could spend time with her, she died. Galwan was then camping in the hills.

During the India-China standoff in 2020, newspapers were full of reports attributing Galwan valley to Ghulam Rassul Galwan and his heroics, during the trip with Charles Murray - the “Lord Sahib”. But Galwan who had been brutally honest in describing life, including his illicit affair, jail term and/or the “lie matters”, didn’t mention any such achievement. Let us assume that those pages were lost during the back and forth movement of the manuscript between Galwan and the prime inspiration behind the book – a “poor (American) Sahib”, Robert Barret and his wife – for nearly one and a half decades.

Galwan started writing the book with barely a dozen words in his stock. By the time the book came out in “breaking English” (his editor didn’t write it for him but helped him express his free spirit) in 1924, from London, with a foreword by Sir Younghusband; Galwan became the chief native assistant of the British joint commissioner at Leh. But that book was probably the sole purpose of his life. He died the very next year, in 1925, at the age of 47.

What he left behind is not a literary work in the traditional sense of the term. Galwan didn’t have the pedigree of Sarat Chandra Das who was a civil engineer by training and ended up not only with a travelogue (“Journey to Lhasa: The Diary of a spy”) but also as an outstanding scholar on Tibetan language and culture (Das compiled a dictionary of Tibetan language). The only commonality between Das and Galwan was: Both ended up serving for Younghusband.

And, yet Galwan left behind an invaluable treasure – a candid, common man’s take on life in the region. It is rich on socio-cultural references like the sharp difference between Ladakhis and Baltis. An explorer will be thrilled to read the hair-raising experience of crossing Mushtag Pass that was once the shortest route between Yarkand and Baltistan. It will tell you that Buddhism had a deep impression on life in the region, cutting across religion. However, Hinduism suffered due to the practice of untouchability.

While reading this book you may reconstruct the history of the region. Khotan, which was once an Iranian Saka Buddhist kingdom on the edge of the Taklamakan desert now ended up in Xinjiang province of China. Most importantly, it tells you that Ladakh of 19^th century took pride in their Indian identity and had deep distrust to China.

Before I end this presentation, I cannot but repeat one incident from Galwan’s book. During that clash with the Chinese somewhere in the Pamirs, in 1892, Galwan was the only one to be badly injured from his camp. The Chinese promised to maintain peace and then attacked from the behind.

On the next day, Major Roche took account of the situation in the other camp and told Rassul: “Don’t be sorry. Here is only you, one, lying down. There among the Chinese, are seven men, lying down.” 

---

^[i] “Galwan, Galwan Valley and the Great Game”. Kashmir Observer. June 23, 2020. https://kashmirobserver.net/2020/06/23/galwan-galwan-valley-and-the-great-game/

^[ii] “Servant of Sahibs” by Ghulam Rassul Galwan./ 

India's COVID stimulus: Questions on source of finance apart, right move at the right time

Pratim Ranjan Bose

The expectation was for handouts, following precedence of rich economies like the US. The Indian government ensured that there was enough liquidity in the system to sustain short run needs and, used COVID as a plank to carry out long pending reforms to ensure all round future growth.

The primary aim of the initiative is to convert India into an attractive destination to global investor community, in the quickest possible time, with a special eye to attract a sizable share of the value chain now concentrated in China and looking for relocation opportunity.

India's Prime Minister Narendra Modi and his finance minister Nirmala Sitharaman.
Picture courtesy: The Financial Express 

Yes, the government did give handouts for the poor through a mixture of cash, MNREGA work and free foodgrains, cooking gas etc to help the rural and urban poor to mitigate the short-term crisis. Majority of it was announced under PM Garib Kalyan at the beginning of the lockdown.

Many of these benefits are further extended in the first three phases of the recent announcements by Finance Minister Nirmala Sitharaman under the Rs 20 lakh crore rescue package. In terms of value the total provisions on these heads will exceed two per cent of GDP.

The rest is all about tapping monetary policy space i.e creating finance windows for critical sectors of the economy. The larger benefits of the package lies in creating eco-system congenial to the growth of private sector enterprise and unlocking value from the inefficient or non-strategic government sectors.

Revenue source unclear

India have shown exemplary alacrity in responding to the COVID emergency; as was visible in the speed of disbursement under direct benefit transfer schemes under the Rs 1.7 lakh crore PM Garib Kalyan stimulus.  

Disbursing cash handouts is not easy. The US citizens were asked to register for COVID doles and almost each State suffered server collapse. In comparison, India operation was smooth, courtesy measures (like Jandhan, Aadhar seeding etc) undertaken in the first term of the Modi government.

With 70 per cent debt to GDP ratio and 6.5 per cent aggregate fiscal deficit (including States), Indian could barely afford cash handouts. Arindam Guha, Partner, government and services Leader, Deloitte India, is happy that the government didn’t try to emulate rich economies like the US or Japan.

However, it is not clear how the government will arrange the extra budgetary finances. Considering States are offered reform-linked-window to escalate borrowing by Rs 4.28 crore, the Centre barely has much space left for extra borrowing.

Will India go for printing money and invite its negative impacts? The finance minister didn’t clarify the revenue source in her marathon five-day presentation.

Most probably, the Centre is kept the window open as a last resort but would prefer to generate resources through disinvestments etc. It didn’t give any clarification. Because of the overall uncertainty in revenue collection.  

It may be due to these fiscal uncertainties, the government avoided making any new announcement on creation of highway infrastructure. The omission is surprising since highway construction is considered a major employment generator and GDP multiplier.

However, the government already rolled out a huge pipeline of projects under the Bharatmala scheme. Chances are it will now step up the implementation pace of such projects nefore clearing ground for fresh announcements.

A bold step indeed!

Going by the chain of events one may conclude that the Centre has taken a risk. Even if so, it’s a risk worth taken.

A surprising feature of the post-COVID world is the speed of decision making. Under normal circumstances a plant relocation decision is taken after numerous spot visits, studies, and discussions at the Central and State government levels and business level.

But nothing of this sort was noticed in recent South Korean investments in COVID test kits; or German footwear brand Von Wellx deciding to shift its production base from China to UP.

Clearly the post-COVID world has a high risk-appetite. This is also visible in Serum Institute of Pune’s decision to go ahead with production of COVID vaccine, even before the trials launched by at Oxford University are over.

Under the circumstances, India had limited options of acting fast and quickly putting its house in order or, missing the bus again. India did bite the bullet and didn’t wait for the next Parliament session to announce reform decisions.

Solid reforms

And, the reform initiatives are solid.

Take the case of marketing freedom to farmer coupled with investment in farmgate processing facility. If implemented it will pave way complete overhaul of the existing trade practices where at least 40 per cent of the horticulture production is wasted and intermediaries’ pocket 70 per cent of the value.

While progressive States like Tamil Nadu already amended the relevant legal provisions; many States would have opposed the move in the interest of the existing vested interests. Financially weak States like West Bengal were always at the forefront to block such reforms.

However, now that the initiative is tagged with the borrowing limit, States have limited choice. One good side of such forced measures is it will help remove lot of regional disparity and promote the attractiveness of India both as a market as well as investment destination. 

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(This post was published in ETVBharat in both English and Hindi)  

Pandemic package: Big day for MSMEs. But, implementation will be key

Pratim Ranjan Bose

In his speech on May 12, Prime Minister Narendra Modi made it amply clear that the government is ready to take “bold measures” to safeguard interests of local business and particularly in the MSME (Micro, small and medium enterprise) sector.

True to the promise, the finance minister Nirmala Sitharaman on Wednesday announced some big bang measures which not only aimed addressing the immediate liquidity concerns, but laid foundations for giving the sector much needed impetus for long term growth.

Source: Presentation by Finance Minister

Structural reform

It is a pity that the sector had to wait for decades for as simple a measure as changing definitions so that growth does not come as a disincentive. It was a pity that policies in the past created different classifications within the same small or micro industry for manufacturing and service sector.

The worst part was classification benchmarks were set on investment limits, while the global practice is to follow turnover limit.

All these are history now. Same benchmarks are set for all types of industries. Along with investment, turnover is introduced as additional benchmark.

And all limits are revised upwards by a few times, so much so that a Rs 99 crore turnover company can now be recognized as medium and Rs 4.9 crore turnover enterprise be referred as micro.

The importance will be felt in the years to come. A business will try to achieve higher growth. There is less need to camouflage growth by dividing total revenues under multiple companies of small balance sheets. With a bigger balance-sheet they can bid for bigger contracts and get due loan facilities from banks.

It is a structural reform and will help improve compliance.

Source: presentation by Finance Minister

Credit guarantee

The finance minister announced a multi-billion dollar credit guarantee scheme to remove all hurdles before the MSME sector - which is a major employment generator – to get bank loans to overcome the current crisis.

The Rs 3,00,000 crore worth collateral-free automatic loan by banks and NBFCs to the MSME sector is definitely one big step to address the liquidity issues and give the enterprises a fair chance to survive.

The window also has provision for emergency credit line and will be operative till October 31. Nearly 45 lakh MSMEs are eligible to get four-year loans with one year moratorium on principal repayment and capped interest, meaning there is no risk of interest rate volatility.

There is an additional Rs 20,000 crore subordinate debt-window for two lakh stressed MSMEs, which were not considered bankable under normal conditions.

This coupled with fresh three-month extension of the EPF contribution scheme should help protect many jobs in the sector.

Hand-holding the promising

The best part of this liquidity infusion announcement was Rs 50,000 Fund of Fund provision, created to ensure equity contribution in promising MSMEs, which suffered during the COVID pandemic.

The idea behind the initiative is somewhat similar to venture capital finance, except that here the aim is to ensure that such enterprises survive are able to sail through the crisis period safely and get bigger.

The provision will help create Fund or Funds, which will invest in equity – to avoid immediate repayment obligations – in promising MSME and handhold them to grow into big companies. The finance minister specifically mentioned that the fund will encourage the MSMEs, selected for support under the scheme to get listed.

No global tender

On Tuesday the Prime Minister raised the slogan of “Be vocal about local”. True to the spirit of the call, the finance minister announced that “global tenders will be disallowed in government procurement contracts, upto Rs 200 crore.”

The initiative – which is a rerun of the pre-liberalisation practices - will help create local industries and suppliers who were subjected to unfair competition from deep pocket companies, resorting to undercutting to corner all the contracts.

The intent behind the initiative is definitely good. However, the implementation will remain a question. The main worry is how the government will ensure that best quality goods are offered at competitive prices.

In the past when global tenders were not there, India witnessed growth of an inefficient set of ancillaries who survived on contracts from the State-owned enterprises without much competition. It ensures self-reliance but quality suffered.

EOM.

(This blog is reproduced in ETV Bharat) .