Sunday, 2 February 2020

The New Direct Tax Regime (2020): Relief or Burden?

Abstract

This article analyzes the effect of the “massive tax cuts” of the 2020 Indian Union Budget direct tax rates. It is seen that the new direct tax rate scheme benefits very few people, and most people would be better off choosing the old scheme in their tax computation for the next year. The new direct tax regime is simpler than the old scheme, but it costs taxpayers more.

Several analyses comparing the old and new schemes have come out in social media. But most of them have ignored a key proviso in the new tax scheme, which is that no exemption or deduction is allowed. Most analyses have only looked at the effect of section 80C, but overlooked the more important Housing Rent Allowance (HRA) exemption and the Housing Loan exemption, both of which are substantially more than the 80C deduction and the standard deduction. There are many more deductions available, such as section 80D, section 80CCC, section 80CCD, section 80TTA, section 80GG, section 80E, section 80EE, section 80CCG, section 80DD, section 80DDB, section 80U, section 80G, section 80GGB, section 80GGC, section 80RRB, section 80TTB … all of which will not be available under the new direct tax scheme.

This work considers four of the main deductions/exemptions: HRA, Section 80C, Section 80D (mediclaim), and the Standard Deduction, in comparing the old and new direct tax schemes.

Summary of Old and New Direct Tax Schemes

The direct tax scheme of 2019-2020 was as follows:

The taxable income was calculated by subtracting several exemptions and deductions from the gross income, some of which are listed below:
1. Section 80C, which is a deduction allowed for investment in LIC, PPF, or mutual funds, up to 1.5 lakhs.
2. The standard deduction, which is Rs. 50,000, and is meant to subsume many other deductions, such as the deduction for medical expenses, which used to be allowed in previous years.
3. Section 80D, which is for mediclaim, allowable up to a maximum of Rs. 25,000.
4. The housing exemption, which applied to a House Rent Allowance (HRA) or a Housing Loan (HL) payment.
On this taxable income, tax was assessed as follows:
1. Taxable income of Rs. 0-5 lakhs: zero tax if the total taxable income was less than or equal to Rs. 5 lakhs.
2. If the taxable income is over Rs. 5 lakhs, then the following tax slabs are operational:
  1. Rs. 0 – Rs. 2.5 lakhs: no tax.
  2. Rs. 2.5 – Rs. 5 lakhs: 5% of income above Rs. 2.5 lakhs.
  3. Rs. 5 – Rs. 10 lakhs: 20% of income above Rs. 5 lakhs.
  4. Above Rs. 10 lakhs: 30% of income above Rs. 10 lakhs.
  5. The above slabs are cumulative – hence, if someone makes Rs. 9 lakhs, they would have to pay 5% of Rs. 2.5 lakhs + 20% of Rs. (9-5) lakhs.

The new direct tax scheme of 2020-21 is as follows:

No exemptions or deductions are allowed. The idea behind this is to make the tax code simpler. To make up for this, the tax rates have been marginally reduced at the lower end, as discussed below. Hence, the gross income ends up being the total taxable income.
On this taxable income, the tax payable is again calculated according to the following slabs:
1. Taxable income of Rs. 0-5 lakhs: zero tax if the total taxable income is less than or equal to Rs. 5 lakhs (as before).
2. If the taxable income is over Rs. 5 lakhs, then the following tax slabs are operational:
  1. Rs. 0 – Rs. 2.5 lakhs: no tax (as before).
  2. Rs. 2.5 – Rs. 5 lakhs: 5% of income above Rs. 2.5 lakhs.
  3. Rs. 5 – Rs. 7.5 lakhs: 10% of income above Rs. 5 lakhs.
  4. Rs. 7.5 lakhs – Rs. 10 lakhs: 15% of income above Rs. 7.5 lakhs.
  5. Rs. 10 lakhs – Rs. 12.5 lakhs: 20% of income above Rs. 10 lakhs.
  6. Above Rs. 15 lakhs: 30% of income above Rs. 15 lakhs.
  7. As before, the above slabs are cumulative – hence, if someone makes Rs. 9 lakhs, they would have to pay 5% of Rs. 2.5 lakhs (5-2.5) + 10% of Rs. 2.5 lakhs (7.5-5) + 15% of Rs. 1.5 lakhs (9-7.5).

Which Scheme Is Better For You?

From an examination of the rules above, it is clear that the old scheme allowed many exemptions and deductions, but had higher slab rates, whereas the new scheme does not allow any exemptions or deductions, but has lower slab rates.

The elimination of deductions and exemptions simplifies the tax code and makes the reporting requirements easier. For example, if one wishes to avail of the HRA deduction, one must show rent receipts for the entire year to their employer. If one wishes to claim a PPF deduction, one must show the passbook of the PPF account to prove that one had actually invested the declared amount of money in PPF.

However, people will not mind more paperwork if it means saving some money. The elimination of extra paperwork should not result in the payment of more taxes. Indians are very cost-conscious, and place more value on money than time.

Case 1: IT Employee in Bangalore with a Salary of Rs. 9 Lakhs/Year

Assume that the HRA exemption that this employee can avail of is Rs. 12,000 per month. The current rules state that the allowable HRA exemption is the minimum of:

The actual HRA paid by the company.
Rent in excess of 10% of basic salary
40% of basic salary (50% if you live in Mumbai, Delhi, Chennai, or Kolkata)

Let us make some reasonable assumptions. Let us say that the rent paid by the employee is Rs. 15000 per month, and that his basic salary is 40% of his total salary. Thus his basic salary is 0.4 x Rs. 9,00,000 = Rs. 3,60,000, or Rs. 30,000 per month. Then the three numbers are:

Actual HRA paid = Rs. 12,000
Rent in excess of 10% of basic salary = Rs. 15,000 – 0.1 x Rs. 30,000 = Rs. 15,000 – Rs. 3000 = Rs. 12,000
40% of basic salary = 0.4 x Rs. 30,000 = Rs. 12,000

In this case, the three numbers end up being the same thing, and so the HRA exemption is Rs. 12,000 per month, or Rs. 1,44,000 for the whole year.

Let us also assume that the employee invests the maximum allowable of Rs. 1.5 lakhs in Section 80C – related investments for the year and Rs. 25,000 for medical insurance under section 80D.

There is also the standard deduction of Rs. 50,000 that he can avail of. Thus, under the old scheme with deductions and exemptions, the total taxable income is: Rs. 9,00,000 – Rs. 1,44,000 – Rs. 1,50,000 – Rs. 50,000 – Rs. 25,000 = Rs. 5,31,000. Under the new scheme, there are no deductions or exemptions, so the total taxable income is the full Rs. 9,00,000.

Tax under old scheme:

Total taxable income: Rs. 5,31,000.
The first 2.5 lakhs are tax-free.
Since this is above Rs. 5 lakhs, tax payable for 2.5-5 lakhs = 5% of 2.5 lakhs = Rs. 12,500.
Tax for Rs. 5 lakhs to Rs. 5.31 lakhs: 20% of Rs. 0.31 lakhs = Rs. 6,200.

Total tax to be paid under old scheme: Rs. 12,500 + Rs. 6,200 = Rs. 18,700

Tax under new scheme:

Taxable income: Rs. 9 lakhs
0-2.5 lakhs: 0
2.5-5 lakhs: 5% of 2.5 lakhs = Rs. 12,500
5-7.5 lakhs: 10% of 2.5 lakhs = Rs. 25,000
7.5-9 lakhs: 15% of 1.5 lakhs = Rs. 22,500

Total tax to be paid under new scheme: Rs. 12,500 + Rs. 25,000 + Rs. 22,500 = Rs. 60,000

The tax under the new scheme is more than triple what the employee needed to pay under the old scheme.

Case 2: Employee with a Salary of Rs. 15 Lakhs/Year

Assume that the HRA exemption or housing loan exemption the employee is eligible for is Rs. 25,000/month (a reasonable number – detailed calculations not shown).

Assume also that the employee has availed fully of the Rs. 1.5 lakh deduction under section 80C, the Rs. 25,000 deduction under section 80D, and the Rs. 50,000 standard deduction.

So, the total deductions and exemptions available under the old scheme are:

Section 80C: Rs. 1.5 lakhs
HRA: Rs. 25,000 x 12 = Rs. 3 lakhs
Standard deduction: Rs. 50,000
Section 80D: Rs. 25,000

Taxable income under old scheme: Rs. 15 lakhs – Rs. 1.5 lakhs – Rs. 3 lakhs – Rs. 50,000 – Rs. 25,000 = Rs. 9.75 lakhs

Tax payable under old scheme:

0-2.5 lakhs: 0
2.5-5 lakhs: 5% of 2.5 lakhs = Rs. 12,500
5-9.75 lakhs: 20% of 4.75 lakhs = Rs. 95,000

Total tax payable under old scheme: Rs. 12,500 + Rs. 95,000 = Rs. 107,500

Taxable income under new scheme: Rs. 15 lakhs (no exemptions or deductions)

Tax payable under new scheme:

0-2.5 lakhs: 0
2.5-5 lakhs: 5% of 2.5 lakhs = Rs. 12,500
5-7.5 lakhs: 10% of 2.5 lakhs = Rs. 25,000
7.5-10 lakhs: 15% of 2.5 lakhs = Rs. 37,500
10-12.5 lakhs: 20% of 2.5 lakhs = Rs. 50,000
12.5-15 lakhs: 25% of 2.5 lakhs = Rs. 62,500

Total tax payable under new scheme: Rs. 12,500 + Rs. 25,000 + Rs. 37,500 + Rs. 50,000 + Rs. 62,500 = Rs. 1,87,500

Again, the tax payable under the new scheme is substantially (74%) higher.

Effect of Deductions and Exemptions

It can be seen from the previous examples that even though the tax rates for incomes below 15 lakhs have been reduced, with more tax slabs, the tax payable has actually increased. Of the deductions and exemptions considered here, three have a fixed maximum: section 80C (1.5 lakhs), standard deduction (Rs. 50,000) and section 80D (Rs. 25,000). The total from these three comes to Rs. 2.15 lakhs. The bigger contribution to reducing the taxable income is the HRA in case of rent or the Housing Allowance in case of home ownership for which one has to pay off a loan. In our first example, this was Rs. 1.44 lakhs, and in the second example, it was Rs. 3 lakhs. When this is deducted from the tax payable, the tax payable reduces dramatically.

This can be seen in Figures 1-3, which show the tax payable at different gross incomes for different total deduction/exemption amounts. It can be seen (Figure 1) that when the total deduction/exemptions are less than Rs. 2.5 lakhs, the tax payable is lower for the older scheme at low incomes but higher for the older scheme at higher incomes. For a total deduction/exemption amount of Rs. 2 lakhs, the point at which the new scheme tax becomes lower than the old scheme tax is about Rs. 12.25 lakhs/year.

Figure 1. Tax Calculation at Total Exemptions/Deductions of Rs. 2 Lakhs/Year

At a total deduction/exemption amount of Rs. 2.5 lakhs, the tax from the new scheme is higher than the tax from the old scheme until the gross income reaches Rs. 15 lakhs/year, as can be seen in Figure 2. After this, the tax payable from both schemes is the same as the income rises.

Figure 2. Tax Calculation at Total Exemptions/Deductions of Rs. 2.5 Lakhs/Year

For a total deduction/exemption amount greater than Rs. 2.5 lakhs, the tax from the new scheme is always greater than the tax from the old scheme. This can be seen in Figure 3.

Figure 3. Tax Calculation at Total Exemptions/Deductions of Rs. 3 Lakhs/Year

Conclusions

The new direct tax scheme is disadvantageous to anyone who has a total of deductions and exemptions higher than Rs. 2.5 lakhs. For a lower amount in deductions and exemptions, there is a threshold income above which the new scheme is more advantageous and below which the old scheme is more advantageous. This can be the case for those who live in their own (fully paid-up) home and so do not have any rent to pay or have any housing loan payments. For everyone else, it seems to be more advantageous.

For this year, this is not a serious problem for the people, since the choice of which tax scheme to adopt is left to the taxpayer. But it is a cause for worry for the future, because the government has indicated its preference for the new scheme and so there is a strong possibility that next year, the taxpayer will not have a choice but to use the new tax scheme and therefore pay higher taxes.

This budget is a lost opportunity for the government, and indicates that the government has still not understood the cause of the economic slowdown – that the slowdown is demand-driven, not supply-driven. Yet, all of the government’s measures have been aimed at the supply side. The government has been heaping sop upon sop for industry – decreasing corporate tax, removing the dividend tax, lowering interest rates, and so on. This would be a good prescription if demand were high and if what was stopping companies was the cost of doing business and of getting finance. But the situation in India today is one in which common people are cutting down on buying Rs. 5 Parle biscuit packs and underwear. No sane company will take out loans to build new plants when demand is so low and when asset utilization capacity is as low as it is today in India.

So the correct prescription for this budget would have been to drastically cut taxes at the low end. Perhaps by making incomes of up to Rs. 10 lakhs/year tax-free. That would have been a bold move. The income foregone by the government would have been more than made up for by revenues due to increased consumption, which would have given the Indian economy a boost and the chance to recover.

But such a tax cut would only have benefited the organized sector. A similar boost was also needed for the unorganized sector. In yet another sign that the government simply does not understand the economic crisis, the government has reduced the allocation for MNREGS from Rs. 71,000 crores in the previous year to Rs. 61,500 crores in the 2020-21 budget. With a devastated rural sector, the only thing saving them from utter destitution has been the MNREGS. The move to reduce funding to the MNREGS will only worsen an already bad situation on the rural front.

But, as we have seen time and again, the one thing most dramatically lacking in this government is common sense. And hence this insipid and worthless budget, which does not show any sense of urgency or any acknowledgment of the massive economic crisis that the country is in. One can only reluctantly conclude that the free fall the Indian economy has been in for the last year will continue unabated for the next year, thanks to the incompetent leadership of the country. And it does not look like we will hit rock bottom anytime soon.

Wednesday, 25 December 2019

Remembering Rajaji

Abstract

December 25 is remembered in India not only as Christmas but as an important anniversary of some important Indians. Today is the birth anniversary of composer Naushad Ali (1919); of former PM Atal Bihari Vajpayee (1924); and of the great sarangi player Pandit Ram Narayan (1927). Today is also the death anniversary of the great Indian leader, statesman, and writer C. Rajagopalachari (1972), or Rajaji as he was popularly known. In this article, I give a brief summary of Rajaji's life and accomplishments. Much of my knowledge of this remarkable man has been gleaned from Professor Rajmohan Gandhi's Sahitya Akademi-winning biography of his grandfather.

Today is the 47th death anniversary of one of the tallest leaders of the Indian independence movement, Chakravarti Rajagopalachari. Rajagopalachari, who was known also as Rajaji or CR, was a close confidante of Gandhiji, Jawaharlal Nehru, Vallabhbhai Patel, Rajendra Prasad, and Maulana Azad (who, with Rajaji, were the Mahatma's top 5 Generals in the freedom movement) and the last (and first Indian) Governor-General of India. He was also the Chief Minister of Madras State and Governor of Bengal at different times in his long political career. At one point, he was Gandhiji's anointed successor (and so might have been our first PM) but that honour later went to Nehru after Rajaji disagreed with Gandhiji on the Quit India movement and did not participate in it. But Rajaji himself would likely not have wanted to be PM. He felt insecure as a national leader because of his poor command of Hindi, and in any case was never a mass politician like Nehru, despite his indisputable brilliance — he never won an election to any lower House (he refused to contest). Despite this, had Rajaji desired, he could have had any position he desired — for example, as Congress President (which he was asked to become many times) or the first President of independent India (for which both Nehru and Patel preferred him to Prasad) — but he never threw his hat in any ring; he would only serve if asked. Rajaji was such an old veteran of the freedom movement and of Indian politics that he not only fought political battles with Jawaharlal Nehru in his later life, but also fought with Nehru's father Motilal in the earlier part of his life (this was on whether or not Indians should serve in the British Provincial Councils, which at the time Motilal Nehru and others favoured, but Gandhiji did not.)

Like Nehru, Prasad, Patel, and many others, Rajaji left a highly lucrative career as a lawyer and lived in relative poverty for most of his life to be part of the freedom movement. He was known to be a brilliant lawyer and one of the sharpest legal minds in the country in the early part of his long and distinguished career, before he gave up practice as a form of non-cooperation with the British government.

Rajaji was also Gandhiji's sammandhi — his daughter Lakshmi married Gandhiji's third son Devadas Gandhi. Two of their children are quite famous — the biographer and writer Rajmohan Gandhi, and the diplomat and former governor Gopalkrishna Gandhi.

Rajaji lived to a ripe old age of 94, and led an active life until the very end. In addition to his contributions as a statesman and politician, Rajaji was also an accomplished writer. His abridged translations, both in Tamil and English, of the Ramayana and Mahabharata, are classics. He was also a regular contributor to the “Swarajya” magazine published by Kalki Krishnamurthy.

Rajaji was also a highly vocal critic of Nehru's and Indira Gandhi's socialist policies. He was the person who invented the phrase, “License-Permit Raj.” To oppose the Congress government's socialist policies, Rajaji formed the Swatantra Party (at the age of 81!) which advocated free market economics. Rajaji was a staunch opponent of communism all his life. Unlike the Jana Sangh, which was also opposed to socialism, the Swatantra Party did not discriminate on the basis of religion. The Swatantra Party contested general elections in 1962, 1967, and 1971, winning 44 seats in the Lok Sabha in 1967. Rajaji died in 1972, after which the party gradually dissolved without his leadership. Rajaji was considered universally as one of India's wisest statesmen. Rajaji was prescient enough to predict that Pakistan would split in 25 years, which happened in exactly the time he predicted.

Rajaji was a strong proponent of Hindi as a national language before independence, because he saw Hindi as a unifying force for an India still under colonial control; however, when he was CM of Madras State after independence, he opposed the mandatory imposition of Hindi and favoured English as a national language. He was also an opponent of Hindi during the 1965 anti-Hindi agitations in Tamil Nadu.

One of his weaknesses was his tendency to not yield his position on an issue even when there was overwhelming evidence that he was on the wrong track politically. One such instance was when, as CM of Madras State, Rajaji passed a new education bill, whereby elementary school students would study in schools half the day and spend the other half learning their parents' occupations. This caused a furore in Madras, as the Justice Party of “Periyar” E.V. Ramaswamy Naicker accused Rajaji of trying to perpetuate the caste system. Rajaji could have easily withdrawn the bill and defused the situation. But he stubbornly clung to his position, leading eventually to his resignation and his replacement as CM by K. Kamaraj.

Rajaji's tenure as CM of Madras State during 1952-54 was also marked by the division of the state into its Tamil-majority and Telugu-majority parts, and the formation of Andhra Pradesh as the first linguistic state in India after the death of Potti Sriramulu in 1952. This, of course, led to the creation of language-based states all over India, leading to the map of India that we see today.

Rajaji was a proponent of nuclear disarmament ever since the first atomic bomb was dropped on Hiroshima, and argued for world peace to his very end. To this end, he even met with US President John F. Kennedy in 1961 as part of a delegation from the Gandhi Peace Foundation that was headed by him with the active support of PM Jawaharlal Nehru, even though Nehru and Rajaji were on opposite sides of the political fence by then. As Rajmohan Gandhi recounts, Rajaji was asked by the President of the Gandhi Foundation, R.R. Diwakar, to head the delegation to the US. Rajaji responded in the affirmative, but specified that he would only do so “if the Indian government would support such a mission and if he was not expected to respond with silence or evasion to questions about India that might be put to him abroad. If Nehru was uneasy on this score, he would rather not go.” It is a measure of how much of a democrat Nehru was that he promptly agreed to both of Rajaji's conditions. Can we imagine something like this happening today — a government sponsoring its chief political adversary to go abroad, represent the country, and even allow them to publicly criticize the very government that had sponsored the trip? At the end of the meeting, Kennedy said that the meeting “had a civilizing quality on me.”

A few years earlier, in 1954, Rajaji also had the occasion to lecture then-Vice President Richard Nixon (in the Eisenhower administration) on the importance of nuclear disarmament when he came to India on an official visit. Nixon wrote about their meeting in his memoirs 36 years later that the meeting “had such a dramatic effect on me that I used many of his thoughts in my speeches over the next several years.”

All in all, Rajaji was a remarkable man - lawyer, politician, leader, statesman, litterateur. He was a mixed bag, and people will have different views on him, but there is no doubting his patriotism and his enormous contributions to India. He was honoured for his contributions by being conferred the very first Bharat Ratna in 1954.

References

Rajaji — A Life, by Rajmohan Gandhi, Penguin, 2000.

Saturday, 23 November 2019

The Cost of Hindu Appeasement

The philosopher and essayist George Santayana famously wrote that “those who cannot remember the past are condemned to repeat it.”

I fear I myself may have been guilty of this sin (forgetting the past) recently, when I wrote in a message to my friends, reacting to the SC verdict on Ayodhya, that I hoped that this verdict would take the biggest grievance and most potent weapon of the BJP for the past 30 years, viz., the Ram Janmabhoomi issue, out of their armoury, and force them to focus on issues of governance.

That in itself is not an unreasonable hope: after all, the BJP’s rise and rise began only with the Ayodhya agitation, which started in 1989, under the leadership of LK Advani, and culminated in the Supreme Court verdict of 9th November, 2019. This far-reaching verdict granted the entire land where the Babri majsid had once stood to the Hindus, even ordering the Central Government to build a Ram Temple at the spot (why this is a concern of the Honourable SC is a mystery). So to hope that the granting of the main demand of the Hindutva movement of the last 30 years might give us some respite is not illogical.

The Demolition of the Babri Masjid on December 6, 1992

However, in hoping so, I had clearly forgotten what history has taught us happens when you appease those who bully and oppress. The classic case of failed appeasement, of course, is that of the Nazis before World War II.

I am thinking of how, in the 1930s, Adolf Hitler first annexed the Saarland, then the Rhineland, then enforced the “Anschluss” (union) with Austria, then annexed the Sudetenland, and finally invaded Czechoslovakia, before the rest of Europe decided that there was no end to his territorial ambitions, and declared war on Germany when Hitler invaded Poland in 1939.

It is important to note that at the September, 1938 Munich agreement between Germany, Italy, France, and Britain to force Czechoslovakia to give up the Sudetenland to Germany under the threat of imminent war, Hitler grandly announced that the Sudetenland was his “last territorial claim” in Europe.

And yet, within six months of the agreement, Germany had invaded and conquered the rest (the “rump") of Czechoslovakia. And in six more months, Hitler had invaded Poland.

It was the invasion of Czechoslovakia that told Britain and France that Hitler could not be trusted, and that the Munich agreement was a failure and a mistake.

What was the lesson of Munich for posterity? The lesson was that appeasement of an aggressor does not work; on the contrary, appeasement only encourages the aggressor to indulge in more aggression.

Fast forward to 2019.

Why did the SC rule in favor of the Hindus in the Ram Janmabhoomi dispute? And why were so many people “relieved” at the verdict?

There may be many reasons for this. It is hard for us to fathom why the Hon. SC delivered such a verdict. But certainly we can speculate on why many people have welcomed the verdict. In my view, one of the main reasons is the implicit (and often explicit) threat of violence in the event of a verdict that might be unfavourable to the Hindus. In today's hyper-aggressive posturing by the Hindu right, it does not take an Einstein to figure out that had there been an adverse verdict (for the Hindus), there could have been widespread violence, bandhs, and lynchings all over the country. Rivers of blood could have flowed in communally sensitive areas. This is not an idle speculation: Advani's “Rath Yatras” were accompanied by extensive rioting and killing. Whatever other motivations the SC might have had, this concern could not have been far from the surface, and the Court would have been very aware of the heavy responsibility that lay in its hands as it drafted the verdict. It is not inconceivable that the need to maintain public peace and order trumped other aspects of the case.

Several commentators have pointed out some of the puzzling and unexplained aspects of the verdict. For instance, Brinda Karat writes in ndtv:

The basic question which is troubling is that after the judgement accepts that the demolition of the mosque in 1992 and the placing of the idols in 1949 were “serious violations of the law,” why does the court reward the serious violators of the law by handing over the entire land to them? Are there any overwhelming issues which would support such a decision? The judgement does not provide any convincing reasons.

The judgement acknowledged, though perhaps inadvertently, the political dimensions. One of the reasons given while rejecting the Allahabad High Court judgement mandating division of the disputed land into three equal parts was that it "will not restore a lasting sense of peace and tranquility." Therefore, one can assume that the Supreme Court believed one of the aims of its judgement must be to "restore a lasting sense of peace and tranquility." This would be based more on a political assessment rather than one based on legal issues.

… the fact that the Supreme Court itself recognised that the demolition of the mosque was illegal and that placing of the idols in 1949 was a desecration of the mosque, and still gave the verdict in favour of those who believed it was originally a temple made the verdict seem contradictory. The judgment clearly states: “The destruction of the mosque and the obliteration of the Islamic structure was an egregious violation of the rule of law.”

Yet, the very act of placing the idols and destroying the mosque has been used to suggest that Muslims did not have exclusive possession of the inner courtyard of the disputed land, thus making the case stronger for Ram Lalla.

One cannot escape a sense of deja vu at the implicit expression of hope that Karat highlights in the judgment, because it reminds us of King George V's words when Neville Chamberlain signed the Munich Pact in September 1938 with Adolf Hitler:

After the magnificent efforts of the Prime Minister in the cause of peace, it is my fervent hope that a new era of friendship and prosperity may be dawning among the peoples of the world.

"I've Got It!" British PM Neville Chamberlain proudly displays the Munich Agreement After Returning to the UK

And so, just as Europe unsuccessfully appeased Hitler to prevent a war from starting again in Europe in 1938 (it was, at the time, less than 20 years since the end of the Great War, aka WWI) and the big powers in Europe decided to cave in to Hitler's demands to prevent a second World War, we in India seem to have caved in to the demands of the Hindu right in Ayodhya to prevent further violence. Thirty years of strife and violence are enough, the Hon. Justices appear to have decided.

But just as appeasement of a bully did not work in Europe in 1938, it will not work in India in 2019.

Just as Munich was preceded by so many conquests, such as the return of the Rhineland and the conquest of Austria, Ayodhya, too, was preceded by several aggressive moves by the Hindu right — "Sabarimala; the public lynching of Muslims since 2015; the anti-“Love Jihad” campaign; the Citizenship Amendment Bill; the National Register of Citizens; vigilante “gaurakshak” groups to monitor cow slaughter; and many others. In every one of these instances, we have appeased the aggressors. Just as the Nazis had the support of a majority of Germans, the Hindu right has the support of a majority of Indians in these actions. But even those who do not support the Hindutva agenda do not oppose it lest it makes the Hindu right more agitated. I read an anecdote just the other day where someone said that they were travelling in an autorickshaw when a right-wing gang on motorbikes shouted “Jai Shri Ram” at them. The auto driver said “Jai Shri Ram” in return and counseled the lady passenger travelling with him that it is better to say what these gangs want than be dead or in the hospital. Violence works.

Time Magazine's Cover in 1938. Adolf Hitler was Chosen "Man of the Year" for the Munich Agreement

Just as Munich only encouraged Hitler to further invade Czechoslovakia and Poland, eventually leading to WWII, Ayodhya will only encourage the Hindu right to repeat its Ayodhya formula — in Kashi, Mathura, and hundreds more places where the Hindu Right believes mosques were built after destroying temples. And it will encourage the Hindu Right to continue its anti-minority agenda in other ways as well. The Citizenship Amendment bill and the National Register of Citizens (NRC) bill are slated for the next legislative session of Parliament, and it will not be long before the BJP will bring in a Uniform Civil Code. The idea behind these bills is the same: the reduction of the Muslim to a second-class citizen.

You can delay the inevitable, but you cannot stop it by appeasement.

It took a six-year destructive war that killed millions, a complete and humiliating defeat for Germans, and the total destruction of Germany, to change Germans from their virulent racism to the liberal democracy that they are today. One can only hope that it will take far less than that to change India from where it is now. Otherwise the future looks bleak.

We are staring into a bottomless abyss as a nation. We are clearly not the nation of Nehru, Gandhi, Patel, and Rajaji and, in fact, I would not be surprised if, in the near future, we formally become a “Hindu rashtra.” I have already written about my expectations of the future and the disaster such a step will bring to India. A Hindu India will be the mirror image of a Muslim Pakistan, and we all know what has happened with our neighbour in this aspect. This is a country that was unable to respect one of its own citizens, a Nobel Laureate, Dr. Abdus Salam, for the only reason that he belonged to the Ahmaddiya sect, which is a persecuted sect of Islam in Pakistan. Because of this, Dr. Salam was forced to leave Pakistan for England, and died in Oxford. Is this the sort of country we aspire to be?

Supporters of this regime might question the parallel with WWII Germany: after all, we are not engaged in a military life-or-death war of global domination, they might say. Why or how might we be utterly destroyed as Germany was in 1945? But destruction of a nation need not be physical or political. It can also be economic and moral. We are already seeing many signs of the decay of this country in the last five years.

One look at the trajectory of the economy in the last three years should be proof enough. You may wonder what this has to do with the right-wing policies of the government. There are two connections. One is that people of talent stay away from reactionary governments such as these. It is a well-known and oft-commented fact that the Modi administration seems to have an obvious lack of talent and ability. Its ministers seem to have been chosen not because of any exceptional ability demonstrated in the past but because of their servile disposition and their singular ability to carry out their master’s orders without question.

The other is the supreme leader’s own distaste for any feedback that might be even remotely critical of his government or policies. The last five years have seen highly qualified people in the finance ministry, such as Drs. Raghuram Rajan, Arvind Subramanian, Viral Acharya, and Urjit Patel leave the administration because the government could not handle constructive criticism from them. People of ability cannot function under such constraints. A policy is either right or it is wrong; a wrong policy cannot be certified as right simply because the supreme leader thinks it is right or cannot handle criticism. But in the current political climate, such disagreements are not tolerated.

The net result is disastrous policies such as demonetization and GST, which are the primary causes of the tailspin the Indian economy is currently in. After stoutly denying any crisis in the economy, the government has finally at least admitted that there is a crisis today. But the crisis is far deeper than the government dares to admit. The real GDP growth rate might be far lower than the 5% or so that is currently estimated to be the current annual growth rate. Unemployment is at its highest level in decades. Things are so bad that the government is refusing to release its own reports, be they of unemployment or consumer spending. Even the measures the government is implementing are flawed, as the government is focusing on supply-side measures, whereas the problem is one of demand. This is again indicative of the incompetence in the government and the inability of this government and its leaders to listen to contrarian positions even at a time of crisis.

Another reason why economic performance must suffer under this government is that the very raison d'etre of the government has changed. In 2014, the Modi Sarkar was ostensibly elected to bring in “vikas” (development). By 2019, that promise lay in tatters, and yet the Modi Sarkar was voted to power with a stronger mandate. Clearly the vote was a vote of confidence in the government's majoritarian policies, and in turn, Mr. Modi has rewarded his constituency, the Hindu right, by instituting the most hard-line Hindutva policies to date, with promises of further upping the ante.

When a government is going to be judged on its majoritarian policies, it is obvious that economic policies and performance on economic metrics will take a backseat. So, if anything, we should expect the economy to slide even further.

This is just the beginning of a snowballing crisis. The ghosts of those who died waiting in the demonetization queues in November and December 2016 have come to haunt the Indian economy, and they will take down those who did not die along with them. This story does not have a happy ending.

So, utter destruction of a country need not be by war. It can also be the complete economic destruction of a country, the hollowing out of its productive capacity, the resulting virtual slavery, and the selling out of the country to foreign powers. It is this reality that is staring us in the face.

And when all of it finally happens, it will be because we appeased Hindu majoritarianism for the last five years and continue to do so.

Saturday, 21 September 2019

Another Big Economic Blunder

Abstract

The Indian government is flailing around trying to solve the problem of the economic slowdown that was caused by its own previous wrong economic policies, especially demonetization and a badly-thought-out GST. The latest move of the Finance Minister in lowering corporate taxes by 10% is not only going to be ineffective in solving the root cause of the slowdown, but has the potential to make things worse by reducing India’s financial cushion in the face of further global economic shocks.

The statements of the Finance Minister, Ms. Nirmala Sitharaman, yesterday, lowering the corporate tax rate by about 10% have led to euphoria in the stock markets. Industry leaders are ecstatic about the “pro-business” attitude of the country. Supporters of Mr. Modi are also thrilled and have begun to hope that the long-promised “acche din” will finally come after 5 long years.

However, while it is true that this is a business-friendly policy change, it is unlikely to change the current economic situation on the ground. Industry leaders are understandably happy — who would not be if they had to pay less tax? And shareholders of companies are also understandably happy — the companies their money is invested in are making lower losses.

But what are they going to do with the money they are thus saving? Are they going to set up new factories and increase employment? Are they going to re-hire the staff that they fired in the last few months? Are they going to increase the capacity utilization of their existing factories?

NO.

I repeat, NO. The problem with this government is that it has fundamentally failed to diagnose the problem — partly because the correct diagnosis would reflect poorly on its own past performance.

The correct diagnosis is that demonetization devastated the informal and the rural economy, and a badly-formulated GST destroyed whatever was left. Because of this, people have no buying power, no money, and no jobs. Small-scale industries and the rural economy have been destroyed in the past 3 years because of these misbegotten economic policies of PM Narendra Modi, leading to widespread unemployment and shattered businesses. So nobody has money to buy anything.

The root of the current slowdown in India is that there is no demand. People are not buying underwear and even Parle-G and Britannia products, such as biscuits. And when that is the case, it is quite clear that they will not buy cars and motorcycles, let alone homes.

The solution to the current malaise is putting money in ordinary people’s pockets by generating jobs on a massive scale. This can only be done by large public works, such as irrigation works and replenishment of water bodies (on a permanent basis). Water works are important also because India faces a looming water crisis. A large government program to shore up water resources would therefore achieve two objectives simultaneously – eliminate unemployment and ensure the country’s water future, which in turn will kickstart development in the future. Building highways is not the solution because these days, it is a largely mechanized operation. In addition, is unlikely to yield immediate returns, because we are not being constrained by transport bottlenecks. Trucks are not being sold today because there is reduced merchandise to ship because of the slowdown. Trucks are sitting idle in the depots of transport operators because they have no goods to transport. So what will more highways achieve?

Instead, the government has been barking up the wrong tree, by emphasizing supply-side economics. They put more cash into banks by making the RBI part with a huge dividend. They lowered interest rates. And now they are reducing taxes on corporates.

But why would corporates hire any more workers or build any more factories when people are not buying their existing stock of goods? Auto companies like Ashok Leyland (a truck manufacturer, notably, not a car manufacturer – which tells you the problem is more widespread than “millenials not buying cars” - as the FM opined recently) are shutting down factories for half of September because they already have excess inventory.

So, even if you did not tax companies at all, and even if you made interest rates close to zero, companies will not, in today’s business climate, either create new factories or increase production at existing factories, because there is no demand for their products. They will just sit on that pile of cash. If anything, they will invest abroad with that money, as Anand Mahindra is doing – Mahindra recently announced that they are doubling their infrastructure and job creation in the US. That’s a sensible business decision for Mahindra, because Modi and his government have brought India down to such a low level that the US is now looking like a more attractive destination for investment than India.

On the other hand, the amount that the government is forgoing because of this corporate tax cut is around Rs. 1.45 lakh crores. Just recently, the government forced the RBI to part with its biggest dividend ever to the government – of Rs. 1.76 lakh crores. Clearly, most of that amount is going into this tax rebate for corporates. And it is not going to result in any increased consumption of goods or greater employment of people. It will not change the slowdown.

So who will benefit from this largesse? India, Inc., will, and so will those who depend on it. Those who will reap the biggest dividends of this largesse will be those with the most shares in the companies — namely, the promoters. Individual shareholders, either directly or through mutual funds, will benefit to the extent of their shareholding; but clearly, the lion's share of this reduction in taxes will go to the promoters of companies — the Ambanis, Adanis, Birlas, Tatas, Mazumdar-Shaws, and the like. Nothing wrong with that if part of that goes back into the ecosystem by creating more jobs. But as we have already seen, the business climate today is not conducive to the creation of more jobs, because the problem is not supply-driven but demand-driven.

So the government, after blundering monumentally by Mr. Modi’s disastrous policy of demonetization in November 2016 and a badly-thought-out GST policy, and many other mistakes, such as its surcharge on FPIs (which it has belatedly backtracked now), has committed another major blunder which will not only not have any immediate effect, but will further deplete the already depleted treasury of the government, making it vulnerable to any external shocks such as a steep rise in oil prices, which has already started due to the drone attacks on the Saudi oilfields that has taken out half of the Saudi crude supply out of the market. Thanks to the RBI transferring vast quantities of its reserves to the government, which the government has been profligate with, India has very little financial cushion for any more global surprises. If there were a war in the Persian Gulf or a war with our western neighbor, that would be the last nail in the coffin of the Indian economy.

This is not to say that a reduction in corporate tax rates is undesirable or a bad policy per se. It would have been a great boost to business in a good economy where we have robust demand and where growth is constrained by supply-side policies, such as interest rates or high taxation. But when there is a growth slowdown because of lack of demand, this is not the prescription the doctor ordered. It will fail to solve the country’s economic problem, and in fact will make things worse. The only people who will benefit are the promoters and shareholders of companies, because this cash saving will mitigate their current losses, and that is why Dalal Street is cheering.

But there is nothing for the common man to cheer about. This move is a big blunder, because this money that was received from the RBI could have been used to really kickstart the economy, but the government has chosen to use it on a measure that will have no tangible benefits. Now the government has no more money left for any more major interventions. This was their last chance, and they have blown it. In addition, this will lead to an increase in the fiscal deficit, with all the accompanying evils of that development.

It is in times like this that we understand why Harvard is more important than hard work.

Sunday, 1 September 2019

When Bigotry and Stupidity Combine – The NRC Mess in Assam

When Bigotry and Stupidity Combine — The NRC Mess in Assam

Abstract

The story of the NRC in Assam is that of two competing streams of bigotry — one of Assamese chauvinism and the other of Hindu chauvinism. It had its roots in the Assam movement of the late 1970s and early 1980s, which ended in the misbegotten Assam Accord of 1985. One of the provisions of the Assam Accord was the fateful decision to expel foreigners from Assam. Successive governments since 1985, both at the Centre and at the State level, including Rajiv Gandhi’s own government, had wisely refrained from actually implementing the provisions of the Assam Accord. But the BJP and the AGP have, through their vote-bank activism (the former for the Hindu vote-bank and the latter for the Assamese vote-bank), opened the Pandora’s Box of strict implementation of the Assam Accord, with unpredictable consequences for the peace and stability of Assam, not to mention the profound humanitarian costs of declaring millions of people as noncitizens — people who have known no other country than India from the time of their birth.

This entire push to implement the Assam Accord in letter and spirit is irresponsible, cynical, and heartless; and now the crows have come home to roost, with the National Register of Citizens mentioning in its second count that 1.9 million people in Assam have been identified as foreigners and will have to be expelled from India.

The verdict has pleased no one. The BJP is unhappy because the NRC count has revealed that a large number of Bengali Hindus are illegal immigrants, and that a large number of Assamese Muslims have been identified as citizens — something that busts their narrative of India being inundated by waves of Muslim immigrants. The AGP is unhappy that more Bengalis, both Hindus and Muslims, have not been identified as foreigners. And, of course, those who have lived their entire lives in India and are suddenly being told that they are no longer Indians but foreigners are not happy.

The issue that no one in the more-than-hundred-year-old history of the Assam agitation seems to have thought of — be they political parties, leaders, or courts — is where the so-called foreigners will be expelled to — because no country will accept them. This is the stupidity and short-sightedness of the entire movement that, when combined with the bigotry of the prime movers in the issue — the BJP and the AGP — has led to a complex and unpredictable situation in Assam today. To make matters worse, the BJP is threatening to pass the Citizenship Amendment Act — a backdoor way to make illegal Hindu immigrants legal in Assam — something that will certainly lead to chaos and violence in the entire Northeast.

Background of Immigration Into Assam

Most people in India must have heard of the NRC in Assam by now. The NRC is the National Register of Citizens. Even though the name has “national” in it, this register pertains only to the state of Assam.

The NRC is a list of “legitimate citizens of India” in the Indian north-east state of Assam. The purpose of this list, according to the people who were responsible for it, is to identify who are legitimate citizens of India and who are illegal immigrants (specifically, from Bangladesh — or East Pakistan, as that region was known before 1971). This list was first created in 1951 in Assam. On January 1, 2018, the first revised list of the NRC in nearly 70 years was published. It identified 4.1 million people as non-citizens of India in Assam. Following this, the government said that this list was not final; that people could appeal their exclusion and a second list would be created after further checking. That second list came out on August 31, 2019, and it has now identified 1.9 million people as illegal immigrants; the petitions of around 2.2 million people to be included in the list have been accepted.

The purpose of this article is to tell you what this NRC is all about and why these 1.9 million people are going to be made stateless.

The issue of illegal immigrants, or “foreigners,” moving in to Assam is an issue dating to 1886, when the British, after defeating the Burmese in the First Anglo-Burmese war of 1824, gradually took control over Assam and then opened Assam up to migrants from the rest of the British Raj in India, particularly Bengal. This was followed by various waves of immigration into Assam, fuelled mainly by the tea estates which the British had established in Assam, for which the British brought in Bengali workers.

Although immigration to Assam was continuous during British rule, involving both Hindus and Muslim immigrants, there were two important waves post-Independence. The first wave came during Partition, when Hindus migrated to India from East Pakistan following persecution by the Muslim majority there. It is estimated that around 500,000 immigrants from East Pakistan came in to Assam during Partition. Many of these settled in Assam. There was serious concern about the changing demographics of Assam. In response, the Indian Government passed the Immigrants (Expulsion from Assam) Act, 1950. This act came into effect on 1 March 1950. It mandated the expulsion of illegal immigrants from Assam. But how was the Government to know whom to expel? For this purpose, it created the first National Register of Citizens in Assam in 1951 as part of the 1951 census. The implicit assumption in the Act was that the Indian government would be able to send immigrants from East Pakistan back there. Nobody seems to have considered the possibility that East Pakistan might refuse to take these people back. In the event, no one was actually sent back, so the hypothesis was never tested.

The second wave came to India because of the crimes committed against Bengalis in 1971 in the events leading up to the Bangladesh independence war. Since then, both Hindus and Muslims have continued to migrate from Bangladesh to India.

Things came to a head when, following the death of Hiralal Patwari in 1978, by-elections had to be held in the Mangaldoi assembly constituency in Assam. It was noticed that the number of registered voters had risen dramatically since the previous election – much more than could be explained by population growth. This triggered a popular outrage against the “takeover” of Assam by foreigners, spearheaded by the All-Assam Students Union (AASU), led by Prafulla Mahanta.

The Assam Accord and the IMDT Act

The Assam movement of 1979-1985 became extremely violent and, to put an end to this, former PM Rajiv Gandhi agreed to the “Assam Accord” that he signed with Prafulla Mahanta on 15 August, 1985. One of the key provisions of the agreement was that those immigrants who came in to Assam before March 25, 1971 would be considered legal immigrants, whereas those who had entered Assam on or after March 25, 1971 would be deemed illegal and expelled. To enforce this, the Illegal Migrants (Determination by Tribunals) Act, also known as the IMDT Act, 1983, was used. This act provided the mechanism by which people could be identified as either citizens or illegal immigrants. Prafulla Mahanta subsequently founded the Asom Gana Parishad (AGP) party, the political incarnation of the AASU, and subsequently became the Chief Minister of the State of Assam.

This was an unwise agreement, despite having had the effect of stopping the violence, because no thought was given to what would be done with those deemed illegal immigrants. Deporting them to Bangladesh was the likely thought in the minds of the Assamese, but the Assam accord was drafted without ever taking consent from Bangladesh, and so there was never any assurance that anyone identified as a Bangladeshi immigrant by India would ever be accepted back by Bangladesh. In fact, Bangladesh has recently reiterated that under no circumstances would it accept anybody back from India.

Despite this fact, the Assam Accord did not result in large-scale deportation of illegals, because the IMDT act had many safeguards for the immigrants that made deportation difficult. The most important among these was that the onus of proving that someone was an illegal immigrant was on the accuser, not the accused. If someone was accused, they could prove their citizenship by simply providing a ration card as proof. If the case still went further, it would be brought before a tribunal of retired judges who would decide on it. The central government also had the option to decide to throw out any petition for naming someone as an illegal immigrant on the grounds that the petition was frivolous. All this provided substantial safeguards for immigrants.

The End of the IMDT and the Revival of the NRC

It should be noted that the IMDT Act had some key differences with the Foreigners Act, 1946, which applied to the rest of India. Under the Foreigners Act, 1946, the onus of proving citizenship is on the accused and not on the accuser. Under the IMDT Act, on the other hand, the onus is on the accuser to prove that the accused is not a citizen. Because of this, very few people were actually deported under the IMDT act.

To change this, Sarbananda Sonowal of the AGP (now of the Bharatiya Janata Party, or BJP) challenged the IMDT Act in the Supreme Court in 2005 and won the case. The Supreme Court said in its observation that because of the generous safeguards in the IMDT Act, less than 0.5% of all cases filed under it resulted in deportation, and struck down the IMDT Act as unconstitutional. The Court said in its judgement that “the Bangladesh nationals who have illegally crossed the border and have trespassed into Assam or are living in other parts of the country have no legal right of any kind to remain in India and they are liable to be deported.”

However, the honourable SC does not seem to have seriously considered the question of where the said illegal immigrants were to be deported, given that no country would accept so many migrants back into their country. Furthermore, the decision on whether someone was an illegal immigrant or not was to be decided by India, not Bangladesh. Why any country would accept the verdict of another country on a matter regarding those it would be forced to accept as its own citizens is hard to imagine.

With the disbanding of the IMDT Act, the question of how illegal immigrants were to be identified and dealt with came back to the fore. The issue was finally settled by the Supreme Court in 2013 in its judgement in response to writ petitions by Assam Public Works and Assam Sanmilita Mahasangha & Ors. In its judgement, the SC ordered that the NRC should be updated to identify illegal immigrants, and the illegals should be expelled.

Accordingly, the process of updating the NRC was begun in 2015, and the first draft of the revised NRC finally made it on 1 January 2018. This was then revised, taking appeals and objections into account, and the revised list was announced on August 31, 2019.

Hindu vs Muslim Immigrants

One of the central poll planks of the BJP had always been that Muslim migration from Bangladesh to India had been unchecked and had led to a rise in the Muslim population of India. They had always accused the Congress of not doing enough to stop the immigration because Muslims formed a useful vote bank for the Congress. The BJP had promised that, if elected, they would put a stop to illegal Muslim immigration into India.

To this end, they decided to support the AGP. A political alliance was formed between the BJP and the AGP to form a government in Assam. The BJP reasoned that the AGP was against immigration into Assam, and the BJP was against immigration into Assam as well, and so this was a natural partnership.

But this was anything but a natural partnership.

The AGP’s objection to immigration was ethnic. They were opposed to the immigration of anyone who was not ethnic Assamese. This included both Hindus and Muslims. In particularly, the AGP was violently opposed to Bengali Hindu immigrants living in Assam. The AGP’s prime consideration was that Assamese culture was being wiped out due to Bengali influence.

The BJP’s objection to immigration was religious. They were opposed only to the immigration of Muslims into Assam (and into all of India.) The BJP had no problems with Bangladeshi Hindus who had settled in Assam.

The alliance between the BJP and the AGP was, therefore, an unholy marriage of convenience on a shaky foundation.

The Citizenship Amendment Act

The BJP realized this problem and, to solve it, introduced the Citizenship Amendment Act. This act would confer Indian citizenship on all Hindu, Sikh, Buddhist, Christian, Parsi, and Jain immigrants, but would specifically exclude Muslims. This suited the BJP’s strategy of hate politics very well, because it selectively excluded Muslims. But it was absolutely unacceptable to the majority of the Assamese, because the Assamese correctly saw the Citizenship Amendment Act as a means to legalize illegal Hindu migrants into Assam through the back door. The BJP tried to pass the bill in Parliament, but was unable to because of the opposition to the bill.

Despite all this, the BJP went ahead and encouraged the creation of the NRC to determine who was an Indian citizen and who was not, in line with the Assam accord. In doing so, the BJP was supremely confident that most of those who were about to be classified as foreigners would be Muslims.

The whole thing is ugly on both sides. On one side of the coin is ethnic hatred, of Assamese for Bengalis; on the other side is religious hatred, of Hindus for Muslims.

Now the revised list has been published, and according to most reports, a large percentage of the identified illegal immigrants are Hindus, in contrast to the BJP’s expectation that most identified illegal immigrants would be Muslim. This is why the BJP frantically (and unsuccessfully) tried to delay the publication of the NRC list, because when a large number of Hindus are denied Indian citizenship, it will hurt the BJP’s Hindu vote bank.

The surprise that the BJP has expressed is evidence of its ignorance — after all, at the time of India’s independence, nearly a fourth of all Assamese residents identified themselves as Muslim; so the fact that a large number of Muslims in Assam are legitimate residents of Assam should not be a surprise to anyone who had done the minimum research on the demographics of Assam.

If the leaders of the BJP had actually done some demographic research, they would have realized that this was going to be the outcome of the NRC. The facts have been in the public domain for a long time. But apparently, they believed their own rhetoric, which they used to whip communal frenzy among the people of India and win elections — that Muslim immigrants were streaming through the border and were going to make Hindus in India a minority. Their ideology blinded them to the fact that the community that was going to be affected most by the NRC in Assam was the Bengali Hindu community.

It is astonishing that the BJP could not see the writing on the wall. The officials conducting the NRC drive are all Assamese, and bear no loyalty to the BJP’s religion-based agenda. Now the BJP will have to deal with the backlash from the Bengali Hindu community. Their only hope to avoid this is to bring in the citizenship amendment bill in Parliament. Just as they finagled their way with the Triple Talaq bill and the abrogation of Article 370, they might be able to pass this law in Parliament as well. But while they may succeed in Parliament, Assam will likely erupt in revolt if they indeed pass the Citizenship Amendment Bill to save the Bengali Hindus facing an uncertain future after being excluded from the NRC. One wonders if the government will send another 100,000 paramilitary forces into Assam to “maintain the peace” as they have done in J&K for the last month, and introduce the Citizenship Amendment Act in as stealthy a fashion as they did the abrogation of article 370. Will yet another state be put under martial law, with curfew for weeks, the state leaders imprisoned, and all communication cut off, in order to fulfil the BJP’s political objectives?

One further point needs mention. The issue of “foreigners” is a sensitive one not only in Assam but in the entire Northeast. This is because of colonial history; when the British ruled in Northeast India, most of the administrative cadre came from Bengal. This has led to a lot of anti-Bengali resentment in many parts of the Northeast. Therefore, any attempt by the BJP to bulldoze its way with the Citizenship Amendment Act will have consequences not only in Assam but in the entire Northeast. Meghalaya and Tripura are prominent examples.

Whither Human Rights?

No matter how the NRC is conducted — whether the target is all non-Assamese or whether it is only Muslim immigrants into Assam — the entire idea is completely heartless and cruel. Not only is the standard of proof being demanded unusually stringent, in a country where the standard of record-keeping is so poor that a large number of people do not even possess birth certificates, but the entire process seems to have been conducted without any endgame plan in mind. That any court, let alone the highest court of the land, the Supreme Court, even allowed this register of citizens to proceed without careful consideration of the consequences is astonishing in the extreme.

For, the entire NRC exercise offers no enlightenment as to what is to be the fate of those declared non-citizens of India. The Bangladesh government has made it clear that it considers the entire matter an internal matter of India, that it does not consider anyone who does not make it to the list of Indian citizens a Bangladeshi citizen, and has clearly said it will not take back any of these people. So what is the plan for these people? Does the government, and does the SC, propose to make these people who were hitherto living freely as Indian citizens prisoners and house them in internment camps? And for how long? No country will take them. If India will not accept them as Indian citizens, does India intend to keep 1.9 million people in jails for the rest of their lives? That would constitute an appalling violation of fundamental human rights.

It is also worth noting that 2019 is a long way away from 1971. Think of someone who may have moved from Bangladesh to India in 1972 – 47 years ago. If this person was in his mid-thirties in 1972, he might not even be alive now. But his children might have been born and might have lived in India for nearly half a century. India is the only country they know. If you suddenly pronounce them non-citizens, where will they go? It is extreme cruelty to send them to another country at this age, even assuming that you can find another country to accept them in the first place.

Incidentally, it is worth pointing out that getting “legal documents” in India is not very difficult if you have the money. Those with the money, even if they are illegal immigrants, whether Hindu or Muslim, would have found it fairly easy to establish their domicile in a country like India, where everything from birth certificates to passports to news can be faked. The present climate must have been a bonanza for forgers in Assam, as the going rates for fake documents must have gone up at least tenfold. The people who will be affected most, therefore, will be those without the means to buy their freedom.

The entire issue of the NRC is a monumental, national disgrace for the people of India. It was a compulsion that forced Rajiv Gandhi to agree to the ethnic basis of the Assam Accord, but he did it as a stopgap bandaid to stop the violence. He also linked the Accord with an instrument like the IMDT Act that would actively nullify the Accord. It would have remained as an unfulfilled promise, had not the greed of the BJP for votes based on dividing people on the basis of religion gotten the better of them.

This entire ugly affair is a stark reminder of what happens when a base impulse – bigotry – is combined with a lack of intelligence to see the consequences of that bigotry.

The story does not end here. We have come so far in this tragedy that we must soldier on to the bitter end. There is no happy ending to this story. Hatred, once allowed free rein, always has victims. Allowing our basest instincts to rule our actions can and will only result in tragic consequences, and the NRC drama is no exception to this rule.

Monday, 27 May 2019

Tumhari Hai Tum Hi Sambhalo Ye Duniya: An Appeal To Fellow-Liberals In India

Abstract

Liberals in India have tried for the past five years to convince their fellow-Indians that Narendra Modi should not be re-elected in 2019 — and failed. Modi has come back to power with a bigger mandate than in 2014. What this means is that the other side is not receptive to the arguments of us liberals — for whatever the reasons may be. There is therefore no point in continuing to highlight what we liberals believe about Modi being bad for the country — the strategy has clearly not worked.

It is therefore time for liberals to take a step back and to disengage from political discussions for a year or two, and watch what actually happens in India under Modi 2.0. If things are bad as we fear, then Modi's supporters will realize the facts for themselves. They will be more likely to admit that things are wrong if they do not have to constantly defend Modi against attacks from liberals. And if things in India actually end up being as rosy as supporters of Mr. Modi believe, then it will be the best of all possible worlds for all Indians.

A Time to Understand Reality

It is now 4 days since the election results were announced. Liberals who fought the war of ideas on social media with the supporters of Mr. Modi are shocked, angry, and depressed that he won with such a large mandate.

They say grief is a multi-stage process, and many of my friends are in different stages. I understand it is hard. I myself have been very involved for the last five years in pointing out the problems in this administration and in trying to convince people not to vote for Modi for a second term. I only achieved closure after I posted my last post titled “A Farewell to Arms” (Apologies to Ernest Hemingway.)

So, while I understand what all of you are going through, here is my appeal.

We tried to convince people that re-electing Modi would be a mistake. We pointed out the various problems, whether economic, social, intolerance-related, related to the scientific temper, or relating to foreign policy. We argued. We shared opinions.

But we failed in convincing people. Modi was re-elected with an even bigger mandate.

What does this tell you? I don't know, but it tells me that whatever I have been doing for the past 5 years has not worked. And so I have understood that repeating that pattern will not convince the other side, either.

Unfortunately, I see many of my friends getting into the same pattern again. That was fine for the last five years, but to continue it is destructive and futile. Yesterday some community leader made some inflammatory statements, and everyone has been posting the video of those statements today, talking about how things in India are getting worse. Others are still arguing as to whether this was a “stolen” election — whether EVMs were selectively tampered. (It does not matter. Even if you somehow discover that they were, the ECI is not going to rerun the election.)

All this is not going to help. These are the things that we tried explaining to them for 5 long years. The other side is not interested in listening. I found recently in a WhatsApp group that I belonged to that highly educated folks from the other side were not even reading my posts — including even instances when my posts had nothing to do with politics. Such is the rift between the liberals and supporters of Mr. Modi. They have closed their minds off and will not read anything you write — because it is you, a liberal, who is posting it. As symptomatic of that, I just responded to a Modi supporter who commented on FB regarding my “Farewell” post without even reading it and started telling me that I was wrong - even though he did not even know what I had written in it.

That is how things are today. You can post all your arguments on how things are bad under Modi. The other side is simply not listening. And, with Modi having won a resounding mandate, they have even less incentive to listen to you.

The Way Forward

So what should we liberals do? I would say we should just take a deep breath, and stop posting on politics, Modi, Rahul, Muslims and Dalits getting beaten up (there are going to be a lot of such incidents now, because lumpen elements on the street will feel vindicated and think they have carte blanche now), and similar topics. Post absolutely nothing on any of these.

Wait for a year at least. Maybe two. Let us see how things pan out.

This has been a war of ideologies. There are those who believe that Modi will bring a golden age to India. There are those of us who believe that he is going to ruin India. Let us understand one thing: both sides genuinely believe that they are correct.

Let us see who is correct here. If we are correct, the other side will realize that things have gone terribly wrong without us telling them a single thing or reminding them by sharing news links. They can read newspapers and websites too.

If they are correct, then that is good news for us too. If the country is indeed going to be better because of Mr. Modi's wise leadership, all of us will be happy. We opposed him only because we are worried that bad things are going to happen. As of now, I believe that, based on what has happened during the last five years. But if the results are different in the next five years, I will have no problem with Mr. Modi. He has been making inclusive speeches since he won. Let us see if he delivers on those words. And let us hope his handling of the economy is better than it was in the last five years.

But clearly, arguing on Facebook is not helping any of us. If the objective is to learn, then we seem to have come to a pass where the other side is simply not interested in even looking at what we share, let alone absorb and learn.

Either they will learn the hard way that what we were saying was right all along, or we will learn the happy way that what they were saying was right all along.

So that's my appeal to you: stop arguing, stop posting news links talking about all the bad things that are happening. Cede the social media space to them. Stop wasting your time arguing. And even if they taunt you, don't respond. After you stop responding a few times, they will stop taunting you, because there is no fun if the other person does not react.

Maintain complete radio silence at least for a year. Or two. There may be times in the next year or two when terrible things happen. Maybe a village of Dalits gets burned (I am not saying it will, just giving an extreme example to make a point). Resist the temptation to say, “See? We told you so!” Let them introspect and come to the same conclusion on their own, without any prodding from us. As long as we are taunting them, they will defend Modi even if something indefensible has happened — just because we are attacking them.

Let us see the worst (or best) that Modi can do.

As Guru Dutt says in the immortal song in “Pyaasa,”

Tumhaari hai tum hi sambhaalo ye duniya (“The world is yours; you take care of it.”)

So, my fellow-liberals, take care of yourselves and your families, use the time that you were spending on Facebook and WhatsApp all these years on reading, music, travel, whatever. Cherish your loved ones. I would even advise not watching news on TV. I have stopped doing that. I get the newspaper anyway — I do not need to know what is happening minute by minute. If Rahul Gandhi is going to resign, it is fine if I find out next morning — it's not like I will go to his home to convince him otherwise if I find out at 3.43 pm.

With that, I will keep my end of the bargain and post nothing more about Indian politics, at least for a year. I will wait and watch what happens and what Mr. Modi does.

I would like to thank all those who have been part of this journey of the last 5 years with me. Your feedback, encouragement, and engagement have meant the world to me.

But now it is time for me to rejuvenate myself. A writer needs to read a lot. Without that, he cannot write informed commentary. Unfortunately, there are only so many hours in the day, and so if you write a lot, you do not get that time to read. I hope to use this hiatus to catch up on my reading.

I have also made many great friends through my writing – people who I admire and in whose presence (real and virtual) I delight to be. These friendships will continue, and I would aver that, in the end, that's what really matters.

With that, Adios, and good luck in all your endeavours!

Peace to all.

Welcome to Seshadri Kumar's Web Home

Sunday, 2 February 2020

The New Direct Tax Regime (2020): Relief or Burden?

The New Direct Tax Regime (2020): Relief or Burden?

Abstract

Summary of Old and New Direct Tax Schemes

Which Scheme Is Better For You?

Case 1: IT Employee in Bangalore with a Salary of Rs. 9 Lakhs/Year

Case 2: Employee with a Salary of Rs. 15 Lakhs/Year

Effect of Deductions and Exemptions

Conclusions

Wednesday, 25 December 2019

Remembering Rajaji

Remembering Rajaji

Abstract

References

Saturday, 23 November 2019

The Cost of Hindu Appeasement

The Cost of Hindu Appeasement

Saturday, 21 September 2019

Another Big Economic Blunder

Another Big Economic Blunder

Abstract

Sunday, 1 September 2019

When Bigotry and Stupidity Combine – The NRC Mess in Assam

When Bigotry and Stupidity Combine — The NRC Mess in Assam

Abstract

Background of Immigration Into Assam

The Assam Accord and the IMDT Act

The End of the IMDT and the Revival of the NRC

Hindu vs Muslim Immigrants

The Citizenship Amendment Act

Whither Human Rights?

Monday, 27 May 2019

Tumhari Hai Tum Hi Sambhalo Ye Duniya: An Appeal To Fellow-Liberals In India

Tumhari Hai Tum Hi Sambhalo Ye Duniya: An Appeal To Fellow-Liberals In India

Abstract

A Time to Understand Reality

The Way Forward

My Blog List