Sunday, 14 June 2020

Narendra Modi, The Anti-National

Abstract

Yesterday, June 13, 2020, the government of Nepal passed a resolution declaring areas which India considers part of its territory to be the territory of Nepal. The resolution was passed unanimously in Nepal's Parliament.

This action by Nepal is unprecedented and indicates that India today has zero influence in Nepal. It also shows that Nepal has firmly gone over to the Chinese camp. This has very dangerous consequences for India in the years ahead.

The root cause of this disastrous deterioration in Indo-Nepal ties is a selfish decision by the Indian Prime Minister, Narendra Modi, in 2015, where he put his own interests and the interests of his party, the BJP, above the interests of the nation in an abortive bid to win a state election in Bihar.

Given the harm that these selfish actions of Mr. Modi have already caused the nation, and the harm that they are virtually guaranteed to cause in the future, it would be fair to call Mr. Modi an anti-national.

Hitting Rock Bottom

The Modi Sarkar's greatest “achievement” (thus far) in foreign affairs is the headline of all newspapers in India today: Nepal has officially released a new map of Nepal that includes areas that India claims as its own.

Nepal has, for decades, from the time Nehru was our first PM, been India's closest ally. The fact that it is largely a Hindu country also worked in favor of this relationship.

From time to time, New Delhi has arm-twisted Kathmandu over the decades since Independence, due to it being the big brother in this relationship, but the relationship continued to be strong despite these small irritants.

But the Modi government has succeeded in completely alienating our closest neighbor and pushing them into China's arms. This is a bonus the Chinese would never have dreamt of — one that popped into its lap without even trying.

Yesterday's Nepalese Parliament vote — which is the strongest signal Nepal can send India — was unanimous.

And that means only one thing.

India does not have a friend left in Nepal.

Congratulations, Mr. Modi.

For this deterioration in relations is directly the result of this incompetent and irresponsible PM's attempt to use foreign relations as a tool to win domestic elections, without any concern for the long-term ramifications of one's actions on the country.

The Nepal Blockade and the Bihar State Election of 2015

What happened, you ask? You may not recall, so let me tell you a five-year old, true story.

There is an ethnic minority group called the Madhesis who live in the region straddling the Nepal-Bihar border. In September 2015, after years of political turmoil, Nepal drew up a new Constitution. This was a secular (Nepal was previously a Hindu nation) Constitution and a Federal one. The Constitution also reframed the borders of the provinces. One of the controversial rules of the new Constitution was the rule regarding citizenship. If a Nepali man married a non-Nepali, his children would automatically get Nepalese citizenship. But if a Nepalese woman were to marry a non-Nepalese, her children would not get Nepalese citizenship until the husband first became a Nepalese citizen. These rules mattered to the Madhesis because there would be intermarriage from both sides of the border among the community.

Concerns over issues like these, plus over the definition of the Nepali Madhesi state in the Eastern Terai (plains) region, which the Madhesis felt was unfair to them, caused a lot of anger among the Madhesis over the new Constitution. There was concern that the Madhesis did not have adequate representation in the new Constitution.

Many of these were also unhappy with the move to make Nepal a secular country and wanted it to go back to being a Hindu state. There were protests and violence by the Madhesis in response to the new Constitution. There were also other ethnic groups that were unhappy with the new Constitution.

Many of these concerns were valid. But what must be remembered is that this was an internal matter of Nepal.

In December 2015, there was also a state election in Bihar, which the BJP was very keen to win. The same Madhesi community exists in Bihar too, and the Modi government was keen to get its votes.

After the new Constitution was promulgated, the Madhesis decided to block the border in protest, and in this it was backed by the Indian government. The anxiousness of the Modi government to support the Madhesis was prompted by anxiety over comments by Lalu Prasad of the RJD in an election rally, in which he criticized the government of Nepal for its policies and vowed to defend the Madhesis of Bihar, with whom the people of Bihar had “roti-beti” relations (i.e., intermarriage). The BJP did not want to be seen as any less fervent in support for the Madhesis, so allegedly, they used the instruments of international trade and policy to try to influence a state election and supported the blockade by not allowing trucks carrying fuel and food to a landlocked country.

The blockade started in September 2015 and ended only in February 2016. The Nepalese had to withstand the harsh and cold winter of 2015-2016 without fuel and food.

As can be imagined after an experience like that, India does not have a single friend left in Nepal. Imagine if the 8-week COVID-19 shutdown in India was not imposed by an Indian government but forced on Indians by a foreign government. The Indian government, of course, not surprisingly, claims it never imposed any blockade on Nepal, that Indian trucks were voluntarily refusing to enter Nepal because of fear of violence, but Nepalese media have countered this narrative by saying that there was violence even before September 2015 and that did not stop the trucks from coming in.

In late January 2016, the Nepalese government amended the Constitution to make some concessions to the Madhesis. Even though the Madhesis said that these didn't go far enough, the blockade miraculously went away and trucks started rolling into Nepal in February.

A relevant detail is that, by this time, the elections in Bihar were over, with the BJP getting badly drubbed at the polls. The government was aware of how unpopular India had become in Nepal and how China had tried to airlift fuel to Kathmandu.

Enter the Dragon

The blockade had zero effect on the BJP's prospects in the election in Bihar. They came third, behind the RJD and the JDU.

But it had huge ramifications in Nepal. In the last four years, Nepal has signed several agreements with China, including fuel and food supply agreements, agreements for creating a railway system in Nepal, and a plan to connect China with Nepal by rail by 2022.

And today's news is the last nail in the coffin of the “special relationship” between India and Nepal.

Once the rail link with China is complete in 2022, Nepal will be firmly in China's orbit. In 2017, Nepal signed up to become part of China's Belt Road Initiative. The railways within Nepal will be built as part of the BRI.

By now, we all know the endgame of the BRI. We have seen it in Sri Lanka, Kenya, and many other countries. Nepal is a poor country and has no way to pay back the Chinese for their generosity in building all this infrastructure.

So how can they pay the Chinese back? Maybe give them some land in return.

Maybe a few military bases within Nepal.

Welcome to India's new nightmare. India is already living in daily fear of China grabbing our territory at their will — as they just did in Ladakh, with the Modi government just watching helplessly. We are already worried about Chinese incursions in Ladakh and Arunachal Pradesh. Now add the entire, long, Indo-Nepal border to this — facing Bihar, Uttar Pradesh, and Uttarakhand. This is no longer some forgettable north-east state (for most Indians). This is the Hindi heartland.

Welcome (again!) to RSS incompetence.

From Nehru's time until even recently, the Nepalese government would never take any major decisions without consulting New Delhi. But yesterday, Nepal demonstrated that India has zero influence in Nepal today.

If incompetence were the only reason for the mess we are in today, it would perhaps be forgivable. But the main reason for this decline in our relations with Nepal is that Modi put his personal interest above the interest of India and took an action in September 2015 that he would have known would cause incalculable harm to the country even though he himself hoped to benefit from that action politically. Some may correctly point out that this is not the first time that India has blockaded Nepal. India did so in 1989, causing immense harm to the Nepalese and their economy. But China was not yet a superpower in 1989, and so India could get away with it.

Had the PM consulted the veteran bureaucrats in the Ministry of External Affairs, they would have undoubtedly counseled against such an action in the changed circumstances of 2015. But it is unrealistic to expect this PM to ever consult any experts. Also, the bureaucrats in the MEA are sworn to protect the interests of the country. In this case, however, the PM’s motive was not the well-being of the country. It was the well-being of his party. And himself.

What do you call a person who prioritizes his interests above those of the nation and who acts in such a way that he benefits personally and the nation loses as a result of his actions?

An Anti-National.

Sunday, 29 March 2020

Asleep at the Wheel – The Looming Coronavirus Catastrophe in India

Abstract

India, under a lockdown since March 25, is finally facing the reality of the Covid-19 pandemic. Unfortunately, over the last four months, the Modi government, preoccupied with political priorities, has let valuable time slip out of its hands. Instead of carefully preparing for a disaster as the country has never before seen, by stocking up on face masks, gloves, sanitizers, ventilators, and the like, in the long available time from November 2019 to March 2020, the government has belatedly woken up from its slumber and is frantically trying to acquire these essential items at the eleventh hour, when it is practically impossible to get them at short notice. The government also did not open up the supply of Covid-19 tests beyond a single Gujarat-based vendor for the longest time, and has rejected the applications of several Indian test manufacturers, with the net result that the medical establishment in India is woefully short of Covid-19 tests.

The PM’s knee-jerk lockdown of the country, a last-minute, desperate move to stem the spread of the virus, without adequate preparation of the public, has also caused untold hardship for the tens of millions of migrant workers on the strength of whom the economy runs, as they have been forced to trek it home for hundreds of miles without food, water, or transportation. To cap it all, a woefully inadequate and poorly thought-out financial package will do little to compensate those who are living on the edge, who will be without any money for the duration of the lockdown, and who will probably be reduced to penury or death by starvation.

And, despite all this suffering, it is unclear, given India’s huge population density, how much the lockdown will actually help in slowing down the spread of the virus, even if a lockdown is the only option at this late stage, given the presence of extremely high-density clusters like slums in India.

Nero Fiddling While Rome Was Burning

The ongoing tragedy of migrant workers in India, where tens of crores (100s of millions) of people are walking hundreds of kilometers to get from urban centres, where they have no work and no food, to their villages in states far away, is a prime example of how this government has mismanaged the Covid-19 pandemic in India.

The situation is analogous to that other great tragedy of recent years, Demonetization, where another draconian measure was imposed on the people with no warning and no consultation with experts, causing incalculable suffering.

The same incompetence and indifference to human suffering is on display again in this government.

Many people had been urging the government to take the Coronavirus pandemic more seriously and many had asked for a complete lockdown well before Modi first imposed his one-day lockdown, on 22^nd March and, finally, the 3 week lockdown, on 25^th. Prominent among these was the opposition leader Rahul Gandhi, who had been arguing for stronger measures as far back as 12^thFebruary in a now widely-shared post on Twitter. The counter-point to that was a post from the PM on 19^th February, talking about how he loved eating “litti-chokha,” a popular dish from Bihar.

Mr. Modi was sleeping on the pandemic. He had higher priorities to deal with, such as continuing the months-long curfew in Jammu and Kashmir, rebuilding the Ayodhya temple, creating the Citizenship Amendment Act (CAA), toppling state governments ruled by opposition parties, preparing for the introduction of the Uniform Civil Code, demonizing the Shaheen Bagh anti-CAA protest, and other political moves much closer to the heart of the ruling BJP party and its parent RSS. Health issues were not a priority.

Exodus

When the PM finally woke up, it was a bit late. Experts had told him that the virus was about to hit stage 3, the stage of community transmission, unless he did something fast. So, in what appears to have become a pattern with him, without much warning, he locked down the nation.

The result? Daily wage workers who could not support themselves in big urban clusters with no daily pay had no choice but to go back home. All transport has been shut down – buses, taxis, autos, trains. So what do these millions of day labourers do? They walk. With their wives and children. For hundreds of kilometers, without food or water. Many migrant workers, at the time of writing, are still desperately trying to go back home, with no transport option, waiting for promised buses to take them home. See here, here, here, here, here, here, here, and here for images and videos. State governments are doing their best to cope with the crisis, but no state government can provide emergency transportation to tens of millions of workers all wanting to go home at the same time after they have been blindsided by the Central government.

The migrant workers who were desperately trying to go home were even accosted by policemen who made them crawl on their knees, made them do sit-ups, and inflicted other illegal punishments as per their whim — for not obeying the lockdown — without a shred of empathy for their situation. The Indian police has a well-deserved reputation for sadism, and they again proved their character in this time of need for poor people.

Even before all this, as soon as wind of the impending lockdown came, people scrambled into buses and trains to take the next possible trip back to their hometowns. There was mass panic. If social distancing was the goal, then the sight of buses and trains packed like sardines was the very antithesis of this. But of course, one could argue that this was inevitable whenever a lockdown was announced. People will leave urban centres and go home. So we can consider that the lockdown did not begin on the 25^th of March in India, but on the 27^th or 28^th. Given the progress of the epidemic so far, this was extremely unfortunate, and will undoubtedly result in a huge spike in cases in a couple of weeks.

The exodus started even before the full lockdown of the country on March 25^th. There was first the one-day lockdown on March 22^nd, which people correctly guessed was a harbinger of the full-fledged lockdown. In addition, several states, such as Karnataka, had their own lockdowns which had come into force before the national lockdown. And there were measures taken even before those lockdowns, such as the notice sent by the Bangalore Municipal Corporation saying that it was not safe for people to stay in PG (Paying Guest) accommodations unless the PGs were following strict hygiene rules — which everyone knew they were not. All these actions, while necessary to contain the epidemic, also increased panic

Assume 50 long distance trains in those last few panic-filled days, each jam-packed with about 1500 passengers (that's a total of 75,000 people, which might be a gross under-estimate), spending 30 hours in close proximity to each other, and you have the perfect recipe for multiplication of cases for a highly contagious infection. For context, it is useful to know that the replication number, R0, which is a measure of how many people one infected person will infect in turn, is 2.38-3.28 for Covid-19, as opposed to 1.5 for Swine Flu. Add to this the hundreds of packed buses. So maybe a total of one lakh (100,000) travellers, traveling anywhere between 10 and 40 hours with others in cramped quarters and zero social distancing.

Now these people have gone back to their towns and villages and infected everyone around them, both during their journey home and after their return to their villages and towns.

We are staring at a human catastrophe in India. China, Italy, Spain, France, and the USA will soon be forgotten. We might just lose the older generation in India, given that the mortality rate of the virus for older people is nearly 15%.

For comparison, think of the event said to be responsible for the explosion of the virus in Italy and Spain - a football match between an Italian and a Spanish side on February 19, attended by about 40,000 spectators. At least all of them were in one place. Our carriers are now spread all over the country.

Inadequate Guidance About the Nature of the Lockdown

In his speech on the 25^th of March, Modi assured Indians that essential services would not be interrupted by the lockdown. But it was not clear from his speech how that would be possible, because he emphasized multiple times in the speech that no one was, under any circumstances, to leave the home. He left no room for exceptions in his speech. And people take what he says very seriously. His repeated exhortations to all Indians not to cross the invisible “Laxman rekha” (trans.“a line that must not be crossed”) drawn around their homes scared everyone and gave people the implicit message that no one should leave their homes, no matter what.

While Mr. Modi did say that essential services would not be disrupted, the strong emphasis on not leaving the home confused local law and order people, who were not sure whether citizens were allowed to walk on the streets or travel in their vehicles to go to grocery or medical stores and whether people should be allowed to deliver milk, vegetables, medicines, or groceries.

The result was that policemen started beating up people who even had legitimate reasons to be on the road. People who moved around to deliver milk, groceries, or medicines were beaten up by cops. Even today, on the 28^th, supply of essentials to the public is not properly in place. Even middle-class families are scared of going to shops to buy essentials, worrying about cops stopping them. Apps like BigBasket have stopped delivering food.

The situation is even more dire for poor families, who do not have any means of transport, and who will have to walk to get food and milk. Worse, they do not have money and cannot get it.

Inadequate Financial Help to Affected People

The government came out with what it called a Rs. 1.7 lakh crore (US $22 billion) relief package for the poor. What did it involve? Among other things, 5 kg of rice or wheat free to each person below the poverty line. But there are two problems with this scheme. One is the difficulty for poor people to go to the nearest ration shop, in the absence of any transport whatsoever. The other is the need for Aadhar (national ID) verification. This is a freebie, so shops have to ensure that nobody uses the benefit more than once. And so they will demand that people verify their identity using their fingerprints. Now we all know the problems with Aadhar. Often the fingerprints do not match (especially for older people), and often, in rural areas, internet connectivity is not very good. So if either of this is a problem for you, then you will not get your extra 5 kg, even if you somehow made it to the ration shop. The side-effect of all this is that the ration shops will have huge stocks of free grain which they will then divert and sell at full price. This is corruption enhancement at taxpayer expense.

The finance minister made the ludicrous statement that to help the poor, the government will give Rs. 500 (about $7) per month to each of 200 million women through their Jan Dhan bank accounts. How bad can tokenism be? You are trying to compensate a person for the lack of livelihood. Many of these daily-wage labourers earn around Rs. 300 a day. And you want to compensate them for the loss of employment for a month by paying them Rs. 500 a month? All this just to be able to tell the world that you have done something? This is, frankly, insulting to the poor. Another similar offering was a one-time, ex-gratia payment of Rs. 1000 to 30 million poor senior citizens, widows, and disabled people. It is too little to mean anything to anyone. And probably the amount of paperwork needed to collect it, along with the ban on transport, will mean very few actually take advantage of even this meagre payout.

Mismanagement of the Medical Aspects

With movement completely prohibited and no way for people without private transport to get anywhere, the numbers of new victims of the virus will not be known properly in the future. Even in normal times, Indians were reluctant to go to the hospital for any flu-like illness. With no way to go to the hospital, and fear of being beaten up, many will simply not report cases until it is too late. We may know about the progress of the Coronavirus epidemic in the future in India only from the deaths because of the lockdown.

The US, the most prosperous country in the world, with a highly developed healthcare system, is already breaking down with inadequate masks even for its doctors and inadequate ventilators for its patients. In Italy, hospitals have run out of room for their patients and temporary shelters are being set up outside hospitals.

With India's extremely poor health infrastructure, what horrors await us?

It might be instructive to look at what the government has done insofar as preparing for this pandemic is concerned, inasmuch as any preparation has been done. Let us first understand what we actually know about this virus from the experience of other countries.

How does this virus kill? It attacks the respiratory system. The patient finds it difficult to breathe. Thick mucus is secreted in the airways and collects in the lungs. This makes it harder and harder for the patient to breathe. The patient tries to cough to remove the fluid in his or her lungs. Because the patient’s lungs are filling with fluid rather than air, there is severe shortness of breath. The patient literally suffocates to death. What happens is that the virus leads to pneumonia that triggers acute respiratory distress syndrome (ARDS), which leads to death.

This is why the virus spreads through throat and nasal secretions. Those in close proximity to a patient or a passive carrier (one who has the virus but exhibits no symptoms) can get it from their nose and throat secretions, as when they cough or sneeze. If these nasal or throat secretions are left on surfaces, as might happen when a person covers their mouth while sneezing and then touches a railing, then anyone who touches the same railing and then touches their mouth or nose might get infected.

These facts tell us how to address the problems of transmission and treatment. Transmission is through aerial droplets from infected people. Therefore, the first line of defence for any medical professional who deals with Covid-19 patients is a face mask that can prevent the virus from reaching his or her nose or mouth. Similarly, so that a healthcare worker does not touch an infected droplet, he or she needs to use gloves while handling a patient.

Secondly, once a patient does get the virus, the key to the patient’s survival is to prevent pneumonia and ARDS. When a patient’s airways are blocked with fluid, he or she has difficulty getting enough oxygen, and so the solution is to have ventilators so that the patient can be given oxygen to survive.

What is India’s supply of face masks, gloves and ventilators, especially for medical professionals? Has the government secured enough of these items and prioritized them for the safety of medical professionals? There is no evidence to indicate that it has. In fact, it was only on March 20^th that the government even banned the export of face masks. There has been no attempt to secure face masks for the medical establishment in India in the likely scenario that the number of cases could exponentially rise. In fact, when the epidemic was raging in China, Indian manufacturers were eyeing a bonanza in exports to China, and the government seemed unconcerned that masks that might one day be vitally necessary were being exported to China. This is where alertness in a government is necessary, especially towards an impending national disaster.

What about ventilators? According to an article in The Print, India has about 40,000 ventilators, but this is expected to be woefully inadequate – when the infection goes through the roof, we may need about 100 times as many ventilators. What has the government done about this? Until very recently, nothing. As with everything else concerning Corona virus, the government woke up to the threat only now. On 27^th March, there was an announcement that Bharat Electronics (BEL) will be producing 30,000 ventilators. The company was only approached by the government on March 26th. The government also announced that it will be procuring another 10,000 ventilators from another (unspecified) PSU. Keep in mind that nothing has started; the production line has to be set up and manufacturing started, and all this could take a few months.

A private company, Skanray, has said that it will ramp up production and manufacture 100,000 ventilators in two months. This announcement was made just a few days ago. The problem is compounded by the fact that ventilator manufacturers import many of their parts, and most parts are not available today because other countries have imposed export restrictions on these components as they are battling with the virus themselves. This was, therefore, something that BEL should have been tasked with developing a month ago so that the indigenous technology was already available by the time the number of cases started rising. Another company, AgVa, a startup, has been approached by the government, again recently, and the company has said it will be able to provide 5000 ventilators by April 15. Looking at these numbers, it is clear that we are going to be woefully short of our needs when the situation escalates.

Let us look at gloves. As in the case of masks, Indian companies were happily exporting gloves to China in February, and the government was not concerned in the least. A Business Today report dated February 6 mentioned that although the government had enquired about the production capacity of Indian glove manufacturers, it had not asked them to ramp up production. On March 18, in a reply in the Lok Sabha, the government said that it had provided 15 tonnes of medical supplies to China worth Rs. 2.11 crores. As the report said, “Minister of State for External Affairs V Muraleedharan said the medical supplies included one lakh surgical masks, five lakh pairs of surgical gloves, 75 pieces of infusion pumps, 30 pieces of enteral feeding pumps, 21 pieces of defibrillator and 4,000 pieces of N-95 masks.” Even on March 18, the government had not realized the seriousness of the situation. The government was trying to express solidarity with China, without realizing that within a month, India itself would desperately be needing those same supplies. And now, gloves are in extremely short supply all over the world as Malaysia, which manufactures 60% of the world supply of gloves, is under a shutdown.

All in all, this is a very sad and dangerous state of affairs. The central government seems to have woken up to the reality of the virus only a few days before PM Modi’s “Janata Curfew” call on March 22^nd, and seems to have started consulting experts and thinking about the problem only after that. Even an order on March 13^th including masks and sanitizers in the Essential Commodities Act was done thinking not about how we might need it for the fight in the hospitals and clinics against the Coronavirus epidemic, but rather to reduce prices for consumers who might want to buy these goods.

And this was despite the fact that on March 3^rd, the World Health Organization gave a warning to all countries that there was a looming shortage of medical equipment, and advised governments all over the world to increase production of such equipment by 40%. Modi obviously did not get the memo, even though it was reported in all the papers. Even before this, on January 30^th, the WHO declared the Coronavirus pandemic a global health emergency. But at the time, the PM and his government were not concerned about anything other than winning the 2020 Delhi assembly elections, which they lost nevertheless. A government's outcomes are directly proportional to its efforts.

What about tests? The government had, until recently, only permitted one company to provide it with tests for Covid-19. Which is this company? It is an Gujarat-based company called CoSara Diagnostics Private Limited, a US-India collaboration of US-based Co-Diagnostics, Inc. (CODX) and Synbiotics, Ltd., a division of the Ambalal Sarabhai group. A report in the Huffington Post said in this regard,

Earlier this month, at a public event in Utah, Co-Diagnostics Inc.’s head of business development, Joe Featherstone, said the company had devised the test in just seven days using advanced computer algorithms rather than the standard process of trial and error, which takes several weeks. Its India manufacturing partner, Synbiotics Ltd, has a track record of manufacturing anti-fungal medication, but no previous experience in making diagnostic kits.

An inspection of the company financials of CoSara and its American parent, CODX, suggests that the COVID-19 test would be CODX’s first ever commercially scaled diagnostic product and India, most likely, its first major market.

While the government has very recently (report dated March 27^th) allowed more companies to sell Covid-19 tests, most of them are from China, USA, Poland, and Germany. Only one Indian company, MyLab, was allowed to sell its kits in India. Kits made by thirteen other Indian companies were rejected by the Indian Council for Medical Research (ICMR). This at a time when most countries, such as the US, recognize that one of the major problems is the lack of availability of test kits.

There is a reason why it is important to focus on masks, gloves, ventilators, and the like in terms of the needs of healthcare professionals rather than the common people. This is because when the cases start shooting up and patients start filling up hospital wards, the pressure will be on doctors, nurses, and other medical staff. They will need masks and gloves in abundance to treat the patients. These will run out very fast. They will need test kits to determine who has the virus and who has recovered. They will need ventilators to keep critically-ill patients alive. And if doctors and nurses do not have adequate personal protection equipment (PPE) such as masks and gloves, they will be exposing themselves to the virus. If that happens, many of them may simply not report for work rather than risk their lives. As it is, even with masks and gloves, the virus is infecting many medical professionals worldwide. To treat Coronavirus patients without PPE is to commit suicide.

How Bad is the Situation?

To understand how dangerous the spread of the virus in India was, I plotted the data of the number of cases in India versus the number of days on March 24, 2020, using data from covid19india.org, a crowdfunded initiative. The data was current until March 24. I have not updated this data since then, because once the lockdown is in force, it is my belief that reporting of illnesses will go down because of the inhibitory effect of the lockdown – no autos, buses, or taxis for a person to go visit his or her doctor if he is unwell. I expect a temporary reduction in the number of cases reported, and so I believe the data is only accurate up to March 24.

By plotting the data on a logarithmic scale, it can be seen that the relationship between the number of cases and time is exponential. What this means is that the infection has entered its exponential phase. From the data, it can be seen that the number of cases doubles in roughly 3.5 days. A simple extrapolation tells us that if the number of cases continues to multiply at this rate, we might be looking at more than 50,000 cases by 15^th April. The lockdown that is in place now should have a mitigating effect but, as has been seen in other countries, the effects of the transmission that has already taken place (as in the long bus and train journeys prior to the shutdown in India) will have a huge effect, and so cases will continue to rise for a significant period of time. A prime example of this is Spain, which imposed a complete lockdown on March 14^th; however, as of the date of writing (28^th March), deaths in Spain continue to skyrocket. It is, therefore, reasonable to expect that the number of cases and deaths in India, too, will keep rising even though a lockdown is in place.

Whether it will reach the 22 million cases by 15^th May that the chart shows depends partly on the discipline of Indians to maintain lockdown conditions for an extended period of time — again, given Spain’s experience, it is doubtful that the situation will resolve itself in 3 weeks of lockdown. One would expect the number of cases and deaths to continue rising even after April 15, but hopefully they will not reach the numbers that the extrapolation in the graph, which is based on no mitigation efforts such as social distancing, suggests.

Having said that, an important difference between India and Italy or Spain is the population density. While middle- and upper-class Indians live in comfortable homes that are well-separated and can therefore be socially distanced, most of India’s urban poor live in staggeringly crowded places, such as the famous Dharavi slum in Mumbai. People here have no option to socially distance. Often ten people live together in a 10 ft x 10 ft dwelling, and these dwellings are right next to each other, with just 6 feet distance between two rows of homes. If a single person gets infected in a slum like Dharavi, it is hard to see how the entire slum will not be infected. With so many infected people, and without room for them in hospitals, how long before the entire population is infected? Therefore, whether social distancing can be truly effective in slowing down the exponential rate of growth in a country with such densely populated clusters remains to be seen.

Was all this unavoidable? NO.

What would a more prepared and competent leader do?

What Could Have Been Done

The Coronavirus epidemic started in November 2019. That is why it is known as Covid-19, not Covid-20. The Indian government had a head start of four months before things became critical, as they did after March 15^th. But the current government and its leader were too busy dividing the country to think of saving it.

One criticism I often encounter when criticizing the government is, “all this is fine, but what else could they have done? Why don’t you tell us what you would have done better?” So, let us look at some of the things the government could have done, well before mid-March, that would have left our country a lot safer and with a lot less pain:

Place a restriction on the export of medical supplies, such as gloves, masks, and sanitizers.
Ask the major players in India's textile industry to start manufacturing masks.
Ask manufacturers to ramp up production of gloves.
Ask major Indian manufacturing establishments to start producing ventilators.
Arrange for more testing kits and approve more Indian companies that could manufacture Covid-19 test kits.
Impose a lockdown a month before it was actually imposed.
Inform the country two weeks in advance that the country is headed towards a lockdown, and assure them that there is no immediate danger, but that if there were no lockdown, it would get dangerous. This would allow migrant workers to take transport to their native places in an orderly way, and all this would have been done a long time before the virus had spread so much. This would have avoided any suffering.
Make it clear down the chain, from centre to state to city to town to village, that essential services are exempt from the lockdown; that no one is to harass delivery folks of medicines, groceries, milk, and the like.
Ensure that home delivery of all essentials would be fully operational at the time of the lockdown, by talking to the heads of various organizations that do home delivery, well before announcing the lockdown.
Two weeks before the lockdown, ask all daily wage labourers and other vulnerable groups to go to government offices and get a Rs. 5000 handout to sustain them for the next two months. Tell them also to pick up their 5 kg of free rice or wheat from the ration shops before it is officially unsafe to do so because of social distancing concerns.

Now that would have been a meaningful, well-thought-out response rather than the harebrained, knee-jerk, last-minute response from the government. But that would have required the government to fully think through all these possibilities well in advance of the crisis. With this government, that is like asking for the moon.

What we got instead was five minutes of cacophony at 5 pm on March 22^nd by a middle class that was delighted that they could feel good about themselves with just five minutes of empty symbolism. If Mr. Modi really did care about the medical fraternity, he should have provided the tools they are now going to need to fight this disease, not organize a silly and immature spectacle. As things stand, our poor doctors, nurses, interns, wardboys, and other medical professionals are woefully ill-equipped to handle a killer disease, and will be putting their own lives at risk, thanks to a government that has been asleep at the wheel.

Sunday, 1 March 2020

2024 (With Apologies to George Orwell's "1984")

2024 (With Apologies to George Orwell's “1984”)

Abstract

The following passage is taken almost verbatim from George Orwell’s “1984,” pages 12-17, with just a few details edited to make it relevant to India in the 21st century. It is scary how well Orwell’s template fits India in 2020. I have deliberately kept my changes to a minimum, mostly involving changing of names and adding small details to give the passage a 21st century Indian context. Otherwise the words are exactly as George Orwell wrote them 71 years ago.

It should be noted that 1984 was a political satire of its times; and so is this recasting of this passage into 2020s India. It is what I think can happen in a few years time, and therefore is a projection of the future. But I think any reasonable person who sees the news headlines realizes that this projection is not far from the truth. Many of our friends and relatives already think like the protagonist below and, as the Delhi violence and its aftermath are showing, many more are daily getting brainwashed and converted to hate. Ministers spew hate in public; ministers garland murder convicts; and there is little outcry and little action, legal or otherwise, taken against such offenders. So I do not think what you will read below is far from what can happen in a few years.

The Two-Minutes Hate

It was nearly eleven hundred, and in the Records Department, where Onkar Singh worked, they were dragging the chairs out of the cubicles and grouping them in the center of the hall, opposite the big telescreen, in preparation for the Two Minutes Hate…

The next moment, a hideous, grinding speech, as of some monstrous machine running without oil, burst from the big telescreen at the end of the room. It was a noise that set one’s teeth on edge and bristled the hair at the back of one’s neck. The Hate had started.

As usual, the face of Nehru, the Enemy of the People, had flashed onto the screen. There were hisses here and there among the audience. The little saffron-clad woman gave a squeak of mingled fear and disgust. Nehru was the renegade and backslider who once, long ago (how long ago, nobody quite remembered), had been one of the leading figures of the evil Congress, almost on the same level as Bade Bapu (Big Daddy) today, and then had engaged in anti-national and counter-Hindu activities for all the 17 years that he ruled Bharat. This was before the birth of Bade Bapu, who would never have allowed a traitor like Nehru to become PM of Bharat one day.

The program of the Two Minutes Hate varied from day to day, but there was none in which Nehru was not the principal figure. He was the primal traitor, the earliest defiler of Bharat’s purity. All subsequent crimes against the country, all treacheries, acts of sabotage, heresies, deviations, sprang directly out of his teaching. Somewhere or other, his descendants and followers were hatching conspiracies; perhaps somewhere beyond the sea, under the protection of foreign paymasters; perhaps even — so it was occasionally rumoured — in some hiding place in Bharat itself.

Onkar’s diaphragm was constricted. He could never see the face of Nehru without a painful mixture of emotions. It was the handsome face of a Kashmiri Pandit, with the traditional white cap of the Congress — a clever face, and yet somehow inherently despicable …

The telescreen changed from Nehru’s face to that of his great-grandson, Rahul Gandhi, who was delivering his usual venomous attack on the doctrines of the Bharatiya Janata Party (or, as it was known in 2024, just “The Party,” as all other parties had been outlawed) — an attack so exaggerated and perverse that a child should have been able to see through it, and yet plausible enough to fill one with an alarmed feeling that other people, perhaps less level-headed than oneself, might be taken in by it. He was abusing Bade Bapu, he was denouncing the dictatorship of the Party, he was demanding the immediate conclusion of peace with Pakistan, he was advocating freedom of speech, freedom of the press, freedom of assembly, freedom of thought, he was crying hysterically that the idea of India had been betrayed — and all this in rapid polysyllabic speech which was a sort of parody of the habitual style of the orators of the Party, and even contained shuddh Hindi words; more shuddh Hindi words, indeed, than any Party member would normally use in real life.

And all the while, lest one should be in any doubt as to the reality which Rahul’s specious claptrap covered, behind his head on the telescreen there marched the endless columns of the Pakistani and Chinese armies — row after row of solid-looking men with expressionless faces, who swam up to the surface of the screen and vanished, to be replaced by others exactly similar. The dull, rhythmic tramp of the soldiers’ boots formed the background to Rahul’s bleating voice.

From time to time, other hated critics of the regime, such as Kanhaiya Kumar and Arvind Kejriwal, had their faces projected on screen, and a harsh voiceover shouted, “Bharat tere tukde honge, insha Allah, insha Allah!” (“India, you will be torn to bits, Allah willing.”) At another point, faces of familiar opponents of the party and enemies of Hinduism, such as Shashi Tharoor and Mamata Banerjee, and intellectuals such as Amartya Sen, Raghuram Rajan, and Romila Thapar were flashed with a loud shout from the telescreen background, “Desh ke gaddaaron ko, goli maaro saalon ko.” (“Shoot the traitors to the country.”)

Before the Hate had proceeded for thirty seconds, uncontrollable exclamations of rage were breaking out from half the people in the room. The self-satisfied sheeplike face on the screen and the terrifying power of the Pakistani and Chinese armies behind it were too much to be borne; besides, the sight or even the thought of the Nehru-Gandhi family, to which both Nehru and Rahul belonged, produced fear and anger automatically. They were objects of hatred more constant than China or Pakistan.

But what was strange was that, although Nehru and his followers were hated and despised by everybody; although, every day, and a thousand times a day, on platforms, on the telescreens, in newspapers, in books, his theories were refuted, smashed, ridiculed, held up to the general gaze for the pitiful rubbish that they were; in spite of all this, his influence never seemed to grow less. Always there were fresh dupes waiting to be seduced by him and his philosophy. A day never passed when spies and saboteurs acting under the directions of the Congress were not unmasked by the Thought Police. The Congress commanded a vast shadowy army, an underground network of conspirators dedicated to the overthrow of the State. The Brotherhood, its name was supposed to be. There were also whispered stories of a terrible book, a compendium of all the heresies, of which Congress leaders and others like Kanhaiya Kumar were the authors and which circulated clandestinely here and there. It was a book without a title. People referred to it, if at all, simply as the book. Neither The Brotherhood nor the book was a subject that any ordinary Party member would mention if there was a way of avoiding it.

In its second minute the Hate rose to a frenzy. People were leaping up and down in their places and shouting at the tops of their voices in an effort to drown the maddeningly bleating voice that came from the screen. The little saffron-clad woman had turned red, and her mouth was opening and shutting like that of a landed fish. The dark-complexioned girl behind Onkar had begun crying out “Swine! Swine! Swine” and suddenly she picked up a heavy Shuddh Hindi dictionary and flung it at the screen. It struck Rahul’s nose and bounced off; the voice continued inexorably. In a lucid moment, Onkar found that he was shouting with the others and kicking his heel violently against the rung of his chair. The horrible thing about the Two Minutes Hate was not that one was obliged to act a part, but that it was impossible to avoid joining in. Within thirty seconds, any pretense was unnecessary. A hideous ecstasy of fear and vindictiveness, a desire to kill, to torture, to smash faces in with a sledge hammer, seemed to flow through the whole group of people like an electric current, turning one even against one’s will into a grimacing, screaming lunatic.

…

The Hate rose to its climax. The voice of Rahul had become an actual sheep’s bleat, and for an instant the face changed into that of a sheep. Then the sheep-face melted into the figure of the Chinese soldier who seemed to be advancing, huge and terrible, his submachine gun roaring and seeming to spring out of the surface of the screen, so that some of the people in the front row actually flinched backwards in their seats. But in the same moment, drawing a deep sigh of relief from everybody, the hostile figure melted into the smiling face of Bade Bapu, be-spectacled, white-bearded, full of power and mysterious calm, and so vast that it almost filled up the screen. Nobody heard what Bade Bapu was saying. It was merely a few words of encouragement, the sort of words that are uttered in the din of battle, not distinguishable individually but restoring confidence by the fact of being spoken. Then the face of Bade Bapu faded away again, and instead the slogans of the Party stood out in bold capitals:

GARV SE KAHO HUM HINDU HAIN!

(“Say proudly that you are a Hindu”)

ACCHE DIN AA GAYE HAIN!

(“Good days have arrived!”)

DESH KE GADDAARON KO, GOLI MAARO SAALON KO!

(“Shoot the traitors to the country”)

HINDI HINDU HINDUSTAN, MULLAH BHAAGO PAKISTAN!

(“Hindustan (India) is for Hindi-speaking Hindus! Muslims, go to Pakistan!”)

But the face of Bade Bapu seemed to persist for several seconds on the screen, as though the impact that it had made on everyone’s eyeballs was too vivid to wear off immediately. The little saffron-clad woman had flung herself forward over the back of the chair in front of her. With a tremulous murmur that sounded like “My Saviour!” she extended her arms toward the screen. Then she buried her face in her hands. It was apparent that she was uttering a prayer.

At this moment, the entire group of people broke into a deep, slow, rhythmic chant of “Mo-di!… Mo-di!… Mo-di!” over and over again, very slowly, with a long pause between the “Mo” and “di” — a heavy, murmorous sound, somehow curiously savage, in the background of which one seemed to hear the stamp of naked feet and the throbbing of tom-toms. For as much as thirty seconds they kept it up. It was a refrain that was often heard in moments of overwhelming emotion. Partly it was a sort of hymn to the wisdom and majesty of Bade Bapu, but still more it was an act of self-hypnosis, a deliberate drowning of consciousness by means of rhythmic noise.

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.

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Sunday, 14 June 2020

Narendra Modi, The Anti-National

Narendra Modi, The Anti-National

Abstract

Hitting Rock Bottom

The Nepal Blockade and the Bihar State Election of 2015

Enter the Dragon

Sunday, 29 March 2020

Asleep at the Wheel – The Looming Coronavirus Catastrophe in India

Asleep at the Wheel – The Looming Coronavirus Catastrophe in India

Abstract

Nero Fiddling While Rome Was Burning

Exodus

Inadequate Guidance About the Nature of the Lockdown

Inadequate Financial Help to Affected People

Mismanagement of the Medical Aspects

How Bad is the Situation?

What Could Have Been Done

Sunday, 1 March 2020

2024 (With Apologies to George Orwell's "1984")

2024 (With Apologies to George Orwell's “1984”)

Abstract

The Two-Minutes Hate

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

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