Congress & BJP: Stratagems for 2019

The Modi govt. has completed three & a half years in power, without an effective opposition but the impending Gujarat assembly elections is turning out to be a cliff-hanger; an inflection point seems to have now been reached with the opposition tasting blood. Time is hence ripe to predict the broad strategies likely to be adopted by the BJP & the Congress in the run up to the 2019 general elections.

BJP Strategy: “Hindi, Hindu, Hindustan”

The BJP believes in the slogan: “Hindi, Hindu, Hindustan “given by its progenitor, the Jan Sangh. MS Golwalkar – the 2^nd head of its ideological fountain-head, the RSS - insisted on 5 unities – one language, one faith & one race with one culture in one nation “Akhand Bharat”.  It insists on “Hindi” as all pervasive national language & “Hindutva” as an ideological glue holding entire “Hindustan” under a nationalistic & patriotic spirit.

Congress Strategy: “Linguism, Secularism, Federalism”

The dispirited Congress seems to have got a boost vide an alternative narrative that emanated not by the central think tank but from the Karnataka CM – Siddaramiah whose strategy roughly translates into the alternative slogan: Regional Language, Secularism, Federalism.  The DMK rode to power, in TN, for the first time, in 1967 riding on the anti -Hindi agitation. As part of a national party that instituted the 3 language education policy, Sidaramiah, cannot prescribe the 2 language policy followed in neighbouring TN but instances of blackening of Hindi names across metro stations has been seized to create a new discourse of Kannada nationalism; there is now a demand too to have a Karnataka flag.  The opposition, DMK, in TN, in Mar ’17, joined chorus when it opposed the English markings on national highway milestones being replaced with Hindi inscriptions. Telangana, in Sept’17,  too made Telugu a compulsory subject from  standard 1 to 12, surprisingly, attracting praise from VP, Venkaiah Naidu, indicating that many leaders from the BJP too, hailing from non- Hindi states - are uncomfortable with Hindi imposition.

With the BJP pushing for Hindu consolidation against the significant other ‘Muslim”, the opposition has traditionally favoured a “secular” discourse inviting the epitaph of “pseudo – secularism” from the former.  Siddaramiah has now creatively found a new opening by endorsing the demand of Lingayats – the core support base of the BJP & at a 20% of the population, a dominant electoral constituency of Karnataka – that they be declared a separate religion, since the founder Basavanna had shunned Vedic rituals & agama shastras; incidentally, BJP strongman, Yeddyurappa, a Lingayat, had demanded a separate religion status some years back & hence cornered.

Hindu consolidation is also countered vide caste assertion. In Gujarat, the Rajput, Alpesh Thakur, Dalit, Jignesh Mewani & the Patidar, Hardik Patel have extended support to the Congress, fracturing the Hindu forces in their Gujarat lab.

While the BJP has been articulating the spirit of “co-operative federalism” the dominance of Narendra Modi over both the party & govt. & the use of article 356 in Uttarakhand & Arunachal has strengthened opinion that the country is regressing towards the Indira Gandhi era of greater centralization – the re- emergence of the Delhi Sultanate. Hence the demand for true Federalism by the opposition is a rallying clarion call.

Modi -Shah Counter

The Modi - Shah juggernaut though is not sitting idle. The death of a strong supremo like Jayalalitha without an anointed successor or a strong democratic party hierarchy – but with a 1.5 crore cadre - is a once in a lifetime opportunity which they are keen to exploit; IT raids on the Mannargudi clan is to finish the money bags of the party & force a merger at an opportune time, perhaps post 2019. However, TN politics is characterized by an oscillating polity with one of the Dravidian parties winning in alternate elections. It is thus feasible that the DMK led group would get about 35 of the 39 seats in 2019; the Modi-Karunanidhi meeting recently in Chennai should be seen in this regard. The BJP is thus running with the hare & hunting with the hounds.

The Challenges to the BJP

The BJP’s electoral compulsions are palpable. A marginalized Shiv Sena is blowing hot & cold & could join the NCP-Congress combine in fighting the BJP in the 2019 elections. The Akali-Dal is unhappy just like the Telugu Desam but would hitch their bandwagons to the BJP since the Congress is their prime opposition in their home states. The JD (U) too is smarting post their non-inclusion in the union council of ministers; having dumped the BJP in 2014 & re-entering into their embrace in 2017, the JD(U) is constrained of further leg room.  All of them would demand their pound of flesh at an opportune time.

Other problems abound. The BJP won 282 seats in 2019, 10 more than a simple majority aided majorly by winning 71 of the 80 seats in UP.  They maintained their dominance in the assembly elections too held in 2017 benefitting from a fractured polity. Stung & wise a SP-BSP-Congress combine is a distinct reality in 2019, an alliance that could win at least 60 seats, dipping the BJP tally by about 50 seats.  The road to Delhi passes via Lucknow & a dip in seats here could be fatal.  The impressive performance, in 2014, in Gujarat (26/26), Rajasthan (25/25), Haryana (7/10), Madhya Pradesh (27/29), Chhattisgarh (10/11), Maharashtra (23/48) are unlikely to be repeated in 2019. Thus the BJP’s no.  would drop by at least 100  in 2019; it could still emerge as the single largest party though.  Inducting TMCs Mukul Roy in Bengal, & hobnobbing with BJDs Jay Panda in Odisha & Narayan Rane in Maharashtra are hence efforts at either adding a saleable strategic face or muscle in a bid to increase the national catchment. 

The BJP is losing current allies – MDMK of TN in 2014, SSS of Maharashtra in 2017 - & having opened up new war fronts - BJD in Odisha - might not attract new ones; it would however better its performance in Odisha in 2019. To cross the magic fig. of 272 on their own & deny negotiating space to their miffed allies, the BJP could reignite the strategies that paid handsome dividends in the past. The storming of Parliament in 1966 by the RSS & its affiliates on the issue of banning “cow slaughter” helped the Jan Sangh- win 35 seats in 1967 elections from 14 in 1962; it was their largest haul since independence. Likewise, the Ram Mandir agitation – by the Kamandal forces – helped it get to 120 seats in 1991. Thus cow protection, Ram Temple, invocation of nationalism over Vande Mataram, National Anthem & Bharat Mata, & Love jihad could be the various vectors employed. A skirmish at the border could fuel hyper nationalism. While “Vikas” would be the overarching theme spoken by national leaders, the cadre would sharpen the other vectors at the ground level.

Conclusion

The run up towards 2019, unfortunately, looks bloody. Gauri Lankesh’s assassins are still untraced. A fractious polity divided on the basis of caste by so called “secularists” or into religions by so called “communalists” are fatal for the growth of the nation. Hope better sense prevails across both the camps. Jai Hind!!

Pollution: How To Reduce Stubble Burning

The pollution haze in North India & the corresponding brouhaha in NCR has become a yearly malady, during the winter months, impacting citizen health & India’s international image.  Construction dust, vehicular pollution, industrial fumes, stubble burning in neighbouring states & tandoor & DG set exhausts are some of the prime culprits. Shift to CNG buses in 2001, vide a Supreme Court ruling, issued in 1998 & launch of Metro rail in 2002 were transformational initiatives but there is now a need for more policy measures. Stubble burning – a regular phenomenon during Oct- Nov - gained headlines since the Delhi CM Kejriwal has written to his counterparts requesting their support to quell the practice.

Punjab passed a law (Punjab Preservation of Subsoil Water Act), in 2009, making sowing of crops before May 10^th & transplantation before June 10 punishable by law with an intention to prevent excessive use of groundwater during summer months; sowing in June & the onset of monsoon soon after helped in improving the ground water situation; Haryana too followed suit in replicating the law the same year. Water usage dropped from 4500 litres per Kg of paddy production, planted in April- May to 1500-2000 litres of ground water usage when planted later. Farmers too shifted to planting sunflower or grams during April – May followed by rice thereafter. However the gap between rice, the Kharif crop (Apr- Oct) & wheat, the Rabi crop (Nov- Mar) leaves only a 15 – 20 day interlude forcing stubble burning as a cheaper & quicker option.

Greater prosperity leads to a shift of people away from agriculture & migration induces labour shortages forcing wage increases & later mechanization.  The use of “combine harvesters” leaves a longer stubble. Moreover, wheat stubble is preferred over rice stubble as animal feed in states like Punjab. Since it generally costs about Rs 2000/- per acre to remove the stubble farmers would prefer using a match stick - costing less than a rupee- to set the same on fire rather than expend labour to remove the same despite crop residue burning being banned by the National Green Tribunal on Dec 10, 2015 & the ruling is further supported by the Air (Prevention and Control of Pollution) Act, 1981. However, taking action against the farmers is difficult since they form an important vote bank & today have the support of militant unions. Unless they are compensated substantially more than their costs, stubble burning would persist.

Biomass burning – stubble, forest etc. - which was largely concentrated in the North western states of Punjab & Haryana is now spreading to UP, MP, Chhattisgarh, Odisha, Jharkhand, Rajasthan & small pockets of South India as per the NASA satellite images; increased irrigation leads to greater crop intensification – 3 crops yearly - & greater mechanization trends point towards an increased geographic spread of the malaise of residue burning & hence a national policy would be in order.

Policy Alternatives

Stubble can be used for producing power in boilers at 99% efficiency that leaves less ash than coal plants; it is also cheaper than coal. However, this might necessitate capital costs in building a 10-20 MW plant in each taluka to use the stubble generated in the catchment area.  Cost, hence, will be the key since the latest renewable energy price bids have dropped to as low as Rs 2.5/-per unit. Many states today have annulled the long term power purchase agreements – concluded at a rate between Rs 4-5.5 /- per unit - from thermal power plants & buying from exchanges instead, will be loath to purchase power produced vide stubble power plants at a higher cost.

Today, stubble is bought at Rs 100/- per quintal at factory site; the farmer who spends about Rs 2000/- per acre, on labour costs to remove stubble incurs additional cost to transport the same to the site. Since he barely recovers his costs, there is disinterest. Unless he is compensated to the extent of Rs 4- 5000 per acre, residue burning, would persist.

Stubble can be used to make cardboards, paper or ethanol; the sugarcane lobby, though, has a stranglehold on ethanol production - used to blend with petroleum fuels - & there is a need for greater democratization. This might be a better alternative to power production & a medium term plan since it involves capital cost & time to put up the plants.

Appeal to the Farmer & his Family Health

Even while the economic incentives model is launched, education campaigns need to be run simultaneously to convince the farmers that their own health is suffering, because of crop residue burning, increasing their healthcare expenditure in the bargain for particulate matter hits their lungs before affecting the people of NCR. Prompting them to use the stubble for organic farming practices would be a sound long term solution. 

Use of rotavators to remove stubble is a solution as are ‘Happy Seeder” machines that allow planting the wheat crop without removing the stubble with the added advantage of the stubble serving as mulch for dew. However demand for these machines has been low, despite subsidies, since India has a predominance of marginal farmers - about 85% of the total nos. - having less than 2 hectares (5 acres) holding; co-operative societies too haven’t shown enough urge. If the health appeal is bought by the farmers, the use of these machines would automatically increase.

The other alternatives are use of low gestation rice crops like PR121 or 126; if the gap between 2 crops thus increases, burning could reduce. It is also important to note that Punjab – a wheat producer & consumer - moved from the traditional crops like maize, pearl millet, pulses and oilseeds to the rice- wheat cycle in the 1970's, lured by the MSP support offered by the govt. With rice cultivation increasing in the rest of the country it may be time to revert to the traditional crops & govt. intervention on MSP & buying assurance for those crops is the policy intervention desired.

Conclusion

Unfortunately, legislative & executive inaction is forcing judicial intervention on policy. While the Delhi govt. has requested the neighbouring states for help, the Punjab CM has blamed the centre for not providing the requested subsidy to undertake the stubble buying option; farmers organization, BKU, had launched a protest in Haryana threatening to take 50 tractor-trollies of paddy stubble to the city & if the govt. makes no arrangements, for purchase, they would burn the same under protest.  The Delhi govt. which had provided for buying 2000 buses in the 2015-16 budget finds their request to the DDA – which falls under the central urban development ministry – to release land for building bus depots unacknowledged; the tussle with the LG puts decisions in a limbo.  AAP launched the odd-even scheme but has not taken much action on the construction dust issue while the solid waste disposal plans of the Municipal corporations of Delhi, that falls under the BJP,  have left much to be desired.  It is time we transition from political filibustering & work on concrete solutions with time lines. Else, the “gas chamber” will devour us. Isn’t it time to make “Right to breathe clean air” a fundamental right?

Demonetization in India: The First Anniversary

On 8^th Nov'16, at 8PM,  PM Modi announced the withdrawal of 500 & 1000 rupee notes from the system, starting midnight, as a measure to tackle “black-money” & offered exchange of demonetized notes till end Dec'16. The international media attention was focussed on India & the serpentine queues that followed demonetization (DeMo) & despite about 100 people losing their lives & attempts to provoke, peace held, giving credence to the view that the laity wanted to give the PM a chance. Modi’s predecessor, Manmohan Singh, however, dubbed this exercise as ‘Organized loot & Legalized plunder” & predicted a 2% drop in GDP while Arun Shourie called it the “Largest money laundering scheme ever”. One year hence, the govt. announced that the first anniversary would be celebrated as “Anti-Black Money Day” while the opposition dubbed it a “Black day”.

In a “post truth” world, where both the ruling & the opposition camps pick up convenient data points & spout half-truths, a fact check is in order. Evaluating all the government’s promises while rolling DeMo & checking achievements during the last one year would serve as the right template

(1)Move to end corruption

With some note series never returning to the banking system post issue by the RBI, it was assumed that the cash had lapsed into a parallel economy; the then Attorney general, Mukul Rohatgi, in Dec 2016, submitted to the honourable Supreme Court that only about 10 to 11 lakhs crores would be returned, implying that about 4.44 to 5.44 Lakh would remain unreturned. Perhaps, the RBI would have extinguished & passed on the reduced liability as a windfall dividend to the govt. ; perhaps, the govt. also reasoned that about 2.5 to 3 lakh crores of black money returned would invite a tax liability – at 60% - for exceeding the known sources of income, leading to a further windfall, though post the hiatus of a litigation. One year later, the RBI concedes that of the 15.44 Lakh crores withdrawn, 15.28 Lakh crore has returned to the system; cash in co-operative banks & that circulating in countries like Nepal & Bhutan - where the Indian rupee is freely exchanged  - if returned, would perhaps mean a 100% return to the system. Substantial fines have not been recovered yet since litigation is a long drawn out process; the govt. though claims that 3.68 lakh crores & 23 lakh accounts are under surveillance. The current strength of the tax dept. though would render the scrutiny of all those accounts well-nigh impossible.

With no perceptible prosecutions in the HSBC & Liechtenstein names nor the Panama & Paradise papers many could dub the govt. as indulging in “headline management” alone; entry of leaders like Narayan Rane, Sukh Ram & Mukul Ray into the BJP might strengthen the impression that the party is not serious on either corruption or unearthing black money.

(2)End Stone-pelting in Kashmir & Naxal violence

As per the J&K police report sourced by Scroll & reproduced in an article on 24^th Aug, the stone pelting figs in Kashmir rose during July – Sept ’16 post Burhan Wani’s killing on July 8^th & subsided thereof. Incidentally, in Nov 16 the stone throwing incidents were only 102 & have been virtually flat; the minor upside in Apr-May 17 was due to the Srinagar by poll. The govt. argument that stone throwing incidents dropped 75% due to DeMo is hence factually incorrect.

The govt. claims that Naxal activities dropped by 20%. Naxal movement in the Red corridor extending from Telangana to Nepal is funded vide extortion & perhaps, fund flows from powers - inimical to India – abroad.  Incidentally, the worst Naxal attack leading to the loss of the lives of 25 CRPF jawans at Sukma in April 17 – happened after demonetization. Cutting off funds to the Naxals by providing security to the contractors to end extortion by the local police & pinpointed intelligence by the IB & ED to attack fund flow from abroad would have been a more prudent strategy & not DeMo.

(3)Remove Fake currency

As per an ISI Kolkata study submitted to the govt. fake currency in India is about 400 crores (0.02% of the entire cash economy of about 18 lakh crores); about 70 crores is pumped in yearly, largely by Pak, vide the porous Bangladesh border. Only 1/3^rd of the same is detected with an 80% contribution by 3 private banks Axis, ICICI & HDFC indicating the need for better surveillance at public sector banks; sealing the Bangladesh border should be the next step.  Using a sledgehammer approach was hence illogical.

(4)Make India a digital society

The govt. claims that DeMo spurred digital payments & showcased the increase in POS machines from 15 lakhs to 28 lakhs & launch of the BHIM app as achievements.  Touting the POS machine upside is surprising since NiTI Aayog CEO opined that ATMs, POS, Credit & debit cards would become redundant in India by 2020 since India would transition towards payments “using the thumb in 30 seconds”.  Unfortunately, ATM withdrawals which were at Rs2.22 Lakh crore in Sept ’16 reached a similar fig of  2.26 lakh crore by Mar’16 indicating that India is reverting back to the cash economy.

(5)Reduce the Cash to GDP ratio

The govt. claims that the cash to GDP ratio has dropped from 12.2% to 8.8% post DeMo putting India in the same league as advanced & Emerging economies like France, Germany, Italy, Thailand & Malaysia; however what is conveniently omitted is that the 8.8% fig is end  Mar '17 when cash in circulation (CIC) was 13.1lakh crores. The re-monetization process has since progressed with CIC in Oct ’17 crossing 16 lakh crores. Assuming the $2.3 trillion Indian economy to grow at a nominal rate of 10% (6.5% real rate +3.5% inflation rate) the cash to GDP ratio has now inched closer to 10% & if CIC growth persists at the same rate it is reasonable to predict it reaching a fig of 11.5-12% by Mar 2018. Thus we revert back to where we started.

Nordic countries have a cash to GDP ratio under 4% while Japan is at 19% & both categories of nations are known to run honest economies indicating that lower cash, though desirable does not necessarily eliminate black money. Brazil & South Africa, on the contrary, with the fig under 4% have a reputation for being corrupt economies.

At 18 lakh crore CIC pre DeMo over a 134 cr. population amounts to a per capita cash holding of about Rs 13500/- (~ $200)which is very low as compared to cash in hand of Nordic countries where the fig is higher than $900 despite CIC – GDP at 4%.

(6)Drop in Prostitution

Ravi Shankar Prasad – has made a bold claim that flesh trade dropped due to DeMo since human trafficking from Bangladesh & Nepal fell due to lack of cash. Obviously, it is a qualitative assessment since no figs were circulated to support his moral claim. It would be interesting for the govt. to answer the query: With cash back in circulation would it lead to an upside in prostitution again & if so how does the govt. plan to tackle the same?

(7)Increase in PF & ESI

The govt. claims that lack of cash propelled firms to open bank accounts for workers – paid in cash till then – forcing them to make statutory declarations. There is an increase in 1.01 crore PF accounts & & 1.03 crore ESI accounts thereby creating a safety net. EPFO members increased from 8.55 cr. in Mar 2012 to 17.14 cr. by Mar’16 i.e  2.14 cr. increase annually; if so the 1.01 cr fig touted by the govt. (unsure if it is for the Nov’16- Mar’17 period ) period is in consonance with regular trends.

The opposition has attacked the govt. on the snafu broadly on the following issues

(1)Loss of Jobs

As per CMIE, 1.5 million jobs were lost during the period Jan-Apr ’17 based on a household survey; Industry association FICCI’s report supports the dire employment scenario.  Most of the companies in the BSE 500 have shown a dip in employee nos. except those in the pharma & auto sectors.

Post DeMo qualitative reports emerged from textile clusters like Tirupur, industrial clusters like Mayapuri in Delhi etc of about lack of cash availability leading to delayed / stoppage of salaries leading to employee absenteeism or worse still reverse migration back to villages. Supply chains were severely damaged because of payments to suppliers being delayed. GST transition ensured furtherance of the pain since the MSME’s were ill equipped to handle the filing requirements. India is constrained by the lack of data on the informal sector & it is therefore prudent to argue that the informal sector was more likely to be adversely affected due to DeMo than the formal sector.

(2)Increase in Imports

Mammohan Singh had attributed the increase in imports from China of 2.41 lakh crores in the first 6 months of the current year over the 1.96 lakh crores for the corresponding period of last year to the effect of the supply chain shock.

Conclusion

Indian economy growth rate dropped from 7.9% in Q1 2016-17 & continued its downward trajectory thereafter.  It is therefore reasonable to argue that the drop of over 2% by Q1 FY 18 was not due to DeMo alone;  With exports growing from Sept 16 & public investment front loaded, the drop in private investment & consumption could be the likely culprits along with DeMo.  Instead of pump priming the economy,  DeMo led to a further drop in growth rates to a low of 5.7% in Q1FY18 for which the govt. should be held liable.

India spent about 4500 crores (3420 cr last year vs 7965 crores  this year)  over the previous year in printing of additional currency notes & could have spent about Rs 13000 crores in transporting the new notes & carrying the old currency back to the treasury. The RBI paid an additional interest of 17406 cr on the additional deposits this year while it earned 506 cr last year on liquidity mopping up operations. Hence the RBI was constrained to reduce its dividend to the govt. by Rs 35000 crores this year (65,880cr last year vs 30,662cr this year). Even a very conservative estimate of 0.5% of GDP drop due to DeMo alone (75000 crore) which combined with the reduced dividend from the RBI amounts to about 1.1 lakh crores even while the opposition claims a range between 1.5-3 lakh crores. While the opposition have painted DeMo & GST as “twin blows” it would be reasonable to conclude that while GST is good for the economy despite teething troubles, DeMo was an ill thought out move.