Dr. Prema Ramachandran
Adviser, Health, Planning Commision
Perspective
India, the second most populous country in the world, has no more than 2.5% of global land but is the home of 1/6th of the world's population. The prevailing high maternal, infant, childhood morbidity and mortality, low life expectancy and high fertility and associated high morbidity had been a source of concern for public health professionals right from the pre-independance period. The Bhore Committee Report (1946) which laid the foundation for health service planning in India, gave high priority to provision of maternal and child health services and improving their nutritional and health status. It is noteworthy that this report which emphasized the importance of providing integrated preventive, promotive and curative primary health care services preceded the Alma Ata declaration by over three decades. Under the Constitution of India elimination of poverty, ignorance and ill health are three important goals. Successive Five Year Plans have been providing the policy frame work and funding for planned development of nationwide health care infrastructure, manpower, drugs, devices and other essential items for improving health status of mothers and their children
In 1951, the infant republic took stock of the existing situation in the country and initiated the first Five Year Development Plan. Living in a resource poor country with high population density, the Planners recognised in the census figures of 1951, the potential threat posed by population explosion and the need to take steps to avert it. It was recognised that population stabilisation is an essential prerequisite for sustainability of development process so that the benefits of economic development result in enhancement of the well being of the people and improvement in quality of life. India became the first country in the world to formulate a National Family Planning Programme in 1952, with the objective of “reducing birth rate to the extent necessary to stabilise the population at a level consistent with requirement of national economy”. Thus, the key elements of health care to women and children and provision of contraceptive services have been the focus of India’s health services right from the time of India’s independence. Successive FiveYear Plans have been providing the policy framework and funding for planned development of nationwide health care infrastructure and manpower. The Centrally Sponsored and 100% centrally funded Family Welfare Programme provides additional infrastructure, manpower and consumables needed for improving health status of women and children and to meet all the felt needs for fertility regulation.
Achievements of the Family Welfare Programme
Basic premises of the Family Welfare Programme are:
Acceptance of FW services is voluntary
FW programme will provide :
Integrated Maternal and Child Health (MCH) & FP services
Ensure easy and convenient access to FW services free of cost
Effective IEC to improve awareness
Major Achievements of FW Programme are:
Reduction in Crude Birth Rate (CBR) from 40.8 (1951 Census) to 27.2 in 1997 (SRS 97)
Reduction in Infant Mortality Rate (IMR) from 146 in 1951 to 71 in 1997 (SRS 97),
Increase in Couple Protection Rate (CPR) from 10.4% (1970-71) to 45.4% on 31.3.1998 (Dept of Family Welfare)
The National Family Health survey (1992-93) indicated that
There is universal awareness about contraception
40.6% of currently married women use contraceptives
Wanted fertility is lower than the actual fertility
There is a large unmet need for contraception: -
11.0% for birth spacing methods and
8.5% for terminal methods
Lessons learnt during implementation of FW programme:
Governmental network provides most of the MCH and contraceptive care
Adequate financial inputs and health infrastructure are essential prerequisites for the success of the programme
Providing efficient and effective integrated MCH and contraceptive care helps in building up rapport with the families
IEC activities are powerful tools for achieving the small family norm;
The population is conservative but responsible, responsive and mature; their response is slow but rational and sustained
Population Growth
Over the last four decades there has been rapid fall in Crude Death Rate (CDR) from 25.1 in 1951 to 9.8 in 1991 and less steep decline in the Crude Birth Rate (CBR) from 40.8 in 1951 to 29.5 in 1991. As a result, the annual exponential population growth rate has been over 2% in the last three decades. During the Eighth Plan period the decline in CBR has been steeper than that in the (CDR) and consequently, the annual population growth rate has been around 1.9% during 1991-95.
The rate of decline in population growth is likely to be further accelerated during the Ninth Plan period. Though the decline in CBR and CDR has occurred in all States, the rate of decline in CBR was slower in some States like U.P. and Bihar.
There are substantial differences in CBR and IMR between States (Figure 3 and 4) and even within the same State there are substantial differences between districts .
Population Projections and their implications to FW programme
The population of the country was 846.3 million in 1991 as recorded in the census.
As per projections made in the Report of the Technical Group on Population Projections the estimated population in the census years 2001 and 2011 will be 1012.4 million and 1179 million respectively. There are major differences between states with regard to their current population size as well as their potential to contribute towards the increase in the population of the country during 1996-2016 (Figure-5,6)
The five states of Bihar, Uttar Pradesh, Madhya Pradesh, Rajasthan and Orissa, which constitute 44% of the total population of India in 1996, will constitute 48% of the total population of India in 2016 (Figure-6). These states will contribute 55% of the total increase in population of the country during the period 1996-2016 (Figure-7). The progresss in these states would determine the year and size of the population at which the country achieves population stabilisation. In all the states performance in the social and economic sector has been poor. The poor performance is the outcome of poverty, illiteracy and poor development which co-exist and reinforce each other. Urgent energetic steps are required to be initiated to assess and fully meet the unmet needs for maternal and child health (MCH) care and contraception through improvement in availability and access to family welfare services in the states of UP, MP, Rajasthan and Bihar in order to achieve a faster decline in their mortality and fertility rates. The performance of these states would determine the year and size of the population at which the country achieves population stabilisation.
Population Projection– implications to the FW Programme
There will be massive increase of population in the 15-59 age group (from 500 million to 800 million) in just twenty years (Figure). The RCH care has to provide the needed services for this rapidly growing clientele. Along with the demographic transition, there is concurrent ongoing socioeconomic, educational, information technology transition. The population in this age group will therefore have greater awareness and expectation regarding both the access to a wide spectrum of health care related services and the quality of these services. The Family Welfare Programme has to provide the wider spectrum of health care needs of this population – including maternal and child health care, contraceptive care, management of gynaecological problems, STD/RTI/HIV management and control; quality of services need also be improved. Increasing number of the population beyond 60 years would necessitate provisions for management of some of the major health problems in this age group including management of cancers.
The number of births will not alter substantially over the next two decades; this respite from increasing numbers should be utilised to provide improved access to high quality of services so that there is reduction in the current high IMR and MMR. This in turn might lead to a fall in the current high desired level of fertility. If the birth rate continues to decline at the present rate, replacement level of fertility will not be achieved till 2026. In view of the serious implications of this, efforts should be made to meet all the felt needs for contraception and achieve a more rapid decline in birth rates
Policy and strategy for achievement of rapid population stabilisation
The current high population growth rate is due to:
the large size of the population in the reproductive age-group (estimated contribution 60%);
higher fertility due to unmet need for contraception (estimated contribution 20%); and
high wanted fertility due to prevailing high IMR (estimated contribution about 20%).
Unmet needs for health and contraceptive care exist in all regions and all segments of the population irrespective of religion, caste, education and income status.
The objective of the Population policy is to achieve rapid reduction in the population growth rate by :
meeting all the felt-needs for contraception; and
reducing the infant and maternal morbidity and mortality so that there is a reduction in the desired level of fertility so that the country achieves replacement level of fertility by 2010.
The country’s medium and long term efforts will be focussed on bringing about an accelerated convergence of ongoing demographic, socio-economic, educational and information technology transitions, enable the increasingly literate and aware families to achieve their reproductive goals, and the country to achieve rapid population stabilisation, sustainable development and improvement in quality of life.
The strategies for achieving these objectives will be:
To assess the needs for reproductive and child health at PHC level and undertake area- specific micro planning; and
To provide need-based, demand-driven high quality, integrated reproductive and child health care.
The Family Welfare Programme will be directed towards:
Bridging the gaps in essential infrastructure and manpower through a flexible approach and improving operational efficiency through investment in social, behavioural and operational research
Providing additional assistance to poorly performing districts identified on the basis of the 1991 census to fill existing gaps in infrastructure and manpower.
Ensuring uninterrupted supply of essential drugs, vaccines and contraceptives, adequate in quantity and appropriate in quality.
Promoting male participation in the Planned Parenthood movement and increasing the level of acceptance of vasectomy.
Efforts will be intensified to enhance the quality and coverage of family welfare services through:
Increasing participation of general medical practitioners working in voluntary, private, joint sectors and the active cooperation of practitioners of ISM&H;
Involvement of the Panchayati Raj Institutions for ensuring inter-sectoral coordination and community participation in planning, monitoring and management;
Involvement of the industries, organised and unorganised sectors, agriculture workers and labour representatives.
Efforts are being made to provide adequate inputs to improve availability and access to services to improve performance so that the disparities between states will be narrowed. It is noteworthy that there are districts in these states where CBR and IMR are well below the national levels; steps may have to be initiated to study and replicate these success stories within each of these states so that the existing disparities between states are minimised.
Tuesday, August 25, 2009
Monday, August 24, 2009
NATIONAL AGRICULTURE POLICY
The first ever National Agriculture Policy was announced on 28th July, 2000. The National Policy on Agriculture seeks to actualise the vast untapped growth potential of Indian agriculture, strengthen rural infrastructure to support faster agricultural development, promote value addition, accelerate the growth of agro business, create employment in rural areas, secure a fair standard of living for the farmers and agricultural workers and their families, discourage migration to urban areas and face the challenges arising out of economic liberalization and globalisation. Over the next two decades, it aims to attain:
A growth rate in excess of 4 per cent per annum in the agriculture sector;
Growth that is based on efficient use of resources and conserves our soil, water and bio-diversity;
Growth with equity, i.e., growth which is widespread across regions and farmers;
Growth that is demand driven and caters to domestic markets and maximises benefits from exports of agricultural products in the face of the challenges arising from economic liberalization and globalisation;
Growth that is sustainable technologically, environmentally and economically.
The policy seeks to promote technically sound, economically viable, environmentally non-degrading, and socially acceptable use of country’s natural resources - land, water and genetic endowment to promote sustainable development of agriculture.
The use of bio-technologies will be promoted for evolving plants which consume less water, are drought resistant, pest resistant, contain more nutrition, give higher yields and are environmentally safe. Conservation of bio-resources through their ex situ preservation in Gene Banks, as also in situ conservation in their natural habitats through bio-diversity parks, etc., will receive a high priority to prevent depletion of bio-diversity.
Balanced and conjunctive use of bio-mass, organic and inorganic fertilizers and controlled use of agro chemicals through integrated nutrients and pest management (INM & IPM) will be promoted.
A regionally differentiated strategy will be pursued, taking into account the agronomic, climatic and environmental conditions to realize the full growth potential of every region. Special attention will be given to development of new crop varieties, particularly of food crops, with higher nutritional value.
A major thrust will be given to development of rainfed and irrigated horticulture, floriculture, roots and tubers, plantation crops, aromatic and medicinal plants, bee-keeping and sericulture for augmenting food supply, promoting exports and generating employment in the rural areas.
Development of animal husbandry, poultry, dairying and aqua-culture will receive a high priority in the efforts for diversifying agriculture, increasing animal protein availability in the food basket and for generating exportable surpluses.
An integrated approach to marine and inland fisheries, designed to promote sustainable aquaculture practices, will be adopted.
The regionalization of agricultural research based on identified agro-climatic zones will be accorded high priority. Application of frontier sciences like bio-technology, remote sensing technologies, pre and post-harvest technologies, energy saving technologies, technology for environmental protection through national research system as well as proprietary research will be encouraged.
The research and extension linkages will be strengthened to improve quality and effectiveness of research and extension system.
Adequate and timely supply of quality inputs such as seeds, fertilizers, plant protection chemicals, bio-pesticides, agricultural machinery and credit at reasonable rates to farmers will be the endeavour of the Government.
The Government will endeavour to create a favourable economic environment for increasing capital formation and farmer’s own investments by removing distortions in the incentive regime for agriculture, improving the terms of trade with manufacturing sectors and bringing about external and domestic market reforms.
Rural electrification will be given a high priority as a prime mover for agricultural development. The quality and availability of electricity supply will be improved and the demand of the agriculture sector will be met adequately in a reliable and cost effective manner.
Bridging the gap between irrigation potential created and utilized, completion of all on-going projects, restoration and modernization of irrigation infrastructure including drainage, evolving and implementing an integrated plan of augmentation and management of national water resources will receive special attention for augmenting the availability and use of irrigation water.
Emphasis will be laid on development of marketing infrastructure and techniques of preservation, storage and transportation with a view to reducing post-harvest losses and ensuring a better return to the grower.
Setting up of agro-processing units in the producing areas to reduce wastage, especially of horticultural produce, increased value addition and creation of off-farm employment in rural areas will be encouraged.
Institutional reforms will be pursued so as to channelise their energies for achieving greater productivity and production.
The Government will provide active support for the promotion of cooperative form of enterprise and ensure greater autonomy and operational freedom to them to improve their functioning.
Endeavour will be made to provide a package insurance policy for the farmers, right from sowing of the crops to post-harvest operations, including market fluctuations in the prices of agricultural produce.
The price structure and trade mechanism will be continuously reviewed to ensure a favourable economic environment for the agriculture sector and to bring about an equitable balance between the rural and the urban incomes.
Quality consciousness amongst farmers and agro processors will be created. Grading and standardization of agricultural products will be promoted for export enhancement. Application of science and technology in agriculture will be promoted through a regular system of interface between Science and Technology institutions and the users/potential users to make the sector globally competitive.
The database for the agriculture sector will be strengthened to ensure greater reliability of estimates and forecasting which will help in the process of planning and policy making.
Follow up Action
Various Central Sector and Centrally Sponsored Schemes are being implemented by the Government of India and the State Governments for development of agriculture and allied activities as per guidelines of the Agriculture Policy. Following major initiatives have been taken to accelerate the pace of developmental activity and implement the objectives of the Agriculture Policy:
Macro Management Scheme has been launched after integrating 27 ongoing Centrally Sponsored Schemes to enable a shift from programmatic approach to a macro mangement mode of assistance to the states in the form of work plans based on crop/area specific, regionally different strategies, to provide flexibility to State Governments and to ensure timely and effective application of limited financial resources.
Common guidelines have been issued for National Watershed Development Project for Rainfed Areas to harmonize the implementing norms with other watershed development programmes. A Watershed Development Fund with a corpus of Rs.200 crores each from NABARD and the Department of Agriculture & Cooperation, has been created.
A Technology Mission for the Integrated Development of Horticulture in the North-Eastern Region has been launched.
Seed Legislation is under revision to provide fillip to varietal research and plant breeding. Enactment of legislation on the “Protection of Plant Varieties and Farmers Rights”.This is likely to stimulate investment and initiative both in public and private sector for development of new plant varieties and a vibrant seed industry. A National Seed Policy is under formulation. A Scheme for Seed Crop Insurance has been launched to cover the risks involved in seed production. A Seed Bank has been established to meet contingent requirements of seed in the wake of natural calamities.
Increasing availability, flexibility and security in the flow of credit to the farmers. All eligible farmers are proposed to be covered under the Kisan Credit Cards scheme within the next 3 years. A personal insurance package is proposed to be extended to Card Holders covering them against risk to life and injury.
A scheme has been introduced for provision of capital subsidy for construction/modernization and expansion of cold storages and storages for horticultural produce.
Rural Infrastructure Development Fund corpus has been increased in 2001-02 from Rs. 45,00,00,00 thousands to Rs.5,00,00,000 thousands and the interest rate charged by NABARD reduced.
Market Information Network has been launched with the objective to provide farmers latest information on price movements ofagricultural commodities and other essential data.
Cooperative Sector Reforms: a new Bill has been formulated and introduced in Parliament for replacing the existing Multi-State Cooperative Societies Act, 1984.
Formulation of new subsidy linked scheme for establishment of rural godowns.
Promotion of Food Processing Industries and value addition in agriculture through the excise exemptions and other interventions.
Standing Committee of Union Ministers and Chief Ministers constituted to consider issues concerning agricultural strategies, food management and promotion of agriculture exports. The Committee has approved the outline of the proposed Grain Bank Scheme which will be extended to BPL families in identified areas and developed on the contours of the recently launched Sampoorna Grameen Rozgar Yojana.
A growth rate in excess of 4 per cent per annum in the agriculture sector;
Growth that is based on efficient use of resources and conserves our soil, water and bio-diversity;
Growth with equity, i.e., growth which is widespread across regions and farmers;
Growth that is demand driven and caters to domestic markets and maximises benefits from exports of agricultural products in the face of the challenges arising from economic liberalization and globalisation;
Growth that is sustainable technologically, environmentally and economically.
The policy seeks to promote technically sound, economically viable, environmentally non-degrading, and socially acceptable use of country’s natural resources - land, water and genetic endowment to promote sustainable development of agriculture.
The use of bio-technologies will be promoted for evolving plants which consume less water, are drought resistant, pest resistant, contain more nutrition, give higher yields and are environmentally safe. Conservation of bio-resources through their ex situ preservation in Gene Banks, as also in situ conservation in their natural habitats through bio-diversity parks, etc., will receive a high priority to prevent depletion of bio-diversity.
Balanced and conjunctive use of bio-mass, organic and inorganic fertilizers and controlled use of agro chemicals through integrated nutrients and pest management (INM & IPM) will be promoted.
A regionally differentiated strategy will be pursued, taking into account the agronomic, climatic and environmental conditions to realize the full growth potential of every region. Special attention will be given to development of new crop varieties, particularly of food crops, with higher nutritional value.
A major thrust will be given to development of rainfed and irrigated horticulture, floriculture, roots and tubers, plantation crops, aromatic and medicinal plants, bee-keeping and sericulture for augmenting food supply, promoting exports and generating employment in the rural areas.
Development of animal husbandry, poultry, dairying and aqua-culture will receive a high priority in the efforts for diversifying agriculture, increasing animal protein availability in the food basket and for generating exportable surpluses.
An integrated approach to marine and inland fisheries, designed to promote sustainable aquaculture practices, will be adopted.
The regionalization of agricultural research based on identified agro-climatic zones will be accorded high priority. Application of frontier sciences like bio-technology, remote sensing technologies, pre and post-harvest technologies, energy saving technologies, technology for environmental protection through national research system as well as proprietary research will be encouraged.
The research and extension linkages will be strengthened to improve quality and effectiveness of research and extension system.
Adequate and timely supply of quality inputs such as seeds, fertilizers, plant protection chemicals, bio-pesticides, agricultural machinery and credit at reasonable rates to farmers will be the endeavour of the Government.
The Government will endeavour to create a favourable economic environment for increasing capital formation and farmer’s own investments by removing distortions in the incentive regime for agriculture, improving the terms of trade with manufacturing sectors and bringing about external and domestic market reforms.
Rural electrification will be given a high priority as a prime mover for agricultural development. The quality and availability of electricity supply will be improved and the demand of the agriculture sector will be met adequately in a reliable and cost effective manner.
Bridging the gap between irrigation potential created and utilized, completion of all on-going projects, restoration and modernization of irrigation infrastructure including drainage, evolving and implementing an integrated plan of augmentation and management of national water resources will receive special attention for augmenting the availability and use of irrigation water.
Emphasis will be laid on development of marketing infrastructure and techniques of preservation, storage and transportation with a view to reducing post-harvest losses and ensuring a better return to the grower.
Setting up of agro-processing units in the producing areas to reduce wastage, especially of horticultural produce, increased value addition and creation of off-farm employment in rural areas will be encouraged.
Institutional reforms will be pursued so as to channelise their energies for achieving greater productivity and production.
The Government will provide active support for the promotion of cooperative form of enterprise and ensure greater autonomy and operational freedom to them to improve their functioning.
Endeavour will be made to provide a package insurance policy for the farmers, right from sowing of the crops to post-harvest operations, including market fluctuations in the prices of agricultural produce.
The price structure and trade mechanism will be continuously reviewed to ensure a favourable economic environment for the agriculture sector and to bring about an equitable balance between the rural and the urban incomes.
Quality consciousness amongst farmers and agro processors will be created. Grading and standardization of agricultural products will be promoted for export enhancement. Application of science and technology in agriculture will be promoted through a regular system of interface between Science and Technology institutions and the users/potential users to make the sector globally competitive.
The database for the agriculture sector will be strengthened to ensure greater reliability of estimates and forecasting which will help in the process of planning and policy making.
Follow up Action
Various Central Sector and Centrally Sponsored Schemes are being implemented by the Government of India and the State Governments for development of agriculture and allied activities as per guidelines of the Agriculture Policy. Following major initiatives have been taken to accelerate the pace of developmental activity and implement the objectives of the Agriculture Policy:
Macro Management Scheme has been launched after integrating 27 ongoing Centrally Sponsored Schemes to enable a shift from programmatic approach to a macro mangement mode of assistance to the states in the form of work plans based on crop/area specific, regionally different strategies, to provide flexibility to State Governments and to ensure timely and effective application of limited financial resources.
Common guidelines have been issued for National Watershed Development Project for Rainfed Areas to harmonize the implementing norms with other watershed development programmes. A Watershed Development Fund with a corpus of Rs.200 crores each from NABARD and the Department of Agriculture & Cooperation, has been created.
A Technology Mission for the Integrated Development of Horticulture in the North-Eastern Region has been launched.
Seed Legislation is under revision to provide fillip to varietal research and plant breeding. Enactment of legislation on the “Protection of Plant Varieties and Farmers Rights”.This is likely to stimulate investment and initiative both in public and private sector for development of new plant varieties and a vibrant seed industry. A National Seed Policy is under formulation. A Scheme for Seed Crop Insurance has been launched to cover the risks involved in seed production. A Seed Bank has been established to meet contingent requirements of seed in the wake of natural calamities.
Increasing availability, flexibility and security in the flow of credit to the farmers. All eligible farmers are proposed to be covered under the Kisan Credit Cards scheme within the next 3 years. A personal insurance package is proposed to be extended to Card Holders covering them against risk to life and injury.
A scheme has been introduced for provision of capital subsidy for construction/modernization and expansion of cold storages and storages for horticultural produce.
Rural Infrastructure Development Fund corpus has been increased in 2001-02 from Rs. 45,00,00,00 thousands to Rs.5,00,00,000 thousands and the interest rate charged by NABARD reduced.
Market Information Network has been launched with the objective to provide farmers latest information on price movements ofagricultural commodities and other essential data.
Cooperative Sector Reforms: a new Bill has been formulated and introduced in Parliament for replacing the existing Multi-State Cooperative Societies Act, 1984.
Formulation of new subsidy linked scheme for establishment of rural godowns.
Promotion of Food Processing Industries and value addition in agriculture through the excise exemptions and other interventions.
Standing Committee of Union Ministers and Chief Ministers constituted to consider issues concerning agricultural strategies, food management and promotion of agriculture exports. The Committee has approved the outline of the proposed Grain Bank Scheme which will be extended to BPL families in identified areas and developed on the contours of the recently launched Sampoorna Grameen Rozgar Yojana.
The Kargil I Remember
The Tenth Anniversary of the victory in “Kargil War” somehow got soggy in controversy. Instead of commemorating a crisp, well-fought and spectacular victory achieved at great human costs against the Pakistani intruders on the snowy heights of Ladakh, India’s northern-most territory, the ruling coalition in India headed by the Indian National Congress quite unwisely happened to politicize it. Reckoning it as a war that was fought and won by the Bharatiya Janata Party (BJP), now occupying the Opposition benches in the Parliament, it attempted to downplay the Anniversary. That the (surreptitious) diabolical Pakistani incursions through the icecaps of the Himalayan heights posed a great threat to the nation and its integrity happened to be coolly overlooked. But for the hype created by the Defence Forces, the media and sundry patriotic pockets in the country the ruling party at the Centre, in a display of un-camouflaged ingratitude to the guardians of our frontiers, had almost succeeded in giving the Anniversary a miss. It was virtually at the last moment that the Prime Minister seems to have decided to go and lay a wreath at the Martyr’s Memorial at the India Gate on 26th July, the date on which ten years ago Indian defence forces wrested back the last of the territories occupied by the Pakistani invaders.
Those who have not been to Ladakh may not be able to fully appreciate the significance of the Indian victory. A plateau with an average elevation of around 10,000 ft (about 3000 meters) with most of the surrounding mountains above the snowline, Ladakh is an arid mountainous region of the Indian state of Jammu & Kashmir (J&K) spanning the Himalayan and Karakoram ranges and the Upper Indus valley. In those rarefied heights where normal activities for a plainsman are a torture, waging a war would seem to be an impossible proposition. Known for its rugged beauty and quaint culture, it has now become a tourism hotspot.
I happened to visit Ladakh more than 40 years ago when it was still a restricted area. Outsiders were not allowed to enter without a permit. I, too, had to obtain one even though I was in the service of the Government of India. So, one beautiful September morning I left Srinagar, the capital of J&K, wangling a ride with an Army Signals major in his jeep proceeding to Leh as a part of an Army convoy, the then district headquarters of Ladakh. With a brief halt in the green and captivating Baltal valley, which now seems has been sacrificed at the altar of religious tourism, we labored up the highway to the famed Zoji- la, the Pass on to which Gen Thimayya of the Indian Army, in a brilliant tactical move, had hauled Light Stuart Tanks to surprise the Pakistani intruders in 1948.
Once we crossed the 11575 ft high Zoji-la, the landscape underwent a dramatic change. Gone were the green Kashmir conifers covering the sides of the mountains and green grass over the meadows. It was now a series of rugged, bare seemingly inhospitable mountains with an occasional trickle of a stream in the plunging depths of the valleys, and the highway, arcing along the contours of the rocky mountainside, climbed up or went down in loops to cross over to interminable series of naked mountains. We travelled sometimes metres away from the Cease Fire Line, which post-1971 became the Line of Control (LOC), that was violated through 1998-99 precipitating the Kargil War.
Stopping for coffee at Drass, reputed to be the second coldest inhabited place in the world and overlooked by Pakistanis occupying the heights on its north, we headed down the same highway that Pakistan attempted to cut off in 1998 to disrupt the logistics of Ladakh.
On our way up we stayed only for a while in Kargil. The local Brigadier was hosting a delegation of members of parliament to a lunch on the banks of the Suru River that flows through the town. We, too, were made to join in. It was a lovely setting by the side of the narrow stream in the generous shade of low hanging trees, a rare luxury in the midst of the surrounding dryness, coupled with the lavish Indian Army fare laid out.
However, the severity of the conditions in which the Army had to function became apparent a few miles away as we came upon a bridge guarded by three soldiers, two on one side and one on the other. With no habitation for miles around, they were by themselves for weeks without a change of scene. With several such crucial points to guard lonesomeness of the soldiers could only be imagined.
On our way back from Leh, as we rolled down from the heights of Fatu-la, at around 13700 the highest pass on this highway, we skirted what looked like a tallish hillock only to discern in the half light a huge a settlement down below. It was the Indian Army brigade at Kargil sprawled a few hundred feet below on a huge flat ground so unlikely in the hilly surroundings. Looking at it from that elevation one could imagine what medieval army encampments would have seemed like at dusk. Several thin wisps of smoke rising up in the air, scattered blinking lights and stray men moving around, almost ant-like, consummated the scene.
Back then Kargil was a small village, dusty, dirty and so dry that the cracked lips made smiling a painful exercise. With around a dozen shops, it was mostly dependent on the Army for supplies and provisions. It has now grown out of all proportions, more so because of the “War-tourism”. The “Kargil War”, somewhat like the Kuwaiti War, was a highly televised war bringing it to the bedrooms across India, raising among the people a curiosity about those rugged heights where the soldiers bravely fought, gave their lives and yet won the “War” for them. No wonder, the benefits of tourism, now a thriving industry, have trickled down giving the place, I am told, a prosperous appearance. One improbable blessing of the “War”!
It was during the day that I happened to realize that what had looked like a tallish hillock the previous evening was a tall, well-shaped mountain dominating the town. Known by its elevation as “13620” it had a forbidding presence and, worse, its heights were occupied by the Pakistanis who could watch every move of the supremely vulnerable brigade down below. Dislodged from it during the 1965 War, it was handed back to them as a sequel to the Tashkent Agreement. The Major, who had won it for the country, it seems, wept like a child when he heard of the hand-over. He had lost many of his brave men who, fearlessly facing enemy bullets, struggled up the feature and clawing their way up inch by inch. A strategic gain, achieved with super-human effort and endurance and at the cost of fresh young blood, was given up on the negotiating table! That dark sinister-looking mountain, as I saw it sitting out on the grounds in front of the Signals Mess, has remained so deeply imprinted on my psyche that the intervening forty-odd years have not been able to wash it away.
The 1998 “War” along the heights from Drass to Kargil would have been, if anything, fiercer. Having seen Kargil with the malefic “13620” towering over it, I wonder how a government can play politics with the sacrifices of the cream of the country’s youth. Surely, people wouldn’t allow it, as the courage, fortitude and the spirit of sacrifice displayed at Drass or Tiger Hill or Tololing are now the very stuff of the nation’s military folklore. Deeply embedded in the nation’s consciousness, efforts to dislodge them would be a futile exercise.
Those who have not been to Ladakh may not be able to fully appreciate the significance of the Indian victory. A plateau with an average elevation of around 10,000 ft (about 3000 meters) with most of the surrounding mountains above the snowline, Ladakh is an arid mountainous region of the Indian state of Jammu & Kashmir (J&K) spanning the Himalayan and Karakoram ranges and the Upper Indus valley. In those rarefied heights where normal activities for a plainsman are a torture, waging a war would seem to be an impossible proposition. Known for its rugged beauty and quaint culture, it has now become a tourism hotspot.
I happened to visit Ladakh more than 40 years ago when it was still a restricted area. Outsiders were not allowed to enter without a permit. I, too, had to obtain one even though I was in the service of the Government of India. So, one beautiful September morning I left Srinagar, the capital of J&K, wangling a ride with an Army Signals major in his jeep proceeding to Leh as a part of an Army convoy, the then district headquarters of Ladakh. With a brief halt in the green and captivating Baltal valley, which now seems has been sacrificed at the altar of religious tourism, we labored up the highway to the famed Zoji- la, the Pass on to which Gen Thimayya of the Indian Army, in a brilliant tactical move, had hauled Light Stuart Tanks to surprise the Pakistani intruders in 1948.
Once we crossed the 11575 ft high Zoji-la, the landscape underwent a dramatic change. Gone were the green Kashmir conifers covering the sides of the mountains and green grass over the meadows. It was now a series of rugged, bare seemingly inhospitable mountains with an occasional trickle of a stream in the plunging depths of the valleys, and the highway, arcing along the contours of the rocky mountainside, climbed up or went down in loops to cross over to interminable series of naked mountains. We travelled sometimes metres away from the Cease Fire Line, which post-1971 became the Line of Control (LOC), that was violated through 1998-99 precipitating the Kargil War.
Stopping for coffee at Drass, reputed to be the second coldest inhabited place in the world and overlooked by Pakistanis occupying the heights on its north, we headed down the same highway that Pakistan attempted to cut off in 1998 to disrupt the logistics of Ladakh.
On our way up we stayed only for a while in Kargil. The local Brigadier was hosting a delegation of members of parliament to a lunch on the banks of the Suru River that flows through the town. We, too, were made to join in. It was a lovely setting by the side of the narrow stream in the generous shade of low hanging trees, a rare luxury in the midst of the surrounding dryness, coupled with the lavish Indian Army fare laid out.
However, the severity of the conditions in which the Army had to function became apparent a few miles away as we came upon a bridge guarded by three soldiers, two on one side and one on the other. With no habitation for miles around, they were by themselves for weeks without a change of scene. With several such crucial points to guard lonesomeness of the soldiers could only be imagined.
On our way back from Leh, as we rolled down from the heights of Fatu-la, at around 13700 the highest pass on this highway, we skirted what looked like a tallish hillock only to discern in the half light a huge a settlement down below. It was the Indian Army brigade at Kargil sprawled a few hundred feet below on a huge flat ground so unlikely in the hilly surroundings. Looking at it from that elevation one could imagine what medieval army encampments would have seemed like at dusk. Several thin wisps of smoke rising up in the air, scattered blinking lights and stray men moving around, almost ant-like, consummated the scene.
Back then Kargil was a small village, dusty, dirty and so dry that the cracked lips made smiling a painful exercise. With around a dozen shops, it was mostly dependent on the Army for supplies and provisions. It has now grown out of all proportions, more so because of the “War-tourism”. The “Kargil War”, somewhat like the Kuwaiti War, was a highly televised war bringing it to the bedrooms across India, raising among the people a curiosity about those rugged heights where the soldiers bravely fought, gave their lives and yet won the “War” for them. No wonder, the benefits of tourism, now a thriving industry, have trickled down giving the place, I am told, a prosperous appearance. One improbable blessing of the “War”!
It was during the day that I happened to realize that what had looked like a tallish hillock the previous evening was a tall, well-shaped mountain dominating the town. Known by its elevation as “13620” it had a forbidding presence and, worse, its heights were occupied by the Pakistanis who could watch every move of the supremely vulnerable brigade down below. Dislodged from it during the 1965 War, it was handed back to them as a sequel to the Tashkent Agreement. The Major, who had won it for the country, it seems, wept like a child when he heard of the hand-over. He had lost many of his brave men who, fearlessly facing enemy bullets, struggled up the feature and clawing their way up inch by inch. A strategic gain, achieved with super-human effort and endurance and at the cost of fresh young blood, was given up on the negotiating table! That dark sinister-looking mountain, as I saw it sitting out on the grounds in front of the Signals Mess, has remained so deeply imprinted on my psyche that the intervening forty-odd years have not been able to wash it away.
The 1998 “War” along the heights from Drass to Kargil would have been, if anything, fiercer. Having seen Kargil with the malefic “13620” towering over it, I wonder how a government can play politics with the sacrifices of the cream of the country’s youth. Surely, people wouldn’t allow it, as the courage, fortitude and the spirit of sacrifice displayed at Drass or Tiger Hill or Tololing are now the very stuff of the nation’s military folklore. Deeply embedded in the nation’s consciousness, efforts to dislodge them would be a futile exercise.
National Governance and Internal Security
There is a crucial link between National Governance and Internal Security. If Internal Security is not maintained Governance cannot be delivered and there would be grave threats to the very unity and integrity of the country. Likewise, Internal Security cannot be safeguarded if Governance is delivered by an inefficient and corrupt administration.
It is perhaps not necessary to define Governance. However, in the simplest terms, governance relates to the effective management of national affairs at all levels of functioning; guaranteeing the country’s unity and integrity and securing the safety and overall welfare of its people. For the attainment of these objectives it would be essential that political, economic, executive and judicial authority is exercised in a manner which ensures that the people are enabled to enjoy their rights, discharge their obligations and resolve their disputes within the parameters of the Constitution and the Rule of Law.
Our exhaustive Constitution provides the basis of the relationship between the Union and the States and delineates the Legislative, Judicial and Executive framework within which the Union and the States shall discharge their respective responsibilities for delivering governance. The Preamble to our Constitution provides the key to its philosophy: it enshrines the sovereignty of the people and envisions a socialist, secular, democratic republic based on justice, liberty, equality and fraternity.
The principles of governance of our country are excellently enunciated in the chapter on Directive Principles of State Policy in the Constitution of India. It has been laid down (Article 37) that the provisions contained in this chapter shall be “fundamental in the governance of the country” and that it shall be the “duty of the State to apply these principles in making laws”.
The founding fathers of the Constitution of India were acutely aware that political democracy would have no significance unless it was accompanied by social and economic democracy. It was their belief that, within the democratic framework, clean and efficient governance would transform the social, economic and political life of our people and build a strong, prosperous and vibrant nation. The Directive Principles, described as the `core’ or the `conscience’ of our Constitution, provide the goals and guidelines which, if vigorously pursued and implemented timely, would have led to removing the inequalities and disabilities suffered by large segments of our society and thus paved the way for the achievement of social and economic justice.
We have still to traverse a very long distance to achieve our nation-building goals. About a quarter of our population still lives below the poverty line. The persistence of large-scale poverty and illiteracy, the lack of employment, shelter, clean drinking water, basic sanitation and health care, food and nutrition, and the yawning gaps in the achievement of various other vital developmental targets manifest the serious failures of national governance. The default in achieving social and economic justice has perhaps been the most signal failure.
The failures of governance have led to the recognition that governance shall become honest and effective, and inequalities shall start reducing, when the people are empowered and the communities are enabled to manage their own affairs. In this context, the 73rd and the 74th Amendments to the Constitution provide the constitutional mandate for the provision of self-governance through the establishment of duly empowered rural and urban local self-governing institutions. It is a matter for deep regret that the States have still to evince the required political will to effectively pursue the path of democratic decentralisation.
Thus, today, in large parts of the country, the people’s sovereignty still means no more than the right to exercise their vote whenever elections are held. It is, however, a matter of enormous satisfaction that, despite failures on various fronts and despite the serious shortcomings of the electoral processes, the spirit of democracy stands deeply rooted in our country.
Among the many reasons for the continuing failures of governance, a significant factor has been the instability of the political regimes in the States from around the late 1960s and at the Centre in the past decade and a half. From 1989 onwards, there were six governments at the Centre in less than a decade. It has also been seen that frequent elections have not invariably engendered conclusive outcomes. In recent years no single party or pre-poll alliance of parties has succeeded in securing a clear majority. Unstable coalition governments in the States, perennially occupied in combating threats to their survival, have failed to deliver effective governance.
Over the years, the politicisation of caste and communal identities has led to divisiveness and disruption of the national ethos. The failure of the electoral system to prevent anti-social, communal, undesirable and even criminal elements from contesting and winning elections has contributed to the progressive decline of the polity and the consequent failure of the State Assemblies and the Parliament to effectively discharge their vital constitutional roles.
Consequent to the 1993 serial bomb blasts in Mumbai, on the direction of the Prime Minister, a Committee was established to enquire into certain aspects of the bombings. In September 1993 this Committee, generally referred to as the Vohra Committee, had reported the existence of a deep nexus between political personalities, public servants and criminal syndicates. As per the Director CBI’s report to this Committee “all over India crime syndicates have become a law unto themselves. Even in the smaller towns and rural areas, muscle men have become the order of the day. Hired assassins have become part of these organizations. The nexus between the communal gangs, police, bureaucracy and politicians has come out clearly in various parts of the country.” Quoting the Director Intelligence Bureau, the Committee reported that the Mafia network is “virtually running a parallel government, pushing the State apparatus into irrelevance” and that in certain States “these gangs enjoy the patronage of local politicians, cutting across party lines, and the protection of functionaries… Some political leaders become the leaders of these gangs/armed senas and, over the years, get themselves elected to local bodies, State Assemblies and national Parliament.” By all accounts, over the past decade and a half, this criminal nexus has enlarged and extended its reach.
Governance has been adversely affected also because political leaders remain incessantly preoccupied with the narrow, sectarian and partisan interests of their parties and the pursuit of day-to-day political gains and have no time or patience to attend to the crying needs of the common man. The failure of the political executive to devote sustained attention to its constitutional responsibilities has led to the governmental functioning in the States being marred by gross delays, inefficiency, insensitivity, unaccountability and pervasive corruption.
Today, thanks to the information technology revolution and the fast spreading reach of the media, the awareness and expectations of the average citizen have been significantly enhanced. This has, correspondingly, generated much deeper dissatisfaction with the failures of governance. Unless urgent and ruthless steps are taken to check maladministration and corruption, the anger and disgust of the common people, particularly the disadvantaged and oppressed elements, could lead to their alienation. And past experience has shown that alienated elements can be easily lured to adopting the gun culture and joining unlawful networks whose activities cause serious public disorder.
In the past decade and more, despite the constraints of governance under coalition governments, the rate of the country’s economic growth has been consistently higher than at any time in the past. It is heartening to observe that the new economic strength is being utilised to significantly enhance the investments in human development and poverty eradication programmes and for the execution of varied schemes for improving the quality of life of the common man.
In the obtaining environment of steady economic growth and dynamism, the interest of foreign governments, companies, investors and entrepreneurs has been growing steadily. Quite understandably, foreign investors would keep a close watch on the situation in our country, to be assured of the security of their assets and holdings. In this context, national governance has the super-added responsibility of ensuring that internal security is effectively maintained to promote our growing international trade and business interests which are vital for the steady growth of our economy.
Let us now take a quick look at the constitutional position in regard to national security management in our country.
The safeguarding of national security encompasses eternal vigilance to meet every threat to the Indian State from every possible source within the country and from anywhere across its land or sea borders or from across the air space.
Broadly speaking, national security would comprise external security i.e. safeguarding the realm against any external threat, and internal security i.e. maintenance of security within the entire country. National security management would also encompass employment, food, water and shelter security; fiscal and economic security; energy, science, technology and environment security; cyber security, etc. However, for the purpose of this Lecture, I shall speak only about issues relating to internal security management.
For appreciating the implications of internal security, it may be useful to keep in mind the physical parameters of our concerns which, while being generally well known, are invariably forgotten.
India is the seventh largest country in the world with an area of about 33 lakh square kilometres. It has land boundaries of 15,200 kilometres, over 600 island territories, a coastline of over 7500 kilometres and an EEZ of 25 lakh square kilometres. We have land frontiers and maritime boundaries with half a dozen neighbouring countries. Except for some of our hinterland States, e.g. Haryana and Madhya Pradesh, all other States and some of the Union Territories have one or more land or sea borders which require to be guarded. Our borders with Pakistan and China are militarised; those with Pakistan have generated a variety of threats ever since Independence.
While discussing India’s security concerns, it would also be useful to remember that our country represents an immense cultural and geographical diversity and socio-religious traditions that go back to 5000 years of recorded history. The well over a billion people of India comprise multi-racial, multi-religious, multi-lingual and multi-cultural societies. We have 22 major languages and over 1500 dialects. Every major religion in the world is practiced in India. The roots of India’s secular and pluralistic traditions are imbedded deep in our ancient history.
India’s internal security problems, arising from varied sources, are influenced by a host of factors among which are its past history, geography, colonial legacy, a burgeoning population, sharp social and economic disparities and complex socio-cultural and ethno-religious traditions which interplay freely in our secular democracy. As events in the past decades have shown, regional and global developments have also been impacting significantly on our security concerns.
Under our Constitution, “Public Order” and “Police” are included in the State List (List II, Seventh Schedule). Consequently, for maintaining internal security, the States have exclusive powers [Article 246(3)] to make laws and take all necessary executive action in respect of both the aforesaid subjects. Thus, in the normal circumstances, the States are responsible for maintaining internal security within their jurisdictions.
As regards the Centre’s responsibility, the Constitution prescribes [Article 355] that it shall be the duty of the Union to protect the States against external aggression and internal disturbances and to ensure that the governance of every State is carried on in accordance with the Constitutional powers, failing which Presidential Rule may be imposed [Article 356] in the defaulting State, till constitutional functioning can be restored. The Constitution also provides [Article 352] for the enforcement of Emergency if a situation exists or there is an imminent danger of the security of India being threatened by war or an armed rebellion.
Looking back, from 1947 onwards, the country has faced varied internal security problems. Some of the more serious threats have emanated from Pakistan’s unceasing efforts to seize Jammu & Kashmir and its sustained strategy to create chaos and disorder to de-stabilise and “break up” India.
India has been facing increasing internal security threats in the past years and, as today, the public order in about 40 per cent of the districts is seriously affected by insurgencies, terrorist activities or political extremism. From about the early 1980s Pakistan’s ISI succeeded in launching terrorist activities in Punjab, which suffered enormous human and economic loses for over a decade till the situation was normalised. Benefiting from the experience gained from its foray into Punjab, Pakistan launched a proxy-war in Jammu & Kashmir in end-1989. Over the past nearly two decades now, the continuing wave of terrorism has resulted in the loss of thousands of innocent lives, ruined the economy and, worst of all, shattered the historical secular fabric of Kashmir. In the North East region, several States have continued to face varying insurgencies, many of which have been accentuated by the ISI’s cross-border networks. Illegal immigration from Bangladesh has led to a demographic upheaval and generated serious communal, political, social and economic tensions and conflicts in several areas of the North East region.
Instigated by the ISI, and spurred by domestic factors, there has been a steady increase in the growth of pan-Islamic militant outfits which have been preaching fundamentalism and spreading subversion and violence. Over the years, the reach of these networks has spread to areas in Central and South India.
Left-Wing extremist groups, specially the People’s War Group and the Maoist Communist Centre, have been continuing to enlarge their violent activities which have progressively spread to cover vast tribal areas in several States.
Several organised criminal and mafia groups have linked up with ISI-supported networks and progressively extended their criminal, subversive and communal activities. The narcotics and drug mafia outfits, also involved in the smuggling of weapons, RDX and other materials for causing death and destruction, have been carrying out large scale havala and money laundering operations. The enormous funds generated by the unlawful activities of these groups have been utilised for spreading Islamic fundamentalism, creating violence and executing terrorist activities. Serious threats to internal security have emerged from the ISI linking up with organised crime and mafia outfits and exploiting this nexus to organise major violent incidents in various cities of India, virtually at will.
For the past nearly three decades now, ever since Pakistan’s initial venture to foment militancy in Punjab, the Centre has been kept incessantly engaged in dealing with serious internal security problems in the North East region, Punjab, Jammu & Kashmir, in the various States affected by the activities of the Naxalite groups and in all the areas affected by violence caused by Islamic fundamentalist groups. The restoration of normalcy in any disturbed area has inescapably involved the application of coercive power which, in other words, means the deployment of the required strength of Central Police Forces and, as required, contingents of the Indian Army.
From the experience gained in combating militancies, insurgencies and terrorist activities in the past years, it has become abundantly clear that the responsibility of the disturbed States does not end merely with the deployment of State or Central Police Forces, or even of the Army, to restore the disturbed area to normalcy. The Armed Forces of the Union are deployed in aid of the civil authority and, constitutionally, the concerned State remains entirely responsible till normalcy is fully restored.
It is necessary to recognise that the deployment of Central Police Forces, or of the Army, for carrying out anti-insurgency/terrorist operations may not yield the expected outcome unless the entire State administrative machinery, led by the Chief Minister, devotes continuous organised attention to sensitively dealing with the root causes that contributed to the break down of public order. Time bound initiatives would need to be implemented to identify and resolve the social and economic problems or the political demands and aspirations of the agitating groups. Simultaneously, the entire State administration apparatus would require to devote close and continuous attention to providing effective governance, systematic attention being paid to resolve the day-to-day difficulties faced by the common man, particularly those which may have emerged on account of the ongoing disturbed situation. Instead of slackening its functioning on account of the prevailing disturbed environment, the administrative apparatus shall need to work overtime to ensure that all socio-economic development and poverty alleviation programmes are implemented with high efficiency and honesty and within an urgent time frame.
To deal in a timely manner with internal security problems, the State Governments need to exercise constant vigilance, particularly in regard to the resolution of complex pending issues, and launch prompt initiatives to open meaningful dialogues with the leaders of the aggrieved groups or communities. Past experience has shown that very high human and economic costs have to be paid if there is a failure to timely deal with issues which can lead to conflicts and violence. The situation is further complicated when a violent agitation, arising from a sensitive demand, is dealt with merely as a law and order problem and the disturbance sought to be quelled with the application of force. In many such cases the agitating elements are supported and incited by adversary external agencies and, when this happens, we see the beginning of much larger problems.
The deep despair and consequent alienation of the disadvantaged communities is heightened by the social, economic and political exploitation to which they are subjected. Feudal systems continue to exist in several parts of the country where the much needed land, agrarian and other reforms have still to be carried through. It is indeed most unfortunate that despite the economic disparities and severe disadvantages from which they suffer, the neglected and oppressed segments of society are further subjected to continuing harassments which arise from the various political parties exploiting religious, ethnic and caste factors merely to secure electoral gains.
Besides the gross failures of governance to pursue the avowed welfare-state goals and deliver social and economic justice to the masses, there has also been failure to timely and sensitively respond to the felt needs and aspirations of ethnic and tribal communities, most of who live in remote, difficult and harsh areas. The demands of such neglected communities have been ignored for prolonged periods and if and when any ameliorative action has been taken it has happened essentially to secure an envisaged electoral gain for the party in power. Such failures of governance have promoted greater distrust and alienation among the neglected communities, which no longer have any faith or trust in their State Governments.
The poor and neglected people have many other reasons to be angry and frustrated. For example, the large outlays provided to the States for poverty alleviation schemes are not timely or fully utilised. In many cases, the funds are diverted to other purposes or even embezzled. Such gross failures result in despair, cynicism and deep seated alienation among the poorest segments of society.
Failures of this kind arise from continuing mal-administration, unaccountability and corruption. Despite endless public criticism in the past several decades, effective steps have still to be taken to deal with corruption at the highest levels and to enforce efficiency, honesty and accountability in the functioning of governmental and public institutions. The Lok Pal Bill has been awaiting enactment for the past nearly four decades now and the functioning of the Lok Ayukts, established in many States, has still to see even the known crooks being brought to book. Needless to stress, if good governance is to be delivered perhaps the most crucial challenge shall be to restore ethical and moral values to public life in our country.
Corruption erodes and weakens the very foundations of the administrative and legal framework and disrupts the Rule of Law. Thus, internal security cannot be safeguarded unless the governmental apparatus is rid of corruption.
Corruption has the subversive affect of destroying discipline. And indiscipline leads to the unaccountability which has permeated the administrative apparatus and also led to the growth of the threatening politico-bureaucratic-criminal nexus about which a reference was made earlier.
Efforts to reduce corruption do not invariably yield the expected outcome as most of the tainted elements enjoy the patronage and protection of their political masters who have placed them in key positions and continue to use them for the execution of their unlawful behests. As I had stated earlier, from the perspective of effective internal security management it is a matter for deep concern that even persons of highly questionable integrity, who may have close linkages with criminal and anti-national elements, could continue to hold responsible positions in the administrative system. The potential of such elements subverting national interests from within the system poses a most serious threat to the security of the State.
The continuing determined efforts of adversary external agencies to destabilise India by spreading religious fundamentalism, inciting tensions that lead to conflicts, and perpetrating violence and subversion, have generated challenges which impinge on issues of external security management. In this context it needs to be recognised that issues relating to the management of internal and external security have become inextricably interwoven and, as such, the Centre would need to evolve a holistic approach to internal security management, in close coordination with the States. I would reiterate that in the security scenario which has evolved over the past three decades and more, it would be impractical, in fact extremely hazardous, to deal sectorally with the management of internal and external security issues.
Internal security cannot be maintained satisfactorily in the country unless the States effectively discharge their constitutional duty of maintaining peace and public order in their realms. The States cannot pass on this crucial responsibility to the Centre, as has been the continuing trend in the past years. A signal failure of the States has been the continued neglect and the political exploitation of their Police organisations. This has most adversely affected the discipline, morale, efficiency, honesty and trustworthiness of the constabulary. It is essential that every State undertakes a time bound programme to enlarge, train and equip its Police to effectively manage the existing and emerging challenges as well as to provide very strong support for the implementation of the Centre’s initiatives to maintain public order in the entire country.
It may be noted that a stable security environment cannot be engendered merely by promulgating new laws. In the ultimate analysis every citizen must discharge his duty to uphold and protect the sovereignty, unity and integrity of the country. It is indeed unfortunate that while the vast majority of our educated people are concerned only about their Fundamental Rights there are not very many who are even aware of their Fundamental Duties, laid down in Article 51A of the Constitution. Even if action were to be taken to enforce the Fundamental Duties of our citizens, it would be unsound to assume that the citizenry of India shall be overnight imbued with patriotic feelings to protect national interests if the environment in which they live and work continues to be vitiated by discrimination, corruption and injustice. The requisite environment can be engendered only if the States perpetually demonstrate and ensure that the laws of the land apply equally to the rich and influential and the highest placed public servants. Side by side, it must be particularly ensured that no injustice is done to the poor and the disadvantaged segments of society as this would result only in promoting distrust and despair among the masses and further eroding their loyalties.
In the aforesaid context, it has also to be noted that lawlessness cannot be controlled and internal security maintained unless the entire framework of the criminal justice system functions with speed, fairness and transparent honesty. In 2005, of the over 23 million cases awaiting disposal in the country, over 7 million IPC crime cases were pending trial. The ever increasing number of criminal cases awaiting investigation and trial and the correspondingly declining conviction rates have generated the growing public perception that crime is a “low-risk, high-profit business”.
Besides the enormous logistical inadequacies in the justice delivery system, the integrity of the magistracy and the subordinate judiciary is seriously tainted. In the recent past, serious allegations of questionable integrity have been raised even against those who man the superior echelons in our judicial structure. Needless to say, the most urgent measures need to be taken to clean up the justice administration apparatus and enlarge and strengthen it to deliver speedy and effective justice. Another cause for serious concern is that while we continue to have hundreds of altogether obsolete and irrelevant laws, most of which were enacted during the colonial period, we do not have an adequately stringent law, applicable all over the country, that can effectively meet the requirements of dealing with terrorist offences, cyber crimes and the fast growing areas of organised criminality which pose a grave threat to national security. We also do not have a Federal Crime Agency which can deal with the serious offences committed by criminal networks whose activities may spread across the States, across the entire country and across various foreign lands. We also need a comprehensive law for dealing with serious economic offences which, if not timely checked, have the potential of disrupting the national economy. Today, terrorist and criminal networks operate in a borderless world and, needless to say, the grave challenges posed by their activities cannot be tackled if the various concerned law enforcing agencies continue to operate within their respective limited jurisdictions. What is urgently required is an appropriate legal framework and an extremely well considered strategy which is executed in the most effective co-ordination between the Centre and the States, to deal with each and every aspect of internal security management.
Another matter for serious concern relates to the failure, over the past six decades, to develop a pool of functionaries who have been especially trained to manage the security apparatus at the Centre. Only the Intelligence Bureau has a sub-cadre of deputationist Indian Police Officers who, after acquiring the required experience, comprise the core of the Bureau and can spend their entire careers in this agency. R&AW, the agency for external intelligence, has been facing serious personnel problems and recently there have been a number of incidents of grave professional failures. As per the continuing practice, the officers assigned to posts in the Home Ministry, drawn from various services and cadres, are not required to possess any past experience in the field of security management. The situation in the States is much worse.
It is a matter for deep concern that despite the serious challenges to national security faced by the country it has still not been recognised that security management cannot any longer be entrusted to persons who have no training or experience in this field. It is also no longer viable to entrust the work of Intelligence agencies only to officers of one particular service. It is necessary that very high priority is accorded for raising a pool of adequately trained and trusted officers who can be assigned to posts in the Intelligence Agencies and the Departments and Ministries which are responsible for managing internal and external security.
In the aforesaid context, particularly keeping in view that even key posts in the Home and Defence Ministries and their related agencies are, on many occasions, assigned to functionaries who have no prior experience of working in the security administration arena, I had proposed (in the Task Force Report on Internal Security, September 2000) that Government may consider the establishment of a dedicated Security Administration Cadre, which is comprised of officers selected from among volunteers from the Civil and Police Services, Defence Services, Defence Science Research Organisation, Science and Technology, Information and Communication Technology, Broadcasting and Media and other relevant areas. It was envisaged that such a pool of officers, in various age groups, would be properly trained and assigned to posts in the security management machinery. After critically assessing their performance, the selected officers could be allowed, as is done in the Intelligence Bureau, to enjoy open-ended tenures so that, over time, they acquire the much needed professional expertise which is sorely lacking in the existing set-up. It was projected that, once such a dedicated cadre gets adequately established, Government would be able to select the most suitable officers, from within this pool of officers, to man posts at given levels in the Union Home Ministry, the Intelligence Agencies, National Security Council Secretariat, Ministry of Defence and other security management related areas. Side by side, the States could be provided required support, particularly well designed training facilities, to raise similar cadres.
The Government had approved the aforesaid approach in early 2001. Nearly seven years have since elapsed. It is apparent that Government do not intend to terminate the continuing practice of even the top most posts in the security apparatus being filled by persons who have no past experience in security management.
I would conclude by saying that considering the extremely worrying scale and pattern of the internal security failures in the recent past, the Centre shall need to significantly enlarge the capacity of its Intelligence agencies, and to also ensure that the States take similar action, so that a constant vigil can be effectively kept across the length and breadth of the country. The Centre would also need to most vigorously pursue the States to ensure that the functioning of their Police forces is completely depoliticised and their autonomous working entrusted to the best available officers, known for their integrity and professionalism. The speediest possible measures must also be taken to revive the criminal justice system and restore its credibility. It is equally important that the State Chief Ministers urgently bring themselves around to fully understanding the altogether grave consequences if they fail to maintain peace and order within their jurisdictions or dither in providing total support and co-ordination to the Centre’s initiatives to make the management of internal security more effective.
And finally, I would reiterate that effective enforcement of the Rule of Law is crucial to the maintenance of national security and delivery of good governance. Any threat to the constitutional values shall pose a threat to the very foundations of our polity and society and, consequently, to the very unity and integrity of our country.
This is an edited transcript of the R.D. Katari Memorial Lecture delivered at the DRDO Auditorium, New Delhi. Mr. N.N. Vohra is Special Representative of the Government of India for the Jammu & Kashmir Dialogue.
It is perhaps not necessary to define Governance. However, in the simplest terms, governance relates to the effective management of national affairs at all levels of functioning; guaranteeing the country’s unity and integrity and securing the safety and overall welfare of its people. For the attainment of these objectives it would be essential that political, economic, executive and judicial authority is exercised in a manner which ensures that the people are enabled to enjoy their rights, discharge their obligations and resolve their disputes within the parameters of the Constitution and the Rule of Law.
Our exhaustive Constitution provides the basis of the relationship between the Union and the States and delineates the Legislative, Judicial and Executive framework within which the Union and the States shall discharge their respective responsibilities for delivering governance. The Preamble to our Constitution provides the key to its philosophy: it enshrines the sovereignty of the people and envisions a socialist, secular, democratic republic based on justice, liberty, equality and fraternity.
The principles of governance of our country are excellently enunciated in the chapter on Directive Principles of State Policy in the Constitution of India. It has been laid down (Article 37) that the provisions contained in this chapter shall be “fundamental in the governance of the country” and that it shall be the “duty of the State to apply these principles in making laws”.
The founding fathers of the Constitution of India were acutely aware that political democracy would have no significance unless it was accompanied by social and economic democracy. It was their belief that, within the democratic framework, clean and efficient governance would transform the social, economic and political life of our people and build a strong, prosperous and vibrant nation. The Directive Principles, described as the `core’ or the `conscience’ of our Constitution, provide the goals and guidelines which, if vigorously pursued and implemented timely, would have led to removing the inequalities and disabilities suffered by large segments of our society and thus paved the way for the achievement of social and economic justice.
We have still to traverse a very long distance to achieve our nation-building goals. About a quarter of our population still lives below the poverty line. The persistence of large-scale poverty and illiteracy, the lack of employment, shelter, clean drinking water, basic sanitation and health care, food and nutrition, and the yawning gaps in the achievement of various other vital developmental targets manifest the serious failures of national governance. The default in achieving social and economic justice has perhaps been the most signal failure.
The failures of governance have led to the recognition that governance shall become honest and effective, and inequalities shall start reducing, when the people are empowered and the communities are enabled to manage their own affairs. In this context, the 73rd and the 74th Amendments to the Constitution provide the constitutional mandate for the provision of self-governance through the establishment of duly empowered rural and urban local self-governing institutions. It is a matter for deep regret that the States have still to evince the required political will to effectively pursue the path of democratic decentralisation.
Thus, today, in large parts of the country, the people’s sovereignty still means no more than the right to exercise their vote whenever elections are held. It is, however, a matter of enormous satisfaction that, despite failures on various fronts and despite the serious shortcomings of the electoral processes, the spirit of democracy stands deeply rooted in our country.
Among the many reasons for the continuing failures of governance, a significant factor has been the instability of the political regimes in the States from around the late 1960s and at the Centre in the past decade and a half. From 1989 onwards, there were six governments at the Centre in less than a decade. It has also been seen that frequent elections have not invariably engendered conclusive outcomes. In recent years no single party or pre-poll alliance of parties has succeeded in securing a clear majority. Unstable coalition governments in the States, perennially occupied in combating threats to their survival, have failed to deliver effective governance.
Over the years, the politicisation of caste and communal identities has led to divisiveness and disruption of the national ethos. The failure of the electoral system to prevent anti-social, communal, undesirable and even criminal elements from contesting and winning elections has contributed to the progressive decline of the polity and the consequent failure of the State Assemblies and the Parliament to effectively discharge their vital constitutional roles.
Consequent to the 1993 serial bomb blasts in Mumbai, on the direction of the Prime Minister, a Committee was established to enquire into certain aspects of the bombings. In September 1993 this Committee, generally referred to as the Vohra Committee, had reported the existence of a deep nexus between political personalities, public servants and criminal syndicates. As per the Director CBI’s report to this Committee “all over India crime syndicates have become a law unto themselves. Even in the smaller towns and rural areas, muscle men have become the order of the day. Hired assassins have become part of these organizations. The nexus between the communal gangs, police, bureaucracy and politicians has come out clearly in various parts of the country.” Quoting the Director Intelligence Bureau, the Committee reported that the Mafia network is “virtually running a parallel government, pushing the State apparatus into irrelevance” and that in certain States “these gangs enjoy the patronage of local politicians, cutting across party lines, and the protection of functionaries… Some political leaders become the leaders of these gangs/armed senas and, over the years, get themselves elected to local bodies, State Assemblies and national Parliament.” By all accounts, over the past decade and a half, this criminal nexus has enlarged and extended its reach.
Governance has been adversely affected also because political leaders remain incessantly preoccupied with the narrow, sectarian and partisan interests of their parties and the pursuit of day-to-day political gains and have no time or patience to attend to the crying needs of the common man. The failure of the political executive to devote sustained attention to its constitutional responsibilities has led to the governmental functioning in the States being marred by gross delays, inefficiency, insensitivity, unaccountability and pervasive corruption.
Today, thanks to the information technology revolution and the fast spreading reach of the media, the awareness and expectations of the average citizen have been significantly enhanced. This has, correspondingly, generated much deeper dissatisfaction with the failures of governance. Unless urgent and ruthless steps are taken to check maladministration and corruption, the anger and disgust of the common people, particularly the disadvantaged and oppressed elements, could lead to their alienation. And past experience has shown that alienated elements can be easily lured to adopting the gun culture and joining unlawful networks whose activities cause serious public disorder.
In the past decade and more, despite the constraints of governance under coalition governments, the rate of the country’s economic growth has been consistently higher than at any time in the past. It is heartening to observe that the new economic strength is being utilised to significantly enhance the investments in human development and poverty eradication programmes and for the execution of varied schemes for improving the quality of life of the common man.
In the obtaining environment of steady economic growth and dynamism, the interest of foreign governments, companies, investors and entrepreneurs has been growing steadily. Quite understandably, foreign investors would keep a close watch on the situation in our country, to be assured of the security of their assets and holdings. In this context, national governance has the super-added responsibility of ensuring that internal security is effectively maintained to promote our growing international trade and business interests which are vital for the steady growth of our economy.
Let us now take a quick look at the constitutional position in regard to national security management in our country.
The safeguarding of national security encompasses eternal vigilance to meet every threat to the Indian State from every possible source within the country and from anywhere across its land or sea borders or from across the air space.
Broadly speaking, national security would comprise external security i.e. safeguarding the realm against any external threat, and internal security i.e. maintenance of security within the entire country. National security management would also encompass employment, food, water and shelter security; fiscal and economic security; energy, science, technology and environment security; cyber security, etc. However, for the purpose of this Lecture, I shall speak only about issues relating to internal security management.
For appreciating the implications of internal security, it may be useful to keep in mind the physical parameters of our concerns which, while being generally well known, are invariably forgotten.
India is the seventh largest country in the world with an area of about 33 lakh square kilometres. It has land boundaries of 15,200 kilometres, over 600 island territories, a coastline of over 7500 kilometres and an EEZ of 25 lakh square kilometres. We have land frontiers and maritime boundaries with half a dozen neighbouring countries. Except for some of our hinterland States, e.g. Haryana and Madhya Pradesh, all other States and some of the Union Territories have one or more land or sea borders which require to be guarded. Our borders with Pakistan and China are militarised; those with Pakistan have generated a variety of threats ever since Independence.
While discussing India’s security concerns, it would also be useful to remember that our country represents an immense cultural and geographical diversity and socio-religious traditions that go back to 5000 years of recorded history. The well over a billion people of India comprise multi-racial, multi-religious, multi-lingual and multi-cultural societies. We have 22 major languages and over 1500 dialects. Every major religion in the world is practiced in India. The roots of India’s secular and pluralistic traditions are imbedded deep in our ancient history.
India’s internal security problems, arising from varied sources, are influenced by a host of factors among which are its past history, geography, colonial legacy, a burgeoning population, sharp social and economic disparities and complex socio-cultural and ethno-religious traditions which interplay freely in our secular democracy. As events in the past decades have shown, regional and global developments have also been impacting significantly on our security concerns.
Under our Constitution, “Public Order” and “Police” are included in the State List (List II, Seventh Schedule). Consequently, for maintaining internal security, the States have exclusive powers [Article 246(3)] to make laws and take all necessary executive action in respect of both the aforesaid subjects. Thus, in the normal circumstances, the States are responsible for maintaining internal security within their jurisdictions.
As regards the Centre’s responsibility, the Constitution prescribes [Article 355] that it shall be the duty of the Union to protect the States against external aggression and internal disturbances and to ensure that the governance of every State is carried on in accordance with the Constitutional powers, failing which Presidential Rule may be imposed [Article 356] in the defaulting State, till constitutional functioning can be restored. The Constitution also provides [Article 352] for the enforcement of Emergency if a situation exists or there is an imminent danger of the security of India being threatened by war or an armed rebellion.
Looking back, from 1947 onwards, the country has faced varied internal security problems. Some of the more serious threats have emanated from Pakistan’s unceasing efforts to seize Jammu & Kashmir and its sustained strategy to create chaos and disorder to de-stabilise and “break up” India.
India has been facing increasing internal security threats in the past years and, as today, the public order in about 40 per cent of the districts is seriously affected by insurgencies, terrorist activities or political extremism. From about the early 1980s Pakistan’s ISI succeeded in launching terrorist activities in Punjab, which suffered enormous human and economic loses for over a decade till the situation was normalised. Benefiting from the experience gained from its foray into Punjab, Pakistan launched a proxy-war in Jammu & Kashmir in end-1989. Over the past nearly two decades now, the continuing wave of terrorism has resulted in the loss of thousands of innocent lives, ruined the economy and, worst of all, shattered the historical secular fabric of Kashmir. In the North East region, several States have continued to face varying insurgencies, many of which have been accentuated by the ISI’s cross-border networks. Illegal immigration from Bangladesh has led to a demographic upheaval and generated serious communal, political, social and economic tensions and conflicts in several areas of the North East region.
Instigated by the ISI, and spurred by domestic factors, there has been a steady increase in the growth of pan-Islamic militant outfits which have been preaching fundamentalism and spreading subversion and violence. Over the years, the reach of these networks has spread to areas in Central and South India.
Left-Wing extremist groups, specially the People’s War Group and the Maoist Communist Centre, have been continuing to enlarge their violent activities which have progressively spread to cover vast tribal areas in several States.
Several organised criminal and mafia groups have linked up with ISI-supported networks and progressively extended their criminal, subversive and communal activities. The narcotics and drug mafia outfits, also involved in the smuggling of weapons, RDX and other materials for causing death and destruction, have been carrying out large scale havala and money laundering operations. The enormous funds generated by the unlawful activities of these groups have been utilised for spreading Islamic fundamentalism, creating violence and executing terrorist activities. Serious threats to internal security have emerged from the ISI linking up with organised crime and mafia outfits and exploiting this nexus to organise major violent incidents in various cities of India, virtually at will.
For the past nearly three decades now, ever since Pakistan’s initial venture to foment militancy in Punjab, the Centre has been kept incessantly engaged in dealing with serious internal security problems in the North East region, Punjab, Jammu & Kashmir, in the various States affected by the activities of the Naxalite groups and in all the areas affected by violence caused by Islamic fundamentalist groups. The restoration of normalcy in any disturbed area has inescapably involved the application of coercive power which, in other words, means the deployment of the required strength of Central Police Forces and, as required, contingents of the Indian Army.
From the experience gained in combating militancies, insurgencies and terrorist activities in the past years, it has become abundantly clear that the responsibility of the disturbed States does not end merely with the deployment of State or Central Police Forces, or even of the Army, to restore the disturbed area to normalcy. The Armed Forces of the Union are deployed in aid of the civil authority and, constitutionally, the concerned State remains entirely responsible till normalcy is fully restored.
It is necessary to recognise that the deployment of Central Police Forces, or of the Army, for carrying out anti-insurgency/terrorist operations may not yield the expected outcome unless the entire State administrative machinery, led by the Chief Minister, devotes continuous organised attention to sensitively dealing with the root causes that contributed to the break down of public order. Time bound initiatives would need to be implemented to identify and resolve the social and economic problems or the political demands and aspirations of the agitating groups. Simultaneously, the entire State administration apparatus would require to devote close and continuous attention to providing effective governance, systematic attention being paid to resolve the day-to-day difficulties faced by the common man, particularly those which may have emerged on account of the ongoing disturbed situation. Instead of slackening its functioning on account of the prevailing disturbed environment, the administrative apparatus shall need to work overtime to ensure that all socio-economic development and poverty alleviation programmes are implemented with high efficiency and honesty and within an urgent time frame.
To deal in a timely manner with internal security problems, the State Governments need to exercise constant vigilance, particularly in regard to the resolution of complex pending issues, and launch prompt initiatives to open meaningful dialogues with the leaders of the aggrieved groups or communities. Past experience has shown that very high human and economic costs have to be paid if there is a failure to timely deal with issues which can lead to conflicts and violence. The situation is further complicated when a violent agitation, arising from a sensitive demand, is dealt with merely as a law and order problem and the disturbance sought to be quelled with the application of force. In many such cases the agitating elements are supported and incited by adversary external agencies and, when this happens, we see the beginning of much larger problems.
The deep despair and consequent alienation of the disadvantaged communities is heightened by the social, economic and political exploitation to which they are subjected. Feudal systems continue to exist in several parts of the country where the much needed land, agrarian and other reforms have still to be carried through. It is indeed most unfortunate that despite the economic disparities and severe disadvantages from which they suffer, the neglected and oppressed segments of society are further subjected to continuing harassments which arise from the various political parties exploiting religious, ethnic and caste factors merely to secure electoral gains.
Besides the gross failures of governance to pursue the avowed welfare-state goals and deliver social and economic justice to the masses, there has also been failure to timely and sensitively respond to the felt needs and aspirations of ethnic and tribal communities, most of who live in remote, difficult and harsh areas. The demands of such neglected communities have been ignored for prolonged periods and if and when any ameliorative action has been taken it has happened essentially to secure an envisaged electoral gain for the party in power. Such failures of governance have promoted greater distrust and alienation among the neglected communities, which no longer have any faith or trust in their State Governments.
The poor and neglected people have many other reasons to be angry and frustrated. For example, the large outlays provided to the States for poverty alleviation schemes are not timely or fully utilised. In many cases, the funds are diverted to other purposes or even embezzled. Such gross failures result in despair, cynicism and deep seated alienation among the poorest segments of society.
Failures of this kind arise from continuing mal-administration, unaccountability and corruption. Despite endless public criticism in the past several decades, effective steps have still to be taken to deal with corruption at the highest levels and to enforce efficiency, honesty and accountability in the functioning of governmental and public institutions. The Lok Pal Bill has been awaiting enactment for the past nearly four decades now and the functioning of the Lok Ayukts, established in many States, has still to see even the known crooks being brought to book. Needless to stress, if good governance is to be delivered perhaps the most crucial challenge shall be to restore ethical and moral values to public life in our country.
Corruption erodes and weakens the very foundations of the administrative and legal framework and disrupts the Rule of Law. Thus, internal security cannot be safeguarded unless the governmental apparatus is rid of corruption.
Corruption has the subversive affect of destroying discipline. And indiscipline leads to the unaccountability which has permeated the administrative apparatus and also led to the growth of the threatening politico-bureaucratic-criminal nexus about which a reference was made earlier.
Efforts to reduce corruption do not invariably yield the expected outcome as most of the tainted elements enjoy the patronage and protection of their political masters who have placed them in key positions and continue to use them for the execution of their unlawful behests. As I had stated earlier, from the perspective of effective internal security management it is a matter for deep concern that even persons of highly questionable integrity, who may have close linkages with criminal and anti-national elements, could continue to hold responsible positions in the administrative system. The potential of such elements subverting national interests from within the system poses a most serious threat to the security of the State.
The continuing determined efforts of adversary external agencies to destabilise India by spreading religious fundamentalism, inciting tensions that lead to conflicts, and perpetrating violence and subversion, have generated challenges which impinge on issues of external security management. In this context it needs to be recognised that issues relating to the management of internal and external security have become inextricably interwoven and, as such, the Centre would need to evolve a holistic approach to internal security management, in close coordination with the States. I would reiterate that in the security scenario which has evolved over the past three decades and more, it would be impractical, in fact extremely hazardous, to deal sectorally with the management of internal and external security issues.
Internal security cannot be maintained satisfactorily in the country unless the States effectively discharge their constitutional duty of maintaining peace and public order in their realms. The States cannot pass on this crucial responsibility to the Centre, as has been the continuing trend in the past years. A signal failure of the States has been the continued neglect and the political exploitation of their Police organisations. This has most adversely affected the discipline, morale, efficiency, honesty and trustworthiness of the constabulary. It is essential that every State undertakes a time bound programme to enlarge, train and equip its Police to effectively manage the existing and emerging challenges as well as to provide very strong support for the implementation of the Centre’s initiatives to maintain public order in the entire country.
It may be noted that a stable security environment cannot be engendered merely by promulgating new laws. In the ultimate analysis every citizen must discharge his duty to uphold and protect the sovereignty, unity and integrity of the country. It is indeed unfortunate that while the vast majority of our educated people are concerned only about their Fundamental Rights there are not very many who are even aware of their Fundamental Duties, laid down in Article 51A of the Constitution. Even if action were to be taken to enforce the Fundamental Duties of our citizens, it would be unsound to assume that the citizenry of India shall be overnight imbued with patriotic feelings to protect national interests if the environment in which they live and work continues to be vitiated by discrimination, corruption and injustice. The requisite environment can be engendered only if the States perpetually demonstrate and ensure that the laws of the land apply equally to the rich and influential and the highest placed public servants. Side by side, it must be particularly ensured that no injustice is done to the poor and the disadvantaged segments of society as this would result only in promoting distrust and despair among the masses and further eroding their loyalties.
In the aforesaid context, it has also to be noted that lawlessness cannot be controlled and internal security maintained unless the entire framework of the criminal justice system functions with speed, fairness and transparent honesty. In 2005, of the over 23 million cases awaiting disposal in the country, over 7 million IPC crime cases were pending trial. The ever increasing number of criminal cases awaiting investigation and trial and the correspondingly declining conviction rates have generated the growing public perception that crime is a “low-risk, high-profit business”.
Besides the enormous logistical inadequacies in the justice delivery system, the integrity of the magistracy and the subordinate judiciary is seriously tainted. In the recent past, serious allegations of questionable integrity have been raised even against those who man the superior echelons in our judicial structure. Needless to say, the most urgent measures need to be taken to clean up the justice administration apparatus and enlarge and strengthen it to deliver speedy and effective justice. Another cause for serious concern is that while we continue to have hundreds of altogether obsolete and irrelevant laws, most of which were enacted during the colonial period, we do not have an adequately stringent law, applicable all over the country, that can effectively meet the requirements of dealing with terrorist offences, cyber crimes and the fast growing areas of organised criminality which pose a grave threat to national security. We also do not have a Federal Crime Agency which can deal with the serious offences committed by criminal networks whose activities may spread across the States, across the entire country and across various foreign lands. We also need a comprehensive law for dealing with serious economic offences which, if not timely checked, have the potential of disrupting the national economy. Today, terrorist and criminal networks operate in a borderless world and, needless to say, the grave challenges posed by their activities cannot be tackled if the various concerned law enforcing agencies continue to operate within their respective limited jurisdictions. What is urgently required is an appropriate legal framework and an extremely well considered strategy which is executed in the most effective co-ordination between the Centre and the States, to deal with each and every aspect of internal security management.
Another matter for serious concern relates to the failure, over the past six decades, to develop a pool of functionaries who have been especially trained to manage the security apparatus at the Centre. Only the Intelligence Bureau has a sub-cadre of deputationist Indian Police Officers who, after acquiring the required experience, comprise the core of the Bureau and can spend their entire careers in this agency. R&AW, the agency for external intelligence, has been facing serious personnel problems and recently there have been a number of incidents of grave professional failures. As per the continuing practice, the officers assigned to posts in the Home Ministry, drawn from various services and cadres, are not required to possess any past experience in the field of security management. The situation in the States is much worse.
It is a matter for deep concern that despite the serious challenges to national security faced by the country it has still not been recognised that security management cannot any longer be entrusted to persons who have no training or experience in this field. It is also no longer viable to entrust the work of Intelligence agencies only to officers of one particular service. It is necessary that very high priority is accorded for raising a pool of adequately trained and trusted officers who can be assigned to posts in the Intelligence Agencies and the Departments and Ministries which are responsible for managing internal and external security.
In the aforesaid context, particularly keeping in view that even key posts in the Home and Defence Ministries and their related agencies are, on many occasions, assigned to functionaries who have no prior experience of working in the security administration arena, I had proposed (in the Task Force Report on Internal Security, September 2000) that Government may consider the establishment of a dedicated Security Administration Cadre, which is comprised of officers selected from among volunteers from the Civil and Police Services, Defence Services, Defence Science Research Organisation, Science and Technology, Information and Communication Technology, Broadcasting and Media and other relevant areas. It was envisaged that such a pool of officers, in various age groups, would be properly trained and assigned to posts in the security management machinery. After critically assessing their performance, the selected officers could be allowed, as is done in the Intelligence Bureau, to enjoy open-ended tenures so that, over time, they acquire the much needed professional expertise which is sorely lacking in the existing set-up. It was projected that, once such a dedicated cadre gets adequately established, Government would be able to select the most suitable officers, from within this pool of officers, to man posts at given levels in the Union Home Ministry, the Intelligence Agencies, National Security Council Secretariat, Ministry of Defence and other security management related areas. Side by side, the States could be provided required support, particularly well designed training facilities, to raise similar cadres.
The Government had approved the aforesaid approach in early 2001. Nearly seven years have since elapsed. It is apparent that Government do not intend to terminate the continuing practice of even the top most posts in the security apparatus being filled by persons who have no past experience in security management.
I would conclude by saying that considering the extremely worrying scale and pattern of the internal security failures in the recent past, the Centre shall need to significantly enlarge the capacity of its Intelligence agencies, and to also ensure that the States take similar action, so that a constant vigil can be effectively kept across the length and breadth of the country. The Centre would also need to most vigorously pursue the States to ensure that the functioning of their Police forces is completely depoliticised and their autonomous working entrusted to the best available officers, known for their integrity and professionalism. The speediest possible measures must also be taken to revive the criminal justice system and restore its credibility. It is equally important that the State Chief Ministers urgently bring themselves around to fully understanding the altogether grave consequences if they fail to maintain peace and order within their jurisdictions or dither in providing total support and co-ordination to the Centre’s initiatives to make the management of internal security more effective.
And finally, I would reiterate that effective enforcement of the Rule of Law is crucial to the maintenance of national security and delivery of good governance. Any threat to the constitutional values shall pose a threat to the very foundations of our polity and society and, consequently, to the very unity and integrity of our country.
This is an edited transcript of the R.D. Katari Memorial Lecture delivered at the DRDO Auditorium, New Delhi. Mr. N.N. Vohra is Special Representative of the Government of India for the Jammu & Kashmir Dialogue.
Saturday, August 22, 2009
BUDGET GLOSSARY
The government's annual budget exercise is no different from the way we all manage our household budgets. The only difference: the former's intimidating jargon. Team ET simplifies the important budget items for its readers in a five-part series. We have, however, departed from the usual way glossaries are presented, in alphabetical order, to a flow-type format wherein terms are explained as the reader would encounter them in the budget. Read on
ON the budget day, the finance minister tables 10-12 documents. Of these, the main and most important document is the Annual Financial Statement.
ANNUAL FINANCIAL STATEMENT:
Article 112 of the constitution requires the government to present to the Parliament a statement of estimated receipts and expenditure in respect of every financial year, April 1 to March 31. This statement is the annual financial statement.
The annual financial statement is usually a white 10-page document. It is divided into three parts, Consolidated Fund, Contingency Fund and Public Account. For each of these funds the government has to present a statement of receipts and expenditure.
CONSOLIDATED FUND:
This is the most important of all the government funds. All revenues raised by the government, money borrowed and receipts from loans given by the government flow into the consolidated fund of India. All government expenditure is made from this fund, except for exceptional items met from the Contingency Fund or the Public Account. Importantly, no money can be withdrawn from this fund without Parliament's approval.
CONTINGENCY FUND:
As the name suggests, any urgent or unforeseen expenditure is met from this fund. The Rs 500-crore fund is at the disposal of the President. Any expenditure incurred from this fund requires a subsequent approval from Parliament and the amount withdrawn is returned to the fund from the consolidated fund.
PUBLIC ACCOUNT:
This fund is to account for flows for those transactions where the government is merely acting as a banker. For instance, provident funds, small savings and so on. These funds do not belong to the government. They have to be paid back at some time to their rightful owners. Because of this nature of the fund, expenditure from it are not required to be approved by Parliament.
For each of these funds the government has to present a statement of receipts and expenditure. It is important to note that all money flowing into these funds is called receipts, the funds received, and not revenue. Revenue in budget context has a specific meaning. The Constitution requires that the budget has to distinguish between receipts and expenditure on revenue account from other expenditure. So all receipts in, say consolidated fund, are split into Revenue Budget (revenue account) and Capital Budget (capital account), which includes nonrevenue receipts and expenditure. For understanding these budgets - Revenue and Capital - it is important to understand revenue receipts, revenue expenditure, capital receipts and capital expenditure.
REVENUE RECEIPT/EXPENDITURE:
All receipts and expenditure that in general do not entail sale or creation of assets are included under the revenue account. On the receipts side, taxes would be the most important revenue receipt. On the expenditure side, anything that does not result in creation of assets is treated as revenue expenditure. Salaries, subsidies and interest payments are good examples of revenue expenditure.
CAPITAL RECEIPT/EXPENDITURE:
All receipts and expenditure that liquidate or create an asset would in general be under capital account. For instance, if the government sells shares (disinvests) in public sector companies, like it did in the case of Maruti, it is in effect selling an asset. The receipts from the sale would go under capital account. On the other hand, if the government gives someone a loan from which it expects to receive interest, that expenditure would go under the capital account. In respect of all the funds the government has to prepare a Revenue Budget (detailing revenue receipts and revenue expenditure) and a capital budget (capital receipts and capital expenditure). Contingency Fund is clearly not that important. Public Account is important in that it gives a view of select savings and how they are being used, but not that relevant from a budget perspective. The consolidated fund is the key to the budget. We will take that up in the next part.
CORPORATION TAX:
Tax on profits of companies.
TAXES ON INCOME OTHER THAN CORPORATION TAX:
Income tax paid by non-corporate assesses, individuals, for instance.
FRINGE BENEFIT TAX (FBT):
The taxation of perquisites — or fringe benefits — provided by an employer to his employees, in addition to the cash salary or wages paid, is fringe benefit tax. It was introduced in the 2005-06 budget. The government felt that many companies were disguising perquisites such as club facilities as ordinary business expenses, which escaped taxation altogether. Employers have to now pay a tax (FBT) on a percentage of the expense incurred on such perquisites.
SECURITIES TRANSACTION TAX (STT):
Sale of any asset (shares, property etc) results in loss or profit. Depending on the time the asset is held, such profits and losses are categorised as long term or short term capital gain/loss. In the 2004-05 budget, the government abolished long-term capital gains tax on shares (tax on profits made on sale of shares held for more than a year) and replaced it STT. It is a kind of turnover tax where the investor has to pay a small tax on the total consideration paid/received in a share transaction.
BANKING CASH TRANSACTION TAX (BCTT):
Introduced in the 2005-06 budget, BCTT is a small tax on cash withdrawal from bank exceeding a particular amount in a single day. The basic idea is to curb the black economy and generate a record of big cash transactions.
CUSTOMS:
Taxes imposed on imports. While revenue is an important consideration, customs duties may also be levied to protect the domestic industry or sector (agriculture, for one), in retaliation against measures by other countries etc.
UNION EXCISE DUTY:
Duties imposed on goods manufactured in the country.
SERVICE TAX:
It is a tax on services rendered. Telephone bill, for instance, attracts a service tax.
While on taxes, let us take a look at an important classification: direct tax and indirect tax, which finds wide mention in the budget.
DIRECT TAX:
Traditionally, these are taxes where the burden of tax falls on the person on whom it is levied. These are largely taxes on income or wealth. Income tax (on corporates and individuals), FBT, STT and BCTT are direct taxes.
INDIRECT TAX:
In the case of indirect taxes the incidence of tax is usually not on the person who pays the tax. These are largely taxes on expenditure and include Customs, excise and service tax.
Indirect taxes are considered regressive, the burden on the rich and the poor is alike. That is why governments strive to raise a higher proportion of taxes through direct taxes. Moving on, we come to the next important receipt item in the revenue account, non-tax revenue.
NON-TAX REVENUE:
The most important receipts under this head are interest payments (received on loans given by the government to states, railways and others) and dividends and profits received from public sector companies.
Various services provided by the government — general services such as police and defence, social and community services such as medical services, and economic services such as power and railways — also yield revenue for the government. Though Railways are a separate department, all its receipts and expenditure are routed through the consolidated fund.
GRANTS-IN-AID AND CONTRIBUTIONS:
The third receipt item in the revenue account is relatively small grants-in-aid and contributions. These are in the nature of pure transfers to the government without any repayment obligation.
We now look at the disbursements section of the Revenue Account of the consolidated fund. It lists all the revenue expenditures of the government. These include expense incurred on organs of state such as Parliament, judiciary and elections. A substantial amount goes into administering fiscal services such as tax collection. The biggest item is interest payment on loans taken by the government. Defence and other services such as police also get a sizeable share. Having looked at receipts and expenditure on revenue account we come to an important item, the difference between the two, the revenue deficit.
REVENUE DEFICIT:
The excess of disbursements over receipts on revenue account is called revenue deficit. This is an important control indicator. All expenditure on revenue account should ideally be met from receipts on revenue account; the revenue deficit should be zero. When revenue disbursement exceeds receipts, the government would have to borrow. Such borrowing is considered regressive as it is for consumption and not for creating assets. It results in a greater proportion of revenue receipts going towards interest payment and eventually, a debt trap. The FRBM Act, which we will take up later, requires the government to reduce fiscal deficit to zero by 2008-09.
RECEIPTS in the capital account of the consolidated fund are grouped under three broad heads — public debt, recoveries of loans and advances, and miscellaneous receipts.
PUBLIC DEBT:
In normal accounting, debt is a stock, to be measured at a point of time, while borrowing and repayment during a year are flows, to be measured over a period of time. In Budget parlance, however, you'll find public debt receipts and public debt disbursals. These are respectively borrowings and repayments during the year. The difference between the two is the net accretion to the public debt.
Public debt can be split into two heads, internal debt (money borrowed within the country) and external debt (funds borrowed from non-Indian sources).
The internal debt comprises of treasury Bills, market stabilisation scheme, ways and means advance, and securities against small savings.
TREASURY BILL (T-BILLS):
These are bonds (debt securities) with maturity of less than a year. These are issued to meet short-term mismatches in receipts and expenditure. Bonds of longer maturity are called dated securities.
MARKET STABILISATION SCHEME (MSS):
The scheme was launched in April 2004 to strengthen Reserve Bank of India's (RBI) ability to conduct exchange rate and monetary management. The RBI mops up excess liquidity, created, for instance when the central bank buys up huge quantities of dollar inflows to prevent undesirably fast appreciation of the rupee, by selling its stock of government securities to banks. When the RBI began to run short of of government securities that had been issued to meet the government's borrowing requirement, the MSS was launched. These securities are issued not to meet the government's expenditure but to provide the RBI with a stock of securities with which to intervene in the market for managing liquidity.
WAYS AND MEANS ADVANCE (WMA):
One of the many roles of the RBI is to serve as banker for both the Central and State governments. In this capacity, the RBI provides temporary support to tide over mismatches in their receipts and payments in the form of ways and means advances.
SECURITIES AGAINST SMALL SAVINGS:
The government meets a small part of its loan requirement by appropriating small savings collection by issuing securities to the fund.
MISCELLANEOUS RECEIPTS:
These are primarily receipts from disinvesment in public sector undertakings.
The capital account receipts of the consolidated fund — public debt, recoveries of loans and advances, and miscellaneous receipts — and revenue receipts make up the total receipts of the consolidated fund.
We now take up the disbursements on capital account from the consolidated fund. The first part deals with capital expenditure incurred on the various services — general services, social services and, economic services. Some of the biggest expenditure items under these heads are defence services, investment in agricultural financial institutions and capital to railways. The second part takes up the public debt (repayments of loans) and various loans made by the government.
The consolidated fund has certain disbursements "charged" to the fund. These are obligations that have to be met in any case and, therefore, do not have to be voted by the Lok Sabha. These include interest payments and certain expenditure such as emoluments of the President, salary and allowances of speaker, deputy chairman of the Rajya Sabha, and allowances and pensions of Supreme Court judges. Parliament and so on. This concludes the discussion on consolidated fund. We now move on to the other budget documents, which give a more detailed presentation of the consolidated fund.
BUDGET AT A GLANCE:
This is obviously a snap shot of the budget, for an easy understanding. Nonetheless, it introduces some new concepts. While receipts are broken down into revenue and capital, unlike the consolidated fund, it shows the centre's net tax revenues. This is because a decent part of the gross tax revenue, as decided by the relevant Finance Commission, flows to the state governments.
Budget at a glance also segments expenditure into plan and non-plan expenditure, instead of splitting into revenue and capital. Each of these is then split into revenue account and capital account. Before discussing plan and non-plan expenditure it is important to discuss the concept of the central plan.
CENTRAL PLAN:
Central or annual plans are essentially the five year plans broken down into five annual instalments. Through these annual plans the government achieves the objectives of the Five-Year Plans. The funding of the central plan is split almost evenly between government support (from the budget) and internal and extra budgetary resources of public enterprises. The government's support to the central plan is called the budget support.
PLAN EXPENDITURE:
This is essentially the Budget support to the central plan and the central assistance to state and Union territory plans. Like all Budget heads, this is also split into revenue and capital components.
NON-PLAN EXPENDITURE:
This is largely the revenue expenditure of the government. The biggest item of expenditure are interest payments, subsidies, salaries, defence and pension. The capital component of the non-plan expenditure is relatively small with the largest allocation going to defence.
It is important to note that the entire defence expenditure is non-plan expenditure. We will now take up the various deficits and the components of plan and non-plan expenditure. In the Budget at a Glance, the plan and the non-plan expenditure make up the total government expenditure. This brings us to the concept of deficit.
FISCAL DEFICIT:
When the government's non-borrowed receipts (revenue receipts plus loan repayments received by the government plus miscellaneous capital receipts, primarily disinvestment proceeds) fall short of its entire expenditure, it has to borrow money from the public to meet the shortfall. The excess of total expenditure over total nonborrowed receipts is called the fiscal deficit.
PRIMARY DEFICIT:
The revenue expenditure includes interest payments on government's earlier borrowings. The primary deficit is the fiscal deficit less interest payments. A shrinking primary deficit would indicate progress towards fiscal health.
We had already discussed revenue deficit earlier. The Budget document also mentions the deficit as a percentage of the GDP. This is to facilitate comparison and also get a proper perspective. In ab- SALAM solute terms, the fiscal deficit may be
large, but if it is small compared to the size of the economy then it is not such a bad thing. Prudent fiscal management requires that government does not borrow to consume, in the normal course. That brings us to the FRBM Act.
FRBM ACT:
Enacted in 2003, the Fiscal Responsibility and Budget Management Act requires the elimination of revenue deficit by 2008-09. This means that from 2008-09, the government will have to meet all its revenue expenditure from its revenue receipts. Any borrowing would then only be to meet capital expenditure — repayment of loans, lending and fresh investment. The Act also mandates a 3% limit on the fiscal deficit after 2008-09. This is a reasonable limit that allows significant-cant leverage to the government to build capacities in the economy without compromising fiscal stability.
It is important to note that since the entire Budget is at current market prices the deficits are also calculated with reference to GDP at current market prices.
RESOURCES TRANSFERRED TO THE STATES
We now look at the resources transferred to the states. As mentioned earlier, a part of the central government's gross tax collections goes to state governments. In the Budget 2007-08 the states were to receive nearly 27% of the gross tax collections.
The Centre also transfers substantial funds to states by way of support to their plans. These are largely in the nature of grants. Centre also gives large grants to states for managing centrally sponsored schemes. Interestingly, the government counts small savings transfers to state governments, which are in the nature of borrowings, as resources transferred to states. Before March 31, 1999, the Centre used to borrow net accretions to small savings (public provident fund, national saving scheme, etc) and lend them to the states. From April 1, 1999, states started receiving 75% of net small savings collections directly; the balance was invested in special Central Government securities during 1999-2000 to 2001-2002. The sums received in the National Small Savings Fund on redemption of special securities are being reinvested in special central government securities. From April 2002, the entire net collections under small saving schemes in each State & UT (with legislature) are advanced to the concerned State/UT government as investment in its special securities.
It seems many states are actually not keen on small savings funds as the cost of these borrowings works out higher than what they can get from the market. We now find the Centre is being forced to mop-up some small savings mobilisation (Rs 5750 crore Budgeted in 2007-08) through special securities as state governments are not taking the entire mobilisation.
This completes the discussion on Budget at a Glance. The expenditure and receipts Budget take up the respective heads in greater detail. We will now take up terms that require some discussion for a clearer understanding of the Budget.
VALUE-ADDED TAX (VAT) AND GST:
VAT helps avoid cascading of taxes (tax being levied upon a price that includes one or more elements of tax) as a product passes through different stages of production/value addition. The tax is based on the difference between the value of the output and the value of the inputs used to produce it. The aim is to tax a firm only for the value added by it to the inputs it is using for manufacturing its output and not the entire input cost. VAT brings in transparency to commodity taxation: right now, only the final tax paid by the consumer is apparent to her, while with value added tax generalised to a goods and services tax (GST) that subsumes both central and state level taxation, the entire element of tax borne by a good (or a service) would be represented by the GST paid on it. A GST of 20% might seem high, but it would be about half the actual incidence of tax in most goods at present.
BHARAT NIRMAN:
Bharat Nirman is the current UPA government’s ambitious programme for building infrastructure, especially in rural India. It has six components - irrigation, roads, water supply, housing, rural electrification and rural telecom connectivity. In each of these areas, the government has set targets that are to be achieved by the year 2009, within four years of its launch.
CESS:
This is an additional levy on the basic tax liability. Governments resort to cesses for meeting specific expenditure. For instance, both corporate and individual income is at present subject to an education cess of 2%. In the last Budget the government had imposed an another 1% cess ‘Secondary and higher education cess on income tax’ to finance secondary and higher education.
COUNTERVAILING DUTIES (CVD) :
Countervailing duty is a tax imposed on imports, over and above the basic import duty. CVD is at par with the excise duty paid by the domestic manufacturers of similar goods. This ensures a level playing field between imported goods and locally produced ones. An exemption from CVD places domestic industry at disadvantage and over long run discourages investments in affected sectors.
EXPORT DUTY:
This is a tax levied on exports. In most instances the object is not revenue but to discourage exports of certain items. In the last Budget, for instance, the government imposed an export duty of Rs 300 per metric tonne on export of iron ores and concentrates and Rs 2,000 per metric tonne on export of chrome ores and concentrates.
FINANCE BILL:
The proposals of government for levy of new taxes, modification of the existing tax structure or continuance of the existing tax structure beyond the period approved by Parliament are submitted to Parliament through this bill. It is the key document as far as taxes are concerned.
FINANCIAL INCLUSION:
Financial inclusion is universalising access to basic financial services (to have a bank account, timely and adequate credit) at an affordable cost. Exclusion from financial services imposes costs on those excluded; these are typically the disadvantaged and low income group. Exclusion forces them into informal arrangements such as borrowing from local money lenders, etc at high rates. Financial inclusion remain a serious issue in India. The government has proposed a no-frills account to provide cheap banking.
MINIMUM ALTERNATE TAX (MAT):
This tax on corporate profits was introduced in 1996-97 and has been modified since. If the tax payable by a company is less than 10% of its book profits, after availing of all eligible deductions, then 10% of book profits is the minimum tax payable. Book profits are profits calculated as per the Companies Act, while profits as per the Income Tax Act could be significantly lower, thanks to various exemptions and depreciation.
PASS-THROUGH STATUS:
A pass through status helps avoid double taxation. Mutual funds, for instance, enjoy pass through status. The income earned by the funds is tax-free. Since mutual funds’ income is distributed to unit holders, who are in turn taxed on their income from such investments, any taxation of mutual funds would amount to double taxation. Essentially, it means that the income is merely passing through the MFs and, therefore, should not be taxed. The government allows VC funds in some sectors pass-through status to encourage investments in start-ups.
SUBVENTION:
The term subvention finds a mention in almost every Budget. It refers to a grant of money in aid or support, mostly by the government. In the Indian context, for instance, the government sometimes asks institutions to provide loans to farmers at below market rates. The loss is usually made good through subventions.
SURCHARGE:
As the name suggests, this is an additional charge or tax. A surcharge of 10% on a tax rate of 30% effectively raises the combined tax burden to 33%. In the case of individuals earning a taxable salary of more than Rs 10 lakh a surcharge of 10% is levied on income in excess of Rs 10 lakh. Corporate income is levied a flat surcharge of 10% in the case of domestic companies and 2.5% for foreign companies. Companies with revenue less than Rs 1 crore do not have to pay
ON the budget day, the finance minister tables 10-12 documents. Of these, the main and most important document is the Annual Financial Statement.
ANNUAL FINANCIAL STATEMENT:
Article 112 of the constitution requires the government to present to the Parliament a statement of estimated receipts and expenditure in respect of every financial year, April 1 to March 31. This statement is the annual financial statement.
The annual financial statement is usually a white 10-page document. It is divided into three parts, Consolidated Fund, Contingency Fund and Public Account. For each of these funds the government has to present a statement of receipts and expenditure.
CONSOLIDATED FUND:
This is the most important of all the government funds. All revenues raised by the government, money borrowed and receipts from loans given by the government flow into the consolidated fund of India. All government expenditure is made from this fund, except for exceptional items met from the Contingency Fund or the Public Account. Importantly, no money can be withdrawn from this fund without Parliament's approval.
CONTINGENCY FUND:
As the name suggests, any urgent or unforeseen expenditure is met from this fund. The Rs 500-crore fund is at the disposal of the President. Any expenditure incurred from this fund requires a subsequent approval from Parliament and the amount withdrawn is returned to the fund from the consolidated fund.
PUBLIC ACCOUNT:
This fund is to account for flows for those transactions where the government is merely acting as a banker. For instance, provident funds, small savings and so on. These funds do not belong to the government. They have to be paid back at some time to their rightful owners. Because of this nature of the fund, expenditure from it are not required to be approved by Parliament.
For each of these funds the government has to present a statement of receipts and expenditure. It is important to note that all money flowing into these funds is called receipts, the funds received, and not revenue. Revenue in budget context has a specific meaning. The Constitution requires that the budget has to distinguish between receipts and expenditure on revenue account from other expenditure. So all receipts in, say consolidated fund, are split into Revenue Budget (revenue account) and Capital Budget (capital account), which includes nonrevenue receipts and expenditure. For understanding these budgets - Revenue and Capital - it is important to understand revenue receipts, revenue expenditure, capital receipts and capital expenditure.
REVENUE RECEIPT/EXPENDITURE:
All receipts and expenditure that in general do not entail sale or creation of assets are included under the revenue account. On the receipts side, taxes would be the most important revenue receipt. On the expenditure side, anything that does not result in creation of assets is treated as revenue expenditure. Salaries, subsidies and interest payments are good examples of revenue expenditure.
CAPITAL RECEIPT/EXPENDITURE:
All receipts and expenditure that liquidate or create an asset would in general be under capital account. For instance, if the government sells shares (disinvests) in public sector companies, like it did in the case of Maruti, it is in effect selling an asset. The receipts from the sale would go under capital account. On the other hand, if the government gives someone a loan from which it expects to receive interest, that expenditure would go under the capital account. In respect of all the funds the government has to prepare a Revenue Budget (detailing revenue receipts and revenue expenditure) and a capital budget (capital receipts and capital expenditure). Contingency Fund is clearly not that important. Public Account is important in that it gives a view of select savings and how they are being used, but not that relevant from a budget perspective. The consolidated fund is the key to the budget. We will take that up in the next part.
CORPORATION TAX:
Tax on profits of companies.
TAXES ON INCOME OTHER THAN CORPORATION TAX:
Income tax paid by non-corporate assesses, individuals, for instance.
FRINGE BENEFIT TAX (FBT):
The taxation of perquisites — or fringe benefits — provided by an employer to his employees, in addition to the cash salary or wages paid, is fringe benefit tax. It was introduced in the 2005-06 budget. The government felt that many companies were disguising perquisites such as club facilities as ordinary business expenses, which escaped taxation altogether. Employers have to now pay a tax (FBT) on a percentage of the expense incurred on such perquisites.
SECURITIES TRANSACTION TAX (STT):
Sale of any asset (shares, property etc) results in loss or profit. Depending on the time the asset is held, such profits and losses are categorised as long term or short term capital gain/loss. In the 2004-05 budget, the government abolished long-term capital gains tax on shares (tax on profits made on sale of shares held for more than a year) and replaced it STT. It is a kind of turnover tax where the investor has to pay a small tax on the total consideration paid/received in a share transaction.
BANKING CASH TRANSACTION TAX (BCTT):
Introduced in the 2005-06 budget, BCTT is a small tax on cash withdrawal from bank exceeding a particular amount in a single day. The basic idea is to curb the black economy and generate a record of big cash transactions.
CUSTOMS:
Taxes imposed on imports. While revenue is an important consideration, customs duties may also be levied to protect the domestic industry or sector (agriculture, for one), in retaliation against measures by other countries etc.
UNION EXCISE DUTY:
Duties imposed on goods manufactured in the country.
SERVICE TAX:
It is a tax on services rendered. Telephone bill, for instance, attracts a service tax.
While on taxes, let us take a look at an important classification: direct tax and indirect tax, which finds wide mention in the budget.
DIRECT TAX:
Traditionally, these are taxes where the burden of tax falls on the person on whom it is levied. These are largely taxes on income or wealth. Income tax (on corporates and individuals), FBT, STT and BCTT are direct taxes.
INDIRECT TAX:
In the case of indirect taxes the incidence of tax is usually not on the person who pays the tax. These are largely taxes on expenditure and include Customs, excise and service tax.
Indirect taxes are considered regressive, the burden on the rich and the poor is alike. That is why governments strive to raise a higher proportion of taxes through direct taxes. Moving on, we come to the next important receipt item in the revenue account, non-tax revenue.
NON-TAX REVENUE:
The most important receipts under this head are interest payments (received on loans given by the government to states, railways and others) and dividends and profits received from public sector companies.
Various services provided by the government — general services such as police and defence, social and community services such as medical services, and economic services such as power and railways — also yield revenue for the government. Though Railways are a separate department, all its receipts and expenditure are routed through the consolidated fund.
GRANTS-IN-AID AND CONTRIBUTIONS:
The third receipt item in the revenue account is relatively small grants-in-aid and contributions. These are in the nature of pure transfers to the government without any repayment obligation.
We now look at the disbursements section of the Revenue Account of the consolidated fund. It lists all the revenue expenditures of the government. These include expense incurred on organs of state such as Parliament, judiciary and elections. A substantial amount goes into administering fiscal services such as tax collection. The biggest item is interest payment on loans taken by the government. Defence and other services such as police also get a sizeable share. Having looked at receipts and expenditure on revenue account we come to an important item, the difference between the two, the revenue deficit.
REVENUE DEFICIT:
The excess of disbursements over receipts on revenue account is called revenue deficit. This is an important control indicator. All expenditure on revenue account should ideally be met from receipts on revenue account; the revenue deficit should be zero. When revenue disbursement exceeds receipts, the government would have to borrow. Such borrowing is considered regressive as it is for consumption and not for creating assets. It results in a greater proportion of revenue receipts going towards interest payment and eventually, a debt trap. The FRBM Act, which we will take up later, requires the government to reduce fiscal deficit to zero by 2008-09.
RECEIPTS in the capital account of the consolidated fund are grouped under three broad heads — public debt, recoveries of loans and advances, and miscellaneous receipts.
PUBLIC DEBT:
In normal accounting, debt is a stock, to be measured at a point of time, while borrowing and repayment during a year are flows, to be measured over a period of time. In Budget parlance, however, you'll find public debt receipts and public debt disbursals. These are respectively borrowings and repayments during the year. The difference between the two is the net accretion to the public debt.
Public debt can be split into two heads, internal debt (money borrowed within the country) and external debt (funds borrowed from non-Indian sources).
The internal debt comprises of treasury Bills, market stabilisation scheme, ways and means advance, and securities against small savings.
TREASURY BILL (T-BILLS):
These are bonds (debt securities) with maturity of less than a year. These are issued to meet short-term mismatches in receipts and expenditure. Bonds of longer maturity are called dated securities.
MARKET STABILISATION SCHEME (MSS):
The scheme was launched in April 2004 to strengthen Reserve Bank of India's (RBI) ability to conduct exchange rate and monetary management. The RBI mops up excess liquidity, created, for instance when the central bank buys up huge quantities of dollar inflows to prevent undesirably fast appreciation of the rupee, by selling its stock of government securities to banks. When the RBI began to run short of of government securities that had been issued to meet the government's borrowing requirement, the MSS was launched. These securities are issued not to meet the government's expenditure but to provide the RBI with a stock of securities with which to intervene in the market for managing liquidity.
WAYS AND MEANS ADVANCE (WMA):
One of the many roles of the RBI is to serve as banker for both the Central and State governments. In this capacity, the RBI provides temporary support to tide over mismatches in their receipts and payments in the form of ways and means advances.
SECURITIES AGAINST SMALL SAVINGS:
The government meets a small part of its loan requirement by appropriating small savings collection by issuing securities to the fund.
MISCELLANEOUS RECEIPTS:
These are primarily receipts from disinvesment in public sector undertakings.
The capital account receipts of the consolidated fund — public debt, recoveries of loans and advances, and miscellaneous receipts — and revenue receipts make up the total receipts of the consolidated fund.
We now take up the disbursements on capital account from the consolidated fund. The first part deals with capital expenditure incurred on the various services — general services, social services and, economic services. Some of the biggest expenditure items under these heads are defence services, investment in agricultural financial institutions and capital to railways. The second part takes up the public debt (repayments of loans) and various loans made by the government.
The consolidated fund has certain disbursements "charged" to the fund. These are obligations that have to be met in any case and, therefore, do not have to be voted by the Lok Sabha. These include interest payments and certain expenditure such as emoluments of the President, salary and allowances of speaker, deputy chairman of the Rajya Sabha, and allowances and pensions of Supreme Court judges. Parliament and so on. This concludes the discussion on consolidated fund. We now move on to the other budget documents, which give a more detailed presentation of the consolidated fund.
BUDGET AT A GLANCE:
This is obviously a snap shot of the budget, for an easy understanding. Nonetheless, it introduces some new concepts. While receipts are broken down into revenue and capital, unlike the consolidated fund, it shows the centre's net tax revenues. This is because a decent part of the gross tax revenue, as decided by the relevant Finance Commission, flows to the state governments.
Budget at a glance also segments expenditure into plan and non-plan expenditure, instead of splitting into revenue and capital. Each of these is then split into revenue account and capital account. Before discussing plan and non-plan expenditure it is important to discuss the concept of the central plan.
CENTRAL PLAN:
Central or annual plans are essentially the five year plans broken down into five annual instalments. Through these annual plans the government achieves the objectives of the Five-Year Plans. The funding of the central plan is split almost evenly between government support (from the budget) and internal and extra budgetary resources of public enterprises. The government's support to the central plan is called the budget support.
PLAN EXPENDITURE:
This is essentially the Budget support to the central plan and the central assistance to state and Union territory plans. Like all Budget heads, this is also split into revenue and capital components.
NON-PLAN EXPENDITURE:
This is largely the revenue expenditure of the government. The biggest item of expenditure are interest payments, subsidies, salaries, defence and pension. The capital component of the non-plan expenditure is relatively small with the largest allocation going to defence.
It is important to note that the entire defence expenditure is non-plan expenditure. We will now take up the various deficits and the components of plan and non-plan expenditure. In the Budget at a Glance, the plan and the non-plan expenditure make up the total government expenditure. This brings us to the concept of deficit.
FISCAL DEFICIT:
When the government's non-borrowed receipts (revenue receipts plus loan repayments received by the government plus miscellaneous capital receipts, primarily disinvestment proceeds) fall short of its entire expenditure, it has to borrow money from the public to meet the shortfall. The excess of total expenditure over total nonborrowed receipts is called the fiscal deficit.
PRIMARY DEFICIT:
The revenue expenditure includes interest payments on government's earlier borrowings. The primary deficit is the fiscal deficit less interest payments. A shrinking primary deficit would indicate progress towards fiscal health.
We had already discussed revenue deficit earlier. The Budget document also mentions the deficit as a percentage of the GDP. This is to facilitate comparison and also get a proper perspective. In ab- SALAM solute terms, the fiscal deficit may be
large, but if it is small compared to the size of the economy then it is not such a bad thing. Prudent fiscal management requires that government does not borrow to consume, in the normal course. That brings us to the FRBM Act.
FRBM ACT:
Enacted in 2003, the Fiscal Responsibility and Budget Management Act requires the elimination of revenue deficit by 2008-09. This means that from 2008-09, the government will have to meet all its revenue expenditure from its revenue receipts. Any borrowing would then only be to meet capital expenditure — repayment of loans, lending and fresh investment. The Act also mandates a 3% limit on the fiscal deficit after 2008-09. This is a reasonable limit that allows significant-cant leverage to the government to build capacities in the economy without compromising fiscal stability.
It is important to note that since the entire Budget is at current market prices the deficits are also calculated with reference to GDP at current market prices.
RESOURCES TRANSFERRED TO THE STATES
We now look at the resources transferred to the states. As mentioned earlier, a part of the central government's gross tax collections goes to state governments. In the Budget 2007-08 the states were to receive nearly 27% of the gross tax collections.
The Centre also transfers substantial funds to states by way of support to their plans. These are largely in the nature of grants. Centre also gives large grants to states for managing centrally sponsored schemes. Interestingly, the government counts small savings transfers to state governments, which are in the nature of borrowings, as resources transferred to states. Before March 31, 1999, the Centre used to borrow net accretions to small savings (public provident fund, national saving scheme, etc) and lend them to the states. From April 1, 1999, states started receiving 75% of net small savings collections directly; the balance was invested in special Central Government securities during 1999-2000 to 2001-2002. The sums received in the National Small Savings Fund on redemption of special securities are being reinvested in special central government securities. From April 2002, the entire net collections under small saving schemes in each State & UT (with legislature) are advanced to the concerned State/UT government as investment in its special securities.
It seems many states are actually not keen on small savings funds as the cost of these borrowings works out higher than what they can get from the market. We now find the Centre is being forced to mop-up some small savings mobilisation (Rs 5750 crore Budgeted in 2007-08) through special securities as state governments are not taking the entire mobilisation.
This completes the discussion on Budget at a Glance. The expenditure and receipts Budget take up the respective heads in greater detail. We will now take up terms that require some discussion for a clearer understanding of the Budget.
VALUE-ADDED TAX (VAT) AND GST:
VAT helps avoid cascading of taxes (tax being levied upon a price that includes one or more elements of tax) as a product passes through different stages of production/value addition. The tax is based on the difference between the value of the output and the value of the inputs used to produce it. The aim is to tax a firm only for the value added by it to the inputs it is using for manufacturing its output and not the entire input cost. VAT brings in transparency to commodity taxation: right now, only the final tax paid by the consumer is apparent to her, while with value added tax generalised to a goods and services tax (GST) that subsumes both central and state level taxation, the entire element of tax borne by a good (or a service) would be represented by the GST paid on it. A GST of 20% might seem high, but it would be about half the actual incidence of tax in most goods at present.
BHARAT NIRMAN:
Bharat Nirman is the current UPA government’s ambitious programme for building infrastructure, especially in rural India. It has six components - irrigation, roads, water supply, housing, rural electrification and rural telecom connectivity. In each of these areas, the government has set targets that are to be achieved by the year 2009, within four years of its launch.
CESS:
This is an additional levy on the basic tax liability. Governments resort to cesses for meeting specific expenditure. For instance, both corporate and individual income is at present subject to an education cess of 2%. In the last Budget the government had imposed an another 1% cess ‘Secondary and higher education cess on income tax’ to finance secondary and higher education.
COUNTERVAILING DUTIES (CVD) :
Countervailing duty is a tax imposed on imports, over and above the basic import duty. CVD is at par with the excise duty paid by the domestic manufacturers of similar goods. This ensures a level playing field between imported goods and locally produced ones. An exemption from CVD places domestic industry at disadvantage and over long run discourages investments in affected sectors.
EXPORT DUTY:
This is a tax levied on exports. In most instances the object is not revenue but to discourage exports of certain items. In the last Budget, for instance, the government imposed an export duty of Rs 300 per metric tonne on export of iron ores and concentrates and Rs 2,000 per metric tonne on export of chrome ores and concentrates.
FINANCE BILL:
The proposals of government for levy of new taxes, modification of the existing tax structure or continuance of the existing tax structure beyond the period approved by Parliament are submitted to Parliament through this bill. It is the key document as far as taxes are concerned.
FINANCIAL INCLUSION:
Financial inclusion is universalising access to basic financial services (to have a bank account, timely and adequate credit) at an affordable cost. Exclusion from financial services imposes costs on those excluded; these are typically the disadvantaged and low income group. Exclusion forces them into informal arrangements such as borrowing from local money lenders, etc at high rates. Financial inclusion remain a serious issue in India. The government has proposed a no-frills account to provide cheap banking.
MINIMUM ALTERNATE TAX (MAT):
This tax on corporate profits was introduced in 1996-97 and has been modified since. If the tax payable by a company is less than 10% of its book profits, after availing of all eligible deductions, then 10% of book profits is the minimum tax payable. Book profits are profits calculated as per the Companies Act, while profits as per the Income Tax Act could be significantly lower, thanks to various exemptions and depreciation.
PASS-THROUGH STATUS:
A pass through status helps avoid double taxation. Mutual funds, for instance, enjoy pass through status. The income earned by the funds is tax-free. Since mutual funds’ income is distributed to unit holders, who are in turn taxed on their income from such investments, any taxation of mutual funds would amount to double taxation. Essentially, it means that the income is merely passing through the MFs and, therefore, should not be taxed. The government allows VC funds in some sectors pass-through status to encourage investments in start-ups.
SUBVENTION:
The term subvention finds a mention in almost every Budget. It refers to a grant of money in aid or support, mostly by the government. In the Indian context, for instance, the government sometimes asks institutions to provide loans to farmers at below market rates. The loss is usually made good through subventions.
SURCHARGE:
As the name suggests, this is an additional charge or tax. A surcharge of 10% on a tax rate of 30% effectively raises the combined tax burden to 33%. In the case of individuals earning a taxable salary of more than Rs 10 lakh a surcharge of 10% is levied on income in excess of Rs 10 lakh. Corporate income is levied a flat surcharge of 10% in the case of domestic companies and 2.5% for foreign companies. Companies with revenue less than Rs 1 crore do not have to pay
Infrastructure Development Through Public Private Partnerships
In order to achieve the targeted growth rate of 9 per cent for the 11th Five Year Plan, country requires enormous investment in physical infrastructure. At 2006-07 prices, infrastructure investment requirement has been estimated at over 20,60,000 crores (about US $ 515.5 billion). This amount cannot be met by public sector alone. Moreover, investment in the social sectors is the priority charge on the Government’s own resources as they are not amenable to private investment in a big way.
Therefore, it is necessary to explore avenues for increasing investment in infrastructure through a combination of public investment, Public Private Partnerships (PPPs) and also, exclusive private investments wherever feasible. PPPs offer a number of advantages in terms of leveraging public capital to attract private capital and undertake a larger number of infrastructure projects, introducing private sector expertise and cost reducing technologies and bringing efficiency in operations and maintenance.
Constraints
While encouraging PPPs main constraints identified are policy and regulatory gaps; inadequate availability of long term finance; inadequate capacity in public institutions and public officials to manage PPP processes; inadequate capacity in the private sector – both in the form of developer/investor and technical manpower; inadequate shelf of bankable infrastructure projects & inadequate advocacy to create greater acceptance of PPPs by the public.
Initiatives to promote PPPs
The Government has taken several initiatives to create an enabling framework for PPPs by addressing issues relating to policy and regulatory environment. Progressively more sectors have been opened to private and foreign investment, levy of user charges is being promoted, regulatory institutions are being set up and strengthened and fiscal incentives are given to infrastructure projects. Approval mechanism for PPPs in the central sector has been streamlined through setting up of Public Private Partnership Appraisal Committee (PPPAC) in the Ministry of Finance headed by Finance Secretary. An Online database on PPP projects in the country is being developed to provide comprehensive information on the status of infrastructure sector PPPs.
Funding of PPP Projects
The Government has taken various steps to address the financing needs of these projects. India Infrastructure Finance Company Limited has been set up to provide long tenor debt to infrastructure projects and a scheme for Financial support to PPPs in infrastructure has been launched to provide Viability Gap Funding to PPP projects. Multilateral agencies such as Asian Development Bank have been permitted to raise Rupee bonds and carry out currency swaps to provide long term debt to PPP projects. Setting up of dedicated infrastructure funds are also being encouraged to increase the flow of equity investments.
The ‘India Infrastructure Finance Initiative’ facilitated by the Ministry of Finance, is one such collaborative effort to deploy approximately US$ 5 billion in capital for infrastructure projects in India. The Fund is structured as a Venture Capital Fund, with about US$ 2 billion in equity capital and US$ 3 billion in long term debt financing with maturities exceeding ten years. Initial steps have been taken to use Foreign Exchange Reserves for building Infrastructure. The Reserve Bank of India has given ‘in principle” approval to invest upto US $ 5 billion in the securities of the SPV and these would be fully guaranteed by the Government.
PPP Projects in India
Analysis based on study of 221 PPP projects in the country reveal that development and use of PPPs for delivering infrastructure services has now at least 10 years of precedence in India, with the majority of projects coming in line in the last five years. Participation as well as innovation with different structures have met with varying degrees of success.
Some sectors like telecommunications, power, ports and roads, have done very good progress compared to limited success in other sectors. Some states have undertaken far more PPPs than others, and a much heavier use of PPPs in some sectors than others. As per the survey of the 221 PPP projects in the main sectors of focus, undertaken at the instance of Department of Economic Affairs for preparation of the Online Database on PPPs, - where a contract has been awarded and projects are underway - the total project cost is estimated to be about Rs. 1,29,575 Crore.
The road projects account for 78 percent of the total number of projects (36 percent by total value) because of the small average size of projects. Ports, with a much larger average size of project, account for 17 percent of the total number of projects (47 percent by total value). It is noteworthy that if ports and central road projects are excluded from the total, there is a relatively small value of deal flow, in basic infrastructure PPPs to-date, suggesting a significant potential upside for PPP projects across sectors where states and municipalities have primary responsibility.
The potential use of PPPs in e-governance, health and education sectors remains largely untapped across India as a whole, though of late there have been some activities shaping in these sectors. Almost all contracts have been of the BOT/BOOT type or close variants. Since its constitution in January 2006, PPPAC has granted approval to 65 projects, with an estimated cost of Rs. 53,284.95 crore. These includes Highways (Fifty-six projects), Ports (six projects), Airports (two projects) and Tourism Infrastructure (one project).
Outlook
The Central Government is working with the State Governments and all other stakeholders to expand the horizon of PPPs in infrastructure development in the country. It has created a favourable atmosphere, provided fiscal incentives and facilitated funding of PPP projects. The Government now allows FDI in most infrastructure sectors to the extent of 100 percent. The time is ripe for the foreign strategic investors for taking greater interest in PPP Projects for infrastructure development.
Posted by Career Quest Education, India
Therefore, it is necessary to explore avenues for increasing investment in infrastructure through a combination of public investment, Public Private Partnerships (PPPs) and also, exclusive private investments wherever feasible. PPPs offer a number of advantages in terms of leveraging public capital to attract private capital and undertake a larger number of infrastructure projects, introducing private sector expertise and cost reducing technologies and bringing efficiency in operations and maintenance.
Constraints
While encouraging PPPs main constraints identified are policy and regulatory gaps; inadequate availability of long term finance; inadequate capacity in public institutions and public officials to manage PPP processes; inadequate capacity in the private sector – both in the form of developer/investor and technical manpower; inadequate shelf of bankable infrastructure projects & inadequate advocacy to create greater acceptance of PPPs by the public.
Initiatives to promote PPPs
The Government has taken several initiatives to create an enabling framework for PPPs by addressing issues relating to policy and regulatory environment. Progressively more sectors have been opened to private and foreign investment, levy of user charges is being promoted, regulatory institutions are being set up and strengthened and fiscal incentives are given to infrastructure projects. Approval mechanism for PPPs in the central sector has been streamlined through setting up of Public Private Partnership Appraisal Committee (PPPAC) in the Ministry of Finance headed by Finance Secretary. An Online database on PPP projects in the country is being developed to provide comprehensive information on the status of infrastructure sector PPPs.
Funding of PPP Projects
The Government has taken various steps to address the financing needs of these projects. India Infrastructure Finance Company Limited has been set up to provide long tenor debt to infrastructure projects and a scheme for Financial support to PPPs in infrastructure has been launched to provide Viability Gap Funding to PPP projects. Multilateral agencies such as Asian Development Bank have been permitted to raise Rupee bonds and carry out currency swaps to provide long term debt to PPP projects. Setting up of dedicated infrastructure funds are also being encouraged to increase the flow of equity investments.
The ‘India Infrastructure Finance Initiative’ facilitated by the Ministry of Finance, is one such collaborative effort to deploy approximately US$ 5 billion in capital for infrastructure projects in India. The Fund is structured as a Venture Capital Fund, with about US$ 2 billion in equity capital and US$ 3 billion in long term debt financing with maturities exceeding ten years. Initial steps have been taken to use Foreign Exchange Reserves for building Infrastructure. The Reserve Bank of India has given ‘in principle” approval to invest upto US $ 5 billion in the securities of the SPV and these would be fully guaranteed by the Government.
PPP Projects in India
Analysis based on study of 221 PPP projects in the country reveal that development and use of PPPs for delivering infrastructure services has now at least 10 years of precedence in India, with the majority of projects coming in line in the last five years. Participation as well as innovation with different structures have met with varying degrees of success.
Some sectors like telecommunications, power, ports and roads, have done very good progress compared to limited success in other sectors. Some states have undertaken far more PPPs than others, and a much heavier use of PPPs in some sectors than others. As per the survey of the 221 PPP projects in the main sectors of focus, undertaken at the instance of Department of Economic Affairs for preparation of the Online Database on PPPs, - where a contract has been awarded and projects are underway - the total project cost is estimated to be about Rs. 1,29,575 Crore.
The road projects account for 78 percent of the total number of projects (36 percent by total value) because of the small average size of projects. Ports, with a much larger average size of project, account for 17 percent of the total number of projects (47 percent by total value). It is noteworthy that if ports and central road projects are excluded from the total, there is a relatively small value of deal flow, in basic infrastructure PPPs to-date, suggesting a significant potential upside for PPP projects across sectors where states and municipalities have primary responsibility.
The potential use of PPPs in e-governance, health and education sectors remains largely untapped across India as a whole, though of late there have been some activities shaping in these sectors. Almost all contracts have been of the BOT/BOOT type or close variants. Since its constitution in January 2006, PPPAC has granted approval to 65 projects, with an estimated cost of Rs. 53,284.95 crore. These includes Highways (Fifty-six projects), Ports (six projects), Airports (two projects) and Tourism Infrastructure (one project).
Outlook
The Central Government is working with the State Governments and all other stakeholders to expand the horizon of PPPs in infrastructure development in the country. It has created a favourable atmosphere, provided fiscal incentives and facilitated funding of PPP projects. The Government now allows FDI in most infrastructure sectors to the extent of 100 percent. The time is ripe for the foreign strategic investors for taking greater interest in PPP Projects for infrastructure development.
Posted by Career Quest Education, India
PANCHAYATI RAJ- POWER TO THE GRASS-ROOTS
Village communities in the Indian sub-continent have been self-governing over the centuries. The earlier councils or assemblies called Sabhas had a position of considerable authority and slowly they assumed the form of the Panchayats. These Panchayats became the pivot of administration and the principal forum for the dispensation of justice and resolution of local disputes. The British Colonial Administration referred to these village communities as “little republics”. The Indian constitution adopted w.e.f. 26th January 1950 included Article 40 that read : “The state shall take steps to organize village Panchayats and endow them with such power and authority as may be necessary to enable them to function as units of self-government”.
In 1957, a historic breakthrough in establishing Panchayati Raj came about through the report of the Team for the Study of Community Development Projects and National Extension Service headed by Shri Balwantrai Mehta which recommended that “public participation in community works should be organized through statutory representative bodies”. The Team was of the view that without an agency at the village level that could represent the entire community, assume responsibility and provide the necessary leadership for implementing development progammes, real progress in rural development could not come about. Further discourse on this matter saw the term “Panchayati Raj” gaining currency as a process of governance organically linking the will of the people from the Gram Sabha to the Lok Sabha. Prime Minister Nehru inaugurated Panchayati Raj in Rajasthan on 2nd October, 1959 at Nagaur.
From 1959 to the eighties, Panchayati Raj made sporadic progress in different parts of the country. While it took root in States such as Gujarat, Maharashtra, Karnataka and West Bengal, in many States elections to the Panchayats were not held regularly and long periods went by when there was no effective representation of people at the grassroots nor was the participation of representative institutions at the grassroots in development programmes and local governance visible. Prime Minister Rajiv Gandhi was driven by a vision to provide the people with a “representative administration”.
He also observed that there were weaknesses in the structure of Indian democracy since although the superstructure was strong, the foundation was weak. Putting together both Houses of Parliament and the State Legislatures, there were only 5-6 thousand persons representing nearly 80 crore Indians. Panchayati Raj finally got the constitutional mandate through the Constitution (73rd Amendment) Bill, which was passed by both Houses of Parliament in December 1992. The Constitution (73rd Amendment) Act, 1992 came into force on 24th April, 1993. The 73rd Amendment provides for the constitution of the Panchayats at the village, block and district levels. Elections at five years intervals are also mandated. Reservation of at least one third of seats for women is provided for. Disadvantaged sections of society such as SCs, STs and OBCs (in some states) get representation in proportion of their population.
The establishment of State Election Commissions and State Finance Commissions is mandatory. Provision has also been made through Article 243ZD introduced through the 74th Amendment to the Constitution for constitution of District Planning Committees. The 73rd Amendment is applicable in 24 States and five Union Territories.
Today, when most States and Union Territories have had three rounds of elections, there are more than 28 lakh elected representations at the 3 levels of Panchayats. Of these over 10 lakh are women, 5.2 lakh belong to the Scheduled Castes and 3.3 lakh to the Scheduled Tribes. The last fifteen years have seen a silent revolution in the rural areas as political representation available to women and marginalized groups has empowered them and improved their social and economic situation very significantly.
One of the first actions of the Government, when it took office in May 2004, was to set up a separate Ministry of Panchayati Raj to provide focused and dedicated attention to operationalizing the constitutional mandate on Panchayati Raj. It was decided to evolve a national consensus regarding the roadmap for Panchayati Raj through consultations between the Centre and the States.
The Ministry of Panchayati Raj organized Seven Round Tables which the State Ministers of Panchayati Raj joined. Within a period of 150 days, from 23rd July 2004 to 19th December, 2004, 18 dimensions of Panchayati Raj ranging from the effective devolution of the 3Fs – functions, finances and functionaries – to district planning, training, capacity building and IT enabled e-governance were discussed. At the conclusion of all the Round Tables the totality of nearly 150 action points were unanimously adopted by all Panchayati Raj Ministers. The priority areas identified for concerted action were Activity Mapping, Panchayat Sector Windows in State budgets based on the Activity Maps and the assignment of functionaries in conformity with the pattern of devolution of functions and finances
Local self-government is a State subject. The 73rd Constitutional Amendment makes it mandatory for all States to hold regular elections to the three tiers of the Panchayati Raj system. Panchayat Raj has thus brought in a third stratum of government to supplement the Union Government at the Centre and the State Government to reinforce the federal characteristics of our Constitution. At an operational level the largest inflow of resources to State Governments is through Centrally Sponsored Schemes that cover sectors like primary education, public health, drinking water, sanitation, etc. identified in the 11th Schedule for devolution to the Panchayats.
Key Objectives
One of the key objectives of Panchayati Raj is to ensure that the process of planning for development in the country follows a bottom-up approach and commences at the grassroots level. The core approach is that the village Panchayat plans prepared with people’s participation are joined by plans prepared by the Intermediate and District Panchayats and these are then consolidated by the District Planning Committees with the Municipal plans into the draft district development plan.
Till now, 18 States in the country have constituted District Planning Committees while the process is underway in the remaining ones where Part IX of the Constitution is applicable. In order to guide the process of grassroots planning an Expert Group was constituted under the Chairmanship of Shri V. Ramachandran and the recommendations of the Group have been accepted by the Ministry of Panchayati Raj and Planning Commission for guiding the process of district planning. Decentralization and planning from the below have also been recognized in the 11th Plan document endorsed by the National Development Council. This document also recognizes the centrality of the role to be played by the Panchayats in the planning and development process.
Backward Regions Grant Fund (BRGF) Programme
The BRGF is designed to redress regional imbalances in development. The fund provides financial resources in supplementing and converging existing development inflows into the identified 250 districts with a view to bridging critical gaps in local infrastructure and other development requirements that are not being adequately met through existing inflows. It is expected that the fund will help strengthen panchayat and municipal level governance with appropriate capacity building, facilitation of participatory planning, decision making, implementation and monitoring to reflect the local felt needs.
Through the Fund, professional support can be provided to local bodies and it is hoped that this will help improve the performance and delivery of critical functions assigned to Panchayats. The substantially untied grant is distributed among the districts with each district receiving a fixed minimum amount of Rs.10 crore per annum. 250 crore is reserved for capacity building while 50% of the balance under this Scheme is released on the basis of population and 50% on the basis of physical area of the district.
It may be mentioned also that Rashtriya Sam Vikas Yojana (RSVY) has been subsumed in the BRGF and balance allocations to districts that have not completed implementation of their plans approved under the RSVY are funded from BRGF. In 2007-08 an amount of Rs.3599 crore was released to the districts under RSVY and BRGF. This year the allocation for the programme is Rs.4670 crore.
Empowerment of Women
Indeed, the proportion of women getting elected tends to be significantly higher than the reserved quota, with women from the scheduled castes and scheduled tribes often securing election to a higher proportion of seats and chairpersonships than women from the socially and economically better off classes. The political and social empowerment of women on this scale is without parallel in the world and without precedent in the history. There are more elected women in India than in the rest of the world put together. Combined with the economic empowerment fostered by the enormously successful women’s self-help group movement, what we are witnessing in the Indian countryside is a gender revolution of a magnitude never before seen.
The Ministry of Panchayati Raj has launched the Panchayat Mahila Shakti Abhiyan (PMSA) in collaboration with the National Commission for Women’s “Chalo Gaon ki ore Programme” that aims at consolidating the collective strength of elected women representatives. Each time a PMSA is convened, elected women representatives in a State get together in a conference where experiences sharing and discussion of common problems is facilitated.
In November 2006, the Ministry of Panchayati Raj published the first comprehensive baseline report on the state of Panchayat across the rural India. In March 2008, the States of Tamil Nadu, Kerala, West Bengal, Rajasthan, Karnataka, Madhya Pradesh, Himachal Pradesh, Andhra Pradesh, Orissa, Sikkim, Manipur, Goa and Haryana were awarded in recognition of their efforts in empowering the Panchayats.
Rural Business Hubs
The idea of setting up rural businesses through facilitation by Panchayats originated from the Prime Minister’s address to the Conference of Chief Ministers on 29th June, 2004, where he stressed the importance of decentralized economic development in rural areas. In November 2004, the Ministry of Panchayati Raj and the Confederation of Indian Industry jointly organized a national presentation on Rural Business Hubs. This was followed up with identification of champion products in block Panchayats, developing linkages with industry and promoting training of artisans and marketing of agri and handicrafts items.
Removing poverty and ensuring that the “Aam Admi” gets the services from the State that he/she is entitled to is the avowed goal of the Government. Satisfactory development of outcomes cannot be ensured without the participation of grassroots institutions of local governance. While much progress has been made over the last 15 years, much more still remains to be done before we can have a true participatory democracy functioning from the grassroots level upwards where every Indian has a voice and every Indian gets his entitlements.
In 1957, a historic breakthrough in establishing Panchayati Raj came about through the report of the Team for the Study of Community Development Projects and National Extension Service headed by Shri Balwantrai Mehta which recommended that “public participation in community works should be organized through statutory representative bodies”. The Team was of the view that without an agency at the village level that could represent the entire community, assume responsibility and provide the necessary leadership for implementing development progammes, real progress in rural development could not come about. Further discourse on this matter saw the term “Panchayati Raj” gaining currency as a process of governance organically linking the will of the people from the Gram Sabha to the Lok Sabha. Prime Minister Nehru inaugurated Panchayati Raj in Rajasthan on 2nd October, 1959 at Nagaur.
From 1959 to the eighties, Panchayati Raj made sporadic progress in different parts of the country. While it took root in States such as Gujarat, Maharashtra, Karnataka and West Bengal, in many States elections to the Panchayats were not held regularly and long periods went by when there was no effective representation of people at the grassroots nor was the participation of representative institutions at the grassroots in development programmes and local governance visible. Prime Minister Rajiv Gandhi was driven by a vision to provide the people with a “representative administration”.
He also observed that there were weaknesses in the structure of Indian democracy since although the superstructure was strong, the foundation was weak. Putting together both Houses of Parliament and the State Legislatures, there were only 5-6 thousand persons representing nearly 80 crore Indians. Panchayati Raj finally got the constitutional mandate through the Constitution (73rd Amendment) Bill, which was passed by both Houses of Parliament in December 1992. The Constitution (73rd Amendment) Act, 1992 came into force on 24th April, 1993. The 73rd Amendment provides for the constitution of the Panchayats at the village, block and district levels. Elections at five years intervals are also mandated. Reservation of at least one third of seats for women is provided for. Disadvantaged sections of society such as SCs, STs and OBCs (in some states) get representation in proportion of their population.
The establishment of State Election Commissions and State Finance Commissions is mandatory. Provision has also been made through Article 243ZD introduced through the 74th Amendment to the Constitution for constitution of District Planning Committees. The 73rd Amendment is applicable in 24 States and five Union Territories.
Today, when most States and Union Territories have had three rounds of elections, there are more than 28 lakh elected representations at the 3 levels of Panchayats. Of these over 10 lakh are women, 5.2 lakh belong to the Scheduled Castes and 3.3 lakh to the Scheduled Tribes. The last fifteen years have seen a silent revolution in the rural areas as political representation available to women and marginalized groups has empowered them and improved their social and economic situation very significantly.
One of the first actions of the Government, when it took office in May 2004, was to set up a separate Ministry of Panchayati Raj to provide focused and dedicated attention to operationalizing the constitutional mandate on Panchayati Raj. It was decided to evolve a national consensus regarding the roadmap for Panchayati Raj through consultations between the Centre and the States.
The Ministry of Panchayati Raj organized Seven Round Tables which the State Ministers of Panchayati Raj joined. Within a period of 150 days, from 23rd July 2004 to 19th December, 2004, 18 dimensions of Panchayati Raj ranging from the effective devolution of the 3Fs – functions, finances and functionaries – to district planning, training, capacity building and IT enabled e-governance were discussed. At the conclusion of all the Round Tables the totality of nearly 150 action points were unanimously adopted by all Panchayati Raj Ministers. The priority areas identified for concerted action were Activity Mapping, Panchayat Sector Windows in State budgets based on the Activity Maps and the assignment of functionaries in conformity with the pattern of devolution of functions and finances
Local self-government is a State subject. The 73rd Constitutional Amendment makes it mandatory for all States to hold regular elections to the three tiers of the Panchayati Raj system. Panchayat Raj has thus brought in a third stratum of government to supplement the Union Government at the Centre and the State Government to reinforce the federal characteristics of our Constitution. At an operational level the largest inflow of resources to State Governments is through Centrally Sponsored Schemes that cover sectors like primary education, public health, drinking water, sanitation, etc. identified in the 11th Schedule for devolution to the Panchayats.
Key Objectives
One of the key objectives of Panchayati Raj is to ensure that the process of planning for development in the country follows a bottom-up approach and commences at the grassroots level. The core approach is that the village Panchayat plans prepared with people’s participation are joined by plans prepared by the Intermediate and District Panchayats and these are then consolidated by the District Planning Committees with the Municipal plans into the draft district development plan.
Till now, 18 States in the country have constituted District Planning Committees while the process is underway in the remaining ones where Part IX of the Constitution is applicable. In order to guide the process of grassroots planning an Expert Group was constituted under the Chairmanship of Shri V. Ramachandran and the recommendations of the Group have been accepted by the Ministry of Panchayati Raj and Planning Commission for guiding the process of district planning. Decentralization and planning from the below have also been recognized in the 11th Plan document endorsed by the National Development Council. This document also recognizes the centrality of the role to be played by the Panchayats in the planning and development process.
Backward Regions Grant Fund (BRGF) Programme
The BRGF is designed to redress regional imbalances in development. The fund provides financial resources in supplementing and converging existing development inflows into the identified 250 districts with a view to bridging critical gaps in local infrastructure and other development requirements that are not being adequately met through existing inflows. It is expected that the fund will help strengthen panchayat and municipal level governance with appropriate capacity building, facilitation of participatory planning, decision making, implementation and monitoring to reflect the local felt needs.
Through the Fund, professional support can be provided to local bodies and it is hoped that this will help improve the performance and delivery of critical functions assigned to Panchayats. The substantially untied grant is distributed among the districts with each district receiving a fixed minimum amount of Rs.10 crore per annum. 250 crore is reserved for capacity building while 50% of the balance under this Scheme is released on the basis of population and 50% on the basis of physical area of the district.
It may be mentioned also that Rashtriya Sam Vikas Yojana (RSVY) has been subsumed in the BRGF and balance allocations to districts that have not completed implementation of their plans approved under the RSVY are funded from BRGF. In 2007-08 an amount of Rs.3599 crore was released to the districts under RSVY and BRGF. This year the allocation for the programme is Rs.4670 crore.
Empowerment of Women
Indeed, the proportion of women getting elected tends to be significantly higher than the reserved quota, with women from the scheduled castes and scheduled tribes often securing election to a higher proportion of seats and chairpersonships than women from the socially and economically better off classes. The political and social empowerment of women on this scale is without parallel in the world and without precedent in the history. There are more elected women in India than in the rest of the world put together. Combined with the economic empowerment fostered by the enormously successful women’s self-help group movement, what we are witnessing in the Indian countryside is a gender revolution of a magnitude never before seen.
The Ministry of Panchayati Raj has launched the Panchayat Mahila Shakti Abhiyan (PMSA) in collaboration with the National Commission for Women’s “Chalo Gaon ki ore Programme” that aims at consolidating the collective strength of elected women representatives. Each time a PMSA is convened, elected women representatives in a State get together in a conference where experiences sharing and discussion of common problems is facilitated.
In November 2006, the Ministry of Panchayati Raj published the first comprehensive baseline report on the state of Panchayat across the rural India. In March 2008, the States of Tamil Nadu, Kerala, West Bengal, Rajasthan, Karnataka, Madhya Pradesh, Himachal Pradesh, Andhra Pradesh, Orissa, Sikkim, Manipur, Goa and Haryana were awarded in recognition of their efforts in empowering the Panchayats.
Rural Business Hubs
The idea of setting up rural businesses through facilitation by Panchayats originated from the Prime Minister’s address to the Conference of Chief Ministers on 29th June, 2004, where he stressed the importance of decentralized economic development in rural areas. In November 2004, the Ministry of Panchayati Raj and the Confederation of Indian Industry jointly organized a national presentation on Rural Business Hubs. This was followed up with identification of champion products in block Panchayats, developing linkages with industry and promoting training of artisans and marketing of agri and handicrafts items.
Removing poverty and ensuring that the “Aam Admi” gets the services from the State that he/she is entitled to is the avowed goal of the Government. Satisfactory development of outcomes cannot be ensured without the participation of grassroots institutions of local governance. While much progress has been made over the last 15 years, much more still remains to be done before we can have a true participatory democracy functioning from the grassroots level upwards where every Indian has a voice and every Indian gets his entitlements.
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