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THE HINDU: Consolidating
ties with France
BUSINESS STANDARD: Ignore proposals
for more tax exemptions
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THE HINDU: Politics, impropriety and President’s
Rule
It is
unfortunate that Arunachal Pradesh, a sensitive border State, should find
itself in the throes of an artificial constitutional crisis.
After seeking some
clarifications from the Union government, President Pranab Mukherjee has
approved the imposition of Central rule. The proclamation will have to be
approved by both Houses of Parliament and the validity of President’s Rule may
be considered by the Supreme Court, but it is difficult not to discern a
discredited political pattern behind the crisis that led to the current
situation. The pattern involves dissidence within the ruling party, the
opposition joining hands with the rebels, confusion over the likelihood of a
floor test, and the Governor intervening in a partisan manner. It is in similar
circumstances that Article 356 of the Constitution has been misused in the
past. And it was in such circumstances that the Supreme Court declared in 1994
that the only place for determining whether a Chief Minister has lost or
retained majority is the floor of the House. Yet, the country is still
witnessing the sad spectacle of partisan politics overshadowing constitutional
propriety. It is a poor
commentary on the Narendra Modi government that
instead of finding ways to facilitate a floor test it has imposed President’s
Rule in the midst of an ongoing hearing before a five-member Constitution Bench
of the Supreme Court. The Congress in the State is also to blame because,
having obviously failed to address the dissidence in its camp against Chief
Minister Nabam Tuki, it appears to be avoiding a floor test as it has not
sought interim orders to that effect from the court.
Undoubtedly, there is a constitutional impasse because six months have
elapsed since the last time the Arunachal Pradesh Assembly met. That itself is
a valid ground for Central rule. But it cannot be forgotten that events were
manipulated in such a way that the divided legislature never got an opportunity
to meet and test the government’s majority. The crisis was precipitated when
Governor J.P. Rajkhowa advanced the session scheduled for January 14, 2016 to
December 16, 2015, and fixed a motion seeking the removal of the Speaker as the
first item on the agenda. In that controversial sitting at a makeshift venue,
the Speaker was ‘removed’ and a ‘no-confidence motion’ adopted against the
Chief Minister. The Gauhati High Court has ruled that the Governor was
justified in advancing the session by acting on his own discretion if he had reason
to believe that the Chief Minister and the Speaker were stalling a particular
motion. The constitutional question of whether the Governor can summon the
legislature on his own and whether he can send a message to the Assembly on
what motion it should take up is now before the Supreme Court. An authoritative
pronouncement is necessary on this question, but what must not be forgotten is
that political processes followed should be rooted in norms of democracy, and
not be at the mercy of any discretionary powers of constitutional
functionaries.
im·pro·pri·e·ty
A
failure to observe standards or show due honesty or modesty; improper language,
behavior, or character.
proc·la·ma·tion
A
public or official announcement, especially one dealing with a matter of great
importance.
dis·cern
Perceive
or recognize (something).
dis·cred·it
Harm
the good reputation of (someone or something).
dis·si·dence
Protest
against official policy; dissent.
im·passe
A
situation in which no progress is possible, especially because of disagreement;
a deadlock.
pre·cip·i·tate
Cause
(an event or situation, typically one that is bad or undesirable) to happen
suddenly, unexpectedly, or prematurely.
dis·cre·tion
The
quality of behaving or speaking in such a way as to avoid causing offense or
revealing private information.
THE HINDU: Consolidating
ties with France
Like
many things French, the country’s relationship with India is an understated
one. Yet, as President François
Hollande wrapped up his three-day visit to India, it would be a mistake to
underestimate what the India-France relationship has come to mean over the
decades, devoid though it is of the grand claims attached to India’s relations
with the big world powers. Russia may be India’s oldest and biggest military
supplier, the U.S. India’s newest close defence partner, and China India’s
biggest trading partner, but it is France
that was India’s first strategic partner. As a result, and through the
strategic dialogue institutionalised since 1998, France and India have close
ties on counterterrorism. These have been given a boost by the agreement on
intelligence-sharing and cooperation on investigations and judicial processes
announced during the visit. In fact, Prime Minister Modi described the common
threats from “Paris to Pathankot”.
On other fronts too, the relationship has held strong. Despite global recrimination
over the nuclear tests in 1998, France was the first to re-start nuclear talks
with India, and among the first to push nuclear trade with India in later
years. While the Rafale aircraft deal has overshadowed much of the discussion
on French ties in the past few days, the fact is that France began to supply
India aircraft (‘Toofani’, or Dassault Ouragan fighters) as early as in 1953,
and has been a consistent supplier since. And over the years, the French space
agency CNES and the Indian Space Research Organisation have collaborated
closely. It should therefore come as no surprise that Mr. Hollande’s marked the fifth visit by a French President as
Chief Guest at the Republic Day parade, something Mr. Modi referred to when he
said India-France relations have “cleared every test over time”.
However, the test that the two sides have not yet cleared is the one in
bilateral trade. Despite 10 per cent growth in most years and more than a
thousand French companies operating in India, India-France trade hovers around
$8 billion, which amounts to half of India’s trade with the U.K. or Germany. A
big reason for this is the impasse in India’s economic relations with the
European Union, which have been hanging fire for more than a year now; France
is more vulnerable here than its neighbours. Mr. Modi’s expected visit to
Brussels for the EU summit in the next few weeks could clear the path for
greater bilateral ties with France as well, but India must look to other ways
to build on this relationship. Some of those will come from the joint ventures
and partnerships envisaged during Mr. Hollande’s visit, on infrastructure such
as railways, smart cities and renewable energy projects. But much more needs to
come from Indian businesses engaging with France, even as the government moves
on long-promised reforms to aid exporters. To quote Mr. Hollande at the CEO
forum, speaking about bilateral trade: “We must go faster, much faster and even
then it’s too slow.”
de·void
Entirely
lacking or free from.
re·crim·i·na·tion
An
accusation in response to one from someone else.
o·ver·shad·ow
Tower
above and cast a shadow over
‘col·lab·o·rate
Work
jointly on an activity, especially to produce or create something.
hov·er
Remain
in one place in the air.
vul·ner·a·ble
Susceptible
to physical or emotional attack or harm.
en·vis·age
Contemplate
or conceive of as a possibility or a desirable future event.
BUSINESS STANDARD: Ignore proposals
for more tax exemptions
One of the most
forward-looking proposals in the last Union Budget, for 2015-16, was the plan
to reduce the headline corporation tax rate by five percentage points in a
phased manner while ending the various exemptions that permit companies to pay
less than the headline tax rate. This was planned to simplify the tax regime,
broaden the tax net, and reduce distortions in the system. In general, the
thrust towards reducing tax exemption-based regimes is welcome. What is
worrisome, however, is that there seems to be a slate of proposals that act in
the opposite direction, to in fact increase the number of tax exemptions - all
apparently for the best of reasons, but dangerous nonetheless.
One such proposal came in from the committee appointed by the Securities and Exchange Board of India, or Sebi, to look into the venture capital scene in India. The committee, headed by N R Narayana Murthy, has suggested several tax breaks for venture capital that it says will help grow the alternative investment ecosystem in India. For example, services to raise funds from overseas investment are proposed to be exempted from service tax. Meanwhile, it has been proposed by the pension regulator that the upcoming Union Budget, to be presented in five weeks, exempt withdrawals from the National Pension Scheme, or NPS, from taxation, and subject it to an exempt-exempt-exempt (EEE) regime, as opposed to an exempt-exempt-tax (EET) regime. The Seventh Central Pay Commission has also recommended that "withdrawals under the NPS should be tax-exempt to place NPS on a par with other pension schemes". Currently the employee provident fund (EPF) is EEE, while the NPS is EET, and there are worries that this leads to a skewed playing field. But levelling the playing field should ideally mean that all schemes become EET, not EEE.
There are too many programmes on the anvil that create new claims on the state. The new farm insurance scheme suggests raising the Centre's commitment to filling any gap between premiums and claims. There is a concern here that must be addressed: this would reduce the insurance companies' incentives to administer the scheme properly. Worse, this might encourage insurance companies to discard their own system of scrutiny of cases claiming insurance benefits without any fear of any losses. Indeed, tax exemptions are part and parcel of various recent government thrusts. For example, solar energy is to be provided exemptions - although, worldwide, tax exemptions on renewable energy have often backfired. If solar energy is truly to become a sustainable backbone for the Indian energy economy, then why subsidise it? If solar energy is genuinely getting competitive on tariffs, as many who back renewable energy claim, then why not expose it to a straightforward tax regime? Even the government's manufacturing policy attempts to involve some protection from taxes. The Make in India website proudly lists various "incentives under the Income Tax Act", including heavier weighted deductions for research and development, and additional deductions for hiring new workers.
The government must recognise that an exemption regime is dangerous. It twists entrepreneurs and investors into seeking out tax benefits rather than good and productive ideas. It distorts the economy. Even if considered important as protection for growing industries, it has been found they become impossible to withdraw. Instead of an exemption regime, Indian entrepreneurship and investments will get a boost if there is a stable and straightforward tax regime where no effort is put into tax arbitrage. This should underlie the drafting of the Union Budget.
One such proposal came in from the committee appointed by the Securities and Exchange Board of India, or Sebi, to look into the venture capital scene in India. The committee, headed by N R Narayana Murthy, has suggested several tax breaks for venture capital that it says will help grow the alternative investment ecosystem in India. For example, services to raise funds from overseas investment are proposed to be exempted from service tax. Meanwhile, it has been proposed by the pension regulator that the upcoming Union Budget, to be presented in five weeks, exempt withdrawals from the National Pension Scheme, or NPS, from taxation, and subject it to an exempt-exempt-exempt (EEE) regime, as opposed to an exempt-exempt-tax (EET) regime. The Seventh Central Pay Commission has also recommended that "withdrawals under the NPS should be tax-exempt to place NPS on a par with other pension schemes". Currently the employee provident fund (EPF) is EEE, while the NPS is EET, and there are worries that this leads to a skewed playing field. But levelling the playing field should ideally mean that all schemes become EET, not EEE.
There are too many programmes on the anvil that create new claims on the state. The new farm insurance scheme suggests raising the Centre's commitment to filling any gap between premiums and claims. There is a concern here that must be addressed: this would reduce the insurance companies' incentives to administer the scheme properly. Worse, this might encourage insurance companies to discard their own system of scrutiny of cases claiming insurance benefits without any fear of any losses. Indeed, tax exemptions are part and parcel of various recent government thrusts. For example, solar energy is to be provided exemptions - although, worldwide, tax exemptions on renewable energy have often backfired. If solar energy is truly to become a sustainable backbone for the Indian energy economy, then why subsidise it? If solar energy is genuinely getting competitive on tariffs, as many who back renewable energy claim, then why not expose it to a straightforward tax regime? Even the government's manufacturing policy attempts to involve some protection from taxes. The Make in India website proudly lists various "incentives under the Income Tax Act", including heavier weighted deductions for research and development, and additional deductions for hiring new workers.
The government must recognise that an exemption regime is dangerous. It twists entrepreneurs and investors into seeking out tax benefits rather than good and productive ideas. It distorts the economy. Even if considered important as protection for growing industries, it has been found they become impossible to withdraw. Instead of an exemption regime, Indian entrepreneurship and investments will get a boost if there is a stable and straightforward tax regime where no effort is put into tax arbitrage. This should underlie the drafting of the Union Budget.
dis·tor·tion
The
action of distorting or the state of being distorted.
thrust
Push
(something or someone) suddenly or violently in the specified direction.
skew
Suddenly
change direction or position
an·vil
A heavy
steel or iron block with a flat top, concave sides, and typically a pointed
end, on which metal can be hammered and shaped.
back·fire
(of an
engine) undergo a mistimed explosion in the cylinder or exhaust.
ar·bi·trage
The
simultaneous buying and selling of securities, currency, or commodities in
different markets or in derivative forms in order to take advantage of
differing prices for the same asset.
‘
un·der·lie
(especially
of a layer of rock or soil) lie or be situated under (something)
INDIAN
EXPRESS: Dilli Pradesh
It
is unfortunate that the Centre has ignored President Pranab Mukherjee’s words
of caution and imposed president’s rule in Arunachal Pradesh, ironically on
Republic Day. When a Constitution bench of the SC is set to hear a petition
related to the political crisis in the state, the Centre ought to have waited.
The hasty action goes against the grain of PM Narendra Modi’s promise of
cooperative federalism. Devolution of an increased share of Central taxes and
removal of overbearing institutions like the Planning Commission were
consistent with this approach. The latest move, however, is a throwback to the
Indira Gandhi era, when the Centre would lean on suppliant governors to dismiss
governments run by opposition parties.
The
crisis in Arunachal Pradesh began last November after a group of Congress MLAs rebelled against CM Nabam Tuki. It
turned into a constitutional breakdown after Governor J.P. Rajkhowa, in a clear
case of gubernatorial overreach, advanced the winter session of the assembly
and issued directions to vote on a resolution calling for the removal of the
speaker at the first sitting of the House. The Gauhati HC initially stayed the
governor’s decision. When it vacated the stay, the speaker moved the SC, which
has referred the case to a Constitution bench. Arunachal Pradesh has a history
of politicians switching sides or splitting parties for office. This lack of
political fidelity among legislators can undermine the democractic practice in
the state and lead to a crisis of faith among the electorate. The instability
in Arunachal is a cause for worry, but political parties should not let
short-term gains dictate their priorities in a state that shares a long,
disputed border with China. There are clearly laid out procedures to settle
disputes over House majority. Moreover, constitutional heads ought to stay away
from political manipulations.
Mukherjee
has been thrust into the role of the nation’s conscience keeper by
circumstances in recent times. His remarks on rising intolerance in the country
even guided Modi’s response to the issue in the past. Modi himself has
acknowledged the president’s references in his speeches, especially regarding
constitutional morality and the importance of respecting norms and traditions
established by Parliament. He ought to have listened to Mukherjee’s wise words
on the Arunachal issue as well.
o·ver·bear·ing
Unpleasantly
or arrogantly domineering
throw·back
A
reversion to an earlier ancestral characteristic.
sup·pli·ant
A
person making a humble plea to someone in power or authority.
break·down
A
mechanical failure.
gu·ber·na·to·ri·al
Of or
relating to a state governor or the office of state governor.
thrust
Push
(something or someone) suddenly or violently in the specified direction.
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