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Thursday, February 28, 2013

A spartan leftist looks at 4th term as CM


Manik Sarkar, Tripura Chief Minister, does not own a house or a car. His bank balance is Rs. 10,000. As Chief Minister, he is expected to carry a mobile phone but he refuses to do so saying the cell will give him a “lavish flavour.”
At a personal level, Manik Sarkar may be a throwback to another era — of scrupulousness and honesty in public life. But that quality is not entirely novel in Tripura where one of his predecessors, Nripen Chakraborty, was well known for his probity.
Coming from a Congress family, this CPI(M) stalwart recalls attending a public meeting by Jawaharlal Nehru. But in his student days, Mr. Sarkar was more impressed by communism than by the Congress brand of socialism.
A member of the party’s politburo, Manik Sarkar has led the Left Dront to three successive election wins — from 1998. His biggest achievement may well be curbing the State’s extremist problem that used to cripple its economy and development. He has personally visited all corners of the State to oversee development activities and taken note of problems faced by the local population.
The captain of the CPI(M) team has made no changes to his daily routine despite the vigorous campaign. Every morning he does some physical exercise, washes his clothes and does other household work.
Before this assembly election the CPI(M) invited many prominent leaders to campaign for left nominees, but he was in the driving seat of the campaign. He did so despite being a contestant from Dhanpur constituency from where he won three times in a row.
In an interview, an optimistic Manik Sarkar believes it’s only a matter of time before the Left Dront records another “massive victory” in Tripura.
In its manifesto, the Congress has promised jobs, allowance to unemployed youths, implementation of pay commission recommendations and free ration to the poorest section of people. What do you think?
All Congress governments since 1952 have been voicing a sea of assurances, but hardly anything has been implemented. The nation is now burdened with 20 crore unemployed youths. People understand the reality and will not fall prey to false promises.
More than 40 per cent of electors vote for Congress despite the fact that CPI(M) has swept several elections in Tripura. Do you think that is a failure on part of your party organisation?
I don’t think there was any failure on our part. Some people could be dissatisfied with us. We cannot do much. I have no power, everything lies with Delhi.
CPI(M) has made the extremist problem an issue this election.
Even Prime Minister Dr. Manmohan Singh branded terrorism as a serious threat to nation. Here his party has tied up with INPT, which is a mask of extremists, for the sake of vote. Congress always shakes hand with subversive groups. But people will reject this tactical alliance and bring back Left Front in power.
There is a sense of resentment among government employees over their pay structure. What is your take?
We have made things better for the employees. By and large they are happy though some are confused.
Trinamool Congress has abstained from contesting in Tripura. How do you see that?
This could be a tactical decision by the party. Its leaders knew that if their party contests all its candidates would lose deposit.
How is it that you have been Chief Minister for three terms?
I don’t see anything as personal. We have done everything collectively, so credit goes to all. We were successful in restoring peace in the state with enormous support from people at large. We have achieved integration of people from all sections. Hindu, Muslim, Christian and Buddhists are all living like brothers. This is something unique in light of the situation in the country.

Wednesday, February 27, 2013

The Union budget and cosy ties with business houses

The Union budget provides an occasion for the UPA government to end its cosy ties with business houses and recognise the political economy of pain and deprivation
In his memoirs of his years as Finance Minister, Confessions of a Swadeshi Reformer, Yashwant Sinha writes, somewhat regretfully, that “economics in India has always been dominated by politics. My experience as Finance Minister proves this point beyond any doubt.” After detailing many attempts from within and outside the sangh parivar at contesting and suborning his presumably good policies and equally good intentions, Mr. Sinha sums up a Finance Minister’s conundrum: “Elections were important and winning them was also important. But we had to remember our responsibility was not only to the present but also to the future. Good economic policies could not, and should not, be sacrificed at the altar of political gain for the present.”
It remains to be seen whether Finance Minister P. Chidambaram will be able to avoid the “populism of the present.” After all, this will be the last serious budget before the political system drifts inexorably towards partisan battles of the next general election. Hence, the last chance to rectify not just a difficult economic situation but also to rescue it from political opportunism, and to salvage the idea and principles of economic reform from a soggy moral calculus.
In the process, Mr. Chidambaram also gets another shot at restoring the United Progressive Alliance dispensation’s reputation as competent manager of the national economy. On a personal note, he can be expected to want to use the budget to reverse the damage the economy suffered under Pranab Mukherjee these last three years.
Three obligations
However, a budget is not just an exercise in balancing books; it is the finest instrument for showcasing a regime’s political philosophy and notions of public morality behind its economic priorities. The power to impose taxes — and the expectation that citizens should joyfully submit to this demand — carries with it the ultimate democratic responsibility. When on February 28, he stands up to present his budget, Mr. Chidambaram will have to be mindful of at least three specific obligations that any Finance Minister needs to always keep in mind.
First, the budget cannot be an exercise in favouring and rewarding (or punishing) this or that business house. Easier said than done. Mr. Chidambaram is known to have friends in the corporate crowd. Perhaps it would be unfair to suggest that the Finance Minister would allow his friendships to cloud his judgment; nonetheless, it will not hurt if he were to be reminded of The Economist’s sound advice to policymakers: “promote capitalism, not capitalists.” This decade-old mantra remains valid and Finance Ministry mandarins will need to demonstrate that they are capable of making a distinction between the shabby interests of this or that capitalist and the healthy requirements of a complex and lawful economy.
There are good political reasons to heed this sage advice. The Finance Minister knows — as do his colleagues in the Congress party and the government — that much of the UPA’s political difficulties have arisen on account of bad blood among the business houses. The genesis of the 2G controversy can be traced to greed and rivalry among corporate honchos. This un-moderated rancour within the corporate world soon sought — and found — passionate partisans and motivated advocates in ‘civil society.’
A mock anti-corruption “movement” was unleashed to distract attention away from the excesses and illegalities of the corporate world. If Mr. Chidambaram still chooses to play favourites among the corporate houses, there will be a heavier political price to be paid by his party.
Business rivalries have already produced a different kind of disequilibrium. Corporate disputes have allowed the Supreme Court — rather some judges — to impose their own ideas and principles on the political executive. Judicial interventions and pronouncements are then worked upon to crank up anger and partisanship against selected political rivals.
Nonetheless, it must be presumed that the Congress has not totally shut down its political antennae. Its leadership knows that many of these captains of industry have an interventionist political agenda. It is no secret that a sizeable section of the Mumbai club is keen to rearrange the ruling arrangements in New Delhi around, say, a Sharad Pawar or a Narendra Modi after the next Lok Sabha elections. There is no earthly reason why the budget should seek to mollify these very greedy and politically ambitious business houses that have proved so intractable these last few years. Rather, the corporate bluff must be called.
Promoter of social good
Secondly, the budget should reveal a government that is not just wedded to the idea of wholesome public interest but is also cognisant of its obligations to be the ultimate promoter and protector of the social good. This basic democratic obligation has somehow been lost sight of in recent years. The budget provides yet another opportunity to the UPA government to satisfy the citizens that it is not in thrall of crony capitalism. It is not a mere platitude. This is an imperative, all the more because there are at least half a dozen senior Cabinet Ministers who are known for their proximity to this or that industrial house, and who at times find it difficult to resolve the conflict between their oath of office and their unhealthy ties with these super-affluent gentlemen. It is this soft corner for a tainted corporate crowd that has fed the perception of collusion and contributed to the alienation of the middle classes. The middle class quest for lawful governance cannot be satisfied without bringing the so-called economic entrepreneurs within the ambit of the law.
Thirdly, Mr. Chidambaram has an obligation to use the budget to signal that the democratic system has the will and the stamina to roll back the corporate offensive in running this country’s national priorities and its collective affairs. No doubt, recovery of the Indian Growth Story is a national imperative; no doubt, the global economic slowdown has complicated this recovery; and, no doubt, “animal spirits” need to be unleashed. Yet, it should be unacceptable to liberal and sensitive voices that the national narrative has simply been hijacked by the presumed need to appease market sentiment, that too at the expense of democratic values. As a centrist party, the Congress in particular has to be always cognisant of the larger political economy of pain and deprivation. A democratic government cannot act as if it has no option but to behave like a hostage to the manipulators of the market sentiment.
Striking an equilibrium
Above all, the state-market equilibrium needs to be reworked in morally defensible terms. Even within the framework of a liberal economy, it is the obligation of the public authority to ensure that the relationship between the corporate and the citizen is a balanced, fair and two-way affair.
It is the task of democratic governance to see to it that the citizen as a consumer gets a sense of fairness, and is not being helplessly taken for a ride by large corporate organisations every time he or she makes a commercial transaction. Many business leaders in India think they have arrived, and that they neither need nor care for the “political crowd” and its democratic obligations. In particular, the business leaders are prone to believe that they are entitled to chafe at any suggestion of lawful restraint on their greed and profits. On the contrary, there is more than a hint of a threat: if elements of the policy regime are not arranged to the satisfaction of corporate interests, “they” will take their investments out of India to friendlier markets. This attitude has already produced unhappy economic and political aberrations.
The larger democratic arrangement has lost its moral lustre and the political and constitutional system has incurred a debilitating legitimacy deficit partly because there remains a perception of collusion between the public authority and the corporate practitioners of unethical practices. Recovery of the lost moral sufficiency of the economy can no longer be postponed.
(Harish Khare is a veteran commentator and political analyst, and former media adviser to Prime Minister Manmohan Singh)

Ex-Qaddafi PM critical after torture in Libya

Al-Baghdadi al-Mahmudi, the last premier of deposed Libyan leader Muamer Qaddafi, is in critical condition after being tortured in a Libyan prison, his Tunisian lawyer said on Wednesday.

Mahmudi "is in critical condition as a result of the torture he has suffered," said Mabrouk Kourchid, adding that "he could die".

The lawyer did not provide any further details nor reveal his sources for fear they could suffer reprisals.

Mahmudi fled to neighbouring Tunisia in September 2011, shortly after rebels seized Tripoli and effectively put an end to more than four decades of Kadhafi's iron-fisted rule.

He was arrested there and extradited to Libya last June, despite warnings from rights groups that he could face the death penalty.

He went on trial in November for what the prosecutor general's spokesman said were "prejudicial acts against the security of the state and financial crimes."

In July, Mahmudi protested his innocence to journalists visiting his prison.

"I am not guilty, not guilty, not guilty," he told reporters during a visit organised by the authorities in an apparent bid to quash rumours he had been tortured.

A physician by training, Mahmudi was loyal to Qaddafi until the end, serving as premier from 2006 up to the final days of his regime.

Along with Seif al-Islam, the toppled dictator's most high-profile son who is also on trial, Mahmudi is one of the few remaining keepers of the many state secrets under Qaddafi, who was captured and killed by rebels in October 2011.
AFP

Tuesday, February 26, 2013

‘Yes, insurance needs better cover but not with foreign capital’

The article by V.K. Shunglu in The Hindu, “The risk business needs better cover” (Op-Ed, February 14, 2013) is one-sided and conspicuously understates certain key aspects of insurance reforms undertaken in the country a decade ago. It misses the basic premise on which an insurance business is run — that of “trust” and the long-term “promises to be upheld.”
This industry should not be seen merely in economic terms. The settlement of the death claim of Hemant Karkare, chief of the Mumbai Anti-Terrorist Squad, who was killed in Mumbai’s 26/11, presents a clear-cut example of Trust.
Mumbai’s Dadar branch of the Life Insurance Corporation (LIC) had settled the death claim amount of Rs.25 lakh within five days whereas a private company (name withheld), where Karkare had coverage for a similar amount, had rejected the claim — and, after a lapse of six months — by stating that the deceased had wilfully risked his life, even after knowing that his life was in danger. That’s why I said the insurance business should not be seen in purely economic terms.
The tag of public sector should not be the reason for spewing venom. There are certain “Crown jewels such as LIC”; it settles 98.6 per cent of claims, the only insurance company in the world to do so. It is true, as Mr. Shunglu says, that the insurance business has become a key player in underpinning the long-term foundations of India’s capital markets and financial system. But for satiating the needs of India’s capital markets, these private insurance companies have done little good for gullible policyholders and their hard-earned monies.
This is an industry in which even with a small amount of investment i.e. Rs.100 crore, thousands and lakhs of crores of public money can be garnered. It is firmly believed that the Foreign direct investment (FDI) hike will allow foreign capital with small investments to gain greater access and control over large domestic savings. The annual report (2011-2012) of the Insurance Regulatory and Development Authority (IRDA) points out that FDI brought in by private life insurance companies up to March 31, 2012, was a meagre Rs.6,324.27 crore, which was to meet share capital requirements prescribed by the regulator. Not a single pie was invested in the infrastructure sector. It is LIC which is a saviour, and the government of the day is utilising it as a captive investor, just as it has done in the case of petroleum major ONGC.
In our country, insurance companies are mopping up people’s savings. During 2011-12, domestic savings were 32 per cent of GDP. Financial experts say that domestic savings, and not FDI, are crucial for any country’s economic development. In India, LIC has provided Rs.7,04,151 crore to the 11th Five-Year Plan (2007-2012) while the four general insurance companies and GIC of India have contributed about Rs. one lakh crore. Where will the government get these huge investments from if it tries to weaken the public sector insurance companies?
The World Economic Forum Financial Development Report 2012 tells the success story of LIC. It shows that given the low level of income and low disposable income of most Indians, insurance penetration in India is much greater than in countries with a per capita income that is 10 times higher. It is remarkable that with a per capita GDP of $1,388.80, India has achieved a life insurance penetration of 3.61 per cent as against 3.56 per cent of the United States with a per capita GDP of $4,8386.77. It is also a matter of pride that the report places India at the top of global rankings in terms of Life Insurance Density (measured as a ratio of direct premium to per capita GDP of 2011).
The LIC, the four general insurance companies in the public sector and GIC of India are doing an excellent job despite competition from private insurance companies. In 2011-12, LIC earned a premium of Rs.81,514.49 crore registering a market share of 71.36 per cent in premium income. It sold 3.57 crore new policies, to take an 80.9 per cent market share in the number of policies. Similarly, the four insurance companies have earned a premium income of Rs.30,532 crore and registered 58 per cent of market share.
The financial crisis in the U.S. and Europe has seriously eroded confidence in the banking and insurance sectors. At the same time, our domestic private insurance partners hardly need capital to be infused by their foreign counterparts, as put forth by the votaries of FDI increase.
Partners of private insurance companies in India like the Tatas and Reliance are on an acquisition spree, spending billions of dollars, both on the domestic and foreign fronts during the last five years. The others, like the State Bank of India and other public sector banks have capital reserves of their own. Some foreign partners have exited not due to a delay in the increase of FDI cap but because they are in search of greener pastures.
The author has also put forth another interesting argument — that shareholders and company boards be left free to determine whether additional investment should be through FDI or FII or by other means.
The world saw the bubble burst in 2008 due to such flawed and mistaken judgements by company boards and shareholders, when they invested the earnings/savings of innocent policyholders into Collateralised debt obligations, or CDOs. India was saved from such a situation because of the domination of the public sector in the banking and insurance sectors. Even the Prime Minister and the Finance Minister have shared this view.
Looking back, it is time to learn lessons from the global collapses of banks, insurance companies and other financial institutions like Lehman Brothers, etc. Foreign investment per se, does not bring any good with it, especially in fragile sectors like insurance. This sector is the pillar of any upcoming and growing economy.
(M.S.R.A. Srihari is a former joint secretary, Insurance Corporation Employees Union, Warangal division. E-mail: msra.srihari@licindia.com)