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Posted on 05 July, 2018, No Comments Comments admin
The Constitution Bench of the Supreme Court on the 4th of July, 2018 settled the law with regard to allocation of legislative and executive powers between the elected Delhi Government and the Central Government along with the administrator of the Union Territory of Delhi – the Lieutenant Governor. There are three judgements delivered. The principal judgement by Chief Justice with whom two other judges have agreed. Theoretically there is very little difference in the opinion of all the five judges and the law declared could be considered a unanimous opinion of the Supreme Court.
It would be both important and necessary to first analyse the law declared by the Supreme Court since various versions of what the Supreme Court has said have appeared in the media.
Delhi as a Union Territory
Delhi unquestionably is a Union Territory. Its power structure has to be separate and distinct. It is the seat of the Central Government, the Supreme Court, the Rashtrapati Bhawan, offices of the Central Government, embassies of foreign countries are located in Delhi, heads of foreign States are frequent visitors to Delhi. Who should, therefore, be controlling the law and order, police, land and various other facets of Delhi? After experimenting Delhi as part ‘C’ State and then as a Union Territory, a hybrid administrative structure for Delhi was conceived. Some powers, including police, public order and land, were vested in the Central Government and several other residuary powers were vested in the elected State Government. They were, however, subject to the keen eye of the Central Government in rare cases where power was not being appropriately used. It has been held by the Supreme Court that the proviso to Article 239AA of the Constitution is in the nature of a protector to safeguard the interests of the Union on matters of national interest in relation to the affairs of the National Capital Territory. It would be appropriate to construe the proviso as a protector of national concerns in regard to governance of the NCT. The Lieutenant Governor is a watchdog to protect them. The court has rightly observed that all the three institutions, the elected Government, the LG and the Central Government must work in harmony keeping the interest of the people and the national capital in mind. Cooperation, operating in their respective constitutional space and not confrontation should be the objective.
The Supreme Court’s Opinion
The Supreme Court has categorically ruled the following:
- The power in relation to police, public order and land shall vest exclusively in the Central Government. It can be exercised through the Lieutenant Governor and the elected State Government has no role in the exercise of these powers.
- The powers mentioned in the State and the Concurrent List will be exercised by the elected State Government. However, the Central Government [under the provision of Article 239AA(3)(b) being pari materia to Article 246(4)] shall also have the legislative power on all the subjects in relation to NCT Delhi.
- The elected State Government will have the executive and the legislative authority in relation to these powers. The Central Government simultaneously will also have the authority to legislate in relation to these powers. If there is an exercise of power by the Central legislature in relation to these powers, it will override the authority of the State legislature.
- The Lieutenant Governor of Delhi is bound by the aid and advice of the State Council of Ministers and has no independent power to overrule the power of the State Cabinet.
- It is incumbent on the State, however, to keep the Lieutenant Governor informed of the exercise of these powers.
- Ordinarily, in the larger interest of democracy and federal politics, the Lieutenant Governor should accept the exercise of power by the State. But if it has good and cogent reasons supported by material to disagree, he can record the same in writing and refer the same to the President (i.e. the Central Government), which will resolve the difference of opinion between the State Government and the Lieutenant Governor. The decision of the Central Government will be binding both on the Lieutenant Governor and the elected State Government. Thus hereto the opinion of the Centre is overriding. The opinion of the court gives due importance to the opinion of the elected State Government but maintains the primacy of the Central Government in the larger interest of the national capital.
Delhi is not a State and, therefore, there could be no assumption that powers which belong to State Government’s also belongs to the elected Government of the Union Territory. It has been specifically held by the Supreme Court that it is crystal clear that by no stretch of imagination, NCT of Delhi can be accorded the status of a State under the present constitutional scheme and the status of the Lieutenant Governor of Delhi is not that of a Governor of a State, rather he remains an Administrator, in a limited sense, working with the designation of Lieutenant Governor. The Council of Ministers being headed by the Chief Minister should be guided by values and prudence accepting the constitutional position that the NCT of Delhi is not a State.
The Judgement in terms of the Constitution
The judgement elaborates at length the constitutional philosophy behind the Constitution and reaffirms precisely the text of what the Constitution says. It does not add to the powers of the State Government or the Central Government nor does it in any way dilute the same. It emphasises at the importance of elected State Government, but Delhi being a Union Territory makes its powers subservient to the Central Government.
There are several issues which had directly not been commented upon but by implication there is some indication of those issues. However, unless issues of importance are flagged, discussed and a specific opinion is rendered, none can assume that silence implies an opinion in favour of one or the other. There are two obvious indications. Firstly, if Delhi has no police powers, it cannot set up investigative agency to investigate crimes as had been done in the past. Secondly, the Supreme Court has held categorically that Delhi cannot compare itself at par with other States and, therefore, any presumption that the administration of the UT cadre of services has been decided in favour of the Delhi Government would be wholly erroneous.
Since several versions of this judgement have appeared in the public space, I hope those who want to contribute to the public debate would read the judgement before commenting on it.
Posted on 01 July, 2018, No Comments Comments admin
It has been one year since the country’s switchover to a new indirect taxation system – the Good and Services Tax. One single tax replaced seventeen taxes and multiple cesses imposed by the Central and the State Governments. This had obviously necessitated every assesse to file multiple returns, have an interface with multiple inspectors and assessing authorities, suffer the cascading effect of having to pay tax even on the tax component already paid, having to pay tax separately in every State when movement of goods took place, to suffer the inordinate delays of multiple checkpoints and obstacles, and being fed up with the taxation system devises measures on how to bypass the tax system. The very foundational idea of the Goods and Services Tax was not original. It had been experimented in several countries of the world. The Indian model had to be devised keeping several facts in mind. An indirect tax, unlike a direct tax, is regressive. In a country where diverse sections of population with different paying capacities, everybody pays the same rate of tax, the rate cannot be different for the wealthy and the not so wealthy as in the case of a direct tax. But in the selection of the commodities which are tax-free or less taxed, a differential could be made in a society like India. Secondly, India had multiple markets, each constituting a different market which needed to be consolidated. Thirdly, the essence of Indian federalism had to be respected. India is a Union of States where both the Union and the States have to be fiscally strong. A weak Union is detrimental to both national sovereignty and growth and weak States won’t be able to deliver development. India is not a confederation of States and, therefore, strengthening of State revenues cannot be at the cost of Central revenues. If the Union does not survive, what will happen to India i.e. ‘Bharat’ – the Union of States?
The Flawed UPA Model of GST
My friends in the UPA and the Congress Party occasionally raise questions as to why some Chief Ministers were not comfortable with the idea of GST during the UPA period. The fact is that almost everyone wanted the GST but not a single State was comfortable with the UPA’s model of GST. There were two prime reasons for this.
Firstly, the UPA Government lost the confidence of the States, including the Congress ruled States. In a move towards the single tax system, the UPA asked the States to abolish the CST. It promised the States that it would give them a compensation in lieu of the CST for a certain number of years. The States acted accordingly, abolished the CST and the Central Government owed the States several thousand crores as CST compensation. When the States demanded CST compensation, the Centre would look the other way. When I took over as the Finance Minister in May 2014, all the States, including the BJP ruled States, told me that they don’t trust the Central Government because of what the UPA Government had done. They will discuss GST only if past CST compensation is paid. I conceded that the UPA let down of the States was unacceptable and in order to bridge the trust, despite pressures on the Central revenue, I will clear the arrears of the Central CST. I, accordingly, did that. The CST compensation was paid. The States were then willing to come to the table and move further on the GST.
The second reason why the UPA failed in its effort to bring the GST was that every State was apprehensive that during the transition period there would be a loss of revenue to the States. How would the States be compensated for the loss of revenue? Their demand seemed logical but UPA chose not to address it. The Constitution amendment proposed by the UPA had no provision for compensating the loosing State. Manufacturing States like Tamil Nadu, Gujarat, Maharashtra and Karnataka were particularly apprehensive. They had raised a flag “No Compensation No GST”. Having brought them to the negotiating table on the strength of the CST payment I agreed to pay to the States, after discussing in the GST Council, a 14% increase of revenue for the first five years for any loss of revenue. The States jumped for this proposal and we succeeded in winning trust of the States back for the GST enactment. Our positive commitment to the federal principles was unambiguously established.
The Petroleum Products Issue
Both Rahul Gandhi and P. Chidambaram have repeatedly demanded that petroleum products be forthwith brought within the GST. When I speak to the Congress Finance Ministers’ in the States, they don’t seem to be ready for it. But what was the UPA’s own track record on petroleum products in the GST? The Constitution amendment proposed by the UPA permanently kept all petroleum products outside the GST. Thus till such time that the Constitution was ever amended again (it is normally difficult to amend the Constitution), petroleum products would never be in the GST as per UPA. Having won over the trust of the States, I used the inclusion of petroleum products as a bargaining issue with the States while conceding the CST and compensation payment to the States. I worked out a formulae that petroleum products would be included in the Constitution amendment providing for the GST but the council can decide the date from which to bring them into GST. The States agreed. The UPA kept petroleum products permanently outside GST. On the contrary, we brought them back into the Constitution as levyable to GST and can gradually impose the GST when the GST Council so decides. For this I would continue to make my earnest efforts and hopefully when the States are more comfortable with the revenue position, it would be an ideal time to strike for a consensus between them.
The Experience After One Year
When the GST was to be launched on the 1st of July, 2017, we were being advised by the Congress to postpone it. A reluctant Government can never take reformist decisions. We went ahead. At the initial stage, we fixed the first set of rates. A large number of requests started coming from trades, industry and, therefore, we started rationalising the rates.
The initial few meetings of the GST Council started reducing the rates wherever it was desirable. If we look at the entire basket of goods and services, the rates today taken collectively are far lesser than under the previous taxation system. With the cascading effect of tax on tax going away, the liability in any case came down.
To develop a consensus, we passed the Constitution amendment enabling the GST unanimously. All legislations enabling the GST were passed unanimously. The rules were put before the GST Council. The have been approved unanimously. We have held 27 meetings of the GST Council so far where every decision has been taken by consensus and unanimity. All the rates are fixed through consensus on the recommendation of the Rates Committee. Whenever there are contrarian views in the Council, a representative Group of Ministers of the State is constituted to work out a via media and we try to evolve consensus one way or the other. I do realise that the delicate federal balance in India has to be maintained. The GST Council is India’s first experience at cooperative-federalism based decision-making authority. We cannot afford to risk a failure and, therefore, it is functioning as to arouse confidence amongst all States. The meetings have always been consensus based. The only area where unanimity seems to be lacking is the television bites that some Ministers’ give after the meeting, which may be necessary for their own political positon. I am willing to live with the experience of a healthy debate and unanimity within the Council and a show of dissent outside the Council meetings.
We have had amongst the smoothest switchovers in one of the largest tax reforms in the country. All the check-posts disappeared overnight. The system of input tax credit ensures that disclosures are made. The GST has encouraged enormous voluntary tax registration. Detailed calculations done in this year’s Economic Survey show that as of December 2017, about 1.7 million registrants were those who fell below the GST threshold but nevertheless chose to be part of the GST. Similarly, more than 50 percent of those who could have chosen to opt for the simpler composition scheme chose to register under the regular GST scheme.
To ensure further compliance, the e-Way Bill has been put in place. Once the invoice matching starts, evasion would become extremely difficult. The assessee’s life has become easier. He files his returns online and his interface with multiple authorities is gone. The return filing process is also being simplified. The Group of Ministers’ has already worked out that mechanism. The overall weighable of the tax basket has come down. As the tax base increases, our capacity to rationalise taxes and slabs will increase further.
The very small businesses have been protected. Those with turnover of less than Rs.20 lakhs don’t pay GST. Those with a turnover upto Rs.1 crore can compound their GST with a payment of 1% tax on the turnover, and file a quarterly return.
A Single Slab
Rahul Gandhi has been advocating a single slab GST for India. It is a flawed idea. A single slab GST can function only in those countries where the entire population has a similar and a higher level of paying capacity. Being fascinated by the Singapore model is understandable but the population profile of a state like Singapore and India is very different. Singapore can charge 7% GST on food and 7% on luxury goods. Will that model work for India? Since GST is a regressive tax, the poor have to be given a substantial relief. Thus most food items – agricultural products and the Aam Aadmi used products have to be tax exempt. Some others have to be taxed at a nominal rate. The others could be taxed higher. Eventually, as the collections improve, many more items from the 28% category can possibly come down. Only sin products and luxury goods can remain there. There would also be a scope again, depending on the collection going up, to merge some of the mid category slabs but for that we have to see the progress of the new tax regime and the possible upward movement in the collections.
The Tax Effect
The impact of the GST on the direct tax is already visible. Those who have to disclose business turnover are now having to disclose their income for the purposes of the income tax. The direct tax collection have, therefore, picked up as per the initial indications. When we look at the GST performance in the first nine months from July, 2017 to March, 2018, and add the entire amount collected – the CGST, SGST, IGST and the composition cess, we will get the sum total of the GST collection. In the very first nine months, the total amount collected is Rs.8.2 lakh crore– Rs.11 lakh crores if annualised, yielding a revenue growth of 11.9% i.e. a tax buoyancy of 1.22, which has historically been achieved very rarely for indirect taxes and espite rates being lowered for consumers. As more and more anti-evasion steps will be put in place, the tax buoyancy will increase further. The GST will strengthen the country’s tax base for the medium term, adding up to an additional 1.5 percentage points of GDP.
Today the States are getting a 14% increase on the tax base of 2015-16 with the help of the compensation cess. Eventually, when the blocked IGST is gradually released to the Centre and the States, even without the compensation cess, most States would cross the 14% growth target. It may also be borne in mind that even today the compensation requirement are minimal and the current level of compensation cess about Rs.7000 crores monthly is more than adequate to ensure that the States are compensated for any loss of revenue. Significantly, the GST is expanding the tax base of the less developed consuming states which will provide more resources for them to devote for development purposes.
The indirect tax base is expanding. There is a seamless flow of goods and services across the country. The ‘Doing of Business’ has become simpler. The switchover has taken place without any major disruption. The IT system after initial teething trouble is functioning much better. For all of this, I want to express my heartfelt thanks to and appreciation for the efforts of the Revenue Secretary Shri Hasmukh Adhia, all the officers of the CBIC and revenue and tax departments of the Center and all the states, officials of GSTN, and the Chief Economic Adviser, Arvind Subramanian.
There is always scope for improvement. Key areas of future action will include further simplifying and rationalizing the rate structure and bringing more products into the GST. I am confident that once revenue stabilizes and the GST settles, the GST Council will look into these carefully and act judiciously.
The biggest success of the GST has been that the GST Council has proved to be an extremely effective and powerful decision making federal institution. The Finance Ministers’ of the States have created history in the matter of federal governance. It has indeed been my privilege to have got the cooperation of each one of them. Thank you, Finance Ministers for having collectively made the GST a historic transformation and an experience worth it for the country.
Posted on 29 June, 2018, No Comments Comments admin
The first sixty-seven years after Independence from 1947 to 2014 saw a total number of 3.82 crore assesses filing tax returns. Obviously, in comparison to total population of almost 1.3 billion, this figure appears highly inadequate. The total direct tax collection (income tax) in 2013-14 was Rs.6.38 lakh crore.
Prime Minister Modi led NDA Government had a multi-pronged strategy to increase the tax base. A campaign involving various steps to flush out black-money, including black-money outside the country, was initiated. The demonetisation led to a lot of people in possession of undeclared cash depositing the same in the banking system. The source of the money was now questioned. Almost 18 lakh people were identified who had made deposits disproportionate to their returned incomes. The use of technology helped the tax department significantly. Most of the functioning of the Income-tax Department is now online, returns are filed online, queries are addressed online, assessment orders are handled online and refunds are also made online. Technology is also used for reconciliation purposes in order to detect those who should be filing returns but are non-filers.
The implementation of the Goods and Services Tax as a single consolidated tax has had a significant impact even on direct taxes. Those who have disclosed a business turnover for the GST now find it difficult not to disclose their net income for the purposes of income tax.
What would be the combined impact of all these measures on India’s direct taxation base? We had targeted to optimise the base increase without any increase on the tax liability. India’s tax to GDP ratio in four years increased by almost 1.5%. On the contrary, a large number of taxpayers in each of the four Budgets of the present Government has benefitted from relief given. Today a medium-term assessment of the impact of these steps can be made. In four years, the number of assesses has increased by 64.6%. The total number of returns filed was 6.86 crores in FY 2017-18. The number of new assesses who filed returns in FY 2017-18 were 1.06 crore. I hope that the percentage increase when the Government completes its first five years would be significantly higher. The total income tax collection for the year 2017-18 is Rs.10.02 lakh crore, a four year increase of 57%. Last year, despite formidable economic challenges, the income tax collection managed to grow by over 18 percent.
Last year, the impact of the GST on direct tax collection was not visible. Since GST had been imposed in the middle of the year, it will be more apparent this year. The first big news for this year is that the advance tax deposit during the first quarter of this year has seen a gross increase of 44% in the personal income tax category and 17% in the corporate tax category. After repayment of refunds due to some excess tax paid in earlier years, which are usually paid back in the first quarter, the net amount would be somewhat lesser. But if the same trend continues in the next three quarters, one expects a significant increase in the direct tax collection this year. The first indication is that the spending is higher, consumption is higher and corporates are seeing increased sales and a greater prospect of profitability. But increase in the amount of collections in category of personal income tax is also due to more people coming within the tax net. There is also the impact of the GST visible this year. This unprecedented taxation growth is a result of the anti-black money measures, use of technology, demonetisation and the GST. Most of these measures were severely criticized by the Congress Party. This is just the medium-term impact of some of these measures. The long-term impact would be significantly higher. Higher tax collection would enable us to continue with the developmental programmes in the country, not to impose any extra burden on the taxpayers and yet maintain the targeted fiscal deficit.
Money in Swiss-Banks
A news item has appeared today indicating an increase of money by ‘Indians’ in the Swiss banking system. This has led to misinformed reaction in certain circles raising a query whether the Government’s anti-black money steps have yielded results.
Switzerland in financial disclosures was always a reluctant state. Of late it was subjected to a lot of international pressures which favoured disclosures and Switzerland ran the risk of being a ‘non-compliant’ State by the FATF. It has, therefore, entered into several bilateral treaties for making disclosures to requesting States. It has amended its domestic laws involving all disclosures and entered into a treaty even with India and real time flow of information with regard to Indians will be made. The flow of information is starting in January, 2019. Any illegal depositor knows that it is a matter of months before his name becomes public and he will be subjected to the harsh penal provisions of the Black money law in India. Assuming this information to be correct, what does past experience show? When disclosures have been made with regard to ‘Indians’, including in the Panama Papers, certainly some of them have held illegal accounts. ‘Indian’ money outside the country is of various categories. Past investigation by CBDT have shown that this includes many held by persons of Indian origin who now hold foreign passport, monies belonging to Non-Resident Indians, as also monies belonging to resident Indians who have made legitimate investments abroad, including transfer of money under the liberalised remittance schemes. It is only monies kept by resident Indian outside these categories which become actionable. The first two categories are within the jurisdiction of those countries where these persons are residents and the third category can easily be checked up in India. If the deposit does not fall in any of these categories, it is per se illegal for which investigations are undertaken, arrests are made and criminal prosecutions are launched. Switzerland has taken significant efforts to get out of the image of being a tax haven and a non-compliant State. It is on the verge of making disclosures in real time and, therefore, is no longer an ideal destination for tax evaders. Those who participate in a public discourse must understand these basic facts before expressing an opinion which may be ill-informed. To assume that all the deposits are per se tax evaded money or that Switzerland in the matter of illegal deposits is what it was decades ago, is to start on a shaky presumption.
Posted on 26 June, 2018, No Comments Comments admin
As the Emergency prolonged on, there was one major pressure on Mrs. Indira Gandhi. International media and world leaders were aghast at the very suggestion that Pandit Nehru’s daughter had abandoned the path of democracy and turned dictatorial. She was always at pains to explain to her international audiences that this was a temporary phase and would not last forever. The Party, however, was of the opinion that since the term of Parliament had been extended by two years, election could await till 1978. Her political feedback and that of the intelligence agencies was that since there was no opposition, she should immediately call for a snap poll, give the opposition little time to prepare and Congress could comfortably sweep the poll. The latter view prevailed and on the 18th of January, 1977, she addressed the nation and announced a General Election to be held in the month of March. The opposition leaders were still in prison, Emergency was still on and would continue. It was decided that a snap poll would take the opposition by surprise, ensure her victory and give her Government the legitimacy it needed.
Since the Tihar Jail was the center of opposition activities, all the political detenues met immediately after the announcement. There were two clear views. George Fernandes and C.G.K. Reddy strongly argued that it would be a farcical election and hence must be boycotted. The other believed that we must use election as a platform to campaign against the Emergency and for democracy. This view was shared with senior leaders in other jails. JP, who had been released on account of ill health, took the first initiative and announced that he would participate and bless the coalition of the opposition only if all the political parties in opposition joined hands and formed a single party. The release of detenues started within a day or two. But some like George Fernandes, Nanaji Deshmukh and those belonging to the RSS were not released till the elections were over. Press censorship was relaxed but not removed.
I was released from detention on 25th January, 1977. My ABVP friends, on the 27thJanuary, took me in a large procession to every college of the university campus. I had suspected that we would meet student audiences with fear and awe. But contrary to my expectations, we witnessed an aggressive participation of students wherever we went. Amongst the released political leaders of Delhi, some of us met in that evening at 7 Jantar Mantar, which eventually became the Janata Party headquarters. On 30th January, Shri Morarji Desai and Shri Atal Bihari Vajpayee were to address a rally. Unaware of the undercurrent, we initially sought permission to hold the rally at Chandni Chowk. The police declined the request due to dangers of a stampede and the venue of the rally had to be forcibly shifted to Ramleela Maidan. The rally turned out to be a big success. The fear was cracking up. People were willing to speak and come out. After almost nineteen months, they were all restless and waiting to hear the “Vajpayee oration”. When Atalji stood up to speak at the Ramleela Maidan, he was cheered for several minutes with slogans. In his customary poetic style, he started with a couplet:
बड़ी मुद्दत के बाद मिले हैं दीवाने,
कहने सुनने को हैं बहुत से अफ़साने,
आओ जल्दी से दो बातें कर लें
ये आज़ादी कब तक रहेगी कौन जाने ।
Events were changing very fast. On the 2nd February, three Congress leaders – Babu Jagjivan Ram, Hemwati Nandan Bahuguna and Nandini Satpathy resigned from the Congress Party and formed ‘Congress for Democracy’. They decided to align with the Janata Party. On the 6th of February, they addressed, alongwith other Janata leaders, a massive rally at Ramleela Maidan. As a student leader representing the face of youth of this alliance, I was asked to be the first warmup speaker at the rally followed by some other leaders till Bahuguna and Jagjivan Ram spoke. Unquestionably this was the largest ever audience I have ever addressed. Mrs. Gandhi had accused Jagjivan Ram of betrayal. She charged him for not informing her during the Emergency as to what was going wrong. A powerful and a crafty orator Babuji responded at this rally by saying:
“कैसे बता देते ? बता देते तो जगजीवन कहीं होते और राम कहीं ।“
The size and enthusiasm of this rally sent a signal in the entire country that a Janata wave was building up. V.C. Shukla tried a petty trick. Before the rally he announced that popular film “Bobby” would be shown on Doordarshan at the time. But so powerful was the anti-Congress mood that people preferred to attend the rally rather than watching “Bobby”. To attend this rally, the crowd had to walk few kilometers since the bus service was also suspended.
I got my first opportunity to participate in an election campaign. I toured north Indian States and went through the entire heartland of Uttar Pradesh spending the last one week entirely in Rae Bareli and Amethi where Mrs. Gandhi and Sanjay were contesting. Campaigning through Rajasthan, I went till Mumbai and eventually Pune. Almost everywhere, we could see a mass citizen’s participation in the campaign. Both Mrs. Gandhi and Sanjay lost their own seats.
When the results were announced, States in north India voted en masse for the Janata Party. In the entire north India and the Hindi heartland, the Congress could win one seat in Madhya Pradesh and one seat in Rajasthan. It lost all the seats of Uttar Pradesh, Bihar, Delhi, Punjab etc. However, it managed to win some seats in the South where the atrocities of the Emergency were relatively less. Janata Party got an absolute majority. Before resigning, Mrs. Gandhi revoked the Emergency and slowly all the detenues were released from the prisons. There was an air of freedom in the entire country.
Institutional safeguards and disturbing observations
The most disturbing observation of the Emergency was, when the Central Government turned dictatorial, the entire system caved in. The Supreme Court became subservient, the media became sycophantic. Post Emergency Advani ji told the Delhi media “when asked to bend, you chose to crawl”. Over two lakh false FIRs were registered and hardly any police officers stood up to protest. Thousands of detention orders were passed when there were no grounds of detention. Hardly any Collector refused to sign an illegal detention order. Even during the campaign when the result appeared inevitable, Mrs. Gandhi was unwilling to see the writing on the wall. She superseded Justice H.R. Khanna and appointed Justice Beg as the Chief Justice of India. Justice Khanna resigned. Palkhiwala commented that the post of the Chief Justice is now too small for Justice Khanna.
The Morarji Desai led Janata Party Government undid lot of damage that the Emergency had done so that nobody experiments such dictatorship in future. The power under Article 352 to impose an Emergency for internal disturbances was now restricted. Article 21 was made non-suspendable. The courts were given the power of judicial review of several detention orders. The 44th Constitution Amendment reversed most of the provisions of the 42nd Amendment. This was a major institutional safeguard.
Another significant development has been the evolution of technology which has made censorship of the media impossible. You could no longer withhold information from the people.
The role of Political Parties.
India’s Left parties have always been a puzzle to me. The CPI was an unashamed supporter of the Emergency. Its political line was that Emergency was a war on fascism. Though theoretically the CPI (M) was opposed to the Emergency and critical of it, it was not an active participant in the struggle against the Emergency. Only two of its MPs were arrested. Its Polit-bureau members, Central Committee members and students’ leaders were, by and large, not put in detention.
The Congress (O), the socialist parties, Swatantra Party, the Jan Sangh and the RSS were the main participants in the Satyagraha and protest against the Emergency. To me the Lohia socialist and their post-Emergency evolution has shown a very curious trend. Dr. Ram Manohar Lohia was the creator of the slogan in the early 60s “Congress Hatao Desh Bachao”. His legacy was represented by George Fernandes, Madhu Limaye and Raj Narain, who were all consistently anti-Congress. Today that legacy has been inherited by Shri Mulayam Singh Yadav in Uttar Pradesh and substantially by Shri Nitish Kumar in Bihar. While the trace of anti-Congressism is visible in both, the party formed by Shri Mulayam Singh Yadav is always willing to do business with the Congress. I have always serious doubts whether those who represent the political DNA of Dr. Lohia and Pt. Nehru can in the long run ever work together.
Though I believe it is impossible for anyone in India to repeat the Emergency, but as the famous advice goes that democracy lies in the hearts of men and women. When it dies there, no Constitution can save it and no judge can protect it.
A Personal Note
Union Minister Vijay Goel has today tweeted a letter, I wrote to him and Rajat Sharma during the Emergency. Thank you Vijay. Vijay Goel and Rajat Sharma were two of closest colleagues on the day of the Emergency. They helped me to organize the 26th June 1975 protest against the Emergency. While I was being arrested, I requested both to disappear, go underground and participate in the Satyagraha starting from 29th June. Both of them led the Satyagraha. Their courage was exemplary. Vijay Goel today is a valuable colleague in the party and the Government. Rajat did not continue in politics when he became a journalist. He today is one of the India’s celebrated journalists and anchors. Both continue to remain close friends of mine – almost a part of my extended family.
(Concluded)
Posted on 25 June, 2018, No Comments Comments admin
Having imposed Emergency on 26th June, 1975, Mrs. Indira Gandhi got issued a proclamation under Article 359 suspending fundamental rights. As a result of this, the right to free speech and personal liberty was gone. Only censored news was available. On June 29th, in order to deflect attention from the suspension of democracy in India, she announced a Twenty Point Programme for the revival of Indian economy. In fact, large number of these twenty points were also retrograde economic measures which had to be reversed in the post 1991 economic reforms. Thousands of political detenues, journalists and academics were detained all over the country. The jails were overcrowded. The jail conditions were horrible.
I was lodged in Delhi’s Tihar Jail for a week. Thereafter, alongwith twenty other detenues I was shifted to the Ambala Central Jail. Under the conditions of detention rules, we were allowed a daily ration in which we had to manage all the meals. The budget available per detenue for the daily food was rupees three. Thus, if there were twenty detenues in a ward, from morning tea, breakfast, lunch, evening tea and dinner, they had to manage food for twenty people within sixty rupees. After months of agitation, this amount was enhanced to rupees five per detenue. For the initial few months, no meetings with family members were allowed. After a few months, your family members could meet for a few minutes once every month, which was subsequently increased to once every week. I was, at that stage, a student of the law faculty with still my final year to clear. A number of detenues filed petitions for quashing their detention. I also filed a similar petition. Subsequently, I moved to court on several occasions for permission to write my law final year exams from jail but the Delhi University was asked to change the rules to the effect that personal presence in the examination center is essential to write the exam. My plea that I be taken to center under police custody to write my exam was rejected by the Government on the ground that my presence in the examination center was a threat to public order. During nineteen months of detention, I, therefore, lost one academic year and was in the danger of losing the second. Due to this litigation, I managed to get transferred back to Tihar Jail from Ambala.
An atmosphere of fear and terror prevailed in the country outside. Political activity had come to a grinding halt. The dissenters were mainly political workers of the opposition party and the RSS. They kept repeatedly organizing Satyagrahas where a number of people courted arrest. It goes to the credit of Shiromani Akali Das that it offered its cadres for Satyagraha every day throughout the Emergency outside the Golden Temple and courted arrest. This earned Akali Dal a great respect in the entire country. The RSS which was unfairly banned also provided a large cadre for Satyagraha.
The press was completely terrorized. Most editors and journalists surrendered and reconciled with the Idea of living in dictatorship. The Congress Party newspaper “National Herald” editorially commented that time had come for India to evolve into a single party democracy. Mrs. Gandhi herself called for the graduation of India from democracy to a “disciplined democracy”. To give it credibility at the cost of losing his own, Acharya Vinoba Bhave called the Emergency “Anushasan Parva”. There were, however, dissenters in the media. The Indian Express and The Statesmen played legendary role in letting know their dissent against the Emergency. Ram Nath Goenka, C.R. Irani and Editor Kuldeep Nayar became the symbols of press freedom during the Emergency.
Was the script of Emergency prepared in advance?
Journalist Coomi Kapoor’s book on Emergency published in 2015 contains handwritten document in the writing of Siddhartha Shankar Ray where he requests Mrs. Gandhi to have lists of persons proposed to be arrested and outlines various other steps which were required to be taken. The document is dated as 8th January, 1975.
Curiously, around the same time in January, 1975 “Motherland”, a daily newspaper edited by K.R. Malkani, had published a front page article based on the astrological prediction by Dr. Vasanth Kumar Pandit, a Jan Sangh MP and astrologer, predicting proclamation of Emergency, arrest of the entire opposition members, censorship on media and India becoming an autocratic State. When published, I found it difficult to believe this astrological prediction. During the Emergency, one of my co-detenues in prison was K.R. Malkani himself. Malkani told me that when arrested on the midnight of 26th June, while others were straightway taken to Rohtak Jail, he was, for three days, kept in a guest house in Haryana and taken to the jail after three days. During those three days, he was grilled by the intelligence agencies as to his source of information on the basis of which that article predicting the Emergency had been enforced. The agencies thought this was a major leak in the Government and were investigating the matter.
Malkani, however, consistently maintained that this was only an astrological prediction. Cumulatively, it was these facts that persuaded me to believe that the script for the Emergency was prepared sometime in January, 1975. The immediate trigger would have been the Allahabad High Court judgement and the insecurity caused by it to Mrs. Gandhi’s positon.
Was this script inspired by what happened in Nazi Germany in 1933?
Hitler became the Chancellor of Germany on 30th January, 1933. He did not have an absolute majority in Parliament. On February 28th, he got his President to invoke Article 48 of the Constitution which gave emergency powers for the ‘protection of the people in the State’. The decree giving emergency powers put restrictions on personal liberty, free speech, right of assembly, association, violation of privacy, home searches and promoted restrictions on property and all other rights. The pretext for imposition of Emergency was that on February 27, German Parliament House, known as “Reichstag” had been set on fire. Hitler claimed that it was a communist conspiracy to burn Government buildings and museums. Thirteen years later, in the Nuremberg trials, it was established that Reichstag fire was the handiwork of Nazis and Goebbels had conceived it. Hitler continued to maintain that his actions were within the four corners of the Constitution. Mrs. Gandhi imposed the Emergency under Article 352, suspended fundamental rights under Article 359 and claimed that “disorder was planned by the opposition in the country”. The security forces were being asked to disobey illegal orders and, therefore, in the larger interest of the nation, India had to become a “disciplined democracy”.
Both Hitler and Mrs. Gandhi never abrogated the Constitution. They used a republican Constitution to transform democracy into dictatorship.
Hitler arrested most of the opposition Members of Parliament and, therefore, converted his minority Government in Parliament into a Government which had two-third majority of members present and voting. He, therefore, brought detailed Constitution amendments vesting all power to one person. Mrs. Indira Gandhi arrested most opposition Members of Parliament and, therefore, procured, through their absence, a two-third majority of members present and voting and enabling the passage of several obnoxious provisions through Constitution amendments. The Forty-second Amendment diluted the power of High Courts to issue writ petitions, a power which Dr. Ambedkar had said was the very heart and soul of India’s Constitution. They also amended Article 368 so that a Constitution amendment was beyond judicial review.
There were a few things that Hitler did not do which Mrs. Gandhi did. She prohibited the publication of Parliamentary proceeding in the media. The law which gave mandate to the media for publishing Parliamentary proceedings was popularly known as the Feroze Gandhi Bill because late Shri Feroze Gandhi had singularly campaigned for her after the Haridas Mundhra scandal, which was raised by him in Parliament. Since Hitler’s own election has been set aside, he had no change to make in this regard. Mrs. Gandhi amended both the Constitution and the Representation of People Act. The Constitution amendment made the election of the Prime Minister non-justiciable before a court. The Representation of People Act was retrospectively amended to insert those provisions so that the invalid election of Mrs. Gandhi could be validated by changes in law. Unlike Hitler, Mrs. Gandhi went ahead to transform India into a ‘dynastic Democracy’.
Goebbels claimed that the “German Revolution has just begun”. All Indian Ambassadors and High Commissioners were asked to propagate that what was happening in India now was nothing short of a revolution. The press censorship laws imposed in India and in Germany were almost similar. You had effectively a one party system in play.
Nazi leader Joachim Ribbentrop, who later became Hitler’s External Affairs Minister, spoke on the need for a new legal system. He argued that the system needed to be replaced because “Adolf Hitler too, like any other common mortal could be tried under the same paragraph of penal law”. Indira Gandhi’s 39th amendment to the Constitution making the election of the Prime Minister non-challengeable and a Prime Minister non-prosecutable actually implemented this suggestion. The Swaran Singh Committee brought in several changes in the Constitution through the 42nd Constitution Amendment.
The most objectionable change was to extend the life of Parliament by two years. The Indian Lok Sabha is elected under the Constitution for a maximum period of five years. It is the grantee of a limited jurisdiction by the Sovereign – the people. It cannot perpetuate its existence, but it was done. In fact from 1971 to 1977 the Lok Sabha lasted for six years. This amendment was subsequently reversed by the Janata Government.
A Nazi leader proclaimed “There is in Germany today only one authority and that is the authority of Fuehrer”. The AICC President, Devakanta Barua proclaimed “Indira is India and India is Indira”. In a letter to Mrs. Gandhi from his detention JP wrote “Do not equate yourself with the nation. India is immortal, you are not”. The most startling similarity in the script was that orders were issued to the effect that the Gestapo’s action could not be made subject to judicial review. Gestapo was Hitler’s secret police. When we detenues filed petitions in the nature of habeas corpus before the High Court, the Government argued that the sole repository of the right to life and liberty was Article 21. If Article 21 was suspended, there was neither a right to life or liberty. Even if there was an illegal deprivation of life and liberty, a citizen had no remedy. The High Courts decided in the citizens’ favour. When this argument was voiced in appeal before the Supreme Court, Justice H.R. Khanna on the Bench, asked Niren De, the Attorney General, if a person is threatened with illegal killing, does he have a remedy in law during Emergency? Niren De promptly answered “my reply shocks my own conscience. It will shock your conscience too. But the natural corollary of my arguments is that he had no remedy in law”. Justice Khanna, years after his retirement, told me that when this reply came, he looked at his four other colleagues hoping that their conscience would have been shocked. But when the four others chose to look the other way, Justice Khanna realized which way they were going to write the judgement. Eventually, the unanimous verdict of all High Courts was reversed by the Supreme Court accepting the non-sustainable argument of Niren De with Justice Khanna dissenting. Justice Khanna became a living legend after his dissent. He had written that his dissent was a challenge to the brooding spirit of law and the intelligence of the future generations which could correct the error into which the majority had fallen. The error was legislatively corrected by Janata Government through the Forty-fourth amendment, which made Article 21 non-sustainable but the intelligence of the future generations led to a current Supreme Court Judge Dhananjay Chandrachud reversing the majority opinion and in particular overruling his own father’s judgement in the habeas corpus case.
The Election Case
The election case turned out to be another judicial monstrosity. Both the Constitution and the Representation of People Act were amended retrospectively in order to legislatively validate Mrs. Gandhi’s election. The laborious Shanti Bhushan did not give up. He argued that a free and fair election was a part of the basic structure of the Constitution and validating an invalid election would violate the basic structure of the Constitution. But Supreme Court created a legal jigsaw to help Mrs. Gandhi. The basic structure theory could be used only to test a Constitution amendment and not an ordinary law. So they struck down the Thirty-ninth Amendment to the Constitution but held that ordinary legislation could not be tested on the touchstone of basic structure. Therefore, the amended Representation of People Act would apply to Mrs. Gandhi and, therefore, her election stood valid under the retrospective amendment. What Parliament could not do by a two-third majority, it could do by a simple majority. Even this proposition of law was subsequently overruled.
Absolute power corrupts absolutely
Vesting absolute power, the Government unleashed tyranny on every institution. The country witnessed the silence of graveyard. The only protest came from die-hard opposition workers. The High Court stood firm but the Supreme Court capitulated. Fourteen independent judges of the High Court were transferred to another High Courts.
Sanjay Gandhi, the younger son of Mrs. Gandhi, took over the reins of the Congress Party and the Youth Congress. The Youth Congress became a law into its own-self. Its’ functioning terrorized the society. Hitler had announced a Twenty-five point economic programme. Mrs. Gandhi had announced twenty. To cover up the gap, Sanjay announced his five point economic and social programme. Dissent became a sin and sycophancy the rule. Film actors and singers and playback singers were asked to join Youth Congress and its allies. If they refused, the then I & B Minister, Vidya Charan Shukla would threaten them. Kishore Kumar, the noted playback singer, was blacklisted by the All India Radio and his songs were never played on All India Radio for refusing to sing at the Youth Congress rallies. Devanand records in his autobiography that when he and Dilip Kumar refused to join the Youth Congress rally, Vidya Charan Shukla threatened both of them. But both of them stood firm. Gulzar’s celebrated film “Aandhi” was banned. Since absolute power corrupts absolutely, a tyranny regime thinks they can get away with every atrocity. Large scale demolitions of houses and business establishments were happening all over the country. Since population control was Sanjay Gandhi’s slogan, forced sterilization was taking place. When a police jeep entered a village, the youth of the village fearing forced sterilization would spend their nights in the farm rather than their house. The common man who did not understand the political consequence of dictatorship, understood it because of forced sterilization. As someone aptly put:
दाद देता हूँ मैं मर्द-ए-हिंदुस्तान की, सर कटा सकते हैं लेकिन नस कटा सकते नहीं l
Little did this dictatorial regime realize that each act was alienating the people. The Government had a single source feedback that they were getting very popular and that there was no opposition. If you curb free speech and allow only propaganda, you become the first victim of propaganda because you start believing that your own propaganda is the truth and the full truth.
[Part 3 (final part) to be continued tomorrow]
Posted on 24 June, 2018, No Comments Comments admin
The years 1971 and 1972 were high points in the political career of Smt. Indira Gandhi. She challenged the senior leaders of her own party and a grand alliance of opposition party. She won convincingly the 1971 General Elections. She was the key centre of political power for the next five years. There was no challenge to her within her own party. The year 1971 also witnessed a civil revolt in East Pakistan where in a General Election the Awami League led by Sheikh Mujibur Rahman had won a clear majority in the Pakistan Parliament. Zulfikar Ali Bhutto’s party had lesser number of seats than the Awami League. How could Pakistan allow its Government to be dominated by East Pakistan? It refused to accept the mandate leading to revolt in East Pakistan. It snowballed into a major crisis with the Mukti Bahini battling the Pakistani army. Ultimately a war with India started on 3rd December, 1971. By 16th December the Indian forces had taken control of East Pakistan and made substantial headway in West Pakistan. The Pakistani forces in East Pakistan surrendered to India and were taken as Prisoners of War. For India and Mrs. Indira Gandhi the break-up of Pakistan was a major political development which led to the creation of a new nation – Bangladesh.
Mismanagement of the Economy, Slogans vs Policy
The stage was now set for Mrs. Indira Gandhi to rule India, deliver to it the promise of “Garibi Hatao” and bring substantial economic growth in India. At this point her popularity was very high. During the decades 60s and 70s, the average growth rate of GDP had only been 3.5%. Most countries in the world were now trying to get out of a regulated economy which was proving to be counter-productive. Even Communist nations were either on the brink of break up or rejecting state regulation. By keeping one party rule intact, China decided to move ahead with the liberalized economy. The tragedy of Mrs. Indira Gandhi politics was she preferred the popular slogans over sound and sustainable policies. The Government with a huge electoral mandate at the Centre and the States, continued in the same economic directions which she had experimented in the late 1960’s. She believed that India’s slow growth was on account of smuggling and economic offences. She enacted a Preventive Detention Law COFEPOSA to deal with smuggling. She believed that confiscation of smugglers’ assets could bring to India a large resource and hence SAFEMA was enacted. She believed that large enterprises with economies of scale had to be stopped and MRTP Act was made more stringent. She believed that land regulations in terms of size, ownership must also apply to urban areas and hence the Urban Land Ceiling Law was enacted. This led to residential construction and apartments’ development not taking off as large chunks of urban land got frozen. Only State development authorities were allowed to develop land. She believed that outsourcing of business was harmful and the Contract Labour Abolition Act was brought in. She nationalized insurance and coal mine business. She botched up the nationalization of wheat trade (subsequently reversed) to tackle the unmanageable inflation. It led to greater inflation. This led to social and trade union unrest where large number of man-days were lost. The first oil shock had already had an adverse impact. Due to its tilt towards Pakistan, the United States suspended a lot of aid to India. Inflation in 1974 touched a staggering 20.2 percent and reached 25.2 percent in 1975. Labour laws were made more stringent and these led to a near economic collapse. There was large scale unemployment and the unprecedented price rise. Investment in the economy had taken a back seat. To make matters worse FERA was enacted. The Foreign Exchange resources in 1975 and 1976 were a mere 1.3 billion dollars.
On 28th February 1974 Shri Y.B. Chavan, the Finance Minister presented the Budget in which he said “as the House is aware the Government has been deeply concerned about the acute inflationary pressure that has prevailed in the economy during the last two years, it is a matter of deep regret that despite these measures, prices continue to rise, the steep fall of 9.5% in agricultural output in 1972-73 was bound to upset the balance in demand and supply, the available indications suggest that there was hardly any increase in the rate of growth of industrial production in 1972”.
In the Budget Speech of 1975-76, Finance Minister C. Subramaniam echoed similar words “inflation has been spreading and its devastating impact across national boundaries continue to impose on developing countries such as India burdens and hardships which we have been ill-equipped to withstand. The impact on the living standard of our people and on the pattern of real incomes within the country has been serious enough”.
The Loss of Political Goodwill
By 1973 it became apparent that the Government had no intention of changing a disastrous economy path on which it had embarked. Its political strategy was instrumental in the Government losing the sympathy of the intelligentsia. It was engaged in a battle with the Supreme Court in order to ensure that the Golak Nath judgement was reversed. This effort failed as majority of Judges decided against the Government in the Keshvanand Bharti case. The three senior judges of the Supreme Court Justice Shelat, Justice Grover and Justice Hegde were superseded and Justice A.N. Ray was appointed Chief Justice of India. The superseded judges resigned. The court was now packed with Government preferred judges. A dangerous thesis was propagated by Law Minister H.R. Gokhale and Steel and Mines Minister Mohan Kumaramangalam that judiciary must follow the social philosophy of the Government and judges must be appointed on the basis of their social philosophy.
The Press was not spared either. One way of controlling the media was to pinch the pocket of the media. The Government therefore, passed an order putting restrictions on the number of advertisements that a newspaper could carry. It was challenged before the Supreme Court by the leading newspapers. Fortunately, the Constitution Bench by majority of four against one struck down the Government action. Justice K.K. Mathew a pro-Government judge in the Keshavanand Bharti case was the dissenting judge who favoured media restrictions.
Two Freak Events
There were two freak events which were parallelly occurring in 1973. On account of the unprecedented price rise in the hostel mess charges of the L.D. Engineering College in Ahmedabad were increased. The second event related to the maverick socialist leader Raj Narain who had lost the 1971 elections to Smt. Indira Gandhi and had filed an election petition challenging the validity of her election before the Allahabad High Court. Political observers had initially believed these events as one of the little consequences to the Government and Mrs. Gandhi.
The low key agitation arising from the hostel price rise engulfed the whole city of Gujarat and it became impossible for the Chief Minister Chimanbhai Patel to manage the social unrest. It became an unmanageable mass movement. The entire civil society was on the streets. The students of Gujarat led the movement. The veteran leader Morarji Desai sat on a fast unto death, till assembly was dissolved and fresh elections were held. The Government had to give in, leading to the dissolution of the state assembly and holding of the fresh elections in June 1975.
Developments in Gujarat triggered similar sentiments in other parts of the country. The immediate impact was in Bihar where frustrated with corruption, unemployment and inflation, the Chhatra Sangharsh Samiti launched a mass movement in the State. Shri J.P. Narayan (JP) who had retired from active public life, jumped into the movement. He inspired the students not only in Bihar but all over the country to organize similar protests. In 1974 as a President of the Delhi University Students’ Union, I convened student leaders from all over the country for a two-day Coordination Committee meeting with JP. I requested JP to address a mass rally on the University campus in Delhi which witnessed an unprecedented turn out. JP toured several parts of India. Student organizations and political parties, particularly the Jan Sangh, Congress (O) Swatantra Party, the socialists all joined the movement. Gandhian and Sarvodaya leaders became active in the movement. The Akali Dal got out from the gurudwara politics. Led by Sardar Prakash Singh Badal, it joined JP in a big way. So did the veterans Biju Patnaik and Acharya Kriplani.
12th June 1975 turned out to be one of the most disappointing days for Mrs. Indira Gandhi. She had been unable to manage the economy. She was increasingly seen as dictatorial and vindictive. The opposition had joined ranks against her. The day began with the sad news of the demise of one of closest Advisers Shri D.P. Dhar. By the afternoon the result of Gujarat Assembly election had come and the Congress party lost Gujarat for the first time and Shri Morarji Desai’s blessed opposition alliance led by Shri Babubhai Desai won an absolute majority. Then came the stunning news that Justice Jag Mohan Lal Sinha of the Allahabad High Court had unseated Mrs. Indira Gandhi as a Member of Parliament and declared her election as null and void. She was accused of spending more money on the elections than permissible and having secured services of Yashpal Kapoor, a public servant, to further her election process. She was held guilty of corrupt practices.
Are individuals indispensable in a Democracy?
By the evening of 12th June large demonstrations were organized outside the Prime Minister’s residence that the judgement of Allahabad High Court should not be accepted. The rule of law was sought to be replaced by a politically dangerous principle that Indira Gandhi was indispensable. A situation was created for the party to rally behind her. An appeal to the Supreme Court was immediately prepared and filed. She succeeded in getting Nani Palkhivala to appear for her. It was the month of June and the Vacation Judge Justice V.R. Krishna Iyer was to hear this appeal and the possible grant of interim order against the High Court judgement. Before the hearing, the Law Minister Gokhale wanted to meet Justice Krishna Iyer and discuss the case with him. The judge asked Gokhale the purpose of the meeting which Gokhale told him honestly. The judge politely declined the meeting. This was disclosed by the judge in his memoirs. The Judge heard Palkhivala for Indira Gandhi and Shanti Bhushan for Raj Narain and passed the usual order which is passed in election appeals. The appeal was admitted. Palkhivala’s request for a stay on the judgement of the Allahabad High Court was rejected. Indira Gandhi could attend Parliament but could not speak as a Member of Parliament. She could speak only as the Prime Minister. The Supreme Court’s order intensified the demand for her resignation. On 24th June the opposition leader met at the Gandhi Peace Foundation with JP. As the Convener of Youth and student organizations, I sat in the back row observing the then national leaders chalking out the strategy. A nationwide satyagrah was to be launched from the 29th of the June. The 25th June witnessed a big rally at Ramlila Maidan. The pressure for resignation was building up.
The midnight of 25th June
Since the war with Pakistan in 1971 India was already in a declared stage of emergency under Article 352 of the Constitution. This emergency was on account of external aggression. There was no need to declare a second Emergency. But it was Siddhartha Shankar Ray who advised her that the second proclamation of emergency was required. It was necessary, he argued to proclaim emergency on account of internal disturbances. Accordingly on the mid night of 25th and 26th June a fresh proclamation was got signed by the President on a state of internal emergency. Simultaneously with the proclamation under Article 352 another proclamation under Article 359 was issued suspending the fundamental rights under Articles 14, 19, 21 and 22 of the Constitution. Every Indian was now devoid of this fundamental right. It was a phoney emergency on account of proclaimed policy that Indira Gandhi was indispensable to India and all contrarian voices had to be crushed. The constitutional provisions were used to turn democracy into a constitutional dictatorship.
The morning of 26th June
In the midnight of 25th and 26th June political leaders across the country were arrested by the police. All those who were opposed to Mrs. Indira Gandhi were a special target. I was one of those whose house was encircled by the police in the early hours of 26th morning. My father, a lawyer, asked for the documents for my detention, which the police did not have. They took him to the police station and then sent him back saying that I must report to the police. In the meanwhile, I escaped from my house and spent the night with a friend in the neighborhood. On coming to know what was happening I started to prepare for organizing a protest on the morning of 26th June. In the early morning I was trying to find out what was happening in other parts of the country. Most of the leaders had been arrested and were taken to Jail. The electricity connection at Bahadurshah Zafar Marg – Delhi’s Press Street, was cut off to ensure that no newspapers were published. By 10 AM censorship has been imposed on the newspapers and an official of the Censor was sitting in the office of every newspaper. I led a protest of Delhi University Students where we burnt effigy of the Emergency and I delivered a speech against what was happening. The police had arrived in large number. I got arrested only to be served a detention order under the Maintenance of Internal Security Act. I was taken to Delhi’s Tihar Jail for the purpose of detention. I thus got the privilege for organizing the only protest on the morning of 26th June 1975 and became the first Satyagrahi against the Emergency. Little did I realize that at a young age of 22 years, I was participating in events which were going to be a part of history. For me this event changed the future course of my life. By late afternoon, I was lodged in Tihar Jail as a MISA detenu.
(to be continued tomorrow)
Posted on 22 June, 2018, No Comments Comments admin
Human rights are at the core of India’s Parliamentary democracy and Constitution. As the world’s largest democracy we gave ourselves a Constitution which guaranteed to every citizen the basic human rights. The right to equality, the right to life and liberty, basic fundamental rights such as free speech etc., the right to religious freedom, the right to judicial redress amongst others, Parliamentary democracy and freedom to vote are essential aspects of those fundamental rights. Most of these fundamental rights are part of the basic structure of India’s Constitution and by their very character unamendable. Even the sovereign Parliament, as a creation of the Constitution, has no constitutional power to amend or alter most of these fundamental rights. In fact, a large number of them are even pre-constitutional rights and have been elevated to the level of natural rights which belong to the human species.
Activities of Insurgent Organisations
Today, amongst others, there are primarily two ideological groups which are involved in insurgency and terrorism. Amongst the Jehadis and the separatists there are many who are trained by our western neighbour and actively financed by it. Their prime objective is to create disaffection against the Indian State. They are active in a few parts of India but predominantly in the State of Jammu and Kashmir. Some local youth have also joined them.
The second group is the Maoist insurgent. They are primarily in some of the tribal districts in central India but their ideological supporters are spread out in various parts of the country. Both these groups want to overthrow constitutionally elected Governments – they abhor democracy. They use violence as a means of impacting a political change. In the system that they perceive, there is no democracy, no elections, no equality, no free speech and no guarantee of life and liberty. On the contrary, most of them believe that power flows from the barrel of the gun. They indulge in large scale violence, killing of innocents and sabotage the development activity for public welfare. The Jehadis believe that there is space for only one religion and the Maoist believe that there is space for none. Of late a visible coordination between the two is becoming more and more apparent.
Who is threatening human rights of the citizens?
In the State of Jammu and Kashmir, who is threatening the human rights of the citizens? The entire Kashmiri pandit community has been banished from the State. Initially spared but after the Chittissinghpura Massacre in the year 2000, most of the Sikh community has moved out. Today most of the people left in the valley belong to the majority community of the State. Most of them don’t support secessionist. Many of them have also set up a base in other cities of India. The Kashmiri youth are going to other States for education and jobs. My own interaction with various groups, particularly students of Kashmir University, left me with an impression that there are extremely bright youngsters with aspirations. Their entire environment is being disrupted. In the last few years most innocent citizens that the terrorist are killing in the valley, are fellow Kashmiri themselves. In fact, one of the worst victims of the Pakistan’s misconceived Kashmir policy has been the residents of Kashmir valley. The region, on the strength of its natural beauty, artisans and agriculture, has the potential of being the wealthiest per capita State in the country. The terrorists have destroyed it. For the past three years the terrorists up their activities in the months of April, May and June so that the economic lifeline of the valley suffers in the tourism season. They terrorise courts; they kill editors; they kill innocent citizens and they don’t allow any alternate religion to be practised. Who is threatening the human rights of the citizens of Kashmir? It is obvious that it is the terrorists and the Jehadis who have done it. The whole country bears a large cost by putting its security personnel in the region in order to protect the innocent citizens. Many security personnel have been martyred.
The Maoist don’t allow development activity to be undertaken in those tribal regions where they have a presence. They kill innocent tribals who don’t agree with them; they destroy public buildings; they kill security personnel and they even charge a parallel tax from helpless citizens. How many times have we come across human rights organisations preparing documents and releasing reports with regard to the human rights of these helpless citizens and the patriotic security personnel who has been sent there to defend these citizens?
The emergence and evolution of human rights organisations
Human rights organisations were conventionally launched in the countries which were either oppressed by dictatorship or were under the oppression of foreign rule. The civil liberties movement had a very important role to play. This is true of India also. Post-Independence these organisations continue to operate at a low key. The civil liberties movement was controlled by the liberals. In the early 70’s, the People’s Union for Civil Liberties (PUCL) was formed by constitutional liberals led by Shri Jai Prakash Narayan. This timed with the supersession of judges, the misuse of Preventive Detention Law and the beginning of dynastic rule. Its relevance increased during Emergency and immediately thereafter. In 1977, the Janata Government headed by Morarji Desai reversed most of the autocratic steps which the Indira Gandhi Government had taken and, thereafter, the comfort level of the liberals on civil liberties increased. In the early 80’s, the ultra-left seized the opportunity and started infiltrating into organisations like the PUCL and the PUDR. The liberals got disillusioned with the Maoist takeover of the civil liberties movement. A few were too gullible not to understand this. Similarly, the Maoist started forming human rights organisations even at the State level and made the non-weaponised ideological Maoist as the face of these organisations. These activists were always in touch with the underground Maoist leaders. They acted as their communication channel. They would rationalise Maoist violence even in the media by arguing that the “root cause” of the violence needs to be addressed. The media was guilty of giving them disproportionate coverage. In the last few years, they expanded their strategy and started coordinating with the Jehadis and separatists notwithstanding their ideological dissimilarity. The only thing common between them was violence, overthrow of the constitutional order and secessionism i.e. the breakup of India. Recent evidence suggest that they are trying to rope in some misguided dalit activists into their fold. This became publically apparent after the “Tukde Tukde” agitation in the Jawaharlal Nehru University and the events which followed in Hyderabad thereafter.
What is the human rights focus of these organisations?
The front human rights organisation which have been taken over by the ultra-left have never spoken about the deprivation of the human rights of the innocent citizens who are victims of their violence. They have never a tear to shed in the indiscriminate killing of the security personnel. They have a propaganda policy and have successfully infiltrated their evil idea at two levels;
Firstly, their ability to coordinate with opinion makers in the western world and with the global human rights organisations has to be recognised. Secondly, even though the Congress Party historically and ideologically would have been opposed to these groups, they have earned a sympathy in Rahul Gandhi’s heart. He had no qualms about joining those who raised subversive slogans at JNU and Hyderabad. With this initial success, the others amongst the so called federal front have forgotten the dangers of these groups to India and Indian democracy. The political adventurists in parties like AAP, TMC and the like only look for a political opportunity in these groups. These human right organisations are an over-ground face of the underground. In the system that they believe in, there is no place for life, liberty, equality and free speech. In fact, there is no space for election or Parliamentary democracy.
Ultimately what every Indian is concerned with is who can hold this country together? Of course, an elected Government, a dialogue with the people, a humane approach with the average Kashmiri is the ultimate object of the Indian State which few can disagree. But it is paramount to protect India’s sovereignty and the right to life of its citizens. At times we get caught in the idioms that we create. One such phrase is “muscular policy in Kashmir”. To deal with a killer is also a law and order issue. It can’t wait a political solution. A fidayeen is willing to die. He is also willing to kill. Should he be dealt with by offering Satyagraha before him? When he advances to kill, should the security forces that confront him, ask him to sit on a table and have dialogue with them. A policy, therefore, has to be to protect the ordinary citizen of the valley; get him freedom from the terror; provide him with a better quality of life and environment. A terrorist who refuses to surrender and refuses a ceasefire offer has to be dealt with as anybody taking law in his own hand. This is not ‘muscular’. It is the rule of law. Let one fact be clear. The Maoist sponsored human rights organisations only espouse the cause of separatism and violence – be it Kashmir or Chhattisgarh. They have brought a bad name to a very precious and valuable concept of human rights. Their international affiliates are no different.
Our policy has to be “Save the Human Rights of every Indian – be it a tribal or a Kashmiri” from terrorists.
Posted on 20 June, 2018, No Comments Comments admin
Few days ago Chief Economic Advisor Arvind Subramanian met me over video conferencing. He informed me that he would like to go back to the United States on account of pressing family commitments. His reasons were personal but extremely important for him. He left me with no option but to agree with him.
Arvind had joined us as the Chief Economic Advisor on 16th October, 2014 for a period of three years. On the expiry of the three year I had requested him to continue for some more time. Even at that stage he told me that he was torn between family commitment and his current job which he considered the best and most fulfilling he has ever done.
Arvind’s interaction with the Government in the Ministry of Finance, Prime Minister’s Office and with other Departments was both formal and informal. His instantaneous communications with his interlocutors had increased his effectiveness. The Chief Economic Advisor’s job had multi-facets to it. He is not a spokesman of the Government. He is an Advisor who has to analyse and thinks several steps ahead. It is a unique responsibility with freedom to the work that he enjoys. Arvind functioned within these parameters and concentrated on the challenges to the economy. His early diagnosis of the twin balance-sheet had led us to adopt the macro-economic strategy of higher public investment in the Budget of 2015-16. He conceptualised JAM (Jan Dhan, Aadhar, Mobile) as a data base for availing public benefits. He contributed to the debate of federalism by conceptualising that the Indian federalism has not merely to be cooperative but also competitive. He came out with newer ideas, policy reforms in the sectors of clothing, fertilizers, kerosene, power and pulses. His report on the Revenue Neutral Rate was of great use in forging a consensus which led to the constitution amendment enabling the GST. He participated in every meeting of GST, gave his independent views and was heard in rapt attention by almost every Finance Minister.
He elevated the quality of the analysis and the presentation of ideas for public deliberation in his four “Economic Surveys”. His documents for four years was treated by several independent critics as one of the best ever produced. The latest survey had about 15 million visitors from 117 countries. The Economic Survey today is a basic teaching material all over India. He thought ahead and, therefore, came out with futuristic ideas on rationalisation of removal of “subsidies for the rich”, universal basic income, climate change, from “socialism without entry and capitalism without exit” and the four C’s that he had historically paralysed decision making. He conducted the first online course on Indian economy for the benefits of students and teachers across the country. He launched the Government’s online education platform “Swayam”, which became one of the most followed courses in India. He travelled across the country and spoke on public platforms on economic issues to elevate the quality of public discourse. He built up a strong team of both “insiders” and “outsiders” in the Economic Division of the Ministry.
Personally I will miss his dynamism, energy, intellectual ability and ideas. He would walk into my room – at times several times a day, addressing me as “Minister” to give either the good news or otherwise. Needless to say his departure will be missed by me. But I know that his heart is very much here. I am sure he will keep sending advice and analysis wherever he is.
I wish Arvind Subramanian and his family all the very best.
Thank you Arvind.
Posted on 18 June, 2018, No Comments Comments admin
The Fourth quarter results of GDP data showed a phenomenal 7.7 percent growth rate and has established India firmly as the fastest growing global economy. This trend, according to experts, is likely to continue for the next few years. With structural reforms like demonetisation, the implementation of the Goods and Services Tax and the enforcement of the Insolvency and Bankruptcy Code, we had two challenging quarters. Those who predicted a two percent decline in GDP growth have been conclusively proved wrong. A distinguished predecessor of mine feared that he may have to live his future in poverty. We have enabled every Indian to be a part of the world’s fastest growing economy. The future looks much brighter than the past. This trend is likely to continue for some years.
The Impact of Structural Reforms
All the structural reforms undertaken in the last four years have been detailed in my blog dated 26.5.2018 titled “My Reflections on the NDA Government after Completion of Four Years in Power”. Similarly, the social sector schemes and the rural development programmes of the present Government have been unprecedented. These involve legislations which are path breaking and development works in roads, railways, housing, power, sanitation – which yield high social benefits require high level of government expenditure. This type of high government spending promotes growth. This is what we are witnessing today.
Where are the Jobs?
An analysis of the data released clearly shows that the construction sector is expanding by double digits. It is a job creating sector. Investment is increasing. Domestic investment is also increasing. The FDI is at an unprecedented level. The IBC is unlocking the value in the Non-Performing Assets. Fixed capital formation is growing. Manufacturing is expanding. We are spending huge amounts on infrastructure creation. Expenditure on rural projects has increased in a big way. The social sector schemes, more particularly the financial inclusion programmes, have created a wave of self-employment. Each one of these is a high job creating sector.
The Revenue Situation
If this trend continues over the next few years we are looking for a better future. The principal source of income of the Central and the State Governments is tax collection. If India remains a tax non-compliant nation, both Center and State Government will have very little to spend. They will borrow more and spend less. Demonetisation, GST, digitisation, AADHAR and the anti-black money measures are leading to gradual formalisation of the Indian economy. Measures like Foreign Black Money Act, Benami Prohibition Act, Income Disclosure Scheme, changing the tax treaties with Singapore and Mauritius have all yielded rich dividends. Net direct tax collection has seen an unprecedented rise in the last few years. We have now reached 6.86 crore income tax return filers last year. The number of income tax returns post demonetisation show a 25 percent growth. Even the corporate returns have increased by 17 percent. The GST after a few weeks of its implementation became problem free and is leading to higher tax collection. With higher revenues, the Government has been able to spend more on infrastructure, rural India and social sector schemes and yet maintained fiscal prudence and keeping the fiscal deficit on downward glide path.
The Central Government collects taxes in the form of income tax, its own share of GST and the customs duty. 42 percent of the Central Government taxes are shared with the States. State Governments collect their 50 percent from GST besides their local taxes. These are independent of taxes on petroleum products. The States charge ad valorem taxes on oil. If oil prices go up, States earn more.
The last four years have seen an improvement in Central Government’s tax-GDP ratio from 10 percent to 11.5 percent. There is an increase of 1.46 percentage points. Almost half of this, 0.72 percent of GDP, accounts for an increase in non-oil tax-GDP ratio. The level of non-oil taxes to GDP at 9.8 percent in 2017-18 is the highest since 2007-08 a year in which our revenue position was boosted by buoyant international environment.
Despite higher compliances in new system, as far as the non-oil taxes are concerned, we are still far from being a tax complaint society. Salaried employees is one category of tax compliant assessees. Most other sections still have to improve their track record. The effort for next few years has to be to replicate the last four years and improve India’s tax to GDP ratio by another 1.5 percent. The increase must come from the non-oil segment since there is scope for improvement.
These additions have to come by more and more people performing their patriotic duty of paying the non-oil taxes to the State. The tragedy of the honest tax payer is that he not only pays his own share of taxes but also has to compensate for the evader. My earnest appeal, therefore, to political leaders and opinion makers is that the full and complete suggestion would be that evasion in the non-oil tax category must be stopped and, if people pay their taxes honestly the high dependence on oil products for taxation eventually comes down. In the medium and long run upsetting the fiscal maths can prove counter-productive.
Being Macro-economically Responsible
This government has established a very strong reputation for fiscal prudence and macro-economically responsible behaviour. We know what happened during the Taper Tantrum of 2013. Fiscal indiscipline can lead to borrowing more and obviously increase the cost of debt. The Government will be spending more on repayment of loans than on developmental works. The currency can become weaker thus importing inflation into the country. If inflows reverse that could add to the adverse perception. The government would be spending less on infrastructure, rural India and social sector, thus making development suffer. Reliefs to consumers can only be given by a fiscally responsible and a financially sound Central Government, and the States which are earning extra due to abnormal increase in oil prices.
Another distinguished predecessor of mine had stated that the tax on oil should be cut by 25 rupees per litre. He never endeavoured to do so himself. This is a “Trap” suggestion. It is intended to push India into an unmanageable debt – something which the UPA Government left as its legacy. We must remember that the economy and the markets reward structural reforms, fiscal prudence, and macro-economic stability. They punish fiscal indiscipline and irresponsibility. The transformation from UPA’s “policy paralysis” to the NDA’s “fastest growing economy” conclusively demonstrates this.
Posted on 13 June, 2018, No Comments Comments admin
A few weeks ago P. Chidambaram, Finance Minister in the UPA Government, claimed that frying pakodas is not job creation. Being cleverer than rest of his colleagues, he perhaps was trying to neutralise the success story of the Mudra Yojana where 12.90 crore loans have been given for self-employment to various weaker sections. The total of these loans has touched Rs.6 lakh crores. This obviously has led to millions of hands generating new work for themselves and those that they employ.
Two days ago, while addressing a gathering of what they claimed were their OBC supporters, Rahul Gandhi spoke on the entrepreneurial skills of Shikanjiwalas, dhabawalas and mechanics. Though factually what he stated was incorrect, the larger point is that he saw virtues in these professions which can act as a launch pad for many start-ups. The great grandson of the man who authored “The Discovery of India” could with his customary inaccuracies one day give to this country his monumental work on “The Rediscovery of Coca Cola”.
It is the NDA Government under Prime Minister Modi which realised the importance of millions of such self-employment opportunities for which in the year 2015 Mudra Yojana was launched. Most of the beneficiaries took small loans, were prompt in their repayment, set up small enterprises and gave themselves, and perhaps one or two people more, an employment. The UPA never did so. I repeat that it was the UPA which during 2008-2014 indiscriminately lent money through banks to these fifteen big defaulters. The Congress Party President prefers the Gobbelian traditions to say the exact opposite. What he claimed before the audience is precisely what we have successfully implemented.
Why does he believe that 2.5 lakh crores of bank loans have been waived? Is it because of his inability to understand that where Performing Asset is not serviced by the debtor, after ninety days it becomes Non Performing Asset. Its chances of recovery as per RBI guidelines, decline. There is a shift in the column that takes place and the bank has to make provisioning on the basis that the possibility of recovery declines. But the debtor liability remains. There is no waiver. When either through the IBC or through legal processes the debt is recovered back, the entry is reversed. For a President of a national party not to understand this basic procedure of bank functioning should be a matter of concern to the entire party as also the country. In dynastic parties political positions are heritable. Unfortunately wisdom is not heritable. It has to be acquired through learning.
Why this sudden love for the Other Backward Classes?
The OBCs deserted Congress Party in the early 1990s. The Congress was always anti-OBC. Late Shri Rajiv Gandhi made strong speech in Parliament against the Mandal Commission. Recently, the Congress Party opposed the grant of constitutional status to the National Commission for Backward Classes. They voted against the constitutional amendment in Parliament. It opportunistically supported reservation for the non-backwards. It impliedly wants to reduce the quota for the OBCs knowing fully well that the judiciary will not allow 50 percent on reservations to be waived and the new claimants would eat into the OBC quota.
Rahul’s Other Gems
- Interacting with his interviewer in Singapore a few weeks ago, Rahul Gandhi left his audience stunned by suggesting if MRI machines in India were connected, this would lead to a Medical Revolution. How? Except breaching a patient’s privacy by sharing his details with other hospitals what would this achieve?
- He told an audience in Karnataka that his party believes that there should be only one GST rate as in Singapore. Singapore charges 7% GST on all food items, cheap clothing and footwear, medical and education spends as on luxury items – BMW cars, alcohol and five star hotels. India has exempted most food items. Should we have same rate for food items, hawai chappals and BMW cars? Singapore, unlike India, has no BPL or lower income groups.
- On education he believes we must have 200 IITs. The UPA never did so. It is the NDA which is now creating a network of IIT’s, IIM’s and AIIMS all over the country.
In all the above statements, there is no ideological pattern. Ignorance with anti-Modism is a common thread
Dynastic political parties are family and personality dominated. Ideology takes a back seat. You can oppose the OBC when it suits you. You can shed crocodile tears for them when the opportunism so requires. You can run down jobs created by frying pakodas. You can quantify on the virtues of running a dhaba. The leader’s ill-informed instincts become the ideology. This can only happen to a party which becomes ideologyless; pushes itself to the fringe; is willing to act as a tailender to regional parties. All this because its only obsession is a person called Narendra Modi.