Sunday, October 31

Junior, not the weaker sibling

On Haryana Day, Ramesh Vinayak writing in Hindustan Times, compares Punjab with the neighbouring state to take stock of what it was that made Haryana click and why Punjab didn't

On November 1, 1966, Haryana emerged on the map of India as a separate state, carved out of Punjab. The two neighbours have ever since shared prickly ties, fighting protracted politico-legal slugfests over river waters and territorial issues. While the jury is still out on the contentious issues, the two have also been engaged in another battle -this one, on the development front.

Four and a half decades on, the verdict on this race is clear: Haryana, once dubbed as the poor cousin of Punjab, has outpaced the senior state on most key parameters. Be it per capita income or average growth rate, fiscal buoyancy or manufacturing and realty boom, even foreign direct investment, Haryana has scripted a trailblazing success story, surging ahead of Punjab, which is caught in a leader-to-laggard syndrome.

In fact, the border state's historic head start -the Green Revolution-powered growth of the Seventies -has almost petered out and Punjab now finds itself bracketed with the slowest growing states.
Haryana, in contrast, continues on a rapid-fire progress mode, with the Gurgaon skyline its leitmotif.

That was for the differences. What is common is their dark underbelly -the poor human development indices, most dubious being the highly skewed sex ratio, the worst in the country, because of rampant female foeticide. Haryana also has a blind spot from inequitable growth, which is confined mostly to cities and towns.

As Haryana steps into its 45th year, Hindustan Times tracks the growth trajectory of the two states to answer the oft-asked questions -who is ahead, in what and why? It's true, Haryana has benefited as much from its proximity to the National Capital as from better-managed economy, while Punjab has the lost decade of the '80s to blame for it losing out on virtually every “revolution“ -automobile, IT or retail -that swept across the country. Yet, in the 21st century, there's no denying the overarching factor remains quality of governance.

Monday, October 18

Why Punjab can’t afford pork

Punjab has been playing bad economics for long, P Raghavan writing in The Indian Express cites figures to show that score-sheet reflects poorly on those governing the state
Clashes between powerful politicians over policy is not unusual, but the fight between Punjab’s former Finance Minister Manpreet Badal and his party on the issue of curbing wasteful spending on populist schemes stands out. It’s rare for Indian politicians to stand up against political largesse or pork-barrel politics as the Americans call it. Growing subsidy bills and debt burdens, issues raised by Manpreet Badal, are usually low-priority matters.
But the big question is: how has Punjab’s profligacy impacted its debt burden and fiscal management? Long-term trends show that the Shiromani Akali Dal government has been lax about containing expenditure, and pushed up the state’s deficits. For instance, the numbers show that during the third stint of the Parkash Singh Badal government, the revenue deficit shot up from Rs 1,485 crore in 1997-98 to Rs 2,336 crore in 2000-01. However, Amarinder Singh’s Congress government that replaced Badal’s was more restrained in its spending. The revenue deficit even declined from Rs 3,781 crore in 2001-02 to Rs 1,749 in 2006-07. But the gains made were reversed sharply in the fourth stint of the Badal regime when the revenue deficit of the state doubled in just three years from Rs 3,823 crore in 2007-08 to Rs 6,234 crore in the budget estimates for 2009-10.
The deteriorating trends in the revenue deficit under SAD rule is also reflected in the fiscal deficits. While the fiscal deficit almost doubled from Rs 2,478 crore to Rs 4,958 crore during the term of the third Badal government in 1997-2002, the Congress government during 2002-07 pushed down the deficit from Rs 4,401 crore in 2002-03 to Rs 4,384 crore in 2006-07. And the fourth Badal government has been even more profligate, with the fiscal deficit doubling in just three years from Rs 4,604 crore in 2007-08 to Rs 9,660 crore in the budget estimates for 2009-10. All this has pushed up the total borrowing of the state to Rs 64,924 crore by early 2010, and the amount is expected to go up by another Rs 5,700 crore in the current fiscal year.
One reason for the growing deficits in Punjab is the poor resource mobilisation efforts. The tax-to-GDP ratio of the state is just 7 per cent, mainly because of the small industrial base. The share of the industrial sector in the state economy is just 13 per cent. Resource mobilisation efforts will only get a boost once the GST rollout allows the state to tap into the huge consumption spending in the state.
However, apart from the sins of omission there are also the sins of commission, which place a large burden on the state. The biggest outgo is on the electricity subsidies in agriculture, where the expenditure has gone up from Rs 2,602 crore in 2008-09 to Rs 3,144 crore in 2009-10, which accounts for almost half the revenue deficit of the state. The reason for such a large electricity subsidy bill is the zero tariff for electricity used for agriculture which accounts for close to a third of the total electricity consumption in the state. The agriculture tariff charged in Punjab stands out in stark contrast to the Rs 3.68 per unit charged as agriculture tariff by the neighbouring state of Himachal Pradesh.
The direct consequence of the growing deficit is the bloated debt burden of Punjab which is now far beyond the 30.8 per cent target fixed by the Twelfth Finance Commission. Most recent numbers show that the debt GSDP ratio of the state was 40 per cent in 2008-09, which far exceeds the all-state average of 26.2 per cent and more than double of that of neighbouring Haryana.
A further increase in debt levels would only further squeeze the resources now available for development programmes and widen the growing gap between Punjab and other states. Most recent numbers show the state’s growth rate has hovered around 7per cent, far below that of the leading states, which grow in double digits. So a reallocation of state resources by cutting down unproductive expenditures should now be the first step.
But despite spending far beyond its means, the state has fallen short of meeting the annual plan targets. By the chief minister’s own admission, the actual expenditure of the plan outlay by the state fell from 98 per cent in 2007-08 to just 58 per cent in 2009-10, mainly due to the large outgo on the implementation of the Pay Commission recommendations and the slowdown in the economy which impacted revenues from the real estate sector and the vat collections.

Friday, October 15

Putting Punjab first

Punjab needs to look beyond the infighting in the Akali Dal. Other states, including Bihar, are marching ahead, undertaking administrative and economic reforms. There are issues even former Finance Minister Manpreet Singh Badal has seldom taken up, writes Nirmal Sandhu in The Tribune
The politics of the bickering Badals has at least cast the spotlight on Punjab’s economic deterioration. Politics often dominates the Punjab scene and economics tends to take a back seat. Manpreet Singh Badal has brought the issue of ballooning, unmanageable subsidies to the centre-stage. Subsidies do drain the scarce resources, no doubt. But there are other equally serious issues which need attention.
Even the sacked Finance Minister has never pointed a finger at the reckless spending ways of the Chief Minister and his colleagues, political extravagance and bureaucratic burden the government bears, all of which contribute substantially to the state’s mounting debt.
India’s economic scene is changing fast, while Punjab is still caught in a bind, thanks to lack of a visionary leadership. States are fast developing infrastructure and compete for foreign direct investment. Why foreign investment has bypassed Punjab is an issue that needs wider discussion.
The economic reforms undertaken by the Centre and some of the progressive states aim at limiting the role of government to essentials like health, education, law and order. Governments are withdrawing from areas where the private sector can perform better. Yet Punjab has not seen any reduction in the role of the state. Shrinking the size of the government has never been an issue in the state.
The Centre has passed a law limiting the number of ministers to one-tenth of the strength of the assembly. But the Punjab leadership has sought to adjust party MLAs as parliamentary secretaries. The Himachal Pradesh High Court has observed that if a parliamentary secretary functions as a minister, it would tantamount to perpetrating a fraud on the Constitution. In Punjab parliamentary secretaries function as ministers.
Sukhbir Badal’s traditional politics, like that of his father, aims at sharing the spoils of office with supporters. His proposal to revive the Upper House of the Vidhan Sabha should be seen in this context. Regardless of the burden on the near-empty treasury, key political leaders, required to win elections, have to be adjusted. The Badal government has made serious efforts for ending political unemployment. When was the last time any Akali leader even spoke, let alone do anything, about unemployment among youth?
There are over 60 boards and corporations, which have political heads. The Chief Minister heads the 11-member Potato Development Board. There is pressure now to saddle boards with vice-chairmen as well. There is even a cow protection board.
The reforms suggest every state must close or disinvest in all loss-making public sector units. As the Finance Minister, Mr Manpreet Singh Badal has seldom pushed for administrative reforms or downsizing the government. Instead Punjab is creating new wasteful bodies. A Punmedia Society has been set up to handle publicity and adverting wings of the state.
A state is supposed to have one Chief Secretary and one Director General of Police. Punjab politicians often pick up juniors or bring someone from outside for the two top posts. Then those senior to them are also promoted to the same rank and get the same benefits. There are about half a dozen officers of the rank of Chief Secretary and an equal number of the rank of DGP. Every minister, MLA, IAS and IPS officer has VIP security.
For Akali leaders being in power means having the most expensive car with the red beacon, a maximum number of gunmen regardless of the security threat and issuing commands to the DCs and SSPs. One VC complained that ministers and MLAs approach him for the transfer of even class IV employees.
Political interference in administrative affairs and poor decision-making lead to needless litigation the cost of which is borne by the government as well as the employees concerned. ASI Dilbagh Singh’s increments were stopped in 1979 and he challenged it in court. The case reached the Supreme Court where too the state plea was dismissed. For 31 years he fought for justice.
It is amazing how the state wastes its time, energy and the taxpayer’ money on small cases. The state has a large army of lawyers on its rolls often engaged in trivial legal battles. If decisions are based on transparent rules and principles instead of the whims and fancies of ministers and officials and if high costs are imposed on erring decision-makers litigation costs can be reduced. It is not that just that the taxpayer bears the high cost of governance; the quality of service provided is also substandard.
To be fair, the politics of extravagance is not confined to the Akali Dal. The BJP has been vociferous in defending its own vote bank in urban Punjab. Whenever, the state regulatory commission recommends a hike in the power tariff the party opposes any additional burden on the urban and industrial consumers. Once it forced the government to absorb the power tariff hike, thus reducing the state’s ability to raise resources.
The record of the previous Congress government was no better. It too had resorted to liberal subsidies, including free power to farmers, maintained the idle force of parliamentary secretaries and made lttle effort to limit the state expenditure. At that time too the government was run by taking loans and no administrative or economic reforms were pursued.
Capt Amarinder Singh too as Chief Minister did not have the courage to take on the power employees and unbundle the state electricity board. The bane of state politics is that hard decisions, which are in the long-term interests of the state and its people, are either not taken or are delayed due to the fear of losing elections.
It is, therefore, understandable that Manpreet Singh has found only feeble support from the BJP and Congress leaders. In such a self-defeating and self-seeking political culture leaders like Manpreet Badal feel out of place and lose out to the majority despite being right. If he has got wider public and media support, it is because he is seen as a well-meaning leader capable of taking difficult decisions, which may not be good for winning the next election, but good for the next generation.
The Badal government has made serious efforts for ending political unemployment. When was the last time any Akali leader even spoke, let alone do anything, about unemployment among youth?

Thursday, October 14

Punjab, a state in decline

Wednesday’s sacking of Punjab’s reform-minded finance minister shows it is now one of the most malgoverned states in the country opines Mint

Decades ago, when the going was good, Punjab was the envy of the country. With the highest per capita income level and the highest growth rate among the states, there was much to be learnt from the land of five rivers. All that ended in 1979 when a separatist movement gripped the state. A decade of bloodshed followed. While peace has returned, Punjab is now one of the most malgoverned states in India.
The sacking on Wednesday of state finance minister Manpreet Badal, the only reform-minded member of the cabinet, should be seen as another negative milestone in Punjab’s journey of decline. It is an open secret that Manpreet Badal and his cousin Sukhbir Badal, the state’s deputy chief minister, cannot stand each other. Had the issue been one of a personality clash alone, the matter could have been dismissed as a small incident.
There is, however, more at stake here. Since the Shiromani Akali Dal (SAD)-led coalition government took charge in early 2007, finance minister Badal had tried hard to end ruinous policies such as free electricity for farmers and other consumers in the state, virtually free provision of various services and, in general, a populist bent in the SAD-led government.
Before 1991, Punjab’s economic model made much sense. In an autarchic economy, the single biggest supplier of foodgrains in the country could pretty much demand what it wanted from the Union government. Ever-rising minimum support prices for wheat and rice ensured a constant monetary surplus in the hands of its farmers. But once India opened up, that money looked more like rent income due to a monopolistic provider of foodgrains. Other states—Karnataka, Gujarat and Maharashtra—had much more sound and organic sources of growth. Punjab never tried to catch up.
In the absence of inventing a new economic model for itself, the least the state could do was manage its finances better. Punjab’s politics, dominated as it is by rural oligarchs, has structural barriers that prevent a turn to rational economic policies. One could say that most states have similar problems, but it acquires a different, more insidious, dimension in a high-income and erstwhile high-growth state. Manpreet Badal’s exit shows that Punjab is not even aware of the problem.

Monday, October 11

Guru Granth Sahib too is a 'juristic person'

There are precedents of courts according Hindu deities the status of a person in law. Jatinder Preet writing in The Sunday Guardian recalls, Guru Granth Sahib too was held 'a juristic person' by the Supreme Court.
While there have been sharp reactions to Ayodhya verdict over it holding Ram a juristic person, it would be instructive to recall that Supreme Court had held Sri Guru Granth Sahib too a juristic person in 2000.
The SC elaborated in the judgment “the very words ‘Juristic Person’ connote recognition of an entity to be in law a person which otherwise it is not. In other words, it is not an individual natural person but an artificially created person which is to be recognized in law as such.”
Interestingly the predominant Sikh concern at that time was ‘Has Guru Granth Sahib been equated with Hindu idol or deity?’ or ‘Has it made the Holy Sikh scripture subject to the jurisdiction of worldly courts?’
Sikhs consider Guru Granth Sahib, a compilation of hymns by Sikh Gurus and other saints of the time, not only a sacred book but a living guru. Upholding this in a judgment entitled Shiromani Gurdwara Parbandhak Committee Amritsar versus Som Nath Dass and others delivered on March 29, 2000, the Supreme Court of India held that Sri Guru Granth Sahib is indeed a juristic person.
A section of Sikh community wary of threats to its separate identity from those who called Sikhism a part of Hinduism were apprehensive of the judgment too. They wondered whether the judgment made the Holy Sikh scripture subject to the jurisdiction of worldly courts and facilitated to drag its name irreverently before the courts just like ordinary property holders or is it appropriate to call Guru Granth Sahib a person or a juristic person instead of Guru?
While concerns were being raised in many Sikh quarters on its implications Kashmir Singh, an eminent legal expert called it a landmark and historic judgment of far-reaching consequences and great significance. According to him, the holy scripture of Sikhs was accorded the status of a juristic person for the first time while asserting that Hindu Idols and Maths have always been recognized to be juristic persons in Hindu Law. He cited a Privy Council ruling of 1925 that said “a Hindu Idol is, according to long established authority founded upon the religious custom of Hindus, and recognition thereof by the courts of law, a juristic entity.”

Mosque is ‘not’ a juristic person
Incidentally another case which can be cited as a precedent in the Ayodhya case also involved SGPC. In the case dating back to 1935 the issue of mosque as a juristic person had come up. It involved claims over a mosque known as Masjid Shahid Ganj and its adjacent land over which a Gurdwara had been built in Lahore. The mosque existed in the place since 1722 but on occupation of Lahore in 1762, the Sikhs took over the possession and built a Gurdwara. Following upholding of their claims by Sikh Gurdwaras Tribunal the mosque was demolished in July 1935 by Sikhs leading to riots. A suit was filed in October 1935 in the Court of District Judge Lahore against the SGPC which was dismissed. The case went up to Privy Council that held that a mosque is not a juristic person. According to Kashmir Singh the contention that ‘a Hindu idol is a juristic person and on the same principle a mosque as an institution should be considered as a juristic person’ was rejected. It was held that there is no analogy between the position in law of a building dedicated as a place of prayer for Muslims and the individual deities of the Hindu religion.