Sunday 19 October 2014

Needed: Minimum 50% Modipower, not 20% (Sunday Guardian)

M.D Nalapat is the Editorial Director of The Sunday Guardian.

hose familiar with Yes Minister know how easy it is for bureaucrats to house-train ministers through saccharine phrases. Preening in the midst of what is outwardly an adoring group of senior officials, ministers may be forgiven for going along with the bureaucracy's prescriptions on what they should do, no matter that such an approach would perpetuate a situation in which 300 million citizens of India are desperately poor and a further 400 million have lifestyles far below what is adequate by any reasonable standard. Narendra Modi was elected to power on a break with the Nehruvian "slow speed" past, and for this to happen, not just the PMO but key ministries such as HRD, Defence, Commerce, Energy, Home and Finance need to act as prime movers.
To those outside the cool shades of governmental authority, there is as yet little sign of substantive change in the functioning of some ministries. Segments of the Modi government function as though they were a mix of just 20% Narendra Modi, 40% Atal Behari Vajpayee and 40% Manmohan Singh. Instead, the mix of governance in all branches of government needs to be at least 50% Modi, with this component rising to 90% by the end of the Prime Minister's first term in office. There should be space for even a very few aspects of the Manmohan model. Despite his frequently not doing what the situation demanded (usually because of opposition from his own party), there are elements in Manmohan Singh which are admirable, such as his dignified and democratic refusal to react in public to those who delivered even the sharpest of barbs against him. Together with Home, the Finance Ministry is key to the success or otherwise of Prime Minister Modi's efforts at doubling the rate of growth from the present 5%.
Thus far, there seems to have been less than total success in "unleashing the animal spirits" present within productive forces. If prices have fallen, the cause for that is not RBI Governor Raghuram Rajan's murderous (for domestic companies) tight money policy, but a global decline in commodity prices. Unfortunately, so total is North Block's support for the text-bookish and job-killing RBI Governor, that it may have shelved the proposal to have an Appellate Authority (the FSLRC) for banks and others to appeal to should they encounter RBI decisions that are whimsical and growth-killing, as indeed is the norm at Mint Road these days. Indeed, both SEBI as well as other agencies have such checks, and North Block should not permit Rajan to be left unhindered in his determination to ensure the defeat of the NDA in 2019 because of the failure of the economy to create enough jobs.
And as for black money in external havens, if even Rs 100 crore of that has returned from havens abroad, that fact is yet to be revealed. There is anyway little point going to Swiss banks asking for details of accounts held by Indian nationals during the present year, as since 2010, most of those with black money have removed their funds from such accounts and placed it in safer locations such as Macau. What is needed is to get Swiss banks and other tax havens (many UK-controlled) to give details of dodgy bank accounts held during the entire previous 15 years, something which tracking technology makes possible. Next, to locate within a single Unified Black Money Command agencies such as the intelligence wings of the Income-Tax department, the DRI, the Finance Ministry, the ED, the FIU and the CEIB, thereby reversing the present situation where (except in rare cases) these agencies do not, as a matter of routine, work closely with each other the way they should.
Including the economic wings of the IB and R&AW, such intelligence wings should be significantly expanded and given more latitude to investigate cases. A senior officer of integrity and competence should be put in charge of such a "Unified Black Money Command Authority", with responsibility to track such funds across the globe, including those parked in the names of foreign nationals who are relatives of looters back home. Prime Minister Modi needs to succeed in bringing back much of such cash before 2019.
The Income-Tax Department is the single biggest reason why few sane individuals wish to invest in India (because of the legal authority given to officials to make arbitrary and often vindictive and subjective estimates of income earned and tax due). For the next two years, the I-T department should focus near-exclusively on government servants, especially those at senior levels. How many of their children are studying abroad, and who is paying for their tuition? How many times have spouses made foreign trips or indeed air journeys within the country, and what are the properties actually acquired by the official and his close relatives? If Prime Minister Modi is to succeed in clearing away the rot in the country, he needs to first cleanse the stables of government. Focusing the attention of the Income-Tax Department on government officials, past and present, as well as Central and state ministers and ex ministers across the country would help in identifying those whose expenditure is far greater than declared income. It is not just toilets that need to be built and cleaned, but the sewer that the governance system in India has become. But for that to happen, key ministries will need to work with at least 50% of the efficiency shown by Narendra Modi himself, rather than the 20% which seems the average among too many in his present team.

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