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Claims and Poll Prospects, By Inder Jit, 21 March 2024 Print E-mail

REWIND

New Delhi, 21 March 2024

Claims and Poll Prospects

By Inder Jit

(Released on 25 September 1979) 

Predictably if prematurely, the poll guessing game is on again. Anyone who even looks like having some clue about the popular mood and the possible outcome of the forthcoming general election is in demand. So also are the astrologers who are better placed than most others they have at least Bhrigu Samhita and the stars to go by not only those in seats of authority and their cohorts, but hundreds of others all over the country are busy getting them to peer into the future. Those anxious to retain power of aspiring to membership of Parliament want help to determine their prospects and tactics. Celestial guidance is also sought by scores of captains of industry and others to decide on the political horses they should profitably back and the best way in which they should hedge their bets. Seasoned politicians and observers alone prefer not to commit themselves and speak in parables or in general terms. Candidly, a discussion in terms of numbers is unduly early. The situation is still largely fluid notwithstanding loud, rival blasts.

Anything can happen between now and the New Year; the poll, according to latest indications, is still likely to be held on or about December 30. This will depend upon a combination of several factors: the prevailing circumstances at the time and the ability of the rival parties effectively to pose vital issues at stake before the people and to shake them out of their tragic indifference to their own long-term interest and that of their children. The situation has already changed greatly since August 22 when the President, Mr Sanjiva Reddy, dissolved the Lok Sabha unexpectedly. The Janata Party and its leaders found themselves down in the dumps that day. Within 48 hours, however, they were smiling again when Mr Morarji Desai and others addressed a “protest meeting” at the Ramlila grounds. Even the most optimistic among the Janata leaders were taken by surprise. Over a lakh of persons turned up at short notice in sharp contrast to the attendance at two earlier meetings, one convened by Janata (S) and the other by Congress (I).

Happily for the Janata leaders, their party prospects appear to have improved over the past month. On August 26, a top Janata leader told me: “Bombay’s welcome to Morarjibhai has been even better than the turnout in New Delhi. We should be able to get as many seats as we held in the dissolved Lok Sabha: about 200.” On Thursday, September 20, Mr Chandra Shekhar told me: “We will win at least 225 seats. We may well bag 300 if the present trend continues.” The Janata chief feels particularly confident on three grounds. First, popular response. “The crowds everywhere”, he says, “are twice those of 1977 and as enthusiastic.” Second, the people’s anger against the Janata is now turning against Janata (S). Few are willing to buy Mr Charan Singh’s “alibis” for the spurt in prices. Third, the people’s continuing abhorrence of authoritarianism. Asserts Mr Chandra Shekhar: “The 1977 vote was not negative. Our people voted positively for freedom and democracy.”

If Mr Chandra Shekhar is confident, Mrs Indira Gandhi, Mr Charan Singh and their respective confidants are no less optimistic. A senior Congress (I) leader told me: “Make no mistake, we are winning. Mrs Gandhi alone can give the country a strong and stable government. Our rock bottom is 240 seats. But we are hoping to win 350 seats.” He then explained: “We drew a virtual blank in the north in 1977. This time we expect to win here at least a hundred seats, giving us a minimum of 250 seats all over the country.” (Mrs Gandhi won 150 seats in 1977.) Top Janata (S) leaders dismiss the Janata and Congress (I) claims as “wishful thinking” and maintain: “Our Alliance alone will triumph. We will get at least 250 seats and may even go up to 325 seats. Each of our allies is going to concentrate in its respective stronghold. No, we shall not fritter away our energies. Chaudhury Sahib will concentrate in the north, Mr Urs and MGR in the south, Mr Chavan and Mr Pawar in the west and the CPM in the east.”

All these are essentially claims and counter-claims. Much will eventually depend upon certain vital factors and indicators -- the nature of the contests, straight, or multi-corner, and the attitude of the Harijans and the minorities who have played a crucial role in the poll outcome over the past three decades and more. The caste Hindus and the backward classes have, no doubt, constituted a majority among the electorate all along. But they have invariably reduced themselves to the position of a hopeless minority (and to nonce) by the unthinking manner in which they have exercised their franchise. Experience has shown that of every hundred Muslim voters, for instance, eighty or so make it a point to poll. What is more, all of them have generally voted for one common candidate. In sharp contrast, barely forty out of a hundred caste Hindus have normally cared to vote and, what is equally significant, they have invariably voted for ten or more candidates, if not for as many!

Not many remember certain basic features of India’s electoral landscape. Until the 1977 poll, the Congress virtually enjoyed the full or “captive” support of the Harijans and the minorities. This enabled the party to win electoral battles again and again. Some veteran observers place this support at about 25 per cent of the votes polled. The Congress thus required only a fraction of the remaining vote to win huge majorities; in 1971, it required merely an additional 18 per cent of the caste Hindu votes to win a massive majority of 352 of the 524 seats in the Lok Sabha on a minority mandate of 43 per cent --- 25 per cent plus 18 per cent. But the situation underwent a radical change in 1977, as a result of the Emergency and its many authoritarian excesses. The Muslims largely decided to oppose Mrs Gandhi and a sizable chunk of the Harijan vote also went against the Congress. The net result? The Congress Party got knocked for a six in the north and won seats only in the south.

Mrs Gandhi is well aware of the powerful support her party has received from the Harijans and the minorities. Indeed, it was this support as symbolised by Mr Jagjivan Ram and Mr Fakhruddin Ali Ahmed which enabled her to win her grim battle against the Syndicate in 1969 as also the poll of 1971. (Her first salvo against the Syndicate at the time of the great split, it may be recalled, was the joint letter Jagjivan Ram and Mr. Ahmed wrote to the then Congress President, Mr Nijalingappa, accusing him of “communalism” and of joining hands with the Jana Sangh!) Mrs Gandhi desperately tried to prevent any erosion in the support of the Harijans and the minorities in 1977. She clarified that Government action in regard to Harijans welfare had nothing to do with Mr Jagjivan Ram personally. She also repeatedly projected the Janata as a party dominated by Jana Sangh and the RSS. But all these efforts proved of little avail.

Much of what has been happening over the past few weeks is largely a part of the self-same exercise by the leading political parties: wooing the Muslim and Harijan voters by all means fair or soul and ensuring for themselves “some minimum committed support.” The Janata Party’s decision to go to the poll battle under the leadership of Mr Jagjivan Ram and to hold out to the Harijan voters the promise of giving them India’s first Harijan Prime Minister has created a major problem for both the Congress(I) end the Janata(S). More and more Harijans now appear inclined tο swing their support in favour of the Janata Party much to the chagrin of Mrs Gandhi. Efforts are consequently on to achieve one of two things: either get Babuji, as Mr Jagjivan Ram is popularly known, to somehow cross over to their side or to erode his credibility vis a vis the Harijan masses. Witness the occasional rumour that Babuji is about to join hands with Mrs Gandhi.

Ultimately, one thing alone is clear. There is little scope for going by the old and familiar indicators or by generalisations. The Muslims and the Harijans might have voted en bloc in the past. But neither can be taken for granted any more. Both communities today increasingly understand their abiding interest and are not going to be taken in by gimmickry. Likewise, the caste Hindus splintered their votes all these years. But they may not necessarily do so this time. (Lately, more and more people have been heard to say: “Is it a crime to be a Hindu?”) Again, Mrs Gandhi may appear to be riding a new wave of popularity. But there are still three months to go. The time for hard decisions is yet to come. --INFA.

(Copyright, India News & Feature Alliance)

 

Land ‘Grab’, ‘Acquisition’: TOTAL REMEDY, NOT NEWS VITAL, By Dhurjati Mukherjee, 20 March 2 Print E-mail

Open Forum

New Delhi, 20 March 2024

Land ‘Grab’, ‘Acquisition’

TOTAL REMEDY, NOT NEWS VITAL

By Dhurjati Mukherjee 

The alleged land grabbing at Sandeshkhali village in West Bengal by a TMC leader continues to hit headlines, but such incidences shouldn’t come as a big surprise as the poor can rattle off cases of their land being unfairly taken either by government or business houses with support of political leaders. It’s a phenomenon across the country oft heard and rather could well even get camouflaged under the term land acquisition. 

This case has, however, drawn much more attention unlike others as it’s got entangled in the murky BJP-TMC rivalry and the alleged sexual abuse of the village women, which of course  is unacceptable in any civil society. Developments such as Prime Minister Modi referring to the incident innumerable times during his recent visits to the state; a division bench of Calcutta High Court directing the state to file an affidavit stating the plan to restore the farmlands allegedly grabbed and turned into pisciculture ponds; directing the CBI to file an affidavit stating how protection could be given to those who had lodged police complaints against land grabbing and sexual torture, domake news and shall be forgotten later. 

The larger picture, of land grab or land acquisition, which has been a phenomenon in the country since the 50s and 60s, simply gets lost. It would not be wrong to recall that even the government has somewhat forcibly taken land from people for various projects like widening of roads and highways, railway projects, power projects etc. And this has been done by paying a paltry sum to the villagers. 

At that time, there was no National Rehabilitation Policy, and the government didn’t deem it necessary to rehabilitate them properly so that these poor people could make a living at their new site. The poor were put to great distress,and some even squandered the money received in liquor and died due to untreated diseases like TB. Likewise, there’s the problem of taking away of tribal land and inadequate compensation been given, with suggestions coming that a national mission for effective implementation of FRA be set up so that all claims are sympathetically considered.  

Recall, the Tatas took away land from the poor tribals in building the township and the steel plant in Jamshedpur as per various reports to substantiate this. The suffering of those whose land was taken away had been documented as survival continued to haunt them. Insofar as land acquisition is concerned, government could justify it on grounds that it has been taken for essential infrastructure projects, but the question remains who benefits the most from such action. The roads and highways, which are normally 6-lane or even wider, to facilitate faster movement of traffic may indirectly help the greater community but essentially such movement of cars benefit the rich and middle-income sections of society. 

It is well-known that the land acquisition laws that India inherited from colonial times were undoubtedly heavily loaded against the interests of landowners and other people dependent on land for their livelihood. The Acts passed have enhanced the scale of compensation to be received by landowners and additionally provided for their rehabilitation and resettlement (R&R) in the event of displacement. 

In fact, the Land Acquisition Rehabilitation and Resettlement (LARR) Act of 2013 diluted most of the ruthless provisions of land acquisition act of 1894 and, most importantly, it made andeliberate attempt to put in place the building block for easy accessibility of land. It included the Act’s fundamental change--the introduction of compulsory prior consent from the farmer for acquiring land. Secondly, the major change in terms of replacing the administrative coercion for land acquisition with market transaction and increased finance to those left without land or livelihood. Thirdly, the Act also provided for a new national wide institutional architecture for rehabilitation and resettlement. Due to these changes, the 2013 Act has been considered as progressive and people-oriented act but only theoretically. 

Most states did not think it fit to judiciously enforce the provisions of the Act, as is the case with others. Moreover, with most of the state governments demarcating lands as Special Economic Zones, the problem has been getting worse. In recent years, the Act has been violated and its said farmers have to unwillingly part with their land with very little compensation and a bleak future. 

Land acquisition is indeed a sensitive subject and there are reports indicating that people whose land has been virtually taken have not benefitted to the extent they should have. It is critical ry to take stock of how much land has been taken away in the last five decades or so and whether the people, whose land has been taken away, are properly rehabilitated, as per the National Rehabilitation Policy, and earning enough for a decent livelihood for themselves and their family.    

Plus, the need to have case studies of land mafias, across states including West Bengal, Jharkhand and Bihar,who takeover land by paying a paltry sum of compensation to further their own business. It is also feared that in majority cases, the people who take away such land have the blessings of the ruling party, and in some others, leaders get a share of such transactions.  

Not only should fair and just compensation be given, but culprits who cheat the poor in the process of acquiring land must be brought to book. Experts have rightly sought the need for an independent expert committee to look into the right of the land loser to get fair compensation and transparency in land acquisition as also his consent in the matter. Unfortunately, the Act does not provide clear guidelines for calculation of what could be said ‘fair compensation’. And needs correction, keeping in view the rehabilitation aspect of the land loser. Additionally, there should be judicious resettlement and rehabilitation of the families affected. Failure to comply with these provisions should be viewed strictly and made punishable. Headlines of land grab or action against a solitary case is not a remedy.---INFA 

(Copyright, India News & Feature Alliance)

Perpetual Dance Of Democracy: ONE NATION, ONE POLL, ANYONE?, By Poonam I Kaushish, 19 March 2024 Print E-mail

0Political Diary

New Delhi, 19 March 2024

Perpetual Dance Of Democracy

ONE NATION, ONE POLL, ANYONE?

By Poonam I Kaushish 

Its’ party time folks as India readies for its greatest nautanki of democracy: General elections April-May. Amidst the bugle sounding BJP’s rallying cry for ‘Ab ki baar 400 paar’ and Congress President Kharge warning it could well be the last election and death knell for federalism, Ex-President Kovind Committee’s 320-pages report recommending a two-step electoral process: Lok Sabha and Assemblies elections followed by municipal and panchayat polls within 100 days has caught the zeitgeist this week.

Including the suggestion that once the appointed date to bring into force provisions for transition to simultaneous polls is fixed, “tenure of all State Assemblies constituted in any election after the appointed date would come to an end on expiry of Lok Sabha’s full term irrespective of when an Assembly was constituted.” Moreover, Constitutional amendments to this effect would not need ratification by States.

Questionable are we moving to ‘One nation, One Election?’ Specially as the country has witnessed 400 polls to Lok Sabha and State Assemblies till date. And given Law Commission had thrice — 1999, 2015 and 2018 — argued for simultaneous elections to “free citizens, Parties and Government from encumbrance of asynchronous elections.

Ditto Parliamentary Committee 2016 which said holding simultaneous elections would reduce massive expenditure incurred in holding polls, underscored by Election Commission pegging cost of holding simultaneous elections at Rs 4,500 crore.

Undeniably, simultaneous elections could be economically viable and a big saving for exchequer. Welcome, as it would help avoid disruptions in governance and policy paralysis due to frequent polls as once a Party is elected and Government formed it can get down to work, take hard decisions in public interest and concentrate on delivering good governance without worrying  about its impact on vote banks.

Think. Several good initiatives are dumped due to electoral considerations lest it upset a caste, community, religion or region. All, becoming victims of policy shutdown, mismanagement and poor implementation.

Let’s face it. Post 2019 Lok Sabha elections, we witnessed 35 State Assembly polls. Now alongside Lok Sabha we have Odisha, Andhra, Arunachal and Sikkim followed by Maharashtra-Haryana October, Jharkhand November. February 2025 Delhi and December Bihar goes to polls. 

With 15 Parties opposing the report, challenge is the procedural details and Government’s disregard of citizens’ right to removing non-performing Governments. Besides, fear it militates against the federal structure of multiple diversities and Constitution’s spirit along-with complex legal procedures that Kovind report proposes for bringing Constitutional amendments which needs to be weighed carefully to allay fears of “infringing federalism.”

More. Opposition perceives one-nation-one-poll as imposition of BJP;s political agenda and extension of its ideological preference for homogeneity and uniformity vis-à-vis faith, customs, language, dress and diet given federal relations are fraught in rival ruled States. And it hinders political accountability and performance scrutiny.

Recall, post Independence, elections to Lok Sabha and State Assemblies were conducted simultaneously October 1951-May 1952 until Nehru Cabinet blotted the copybook by dismissing CPI-led Government in Kerala 1059. But with political instability gaining ground in the sixties, the cycle of simultaneous elections got disrupted.

While Punjab, Bihar and UP couldn’t complete their tenures on three occasions between 1967-1980, Odisha Assembly witnessed five elections during that period and West Bengal Assembly four elections 1967-1972. Resulting in many unstable Governments at Centre and States, leading to early dissolution of Lok Sabha or Assemblies whereby India could never go back to holding simultaneous elections again.   

Moreover, expenditure spiralled, doubling to over Rs 23 crores in 1980, further doubling to Rs 54 crores 1984 and Rs 154 crores 1989. In 1991expenses shot up to Rs 359 crores, 1999 to Rs 880 crores, 2004 Rs 1300 crores, 2014 Lok Sabha elections Rs 30,000 crores and staggering Rs 60,000 crores in 2019.

However, the legal and Constitutional position on Lok Sabha/ State Assembly term is challenging and requires amendments, including ratification by States to avoid future legal confrontation. An example: Article 83(2) and 172(1) aver Lok Sabha/ State Assembly term respectively should be for five years from date of its first sitting. 

But, both do not have a fixed term and can be dissolved earlier. Further, the provisos allow extension of Parliament/Assembly's term for six months at a time following a ‘proclamation of emergency.’ 

Besides, Article 356 allows Centre to bring a State under President's rule by prematurely dissolving its Assembly. But, the Anti-Defection Act, 1995 and Supreme Court placed several safeguards to prevent misuse of this power. 

Kovind’s proposal is not finding takers among INDIA Parties. Why should we agree to truncated tenure of our State Government, is a common refrain. They believe Government’s motive of simultaneous elections is to bridge BJP’s weakness in Southern States where it is hampered byt linguistic sub-nationalism and ideology. 

“It is motivated by political considerations, as when concurrent elections are held voters tend to vote for the same Party. BJP knows it has unparalleled dominance at national level. Also, poll issues at Centre and States are different which would create confusion. A Party could be deserving of support at the Centre for its policies and performance at the national level. Yet, it could be deserving of popular punishment and defeat for its policies and performance at State level. Also, this fractious process would strain our federal fabric,” said a Congress leader. 

Some argue a fixed term for Lok Sabha/ State Legislatures goes against Parliamentary democracy’s basic tenets. What happens if after simultaneous polls, an Assembly’s five-year term is interrupted by political realignments? Clearly, this would help the dominant national Party at the Centre and disadvantage the regional player.

What happens if a Government falls at the Centre or State mid-term? Or if a Government enjoying people’s mandate is voted out, it would continue to hold office or be replaced by another Government, which might not necessarily enjoy the popular mandate?

Plainly, a Government which lacks the confidence of the House would be foisted on people, with no say in the matter. Smacking, of de facto dictatorship or monarchical anarchy, an idea which translates into unrepresentative governance. It would impose artificial fixity on legislatures terms at Centre and States which is at odds with a system given its staggering diversity. 

To avoid this EC suggests a no-confidence motion against a Government must come alongside a confidence motion for another Government and Prime Minister and voting for both motions done simultaneously. Ditto in State Assemblies. 

As and when India ushers in ‘One Nation, One Election’ it will not be the first country to do so. In Germany, Bundestag (Lower House), Landtags (State Assembly) and local elections are held simultaneously. Philippines, too conducts simultaneous elections every three years, though it has a Presidential form of Government. 

True, there are cogent arguments on either side: Development vs accountability? Electoral expenses vs political choices? Governance vs electoral fairness?  Given how elections have an almost talismanic power in the country’s democracy the stakes couldn’t be higher. 

Remember, elections are the bedrock of our democracy, we should avoid polls duplication. With States perpetually in election mode, managing Government is akin to running with the hare and hunting with the hound. India’s democracy should not be reduced to a tu-tu mein-mein between Parties all the time. ---- INFA

 (Copyright India News & Feature Alliance)

 

 

 

 

 

Electoral Bonds Shear Rs 29 Tr: BANKS, ECONOMY IN TURMOIL, By Shivaji Sarkar, 18 March 2024 Print E-mail

Economic Highlights

New Delhi, 18 March 2024

Electoral Bonds Shear Rs 29 Tr

BANKS, ECONOMY IN TURMOIL

By Shivaji Sarkar 

The Indian economy may or may not have matured, it has specialised in its murky Bombay stock operations. It did not crash alone on Wednesday. Two days earlier, on Monday, too the chinks were noticed in the State Bank of India shares in the wake of the Supreme Court’s firmness on submission of details on electoral bonds (EB). In two months, the market has dumped a huge loss of Rs 29 lakh crore. The small caps also took a hit of Rs 30,246 crore portraying far from a glowing picture. 

The losses are the biggest since Covid-19. On March 11, the market lost, Rs 3.15 lakh crore mostly hitting the SBI, followed by Rs 13.9 lakh crore losses across the board, including the Adani group, on March 14. In two sessions the market lost Rs 17.05 lakh crore or almost 30 per cent equivalent of the total central budgetary amount. It tanks over 900 points on Wednesday and on Monday it loses 617.75 points. Together it is a bigger loss than March 13, 2020, when the fall was estimated at minus 14.2 per cent. 

Not to forget that in the wake of the Hindenberg disclosures, the stock market crashed by 1168 points or almost Rs 12 lakh crore on January 23, 2024, the biggest in recent times. Most hits were taken by the groups of Adani, Zee and IRCON. In just about two months, the market has jolted the country with a Rs 29 lakh crore wipe out. The 2024-25 budget is of Rs 47.65 lakh crore. 

Complicating the issue, the retail traders as a new phenomenon are also suffering. Volumes in retail trades multiplied since 2019, when it overtook the US. Murkier operations are in sight. An index of small-cap stocks lost more than Rs 30,246 crore in market value in less than two weeks through March 13. In 2023, Indian investors traded 85 billion in small cap, according to SEBI, in which 90 per cent of active traders lost. 

In 2021-22, investors lost $ 5.4 billion, or $ 1468 apiece, a big sum, for a country with per capita GDP of $2300. This happens through dream cyber kiosks that mushroomed of Whatsapp, Facebook, Telegram and Instagram. The online media carry advertisements by CEOs of top companies alluring to multiply Rs 500 investments. As per SEBI these are mere traps. 

Are the electoral bonds the big shakers? Perhaps. Investors are wary of disclosures of their identities at election time. The way foreign portfolio investors withdrew from the market faintly indicates this. There have been many MoUs with houses in West Asia and other countries. 

Some days back, SEBI Chairman Madhabi Puri Buch had raised concern over ‘frothiness and bubbliness’. On Thursday, Uday Kotak of the Kotak group also says there is ‘frothiness’. The jargon does not say much except that the regulators’ awareness of murkiness and their inability to check it. 

In its statement to the court the SBI says that of the 22, 207 electoral bonds, 22,030 were purchased. The remaining were deposited in the Prime Minister’s relief fund. Two documents were filed with the Election Commission of India, one mentioning names of political parties and the other detailing the bonds redeemed by them. The other set contains the details of electoral bonds purchasers. The total amount has not yet been disclosed though the EC announced that the list has been uploaded on its website. 

It is interesting to note that the Delhi High Court had declared the election donations illegal just prior to the 2014 elections. On 29 March 2014, the court observed that both the Congress and BJP broke laws by accepting cash from companies owned by London-listed Vedanta group (Vedanta Resources) between 2004 and 2012. Sterlite Industries India and Sesa Goa, two companies then registered in India but whose controlling shareholder was Vedanta, donated Rs 87.9 million in total to the Congress between 2004 and 2012. Sesa Goa donated Rs 14.2 million to the BJP, according to the Association for Democratic Reforms (ADR) and presented it in the court. 

An agency report says that a Prudent Electoral Trust has raised $272 million since its creation in 2013, funnelled “roughly 71 per cent of that to BJP. The trust donated $20.6 million to the Congress as well”. It mentions that eight business groups donated to the trust. Nobody has denied receiving corporate funding. The controversy is limited to the factor whether their names and total funding to the parties be disclosed or not. 

On February 15, the Supreme Court struck down the Electoral Bond scheme or anonymous donations to political parties, as unconstitutional, violating right to information under Article 19(1) A of the Constitution. The court also quashed the amendments made to the Income Tax Act and the Representation of People Act, which made the donations anonymous. 

During the last 10 years, electoral trusts reportedly disbursed about Rs 2557.74 to various political parties. Donations are stated to have 360 per cent growth. The growth of donations was phenomenal from 2018 to 2022. Political parties received Rs 9191.41 crore through electoral bonds, with the ruling parties always receiving higher funding. 

The court held that the scheme cannot be justified by saying that it would help curb black money in politics. Instead, it said that transparency in political funding cannot be achieved granting absolute exemptions and feared that such fundings could have a quid pro quo. The top court’s actions rattled the market as such dealings create crisis of credibility and confidence. 

The stock market is not an indication of economic growth. A small fall in the market capex, however, severely impacts the health of the banks. Since the Harshad Mehta scam in 1992, a number of Indian banks and FIs collapsed or merged and now the SBI, Indusind and some other banks are in disarray. The market may recover, but the banking process takes a severe beating. 

This also raises questions about high electoral expenses. The court did have this in mind like the petitioner, ADR. Besides, travel costs have increased, which is owed to the artificially high pricing of petroleum, natural gas, coal and now even electricity. It is also linked to unnecessary toll on highways jacking up inflation to over 5.5 per cent despite low international crude cost. Favours for construction contracts of projects are also questionable, not to forget that rising costs have a cascading effect. 

Market regulators need severe course correction. Losing such huge amount of money in just two months is a serious jolt to the economy and the banking sector. And it may not be the last of such national trauma. Undoubtedly, it would be interesting to watch how it impacts the elections. ---INFA 

(Copyright, India News & Feature Alliance)

 

India-FTA Trade Pact: A REAL BREAKTHROUGH, By Prof. (Dr.) D.K. Giri, 15 March 2024 Print E-mail

Round The World

New Delhi, 15 March 2024

India-FTA Trade Pact

A REAL BREAKTHROUGH

By Prof. (Dr.) D.K. Giri

(Secretary General, Assn for Democratic Socialism) 

The signing of Trade and Economic Partnership Agreement (TEPA) on 10th March between India and EFTA (European Free Trade Association) countries is a real breakthrough for India on building trade relations. This is because India has been negotiating an EFTA with European Union (EU) since 2007, which is yet to conclude. In the meantime, India managed to sign it with four EFTA countries which are small in population but strong in economy. These countries participate in European Single Market of EU and part of the Schengen area. The countries are Switzerland, Iceland, Norway and Liechtenstein. 

Negotiations for a trade agreement began with EFTA in 2008, one year later than that with EU. And it has been concluded earlier. The negotiators of EFTA felt that the agreement signifies success as it precedes any such agreement with the EU or any developed economy. The Indian side was led for the last 10 years by Minister of Commerce and Industry, Food and Consumer Affairs and Textiles, who sounded euphoric about the agreement. He said, “TEPA is a model and ambitious trade agreement”. 

It has created a couple of firsts. For the first time, India is signing an FTA with four developed countries which constitute a powerful economic bloc in Europe. “For the first time in history of FTAs binding commitment of 100 billion USD investment and 1 million direct jobs in the next 15 years has been given. The agreement will give a boost to Make in India and provide opportunities to young and talented workforce. The agreement will provide a window to Indian exporters to access large European and global markets”. 

Beginning in 2008, negotiations covered 13 rounds and then were put on hold in November 2013. They were resumed after gap of 10 years last year in October. And in less than six months, the TEPA was signed. Prime Minister Narendra Modi commended the agreement in a written message, “Despite structural diversities in many respects, our economies possess complementarities that promise to be a win-win situation for all nations”. This feeling was reciprocated by one of the top negotiators, Swiss State Secretary for Economic Affairs, Helene Budliger Artieda, “There was a sense that we could really have a fair and balanced deal, which would the win-win …. five times win for all five parties.” (four EFTA countries plus India). 

The agreement consists of 14 chapters. It focuses on market access related to goods, rules of origin, trade facilitation, technical barriers to trade, investment proportion, market access to services, intellectual property rights, trade and sustainable development and many other legal provisions. Significantly, the agreement will see considerable tariff reduction, increase in market access and simplification of customs procedure. Most of all, the investment of 100 billion USD is the highlight of the agreement which provided the breakthrough moment. 

Prime Minister Modi noted that the global leadership of EFTA countries in innovation and R&D across diverse sectors like digital trade, banking and financial services and pharma will open up new doors of collaboration. Investment in these sectors will open up great opportunities for India. This is the second such full-fledged FTA signed after India’s agreement with the United Arab Emirates.

Indian industries have welcomed the trade agreement. The Director General of Confederation of Indian Industry opined that the agreement will yield multi-dimensional gains to Indian industries. He said, “It will elevate trade, promote technology, knowledge transfer, and encourage investment”. He added that improved market access in EFTA countries for Indian goods will boost India’s export potential and greatly expand employment opportunities. 

As noted, the negotiations concluded in a fast-track mode and the deal was signed just a few days, ahead of the announcement of dates for Lok Sabha elections in India. However, the political-electoral angle in the negotiations could not be attributed to EFTA countries although the incumbent Union Government could dangle it to the electorate as a prize they have secured. A question was asked to the Swiss State Secretary by an Indian journalist, “Did you think this deal would happen before Indian elections?” Her answer was candid. She said that one can never be 100 per cent sure in such negotiations involving five countries. “But I really felt sincere interest, trust and friendship between India and EFTA negotiators”. She pointed out that the agreement on investment chapter was a breakthrough moment. 

According to TEPA’s Chapter 7 that deals with investment promotion and cooperation, both sides are agreed that first tranche of 50-billion USD will be invested within 10 years and another 50 billion in the next five years. The EFTA side clarified in terms of riders that it is not the states that make the investment; it is the companies which do. Norwegian Trade Minister said in a press conference that, “It is about creating the right environment, speaking to our companies and then tracing and tracking development. It is also recorded that if the investment is not made within 15 years with a three-year grace period and another two years in negotiations, India will be entitled to withdrawing some of its trade concessions. 

It is the investment that will define the parameters of success. India should do everything possible to facilitate that investment. Many investors know that India is a big market but are equally aware of the bottle necks. It is for New Delhi to clear such impediments and make it investment friendly. Likewise, India’s export regime has to improve. Timely clearance of goods by the Indian Custom Department is necessary. The timelines for delivery have to be adhered to by the Indian companies. The quality check is another issue that Indian exporters must be wary of. In my research on India-EU trade, these issues were pointed out by EU officials. 

The agreement will come into force after the ratification by EFTA countries expected by the end of this year. Switzerland, the biggest of the four, will possibly bring the agreement for ratification by Swiss Parliament in the autumn session. So, by the end of the year, the agreement should come into force. Other countries which have a different time span for ratification process would also complete it by the end of the year. 

The agreement is indeed a momentous occasion for Indian trade despite the murmur on timing of the agreement which is just before the elections. It is an achievement that Indians should be happy about. This will perhaps open up of the possibility of such agreements in general with other developing countries and hasten the process with the EU in particular. New Delhi should set an example by successfully implementing the TEPA.---INFA 

(Copyright, India News & Feature Alliance)

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