Agenda to destroy agrarian India!
Agenda to destroy agrarian India!Land Bill diluted.The government is doing everything to defend corporate India and MNC interests!The finance ministry now plans to increase fertiliser prices!
Palash Biswas
Mobile: 919903717833
Skype ID: palash.biswas44
Email: palashbiswaskl@gmail.com
It is an agenda to destroy agrarian India. The great indian agrarian crisis is created by market economoy and market is boosted with economic reforms at the cost of rural Indian agrarian world.
Ministry of Rural Development Further Dilutes the Provisions of the Land Bill to Placate 'Fictitious' Investor Sentiments!NAPM Opposes Such Moves and Urges to Pay Heed to Needs of 'Real' Investors, who Own Land, Water, Forest, Minerals and Labour!In what may come as a relief for industry and businesses, the rural development ministry has diluted the consent provision for land acquisition.The consent from two-thirds, or 66 per cent, of land losers will now be required for land acquisition, down from the earlier provision of consent from 80 per cent of land losers, sources told NDTV Profit.Earlier, consent was required from 80 per cent of all project affected families, which included both land losers and livelihood losers. Now, consent will be required only from land losers. However, compensation and restoration and rehabilitation (R&R) will be given to both land losers and livelihood losers.There was strong opposition from several quarters, including the industry as well as several Cabinet ministers to this provision of the land Bill.The Bill will now be discussed by the group of ministers under Agriculture Minister Sharad Pawar at its meeting scheduled for tomorrow.But other provisions of the Bill relating to R&R and compensation issues are likely to remain the same.The Bill will apply only for new acquisitions and not retrospectively. Earlier, the Bill was to apply retrospectively to ongoing land acquisitions where the award of land had not been made or possession not taken.Definition of market value has been amended to ensure that acquisition price does not form the basis for compensation calculation in future acquisitions.Also, power has been given to the collector to not consider transactions which he feels are outliers and not indicative of true value while calculating market value. Earlier, there was a danger of a price spiral as (a multiple of) price of first acquisition in an area would go into calculation of land price for any subsequent acquisitions.States will decide on the thresholds regarding acquisition of irrigated multi-crop land and net sown area. These types of land will be acquired only as the last resort. Earlier, the amount of multi-cropped irrigated land that could be acquired was capped at 5 per cent, and amount of net sown area that could be acquired was also capped.
Further,The Supreme Court verdict on the Presidential Reference on whether the only way to allocate natural resources is through auctions comes as a big relief to the government. But the verdict does not allow the government to license/allocate natural resources in an arbitrary manner. The judgment says the government has to consider the common good and not just revenue maximisation.It just opens the floodgates of all round disaster in rural india already seized within.The aborigine humanscape may not have any respite from monoplistic aggression. Corporate governance, legislation and policy making not enough, the judiciary lets the hell loose as chief justice kapadia as well as to be chief justice Kabir stand rock solid supporting FDI and economic reforms. It is just a death knell for agrarian India.The Supreme Court handed the government a partial victory in its battle with opponents over telecom and coalfield licence awards on Thursday, saying that auction is not the only permissible method for allocating natural resources.Prime Minister Manmohan Singh's government has been rocked by scandals over the non-competitive allocation of radio spectrum and coal blocks at below-market prices, which a state auditor has said together could have cost the exchequer as much as $67 billion in lost revenues.The Supreme Court's view, which is not binding, came after the government sought clarity on an earlier ruling that ordered the cancellation of cellular permits awarded in 2008 because the sale process was "flawed".However, it is likely to be only a small comfort to the government because it also held that auction was still the preferred route when allotting natural resources to private companies for commercial use.
The government is doing everything to defend corporate India and MNC interests!The final report of the Parthasarathi Shome panel, looking into the controversial retrospective tax issue, will be submitted to the Finance Minister on 1 October 2012, Monday, sources in the Finance Ministry said. The panel will also submit the final roadmap on GAAR on the same day.Both reports are likely to be uploaded on the Finance Ministry's website on 1 October.The panel is unlikely to make any company- or case-specific references in its report dealing with the retrospective changes to the Income Tax Act and, thereby, no mention will be made of the Vodafone tax matter.However, the panel is examining the taxability of structures similar to the Vodafone deal, and it will make suggestions on whether such structured deals should be taxed retrospectively or prospectively.It may also suggest whether the interest and penalty liability, for deals which are proposed to be taxed retrospectively, can be waived. Indirect transfer of shares where the underlying asset is Indian has become a contentious issue in the recent past, especially with the government demanding a $2.2 billion tax from Vodafone for its purchase of Hutchison’s India assets in 2007.Mr. Shome was asked to look into the issues related to GAAR by the Prime Minister on July 17.
The finance ministry plans to increase fertiliser prices as part of its effort to put the economy back on track.North Block has written to the ministry of chemicals and fertilisers asking it to revive a move to increase prices by 10 per cent to cut the Centre’s ballooning subsidy bill.The Fertiliser Association of India is also believed to be lobbying hard to get urea prices raised by as much as 70 per cent.JAYANTA ROY CHOWDHURYwrote in the Telegraph, published from Kolkata.Initiated before the presidential polls in July, the exercise could not be carried through because of differences between the minister for fertiliser, who is in favour of a hike, and his deputy.Officials said the effective hike would be a little over Rs 500 a tonne and could help to cut the subsidy bill by up to Rs 5,000 crore, while discouraging farmers from using too much urea.Excessive use of this fertiliser has reduced the productivity of large tracts of land in north-west India.The government has already raised the prices of petrol and diesel and cut the number of subsidised cooking gas cylinders for each family to six a year in a bid to cut down the subsidy bill, which has hit 2.4 per cent of the gross domestic product.In the last 10 years, the government has raised urea prices just once by Rs 500 a tonne.Earlier this year, the government had cut the subsidy on phosphate and potash-based fertilisers by up to 30 per cent; officials had at that time made it known that urea subsidy, too, would have to be slashed.Some time back, the finance ministry had also suggested that urea prices be raised in a staggered manner by 7-10 per cent, every year for the next three years, to address the twin problems of a burgeoning subsidy bill and imbalance in use among various fertilisers.Last year, the fertiliser subsidy was estimated to cost the government some Rs 67,000 crore.Though the government has budgeted for Rs 60,000 crore in subsidy this year, the higher prices of imported urea are expected to push the final sum in the region of Rs 75,000 crore.Officials said the price hike was expected soon as the urea rates have to announced ahead of the Rabi planting season.
FDI in insurance
The finance ministry is also believed to be working on a plan to raise the FDI limit in insurance to 49 per cent from the current 26 per cent.European and US financial firms have long been lobbying for the hike, and every visiting head of state from the West had made this demand for quite a few years.The move, which requires a legislative amendment, had been kept on hold as both the Trinamul Congress and BJP had objected to the higher cap.With Trinamul out of the coalition, the ministry feels the move can be revived.The proposal will have to be discussed with the Samajwadi Party and Mayawati’s BSP to get their approval or the government may face an embarrassment in Parliament.The insurance regulatory and development authority (IRDA) amendment bill will also call for allowing Lloyd’s to open an insurance trading floor in Mumbai, somewhat similar to a stock market, and permit foreign reinsurance firms such as Swiss Re and Munich Re to enter India besides giving a green signal to public non-life insurance companies to raise capital by selling minority stakes.Finance minister P. Chidambaram today met IRDA chief J. Harinarayan. Officially the meeting was on insurance penetration, but sources said the meet was supposed to vet the FDI move before the cabinet took it up for hearing.Earlier this year, when he was the finance minister, Pranab Mukherjee had said that the bill be introduced in Parliament without the section on foreign direct investment as there was still political resistance.However, Prime Minister Manmohan Singh had said the bill should be introduced in the House with the provisions on FDI hike.
On the other hand,after the Congress party, the UPA too today endorsed government's recent tough economic decisions and discussed the need "to do more reforms". This was at a crucial meeting of constituents of the alliance. However, that approval did not happen before DMK and some other like-minded parties tried their best to put the PM and FM on the mat for endangering their collective prospects at the next elections, aside from affecting fortunes of the 'common man'.DMK demanded that the govt withdraw the cap on LPG cylinders or at least raise it by 3-6 cylinders more.But both the PM and FM refused to be pinned down by an enfuriated ally and defended their reforms agenda stoutly.
Prime Minister Manmohan Singh underlined the need for economic reforms to ensure flow of foreign investment.
A fortnight after the announcement to allow FDI in retail, cap cooking gas subsidy and hike diesel prices, the leaders of the ruling coalition today expressed "general satisfaction" over the decisions, which saw the exit of Trinamool Congress-- the second largest UPA constituent.
Auctions are not the only permissible method for disposal of natural resources across sectors, the Supreme Court today said holding that the 2G verdict was confined to allocation of spectrum and is not applicable to other resources.Giving its opinion on the Presidential reference arising out of 2G verdict, a five-judge constitution Bench headed by Chief Justice S H Kapadia also ruled that common good is the touchstone for any policy and if it meets that then any means adopted is in accordance with the constitutional principles.
"In our opinion, auction despite being a more preferable method of alienation/allotment of natural resources, cannot be held to be a constitutional requirement or limitation for alienation of all natural resources," the court said.
It added that it is the government's prerogative to decide on the allocation method, but if resources are distributed for private commercial purposes, methods that do not maximise revenues may be arbitrary.
Telecoms Minister Kapil Sibal said the government welcomed the court's view.
"It has brought clarity to the subject matter and we are very happy about it," he told a news conference.
In February the court had told the government to redistribute the revoked mobile radio airwaves through an open auction, which is scheduled to start in November.
Its latest view is not binding and does not affect its earlier order to cancel the 122 telecoms licences awarded in 2008 and auction off the airwaves, but it may be used as a reference for future government policy decisions.
R&R and compensation provisions
The Land Bill gives just a baseline for compensation. A sliding scale has been proposed and it has been left to the states to fix the multiplier that will determine the final compensation depending on the distance of the plot of land from urban centres. As you move from urban areas towards rural areas the multiplier increases, increasing the compensation amount.
R&R provisions would be applicable even in the case of private purchase if the purchase exceeds a certain threshold. The threshold will be decided by the state Government. Earlier, R&R on private purchases was to apply to all acquisitions above 100 acres in rural areas and 50 acres in urban areas. The state government will also decide about the procedures and functioning of R&R committee at the project-level.
State governments will be free to enact any law to enhance or add to the entitlements enumerated under the Bill, which confers higher compensation than payable under the Bill or make provisions for R&R, which are more beneficial than those provided under the Bill.
The multiplier will not be applicable in urban areas, which means there will be no increase in the market value. However, a ‘solatium’ of 100 per cent (which currently is 30 per cent) will be imposed on this market value calculated. This ‘solatium’ amount is a compensation to ameliorate the pain of forcible acquisition.
All affected families will be entitled to a house provided they have been residing in the area for five years or more and have been displaced. If they chose not to accept the house they will be offered a one-time financial grant in lieu of the same. Affected families will be given a choice of annuity or employment. If employment is not forthcoming they will be entitled to a one time grant of Rs. 5 lakh per family.
Alternatively, they will be provided with an annuity payment of Rs. 2,000 per month per family for 20 years (this will be adjusted for inflation). Displaced families will be given a monthly subsistence allowance equivalent to Rs. 3,000 per month for a period of one year from the date of award.
Affected families will also be given training and skill development while being offered employment. Multiple monetary benefits such as transport allowance of Rs. 50,000 and resettlement allowance of Rs. 50,000 will also be given.
The Bill has a separate chapter to protect the interests of tribals and those belonging to the scheduled castes. As far as possible, no acquisition shall take place in the scheduled areas. And where such acquisition does take place it has to undertake comprehensive consultations with the local institutions of self-governance (including the autonomous councils where they exist).
The rural development ministry claims that given the way in which market value is to be calculated and the imposition of a solatium of 100 per cent over and above the amount, the farmers will surely get a fair price for their land. The collector has to make sure that no other unutilized land is available before he moves to acquire farm land. The final award has to include damage to any standing crops which might have been harmed due to the process of acquisition (including the preliminary inspection).
In case the land is acquired for urbanization purposes, then 20 per cent of the developed land will be reserved and offered to these farmers in proportion to the area of their land acquired and at a price equal to the cost of acquisition and the cost of development. In the case of irrigation or hydel projects, affected families may be allowed fishing rights in the reservoirs, in such manner as may be prescribed by the appropriate government.
Medha Patkar, Dr. Sunilam, Prafulla Samantara, Roma, Gautam Bandopadhyay, Vimal Bhai, Suniti S R, Bhupinder Singh Rawat, Dr. Rupesh Verma, Advocate Aradhana Bhargava, Rajendra Ravi, Shrikanthand Madhuresh Kumar issued a press statement on behalf of NAPM which as follows:
It is extremely unfortunate to note that the draft Land Acquisition, Resettlement and Rehabilitation Bill (retitled as Right To Fair Compensation And Transparency In Land Acquisition, Rehabilitation and Resettlement Bill, 2012) brought by Ministry of Rural Development, which was already seeking to legitimise forcible acquisition by the government for private and PPP projects has further diluted it to placate the investors and their representatives in the Ministry of Trade & Commerce, Finance, Urban Development, Planning Commission and other Ministries.
It is no wonder and seems to be only expected from a government which is being run on the life support given by the private corporations and on their money, especially after completely anti-people decisions in form of allowing FDI in retail and aviation, hike in diesel prices and electricity tariff, disinvestment of public sector units and other related measures.
Even as Group of Ministers meet tomorrow we would like to reiterate our opposition to any such move by the UPA government to enact a legislation which is going to deprive the natural resource based communities of their livelihood and fails to accommodate key recommendations of the Parliamentary Standing Committee comprising of members from different political parties. PSC very clearly has said that no acquisition should be allowed for the private and PPP projects, since they are nothing but a loot of natural resources. The unfolding corruption cases involving auction of coal blocks and spectrum, irrigation scam and others, all testify to greed and illegality in private and PPP projects. It is time for shunning the eminent domain framework of the state rather than expanding it to be a tool in service of private capital. It will be a move for the worse and fundamentally damage the socialist and egalitarian fabric of the constitution, as propounded in the directive principles of state policy or mandated in the Article 243.
NAPM along with many other movement groups under the banner of Sangharsh have been demanding free prior informed consent of the Gram / Basti Sabha for deciding nature of public purpose, to approval of the project and their participation in R&R and various steps of project implementation. Unfortunately under the pressure from industry and their lobbyists even a 80 percent consent clause of the project affected people is now being reduced to the two third of the land losers alone. Similarly, small benefits like a house plot to those displaced are being taken away by increasing the time of residence from three years to five years prior to displacement. Inspite of numerous deliberations with the Ministry, displacement in urban centres seems to be no where on radar, a separate legislation on the urban evictions and displacement is the only way out now.
Ministry of Rural Development in its bid to placate Ministers opposed to its proposal says that the “Bill shall apply prospectively only, i.e., for new acquisitions only, and not retrospectively. Earlier the Bill was to apply retrospectively, i.e., to ongoing land acquisitions where Award had not been made or possession not taken”. This is nothing but further dilution, since we have been saying that nearly 10 Crore people have been affected by various 'development' projects since independence with a very low rate of R&R, nearly 17-20 percent. A new legislation should move forward in addressing the historical injustice committed on the scheduled caste and scheduled tribe who constitute the majority of PFAs by setting up a National Resettlement and Rehabilitation Commission to address their claims of R&R rather than feeling proud in denying their share in development of the nation. It is shameful and nothing else !
A concerted effort is being made by the UPA to say that they are trying to protect the interests of the farmers and communities dependent on the land but unfortunately none of the actions by the government seem to demonstrate that. No wonder if approval to such a Bill by the group of Ministers will only add to discrediting the government, since it seems to be ruling for the interests of the private and multinational corporations alone and not for the people who voted it to power.
The Bill if accepted in current form will not only increase the conflicts surrounding the land across the country as being witnessed around the various infrastructure projects but will prove fatal for it in the next general elections. Group of Ministers must heed to the voices of the people, real investors' and not to the investors holding fictitious wealth. People and communities are real investors, who hold control of land, water, forest, minerals and most important their labour. Lastly, Ministry of Rural Development must not bow to the pressure of the industry lobby and rather pay heed to the Ministry of Social Justice and Empowerment, Tribal Affairs and Urban Housing who are mandated to look after the interests of the marginal communities.
The government cannot terminate oil and gas field contract of a company that has defaulted on its obligations like furnishing of bank guarantees, former Solicitor General Gopal Subramanium has said.
The Directorate General of Hydrocarbon (DGH) has sought his views on Jindal Petroleum Ltd's (JPL) failure to fulfil its legal requirements like submission of bank guarantee for block RJ-ONN-2005/1 in Rajasthan.
Jindal, Hindustan Oil Exploration Company (HOEC), Bharat PetroResources Ltd and IMC Ltd held 25 per cent apeice in the block for which a Production Sharing Contract was signed on December 22, 2008.
While other companies fulfilled their legal obligations,
Jindal defaulted by not submitting the bank guarantee, a financial and performance guarantee and legal opinion within 30 days to become the contractor.
DGH's legal head Simran Dhir on September 21 wrote to Joint Secretary (Exploration) in Oil Ministry that DGH as had been instructed by the ministry, had taken a legal opinion from Subramanium.
Subramanium has opined that Jindal Petroleum has become a contractor despite failing to fulfil its requirements of the PSC, Dhir wrote.
On query if Government can terminate the PSC qua the defaulting contractor and auction the share of the defaulting contractor to any other party, the former solicitor general has opined in negative, the letter said.
On the issue of the share of defaulting contractor (JPL) vesting in the government, Subramanium opined in negative. "However, if all the contracting parties default, the
Government can terminate the PSC," Dhir wrote citing the legal opinion.
Subramanium in his opinion stated that failure to meet legal obligations "does not mean that JPL is not a party to the PSC or a contractor company... The PSC expressly recognises every signatory to that contract as a contractor company."
He went on to state that his "opinion is being rendered on the supposition that only one contracting party has defaulted. Needless to say, if all the contracting parties default, the Government can terminate the PSC. In such an event, no participating interest would survive".
It had been a brutal August for India's Congress party: economic growth was wilting, the monsoon rains were failing and the opposition had it cornered on yet another corruption scandal.
In stepped Sonia Gandhi to revive the morale of the ruling party's lawmakers, exhorting them at a meeting to stand up and fight, fight with a sense of purpose and fight aggressively. It was a stunningly assertive speech from the normally temperate matriarch of a dynasty that has ruled India for most of its post-independence era.
And yet few at the gathering were aware that just a week earlier she had performed an even more dramatic about-face, agreeing to a raft of economic reforms that would be unveiled on Sept. 13 and 14.
Gandhi has no official government post, but as Congress party president and torchbearer of India's widely revered first family, she has the last word on big policy issues: and for her, social welfare has always come before liberalising the economy.
However, more than a dozen officials and party leaders close to the secretive inner circle of the Italian-born leader said that Gandhi was persuaded of the need for urgent action to avert a repeat of the crisis that took India to the brink of bankruptcy in 1991.
This time there was a very grim scenario, said Rashid Kidwai, a Sonia Gandhi biographer who was given an account of the arguments made over weeks by Prime Minister Manmohan Singh and his new finance minister P Chidambaram behind the closed doors of colonial-era government bungalows in New Delhi and even on a plane journey.
It's not that she wanted to go for all this, but it was made very clear to her that, if she didn't, there would be far more dire consequences, Kidwai said.
Sources said the trigger for the reform campaign in Asia's third-largest economy came with the return of Chidambaram as finance minister on Aug. 1.
An eloquent Harvard-educated technocrat with a track record as a reformer, he replaced Pranab Mukherjee, a left-of-centre Congress stalwart who had consistently warned Gandhi against radical reforms that could cost the party votes.
Pranab was from the old school of Indian politics, said a senior government official, who spoke on condition of anonymity. The prime minister and the finance minister had to persuade Mrs. Gandhi that good economics was good politics.
Her acquiescence in the end led to this month's big bang Friday when, a day after taking an axe to costly subsidies on diesel, the government announced that the retail market would be opened to foreign supermarket chains and the bar on foreign investment in both airlines and broadcasters would be lifted.
In sum, these were the most sweeping reforms since Singh took office in 2004 and - in the space of 48 hours - they dispelled the image of a prime minister who was losing his mojo as India's high-trajectory growth faltered.
A RELUCTANT REFORMER
However, insiders say Gandhi remains instinctively wary of economic liberalisation and trimming the budget deficit. For months, she had held out against cutting fuel subsidies that are aimed at the poor and the country's rural majority, fearing the impact on the Congress party's fortunes.
She only agreed when Singh and Chidambaram spelled out that new growth generated by reforms and improved investor sentiment would have a trickle-down effect and provide funds for welfare spending in time for elections due by mid-2014.
They explained to Mrs. Gandhi that social benefits for the poor will need deep pockets, said a Congress party source who declined to be named because the discussions were confidential.
Reuters reviewed more than 30 letters written by Gandhi to the prime minister and U.S. diplomatic cables released by WikiLeaks that portray her as passionate about social issues, and attached to protecting the poor.
That means the sudden burst of reforms could be cut short if Gandhi - who Forbes magazine ranks as the world's sixth most powerful woman - sees no benefits for the rural poor on whom her party relies for votes.
Indeed, party sources said she will now focus on passing a bill on universal food security in December, a populist plan that would cost billions of dollars at a time when her government is under intense pressure to rein in spending.
She just wants enough budgetary resources available to finance her welfare schemes, said Swapan Dasgupta, a prominent journalist and commentator who leans towards the opposition.
She has never spoken about reforms. What she has done is make Congress think of reforms as a low priority and a political liability - she has ingrained that mindset in the party.
A request to interview Gandhi was declined.
PARAMOUNT POWER
Sonia Gandhi, 65, carries the authority of a political family that, after India won independence from Britain in 1947, drove a vision of democratic socialism to uplift the vast rural masses. With that came a mind-boggling range of controls that tied the economy down and kept it closed to global markets.
A turning point came in 1991 when a slump in exports following the collapse of the Soviet Union and a leap in oil import costs due to the Gulf War tipped the country into a balance of payments crisis.
Manmohan Singh, then finance minister, responded with shock treatment, devaluing the rupee by nearly 19 percent. So determined was he to push this through, when the prime minister of the day got cold feet, he reportedly blamed the infamous inefficiency of India's telephone system to pretend that he couldn't contact the central bank in time.
His moves to prise open the economy set the stage for a long run of dazzling growth that peaked at 9.7 percent in 2006/07.
Although Gandhi appointed Singh as prime minister when the Congress party returned to power eight years ago, she has a far more socialist mindset than the Oxford-educated economist who drove that first round of reforms.
Sources close to the Gandhi family say she has been strongly influenced by her late mother-in-law, former prime minister Indira Gandhi, whose policies were considerably left of centre.
Sonia Gandhi initially declined the throne of the Congress party after the 1991 assassination of her husband and former prime minister, Rajiv, but she finally agreed to enter politics six years later to lift the flagging fortunes of the party under her family's brand name.
As party president and chairperson of the ruling coalition, she has kept a low and almost enigmatic profile, appearing to stand above the political fray. When she went abroad for surgery last year there was no official word on her illness, and the media tamely accorded her the privacy a royal might expect.
But Gandhi wields extraordinary power behind the scenes, shaping policy out of the public eye with a tight circle of decision-makers and relying on back-channel negotiations to manage relations with fractious coalition allies
Ratings agency Standard & Poor's, warning earlier this year that India could become the first of the emerging market BRICS economies to lose its investment-grade rating, took a swipe at her resistance to policies mooted by Singh.
The Congress party is divided on economic policies. There is substantial opposition within the party to any serious liberalisation of the economy, S&P said.
Moreover, paramount political power rests with the leader of the Congress party, Sonia Gandhi, who holds no cabinet position, while the government is led by an unelected prime minister ... who lacks a political base of his own.
A BENEVOLENT MATRIARCH
Gandhi gives little away about her thinking on economic policy, but dispatches from the U.S. embassy in New Delhi during the early years of Singh's tenure show she made repeated objections to proposed hikes in fuel prices, which are heavily subsidised to cushion the poor.
Key leaders (including Sonia Gandhi) have opposed the price hikes, criticised the way they have been handled, or urged Congress to capitulate to ... demands for a 'rollback', and the party is finding it difficult to speak with one voice, one of the cables said.
Describing a leader who projects herself as a benevolent matriarch, the dispatches were scathing about one of her pet projects, a scheme guaranteeing 100 days of paid employment per year for rural citizens. At worst, the jobs plan is political patronage run amok and horrid economic policy, one said.
Gandhi also set up the National Advisory Council, a government-funded think tank that offers legislative guidance on social policy and the rights of disadvantaged groups.
A batch of letters Gandhi wrote as chairperson of the council, which were recently released under the Right to Information Act, illustrate where her priorities lie.
Writing to the prime minister and several ministers, she drew their attention to issues such as legal entitlement to subsidised foodgrains, child labour, housing for the poor and indiscriminate acquisition of agricultural land for private companies. In one letter, she closed by urging a minister: You may like to have the matter examined appropriately.
WARNINGS OF IMPENDING CRISIS
How was Gandhi persuaded that, as one government official put it, if you are not growing you are distributing poverty?
For one thing, the economy was in trouble. Growth had dropped to its lowest clip in three years, the fiscal deficit was blowing past official targets, and the government was under heavy fire for sitting on its hands as the crisis mounted.
With Mukherjee gone from the Finance Ministry, Singh and Chidambaram made their move, warning Gandhi of a possible slump in the rupee and even a repeat of 1991, sources said.
There were three meetings over about four weeks ... to tell her that if we don't do all this it will be bad politics, said the senior government official.
Singh also tackled Gandhi at length on the issue in July during a flight from Delhi to the northeastern state of Assam.
Adding his voice at a separate meeting, Commerce Minister Anand Sharma explained to Gandhi t hat opening up to global supermarkets like Wal-Mart Stores Inc could tame the corruption that plagues the state-run food distribution network - a compelling argument after two years of graft scandals that have damaged her government.
When Gandhi returned in September from a medical check-up abroad, the stage was set for 'big bang Friday'.
And although the reforms triggered the walkout of a key coalition partner from the government, reducing it to a minority, she has resisted calls for a U-turn and even plans to join a street march in favour of the retail sector reform.
Gandhi's ambition in all this is to ensure that the Congress party returns to power in 2014, with her son - Rahul - at the helm of the government after eight years waiting in the wings.
What she is concentrating on is really the need to be re-elected, said M.J. Akbar, a former Congress party lawmaker and once a trusted Gandhi family insider. The only thing wrong about this reforms business though is ... they left it too close to the election.
Palash Biswas
Mobile: 919903717833
Skype ID: palash.biswas44
Email: palashbiswaskl@gmail.com
It is an agenda to destroy agrarian India. The great indian agrarian crisis is created by market economoy and market is boosted with economic reforms at the cost of rural Indian agrarian world.
Ministry of Rural Development Further Dilutes the Provisions of the Land Bill to Placate 'Fictitious' Investor Sentiments!NAPM Opposes Such Moves and Urges to Pay Heed to Needs of 'Real' Investors, who Own Land, Water, Forest, Minerals and Labour!In what may come as a relief for industry and businesses, the rural development ministry has diluted the consent provision for land acquisition.The consent from two-thirds, or 66 per cent, of land losers will now be required for land acquisition, down from the earlier provision of consent from 80 per cent of land losers, sources told NDTV Profit.Earlier, consent was required from 80 per cent of all project affected families, which included both land losers and livelihood losers. Now, consent will be required only from land losers. However, compensation and restoration and rehabilitation (R&R) will be given to both land losers and livelihood losers.There was strong opposition from several quarters, including the industry as well as several Cabinet ministers to this provision of the land Bill.The Bill will now be discussed by the group of ministers under Agriculture Minister Sharad Pawar at its meeting scheduled for tomorrow.But other provisions of the Bill relating to R&R and compensation issues are likely to remain the same.The Bill will apply only for new acquisitions and not retrospectively. Earlier, the Bill was to apply retrospectively to ongoing land acquisitions where the award of land had not been made or possession not taken.Definition of market value has been amended to ensure that acquisition price does not form the basis for compensation calculation in future acquisitions.Also, power has been given to the collector to not consider transactions which he feels are outliers and not indicative of true value while calculating market value. Earlier, there was a danger of a price spiral as (a multiple of) price of first acquisition in an area would go into calculation of land price for any subsequent acquisitions.States will decide on the thresholds regarding acquisition of irrigated multi-crop land and net sown area. These types of land will be acquired only as the last resort. Earlier, the amount of multi-cropped irrigated land that could be acquired was capped at 5 per cent, and amount of net sown area that could be acquired was also capped.
Further,The Supreme Court verdict on the Presidential Reference on whether the only way to allocate natural resources is through auctions comes as a big relief to the government. But the verdict does not allow the government to license/allocate natural resources in an arbitrary manner. The judgment says the government has to consider the common good and not just revenue maximisation.It just opens the floodgates of all round disaster in rural india already seized within.The aborigine humanscape may not have any respite from monoplistic aggression. Corporate governance, legislation and policy making not enough, the judiciary lets the hell loose as chief justice kapadia as well as to be chief justice Kabir stand rock solid supporting FDI and economic reforms. It is just a death knell for agrarian India.The Supreme Court handed the government a partial victory in its battle with opponents over telecom and coalfield licence awards on Thursday, saying that auction is not the only permissible method for allocating natural resources.Prime Minister Manmohan Singh's government has been rocked by scandals over the non-competitive allocation of radio spectrum and coal blocks at below-market prices, which a state auditor has said together could have cost the exchequer as much as $67 billion in lost revenues.The Supreme Court's view, which is not binding, came after the government sought clarity on an earlier ruling that ordered the cancellation of cellular permits awarded in 2008 because the sale process was "flawed".However, it is likely to be only a small comfort to the government because it also held that auction was still the preferred route when allotting natural resources to private companies for commercial use.
The government is doing everything to defend corporate India and MNC interests!The final report of the Parthasarathi Shome panel, looking into the controversial retrospective tax issue, will be submitted to the Finance Minister on 1 October 2012, Monday, sources in the Finance Ministry said. The panel will also submit the final roadmap on GAAR on the same day.Both reports are likely to be uploaded on the Finance Ministry's website on 1 October.The panel is unlikely to make any company- or case-specific references in its report dealing with the retrospective changes to the Income Tax Act and, thereby, no mention will be made of the Vodafone tax matter.However, the panel is examining the taxability of structures similar to the Vodafone deal, and it will make suggestions on whether such structured deals should be taxed retrospectively or prospectively.It may also suggest whether the interest and penalty liability, for deals which are proposed to be taxed retrospectively, can be waived. Indirect transfer of shares where the underlying asset is Indian has become a contentious issue in the recent past, especially with the government demanding a $2.2 billion tax from Vodafone for its purchase of Hutchison’s India assets in 2007.Mr. Shome was asked to look into the issues related to GAAR by the Prime Minister on July 17.
The finance ministry plans to increase fertiliser prices as part of its effort to put the economy back on track.North Block has written to the ministry of chemicals and fertilisers asking it to revive a move to increase prices by 10 per cent to cut the Centre’s ballooning subsidy bill.The Fertiliser Association of India is also believed to be lobbying hard to get urea prices raised by as much as 70 per cent.JAYANTA ROY CHOWDHURYwrote in the Telegraph, published from Kolkata.Initiated before the presidential polls in July, the exercise could not be carried through because of differences between the minister for fertiliser, who is in favour of a hike, and his deputy.Officials said the effective hike would be a little over Rs 500 a tonne and could help to cut the subsidy bill by up to Rs 5,000 crore, while discouraging farmers from using too much urea.Excessive use of this fertiliser has reduced the productivity of large tracts of land in north-west India.The government has already raised the prices of petrol and diesel and cut the number of subsidised cooking gas cylinders for each family to six a year in a bid to cut down the subsidy bill, which has hit 2.4 per cent of the gross domestic product.In the last 10 years, the government has raised urea prices just once by Rs 500 a tonne.Earlier this year, the government had cut the subsidy on phosphate and potash-based fertilisers by up to 30 per cent; officials had at that time made it known that urea subsidy, too, would have to be slashed.Some time back, the finance ministry had also suggested that urea prices be raised in a staggered manner by 7-10 per cent, every year for the next three years, to address the twin problems of a burgeoning subsidy bill and imbalance in use among various fertilisers.Last year, the fertiliser subsidy was estimated to cost the government some Rs 67,000 crore.Though the government has budgeted for Rs 60,000 crore in subsidy this year, the higher prices of imported urea are expected to push the final sum in the region of Rs 75,000 crore.Officials said the price hike was expected soon as the urea rates have to announced ahead of the Rabi planting season.
FDI in insurance
The finance ministry is also believed to be working on a plan to raise the FDI limit in insurance to 49 per cent from the current 26 per cent.European and US financial firms have long been lobbying for the hike, and every visiting head of state from the West had made this demand for quite a few years.The move, which requires a legislative amendment, had been kept on hold as both the Trinamul Congress and BJP had objected to the higher cap.With Trinamul out of the coalition, the ministry feels the move can be revived.The proposal will have to be discussed with the Samajwadi Party and Mayawati’s BSP to get their approval or the government may face an embarrassment in Parliament.The insurance regulatory and development authority (IRDA) amendment bill will also call for allowing Lloyd’s to open an insurance trading floor in Mumbai, somewhat similar to a stock market, and permit foreign reinsurance firms such as Swiss Re and Munich Re to enter India besides giving a green signal to public non-life insurance companies to raise capital by selling minority stakes.Finance minister P. Chidambaram today met IRDA chief J. Harinarayan. Officially the meeting was on insurance penetration, but sources said the meet was supposed to vet the FDI move before the cabinet took it up for hearing.Earlier this year, when he was the finance minister, Pranab Mukherjee had said that the bill be introduced in Parliament without the section on foreign direct investment as there was still political resistance.However, Prime Minister Manmohan Singh had said the bill should be introduced in the House with the provisions on FDI hike.
On the other hand,after the Congress party, the UPA too today endorsed government's recent tough economic decisions and discussed the need "to do more reforms". This was at a crucial meeting of constituents of the alliance. However, that approval did not happen before DMK and some other like-minded parties tried their best to put the PM and FM on the mat for endangering their collective prospects at the next elections, aside from affecting fortunes of the 'common man'.DMK demanded that the govt withdraw the cap on LPG cylinders or at least raise it by 3-6 cylinders more.But both the PM and FM refused to be pinned down by an enfuriated ally and defended their reforms agenda stoutly.
Prime Minister Manmohan Singh underlined the need for economic reforms to ensure flow of foreign investment.
A fortnight after the announcement to allow FDI in retail, cap cooking gas subsidy and hike diesel prices, the leaders of the ruling coalition today expressed "general satisfaction" over the decisions, which saw the exit of Trinamool Congress-- the second largest UPA constituent.
Auctions are not the only permissible method for disposal of natural resources across sectors, the Supreme Court today said holding that the 2G verdict was confined to allocation of spectrum and is not applicable to other resources.Giving its opinion on the Presidential reference arising out of 2G verdict, a five-judge constitution Bench headed by Chief Justice S H Kapadia also ruled that common good is the touchstone for any policy and if it meets that then any means adopted is in accordance with the constitutional principles.
"In our opinion, auction despite being a more preferable method of alienation/allotment of natural resources, cannot be held to be a constitutional requirement or limitation for alienation of all natural resources," the court said.
It added that it is the government's prerogative to decide on the allocation method, but if resources are distributed for private commercial purposes, methods that do not maximise revenues may be arbitrary.
Telecoms Minister Kapil Sibal said the government welcomed the court's view.
"It has brought clarity to the subject matter and we are very happy about it," he told a news conference.
In February the court had told the government to redistribute the revoked mobile radio airwaves through an open auction, which is scheduled to start in November.
Its latest view is not binding and does not affect its earlier order to cancel the 122 telecoms licences awarded in 2008 and auction off the airwaves, but it may be used as a reference for future government policy decisions.
R&R and compensation provisions
The Land Bill gives just a baseline for compensation. A sliding scale has been proposed and it has been left to the states to fix the multiplier that will determine the final compensation depending on the distance of the plot of land from urban centres. As you move from urban areas towards rural areas the multiplier increases, increasing the compensation amount.
R&R provisions would be applicable even in the case of private purchase if the purchase exceeds a certain threshold. The threshold will be decided by the state Government. Earlier, R&R on private purchases was to apply to all acquisitions above 100 acres in rural areas and 50 acres in urban areas. The state government will also decide about the procedures and functioning of R&R committee at the project-level.
State governments will be free to enact any law to enhance or add to the entitlements enumerated under the Bill, which confers higher compensation than payable under the Bill or make provisions for R&R, which are more beneficial than those provided under the Bill.
The multiplier will not be applicable in urban areas, which means there will be no increase in the market value. However, a ‘solatium’ of 100 per cent (which currently is 30 per cent) will be imposed on this market value calculated. This ‘solatium’ amount is a compensation to ameliorate the pain of forcible acquisition.
All affected families will be entitled to a house provided they have been residing in the area for five years or more and have been displaced. If they chose not to accept the house they will be offered a one-time financial grant in lieu of the same. Affected families will be given a choice of annuity or employment. If employment is not forthcoming they will be entitled to a one time grant of Rs. 5 lakh per family.
Alternatively, they will be provided with an annuity payment of Rs. 2,000 per month per family for 20 years (this will be adjusted for inflation). Displaced families will be given a monthly subsistence allowance equivalent to Rs. 3,000 per month for a period of one year from the date of award.
Affected families will also be given training and skill development while being offered employment. Multiple monetary benefits such as transport allowance of Rs. 50,000 and resettlement allowance of Rs. 50,000 will also be given.
The Bill has a separate chapter to protect the interests of tribals and those belonging to the scheduled castes. As far as possible, no acquisition shall take place in the scheduled areas. And where such acquisition does take place it has to undertake comprehensive consultations with the local institutions of self-governance (including the autonomous councils where they exist).
The rural development ministry claims that given the way in which market value is to be calculated and the imposition of a solatium of 100 per cent over and above the amount, the farmers will surely get a fair price for their land. The collector has to make sure that no other unutilized land is available before he moves to acquire farm land. The final award has to include damage to any standing crops which might have been harmed due to the process of acquisition (including the preliminary inspection).
In case the land is acquired for urbanization purposes, then 20 per cent of the developed land will be reserved and offered to these farmers in proportion to the area of their land acquired and at a price equal to the cost of acquisition and the cost of development. In the case of irrigation or hydel projects, affected families may be allowed fishing rights in the reservoirs, in such manner as may be prescribed by the appropriate government.
Medha Patkar, Dr. Sunilam, Prafulla Samantara, Roma, Gautam Bandopadhyay, Vimal Bhai, Suniti S R, Bhupinder Singh Rawat, Dr. Rupesh Verma, Advocate Aradhana Bhargava, Rajendra Ravi, Shrikanthand Madhuresh Kumar issued a press statement on behalf of NAPM which as follows:
It is extremely unfortunate to note that the draft Land Acquisition, Resettlement and Rehabilitation Bill (retitled as Right To Fair Compensation And Transparency In Land Acquisition, Rehabilitation and Resettlement Bill, 2012) brought by Ministry of Rural Development, which was already seeking to legitimise forcible acquisition by the government for private and PPP projects has further diluted it to placate the investors and their representatives in the Ministry of Trade & Commerce, Finance, Urban Development, Planning Commission and other Ministries.
It is no wonder and seems to be only expected from a government which is being run on the life support given by the private corporations and on their money, especially after completely anti-people decisions in form of allowing FDI in retail and aviation, hike in diesel prices and electricity tariff, disinvestment of public sector units and other related measures.
Even as Group of Ministers meet tomorrow we would like to reiterate our opposition to any such move by the UPA government to enact a legislation which is going to deprive the natural resource based communities of their livelihood and fails to accommodate key recommendations of the Parliamentary Standing Committee comprising of members from different political parties. PSC very clearly has said that no acquisition should be allowed for the private and PPP projects, since they are nothing but a loot of natural resources. The unfolding corruption cases involving auction of coal blocks and spectrum, irrigation scam and others, all testify to greed and illegality in private and PPP projects. It is time for shunning the eminent domain framework of the state rather than expanding it to be a tool in service of private capital. It will be a move for the worse and fundamentally damage the socialist and egalitarian fabric of the constitution, as propounded in the directive principles of state policy or mandated in the Article 243.
NAPM along with many other movement groups under the banner of Sangharsh have been demanding free prior informed consent of the Gram / Basti Sabha for deciding nature of public purpose, to approval of the project and their participation in R&R and various steps of project implementation. Unfortunately under the pressure from industry and their lobbyists even a 80 percent consent clause of the project affected people is now being reduced to the two third of the land losers alone. Similarly, small benefits like a house plot to those displaced are being taken away by increasing the time of residence from three years to five years prior to displacement. Inspite of numerous deliberations with the Ministry, displacement in urban centres seems to be no where on radar, a separate legislation on the urban evictions and displacement is the only way out now.
Ministry of Rural Development in its bid to placate Ministers opposed to its proposal says that the “Bill shall apply prospectively only, i.e., for new acquisitions only, and not retrospectively. Earlier the Bill was to apply retrospectively, i.e., to ongoing land acquisitions where Award had not been made or possession not taken”. This is nothing but further dilution, since we have been saying that nearly 10 Crore people have been affected by various 'development' projects since independence with a very low rate of R&R, nearly 17-20 percent. A new legislation should move forward in addressing the historical injustice committed on the scheduled caste and scheduled tribe who constitute the majority of PFAs by setting up a National Resettlement and Rehabilitation Commission to address their claims of R&R rather than feeling proud in denying their share in development of the nation. It is shameful and nothing else !
A concerted effort is being made by the UPA to say that they are trying to protect the interests of the farmers and communities dependent on the land but unfortunately none of the actions by the government seem to demonstrate that. No wonder if approval to such a Bill by the group of Ministers will only add to discrediting the government, since it seems to be ruling for the interests of the private and multinational corporations alone and not for the people who voted it to power.
The Bill if accepted in current form will not only increase the conflicts surrounding the land across the country as being witnessed around the various infrastructure projects but will prove fatal for it in the next general elections. Group of Ministers must heed to the voices of the people, real investors' and not to the investors holding fictitious wealth. People and communities are real investors, who hold control of land, water, forest, minerals and most important their labour. Lastly, Ministry of Rural Development must not bow to the pressure of the industry lobby and rather pay heed to the Ministry of Social Justice and Empowerment, Tribal Affairs and Urban Housing who are mandated to look after the interests of the marginal communities.
The government cannot terminate oil and gas field contract of a company that has defaulted on its obligations like furnishing of bank guarantees, former Solicitor General Gopal Subramanium has said.
The Directorate General of Hydrocarbon (DGH) has sought his views on Jindal Petroleum Ltd's (JPL) failure to fulfil its legal requirements like submission of bank guarantee for block RJ-ONN-2005/1 in Rajasthan.
Jindal, Hindustan Oil Exploration Company (HOEC), Bharat PetroResources Ltd and IMC Ltd held 25 per cent apeice in the block for which a Production Sharing Contract was signed on December 22, 2008.
While other companies fulfilled their legal obligations,
Jindal defaulted by not submitting the bank guarantee, a financial and performance guarantee and legal opinion within 30 days to become the contractor.
DGH's legal head Simran Dhir on September 21 wrote to Joint Secretary (Exploration) in Oil Ministry that DGH as had been instructed by the ministry, had taken a legal opinion from Subramanium.
Subramanium has opined that Jindal Petroleum has become a contractor despite failing to fulfil its requirements of the PSC, Dhir wrote.
On query if Government can terminate the PSC qua the defaulting contractor and auction the share of the defaulting contractor to any other party, the former solicitor general has opined in negative, the letter said.
On the issue of the share of defaulting contractor (JPL) vesting in the government, Subramanium opined in negative. "However, if all the contracting parties default, the
Government can terminate the PSC," Dhir wrote citing the legal opinion.
Subramanium in his opinion stated that failure to meet legal obligations "does not mean that JPL is not a party to the PSC or a contractor company... The PSC expressly recognises every signatory to that contract as a contractor company."
He went on to state that his "opinion is being rendered on the supposition that only one contracting party has defaulted. Needless to say, if all the contracting parties default, the Government can terminate the PSC. In such an event, no participating interest would survive".
It had been a brutal August for India's Congress party: economic growth was wilting, the monsoon rains were failing and the opposition had it cornered on yet another corruption scandal.
In stepped Sonia Gandhi to revive the morale of the ruling party's lawmakers, exhorting them at a meeting to stand up and fight, fight with a sense of purpose and fight aggressively. It was a stunningly assertive speech from the normally temperate matriarch of a dynasty that has ruled India for most of its post-independence era.
And yet few at the gathering were aware that just a week earlier she had performed an even more dramatic about-face, agreeing to a raft of economic reforms that would be unveiled on Sept. 13 and 14.
Gandhi has no official government post, but as Congress party president and torchbearer of India's widely revered first family, she has the last word on big policy issues: and for her, social welfare has always come before liberalising the economy.
However, more than a dozen officials and party leaders close to the secretive inner circle of the Italian-born leader said that Gandhi was persuaded of the need for urgent action to avert a repeat of the crisis that took India to the brink of bankruptcy in 1991.
This time there was a very grim scenario, said Rashid Kidwai, a Sonia Gandhi biographer who was given an account of the arguments made over weeks by Prime Minister Manmohan Singh and his new finance minister P Chidambaram behind the closed doors of colonial-era government bungalows in New Delhi and even on a plane journey.
It's not that she wanted to go for all this, but it was made very clear to her that, if she didn't, there would be far more dire consequences, Kidwai said.
Sources said the trigger for the reform campaign in Asia's third-largest economy came with the return of Chidambaram as finance minister on Aug. 1.
An eloquent Harvard-educated technocrat with a track record as a reformer, he replaced Pranab Mukherjee, a left-of-centre Congress stalwart who had consistently warned Gandhi against radical reforms that could cost the party votes.
Pranab was from the old school of Indian politics, said a senior government official, who spoke on condition of anonymity. The prime minister and the finance minister had to persuade Mrs. Gandhi that good economics was good politics.
Her acquiescence in the end led to this month's big bang Friday when, a day after taking an axe to costly subsidies on diesel, the government announced that the retail market would be opened to foreign supermarket chains and the bar on foreign investment in both airlines and broadcasters would be lifted.
In sum, these were the most sweeping reforms since Singh took office in 2004 and - in the space of 48 hours - they dispelled the image of a prime minister who was losing his mojo as India's high-trajectory growth faltered.
A RELUCTANT REFORMER
However, insiders say Gandhi remains instinctively wary of economic liberalisation and trimming the budget deficit. For months, she had held out against cutting fuel subsidies that are aimed at the poor and the country's rural majority, fearing the impact on the Congress party's fortunes.
She only agreed when Singh and Chidambaram spelled out that new growth generated by reforms and improved investor sentiment would have a trickle-down effect and provide funds for welfare spending in time for elections due by mid-2014.
They explained to Mrs. Gandhi that social benefits for the poor will need deep pockets, said a Congress party source who declined to be named because the discussions were confidential.
Reuters reviewed more than 30 letters written by Gandhi to the prime minister and U.S. diplomatic cables released by WikiLeaks that portray her as passionate about social issues, and attached to protecting the poor.
That means the sudden burst of reforms could be cut short if Gandhi - who Forbes magazine ranks as the world's sixth most powerful woman - sees no benefits for the rural poor on whom her party relies for votes.
Indeed, party sources said she will now focus on passing a bill on universal food security in December, a populist plan that would cost billions of dollars at a time when her government is under intense pressure to rein in spending.
She just wants enough budgetary resources available to finance her welfare schemes, said Swapan Dasgupta, a prominent journalist and commentator who leans towards the opposition.
She has never spoken about reforms. What she has done is make Congress think of reforms as a low priority and a political liability - she has ingrained that mindset in the party.
A request to interview Gandhi was declined.
PARAMOUNT POWER
Sonia Gandhi, 65, carries the authority of a political family that, after India won independence from Britain in 1947, drove a vision of democratic socialism to uplift the vast rural masses. With that came a mind-boggling range of controls that tied the economy down and kept it closed to global markets.
A turning point came in 1991 when a slump in exports following the collapse of the Soviet Union and a leap in oil import costs due to the Gulf War tipped the country into a balance of payments crisis.
Manmohan Singh, then finance minister, responded with shock treatment, devaluing the rupee by nearly 19 percent. So determined was he to push this through, when the prime minister of the day got cold feet, he reportedly blamed the infamous inefficiency of India's telephone system to pretend that he couldn't contact the central bank in time.
His moves to prise open the economy set the stage for a long run of dazzling growth that peaked at 9.7 percent in 2006/07.
Although Gandhi appointed Singh as prime minister when the Congress party returned to power eight years ago, she has a far more socialist mindset than the Oxford-educated economist who drove that first round of reforms.
Sources close to the Gandhi family say she has been strongly influenced by her late mother-in-law, former prime minister Indira Gandhi, whose policies were considerably left of centre.
Sonia Gandhi initially declined the throne of the Congress party after the 1991 assassination of her husband and former prime minister, Rajiv, but she finally agreed to enter politics six years later to lift the flagging fortunes of the party under her family's brand name.
As party president and chairperson of the ruling coalition, she has kept a low and almost enigmatic profile, appearing to stand above the political fray. When she went abroad for surgery last year there was no official word on her illness, and the media tamely accorded her the privacy a royal might expect.
But Gandhi wields extraordinary power behind the scenes, shaping policy out of the public eye with a tight circle of decision-makers and relying on back-channel negotiations to manage relations with fractious coalition allies
Ratings agency Standard & Poor's, warning earlier this year that India could become the first of the emerging market BRICS economies to lose its investment-grade rating, took a swipe at her resistance to policies mooted by Singh.
The Congress party is divided on economic policies. There is substantial opposition within the party to any serious liberalisation of the economy, S&P said.
Moreover, paramount political power rests with the leader of the Congress party, Sonia Gandhi, who holds no cabinet position, while the government is led by an unelected prime minister ... who lacks a political base of his own.
A BENEVOLENT MATRIARCH
Gandhi gives little away about her thinking on economic policy, but dispatches from the U.S. embassy in New Delhi during the early years of Singh's tenure show she made repeated objections to proposed hikes in fuel prices, which are heavily subsidised to cushion the poor.
Key leaders (including Sonia Gandhi) have opposed the price hikes, criticised the way they have been handled, or urged Congress to capitulate to ... demands for a 'rollback', and the party is finding it difficult to speak with one voice, one of the cables said.
Describing a leader who projects herself as a benevolent matriarch, the dispatches were scathing about one of her pet projects, a scheme guaranteeing 100 days of paid employment per year for rural citizens. At worst, the jobs plan is political patronage run amok and horrid economic policy, one said.
Gandhi also set up the National Advisory Council, a government-funded think tank that offers legislative guidance on social policy and the rights of disadvantaged groups.
A batch of letters Gandhi wrote as chairperson of the council, which were recently released under the Right to Information Act, illustrate where her priorities lie.
Writing to the prime minister and several ministers, she drew their attention to issues such as legal entitlement to subsidised foodgrains, child labour, housing for the poor and indiscriminate acquisition of agricultural land for private companies. In one letter, she closed by urging a minister: You may like to have the matter examined appropriately.
WARNINGS OF IMPENDING CRISIS
How was Gandhi persuaded that, as one government official put it, if you are not growing you are distributing poverty?
For one thing, the economy was in trouble. Growth had dropped to its lowest clip in three years, the fiscal deficit was blowing past official targets, and the government was under heavy fire for sitting on its hands as the crisis mounted.
With Mukherjee gone from the Finance Ministry, Singh and Chidambaram made their move, warning Gandhi of a possible slump in the rupee and even a repeat of 1991, sources said.
There were three meetings over about four weeks ... to tell her that if we don't do all this it will be bad politics, said the senior government official.
Singh also tackled Gandhi at length on the issue in July during a flight from Delhi to the northeastern state of Assam.
Adding his voice at a separate meeting, Commerce Minister Anand Sharma explained to Gandhi t hat opening up to global supermarkets like Wal-Mart Stores Inc could tame the corruption that plagues the state-run food distribution network - a compelling argument after two years of graft scandals that have damaged her government.
When Gandhi returned in September from a medical check-up abroad, the stage was set for 'big bang Friday'.
And although the reforms triggered the walkout of a key coalition partner from the government, reducing it to a minority, she has resisted calls for a U-turn and even plans to join a street march in favour of the retail sector reform.
Gandhi's ambition in all this is to ensure that the Congress party returns to power in 2014, with her son - Rahul - at the helm of the government after eight years waiting in the wings.
What she is concentrating on is really the need to be re-elected, said M.J. Akbar, a former Congress party lawmaker and once a trusted Gandhi family insider. The only thing wrong about this reforms business though is ... they left it too close to the election.
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