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22 February 2016 Editorial

 

22 FEBRUARY 2016 

Unreasonable demands 

The recurrence of violent protests led by relatively well-off communities demanding reservation, be it Patidars in Gujarat last year or Jats in Haryana this year, is perplexing. The Jats are a relatively prosperous land-owning community in Haryana and are regarded as being high on the “social ladder” in the region. Their political and social might is even more evident in the influence they wield in rural areas and in the leadership of the dominant political parties in the State. The National Commission for Backward Classes had in the past come out with specific reasons against the inclusion of the Jats in Haryana in the Other Backward Classes (OBCs) list. This was overruled by the Congress-led United Progressive Alliance government at the Centre through a notification in March 2014, promising a special quota for Jats over and beyond the 27 per cent reservation for OBCs in jobs and higher education. It was left to the Supreme Court in March 2015 to reiterate the reality and to quash the decision of the UPA to include Jats in nine States among OBCs, stating that “caste” alone could not be the criterion for determining socio-economic backwardness. Clearly, even if the demands do not make any constitutional or legal sense, the bipartisan consensus over extending reservations has emboldened protestors among the Jat community. After all, the Bharatiya Janata Party in power too had voiced support for the implementation of the March 2014 notification. 

Yet, the demands for reservations from these powerful communities is also a consequence of the success of the system of reservations that formed the most significant component of the Mandal Commission recommendations, implemented for the past 25 years, apart from the 65 years of reservations for Dalits and Adivasis. The larger goal went beyond the uplift of the underprivileged and the historically backward; the purpose was to reduce the gap between the “upper” and the “lower” strata in the social hierarchy. That communities which have identified themselves with the upper strata of society also seek “backward” status suggests that through public sector representation and expansion in access to higher education the “economic gap” has been narrowed, or is at least seen to be narrowing. Specifically in the case of Jats, despite higher economic and social standing, there has been a reduction in landholding owing to distribution over generations and a squeezing of rural incomes due to the persisting sluggishness in the agrarian economy. It is a combination of these structural issues over time, besides the relative success of the reservation programme, that has fuelled the unreasonable demands made by Jats. In the case of the more prosperous and diverse Patidars in Gujarat, the demands for reservation were a thin pretext to do away with the system of reservation itself. The agitations, in a way, point to the need to review the list of castes counted as OBCs and to deepen the definition of creamy layer. An opportunity for this was provided through the Socio-Economic and Caste Census, but it was missed.

 

Delivering on Make in India 

In its last 18 months, the UPA government faced up to an economic reality: new investments had come to a halt and projects worth lakhs of crores of rupees caught in red tape were turning unviable, posing a threat to banks that had lent for them. The then Prime Minister, Manmohan Singh, heeded Finance Minister P. Chidambaram’s concern about the impact on public sector banks if these projects were not brought back on track through high-level intervention. When the NDA government assumed office, it found that the mechanism that Dr. Singh had approved to fix the problem — a project monitoring group in the Cabinet Secretariat to steer around roadblocks to big-ticket manufacturing and infrastructure projects — had helped clear projects worth Rs.6.5 lakh crore. In June 2014, the Prime Minister’s Office asked the group to ascertain if the projects it had helped had begun operations. The PMO wanted to know if more chimneys were billowing smoke, if production was going up and jobs were being created on the ground. Three months later, the government launched its Make in India programme to encourage the world to use the country as a global production hub. It promised reforms on norms for foreign direct investment — many of which it subsequently delivered — and a fix for problems that gave the country a poor reputation among foreigners, including unpredictable tax policies and a difficult regulatory environment. 

Over the last week, about 1,000 CEOs and 4,000 delegates representing 2,000 overseas firms were in Mumbai at a glitzy event to showcase Make in India, which Prime Minister Narendra Modi presented as the biggest brand to emerge from the country. He said India was adding deregulation to its strengths of democracy, demography and demand, and promised to end retrospective taxation that had spooked investors during the UPA rule. The Industries Ministry has claimed that Rs.15.2-lakh crore worth of investments were committed at the event. These include some by foreign firms such as Oracle (Rs.2,749 crore) and Ascendas (Rs.4,571 crore), but the list is dominated by Indian players making announcements to coincide with the occasion, including a Rs.6,204-crore project by public sector undertaking Rashtriya Chemicals and Fertilizers. Instead of doubting the numbers, it may be more pertinent to focus on two other developments of the week. Authorities served Vodafone a reminder for tax, which warned of asset seizure in case of failure to pay the dues, prompting a sharp reaction from the British firm. It also emerged that Foxconn was yet to follow through on a $5-billion investment it had announced in Maharashtra last August. To capitalise on the success of Make in India, the government must now show sustained improvement on the ease of doing business and create a transparent and stable tax environment to prove it is capable of delivering on its intent. It should use the same yardstick to measure Make in India’s success as it did for the earlier stalled projects: would products start rolling out of factory gates anytime soon?

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