Having a debt of 2.4 lakh Crores, UP struggle to take breath

"In its annual financial detail and analysis of financial state, the state government has projected a debt burden of Rs 2,39,878.35 crore in 2013-2014, which would be 29.5 per cent of the gross state domestic product (GSDP)"

UP debt estimated to cross Rs 2.3 lakh cr in 2013-14 - Business Standard

Report says that debt obligations of the state (Uttar Pradesh) doubled in last 9 years. Why we are squandering money which we don't have? Even the forthcoming generations have to endure the tiring weight of this liability and its interest. State governments should implement proper fiscal management. Waste less on building statues and more on repaying the debt.

Coming general strike (Feb 20, 21) and some stray thoughts

Secretarial Staff of first International Labor Conference, Washington DC, 1919

Trade unions and organized sector are going for a general strike on coming 20, 21 of February. Ten main demands put forwarded by the unions are,

1. Concrete measures to contain price rise.
2. Effective measures for employment generation.
3. Strict implementation of Labour laws.
4. Universal social security cover for organized and unorganized workers and creation of National Social Security Fund.
5. Stoppage of disinvestment in Central and state PSUs/undertakings.
6. No contractorisation of work of permanent/perennial nature and payment of wages and benefits to the contract workers at the same rate as available to the regular workers of the industry/establishment.
7. Amendment of Minimum Wages Act to ensure universal coverage, irrespective of the schedules and fixation of statutory minimum wage at not less than Rs 10,000 linked with cost price index.
8. Removal of all ceilings on payment and eligibility of bonus, Provident Fund, increased quantum of gratuity.
9. Assured pension to all and compulsory registration of trade unions within 45 days.
10. Immediate ratification of the ILO Convention Nos 87 and 98.

How many times organized unions in India went for a strike against child labour?

My take on the points

1. What is meant by concrete measures? When elections are approaching, no government in the world want high prices for commodities. Soaring prices are not something, which can be lowered just by turning on or off a button. If this is the problem, then they should talk with concerned ministry and opposition parties before trying to shut down the country for two days.

2. We are already spending an enormous amount of money through MNREGA program. Needless to say, one of the main problems for many new projects is our sluggish bureaucracy and red tapes. If the same government employees, who are going to strike for employment generation, can move the files a bit faster; it can make colossal changes in the country.

3. In organized sector labour laws are more stern than required. Regrettably, in unorganised sector people seldom care about labour laws. Will trade unions, who organize strike for the implementation of strict labour laws, try to make some changes in unorganised sector - who don’t have powerful unions to put forward their demands?

4. And who will pay for that social security fund? It is always easy to put forward some idea. Social security fund is certainly a good idea, but we need to toil hard for a lot more years to reach the position of a welfare nation.

5. The role of government is to govern, not to make cars and bulbs. Why government need the ownership of 10- 20 banks which are competing with each other? What is the need for government to have an airline?

6. One of the main reasons behind the concept of contract labour is strict laws associated with permanent labour. In many cases, management is virtually helpless in the face of collective bargaining power of powerful trade unions. This created another class called contract labours who gets a small percentage of salary and benefits enjoyed by permanent workers doing the same job. There is no doubt that, we need to have concrete laws for protecting contract labours.

7. Fixing minimum wage at 10,000 INR? What about unorganised sector here?

8 & 9. Again what about private and unorganized sector? In many government offices, people have to struggle to get their things done - to get a sign, to move a file from one desk to another desk etc. Why don't they think about it first, before going for a strike?

10. ILO convention 87 is - "concerning Freedom of Association and Protection of the Right to organise (Entry into force: 04 Jul 1950)". It’s a fact that, India is yet to ratify this convention. But, does anyone really think that, India is not giving any freedom for association or right to organize? Strike in Feb 20 and 21 itself is the biggest demonstration of these two rights enjoyed by the people.

Convention 98 is "concerning the Application of the Principles of the Right to Organise and to Bargain Collectively (Entry into force: 18 Jul 1951))". Strike by unions is also a form of collective bargaining, isn't it?

By the way ILO conventions 87 and 98 are not the only conventions we didn’t ratify till now. India is yet to verify some important conventions like,
110 - Convention concerning Conditions of Employment of Plantation Workers (Entry into force: 22 Jan 1960)
129 -Convention concerning Labour Inspection in Agriculture (Entry into force: 19 Jan 1972)
148 - Convention concerning the Protection of Workers against Occupational Hazards in the Working Environment Due to Air Pollution, Noise and Vibration (Entry into force: 11 Jul 1979)
169 - Convention concerning Indigenous and Tribal Peoples in Independent Countries (Entry into force: 05 Sep 1991)
170 - Convention concerning Safety in the use of Chemicals at Work (Entry into force: 04 Nov 1993)
172 - Convention concerning Working Conditions in Hotels, Restaurants and similar Establishments (Entry into force: 07 Jul 1994)
182 - Convention concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labour (Entry into force: 19 Nov 2000)

How many are demanding the ratifications of these conventions?

Conclusions

It is true that in last twenty years many things changed in India. But we are nowhere close to anything called welfare state. At the same time, the rigidity of bureaucracy is yet to accommodate the new changes. When bureaucracy itself is facing severe criticism from public, isn’t it their moral responsibility to correct everything from their end before trying to shut down the nation for two full days?

Sajeev.

References

1. Government again Appeals to the Bank Employees not to join the Strike on February 20-21, 2013 - Ministry of Finance, GOI
2. Government Initiatives on proposed Strike by the Central Trade Unions  - Ministry Of Labour and Employment - GOI

3. RBI employees to join nation-wide strike on Wednesday - The Hindu

4. All-India bank employees to go on strike - Postnoon

5. GDP to take Rs 15,000-20,000 crore hit from strike: ASSOCHAM - TOI
6. Support for general strike on Feb 20, 21 - Deccan Herald
7. Unions firm on general strike on Feb. 20, 21 - The Hindu

Photo Courtesy: Wikipedia

CBI and its sacred cow

... CBI has approached the Delhi High Court claiming protection from disclosing information held by it on allegations of corruption under the Right to Information Act... move...came on a Central Information Commission decision allowing RTI plea of activist C.J. Karira who had sought information related to status of sanction for prosecution against public servants facing allegations of corruption during 2007-11.

CBI moves court seeking exemption from RTI - The Hindu

Is information related to allegations of corruption is so sacrosanct?

Banking licenses to private sector

GOI recently decide to give banking licenses to corporate houses. The main aim of giving new licenses is financial inclusion. In other words, to increase the number of houses covered by formal banking system and to make banking services available in rural areas etc.

I have serious doubts about the indented results of this policy. I am not against issuing new banking licenses to private sector but the question here is about issuing licenses to private corporate houses - who owns other companies as well. We badly needs banking reforms, not only in terms of issuing new licenses (last bank formed in India was way back in 2004 – ‘Yes bank’) but in terms of capital rations, reducing NPAs etc.

Let me put forward you some of my concerns

1. Will private banks increase financial inclusion?
My answer is - not much. We have a number of very successful private banks like - ICICI bank, HDFC bank etc. How many of their branches are rural? What is the minimum amount required to open a Savings Account in these banks? I don’t think you may be satisfied with the answers.

2. Won't the corporate houses try to raise loans for their group companies from their own banks?
Assume that, company 'A' badly needs a loan. If ‘A’ or its parent company owns a bank, then won't they try to raise the required amount from their own bank? What if it turned out to be a bad loan? Same question is applicable for funding new projects, parent/ Group Company’s debt restructuring etc.

3. Won't the issue of giving loans be compromised?
Won’t it become easy for corporate houses to register shell companies in offshore tax heavens and use the banks owned by them in Indian to fund their projects? Even now, tax authorities are struggling to swim through the complex holding patterns of shell companies to determine the owner.

4. Will the new banks reform Indian banking sector?
In telecom sector - brilliant baby of Indian liberalization - increasing competition reduced the rates. But in banking, situation is totally different. Even now I am very much worried about the proliferation/ aggressive marketing of credit cards.

5. What about NPA (Non-Performing Assets)?
Even now for many banks the ratio of NPA to total loans is not in a comfortable zone.

Conclusion

I agree that, giant PSU banks may not be able to bring reforms in the pace demanded by government. At the same time, there is no guarantee that private companies will do it either. Most probably they will operate in niche sectors – anything but not rural.  It is to be remembered here that, even US don't allow industrial houses to setup banks (but Britain does, of course with restrictions). We need new private banks, but I would like to see a) new licenses going to existing private financial institutions not operating in other areas b) ownership of any single promoter should not be more than 12-14%.

Sajeev.

References

1. Despite concerns, govt to soon let corporates into banking - Business Standard

Finally Pak Gov's famously delayed letter reached Switzerland, only to hear 'No'

"After a prolonged stand-off with the Supreme Court, the dismissal of former Prime Minister Yusuf Raza Gilani and the threat of another Premier facing the same fate, the federal government had requested the Swiss government to reopen the cases last November. In his reply to Pakistan’s request, Switzerland’s Attorney General told the Law Ministry that the case could not be reopened because it had become time-barred under the Swiss law."

Switzerland not to reopen Zardari graft cases - The Hindu

In Malayalam there is a proverb - "Rogi icchichathum paalu, vidyan kalpichathu paalu", means patient like to have milk as medicine and doctor prescribed milk as medicine. What a magnificent law Swiss government has!!! Only thing people have to do is delay it, delay it and delay it - which is not at all complicated in South Asian environment.