The administrative services are said to be the permanent government in a democracy, while the elected ones are only for a certain period. In our country, region, religion, caste and many other social and cultural factors determine the outcome of election results. In such a scenario, sometimes non-qualified, undeserving and even criminal individuals get elected. The lack of an enlightened political class creates enough room for the bureaucracy to take undue advantage and rule the roost.
We inherited the bureaucratic system set up by the British rulers to rule its enslaved population. This has led the bureaucracy in free India to become a problem rather than being a solution. In the history of independent India, there have been very few examples of top political bosses who had the sagacity to handle the bureaucratic setup properly for the benefit of governance. Among the present generation of leadership, PM Narendra Modi has the apt understanding to handle this system. His level of knowledge of all strata of society, his journey from a chaiwala to Prime Minister which covered almost all walks and terrains of life, and his connection with ordinary people have empowered him with a proper understanding of the functioning of the system in totality. With such leadership at the helm of affairs, the bureaucracy works efficiently and effectively, not out of fear, but from the fact that the boss knows more and better ways to perform their tasks. As a result, the North and South Blocks of the Central Secretariat annexe are more vigilant and mobile today.
Prime Minister Modi has had the skill to deal with the bureaucracy right from the beginning of his stint as the Chief Minister of Gujarat. Only a few of his fellow politicians in Gujarat could master it while they were in his proximity. One of them is Home Minister Amit Shah and the other Praful Patel, Administrator of Dadra and Nagar Haveli and Daman and Diu and Lakshadweep. Patel was Home Minister in his cabinet after Amit Shah had been framed in fake encounter cases by the then Congress government at the Centre.
Dadra and Nagar Haveli and Daman and Diu are union territories which were handed over by the Portuguese to India in the late 1960s. Since then, thousands of crores of rupees have been spent as special grants from the Centre each year as Dadra and Nagar Haveli is a tribal-dominated area and Daman is dominated by an OBC population.
Before Patel took over, the Administrator of these areas used to be a senior IAS officer of the UT cadre. Both UTs were under special financial packages and incentives set up for industries to generate employment for the tribal and OBC youth. Half a dozen IAS/IPS officers were put on deputation in each of the UTs and a separate secretariat was created, to run a territory smaller than a taluka, when compared with other states. A huge chunk of the funds was spent on the salaries of the administration. However, the funds were squandered without proper planning and used for personal gain by the bureaucracy and administration along with the elected public representatives. Meanwhile, the tribal and marginalised populations remained underprivileged, uneducated, and without proper road infrastructure and healthcare facilities.
In the year 2016, Praful Patel was appointed as Administrator of Daman and Diu and Dadra and Nagar Haveli. It has been almost five years since then. The UTs are now unified as one single union territory, with a centralised secretariat in Daman. The layers of the administration have been halved, leading to big savings on recurring expenditures. The whole UT is almost corruption-free today.
Huge development work is being done with the quality and utility of them ensured. The cost of capital-intensive projects has been brought down as there is no corruption and projects are sanctioned by an online tendering process. The best part is that the quality of work has improved, and the Silvassa-Bhilad road connecting to the national highway and roads in Daman is an example of that. Moreover, flyovers are being constructed wherever needed. The administration is working round-the-clock for the welfare of the tribal districts of the UTs.
Silvassa and Daman, once infamous for its rampant corruption by bureaucrats and politicians, breathes easy today. The public is happy because the system is working for their welfare and their voice is heard. The Administrator visits the projects every month for progress reviews and quality checks. The Collector and his associate officers speak to locals to ensure whether they are getting the benefits of public health, better education, efficient teachers, water supply and roads on a regular basis. Some of the government schools in Daman and Silvassa are better than world-class private schools. The whole UT is open defecation-free, each house has a toilet and the «Har Ghar, Nal Se Jal” scheme is under implementation.
Another major development in these UTs have been the medical and engineering colleges. A state of the art 100-bed medical college was added to the existing Vinoba Bhave Hospital which has more than 5000 in the OPD each day. Given the tiny population of 2.5 lakhs, this shows the efficiency of the medical staff and the belief of the people in government facilities. The Silvassa medical college is also a huge gift for the tribal-dominated DNH, as people there can now see their kids become doctors two to three years from now. The first engineering college has also been sanctioned and will be operational in a few years.
Hundreds of other development projects are being implemented within the UTs. The underground electrical lines in Silvassa and Daman, the skywalk chowpati at Silvassa, and seafront development in Daman and Diu are a few worth mentioning here. The UTs are also a tourist destination and these projects will attract more tourists and add to the income of the locals as a result.
These are the same places where the bureaucracy was treated like gods. Now, under able political leadership, they are the servants of the people. The ring road project of Silvassa, which had been halted for sixteen years, was completed within a year. Illegal occupation of public properties by politicians was rampant, and action was taken against that. The administration removed encroachers, although a few of them were ruling party leaders and people used to think the bigwigs are untouchable.
Sheer willpower has changed the scenario of development and the level of governance in these UTs. Remember, this transformation has come with the same set of people, officers and bureaucracy. People are full of praise for them now whereas they thought that bureaucrats are superhuman and can’t be held responsible for their misdeeds and corruption. But the termination of many officials, the forced retirement of medically unfit officials and voluntary retirement of lazy officials have brought a sense of optimism among locals.
In a nutshell, the moral here is that able leadership can prove the theory of “bureaucrats always overweigh politicians” wrong in a big way. Patel has proved that if you know the core of your business, the bureaucracy will be your slave. Politicians are not one and the same; some people know the art of governance and how to implement it, and Patel is one of them, He is still in his late 50s and has a long political career ahead. He belongs to Gujarat and has served Gujarat as a politician except for these five years.
Today, Gujarat also needs such leaders, who can tame the bureaucracy and get the house in order, especially as Gujarat is seeing its crime rate increase with each passing day and corruption become a big area of concern. The Revenue and Police departments also need to be made to work for the welfare, safety and security of the people, not for indulging in the land-grabbing business.
The turnaround of the two UTs and three districts is evidence of good governance and corruption-free administration in all departments. All this has been possible due to the able leadership of the administrator of the UTs and his team of officers who are working tirelessly day and night. This is the “Modi model of governance” which can administer good governance with the same set of officials and bureaucrats.
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PUNJAB CABINET FORMATION APPEARS TO BE INCLUSIVE AND BALANCED
The new Punjab Cabinet appears to be inclusive and aimed at reaping political dividends in next year’s Assembly elections. However, it is too early to predict whether the Congress would be able to keep its flock together, given Captain Amarinder Singh’s dissatisfaction with the party and the omission of his close associates in the ministry. There is no one in the Cabinet who has ready access to the former Chief Minister and it is evident that bridges between him and the new leadership have been burnt forever. Therefore, it would not come as a surprise if the Captain asks the new government to take a floor test within one month or so. His camp has been watching the developments very closely and it is virtually certain that he would be severing his links with the Congress shortly. He is keeping his options open and is likely to take advantage of a possible tussle between Charanjit Singh Channi, his successor and Pradesh Congress president, Navjot Singh Sidhu. Differences between the two have already started over the choice of officers and Sidhu presumes that he shall be the CM after the polls next year while Channi is no green horn, who would allow his advantage to fritter away. The Congress High Command has to assess the unfolding drama very objectively and pragmatically in order to keep the MLS from deserting the party. The Captain is a very astute and perceptive politician who shall make his moves swiftly once the appropriate time arrives. In this context, it would have been better to include someone close to him in the ministry in order to ascertain what all was going on in his mind or camp. In 2016 when he had threatened to form his own party, Rana Gurmeet Singh Sodhi had persuaded him to rethink. This time Sodhi who acted as an interlocutor for the Congress between the Captain and Sidhu at one stage, is out and none of the others who are in the ministry can claim to enjoy proximity which would provide them access to understand Amarinder’s mind. Region wise the new ministry has 9 from the Malwa belt, four from Doaba and the remaining five from Majha. There are nine Jat Sikhs in the new government besides three Dalits, one OBC, four Hindus and one Muslim. The ministry gives an impression that it has been constituted to counter possible threat from the Akalis and the Captain without taking into consideration that the Aam Aadmi Party (AAP) which could emerge as the `X’ factor, closer to the polls. This political change may occur when the Congress decides to announce its list of nominees and those who would be left out may gravitate towards the Captain or AAP. There are indications that the Captain could form his own party which may have an electoral understanding with the BJP. He enjoys immense support amongst the Hindus of Punjab who view him as a nationalist figure. Therefore, to offset that perception, the Congress has included four influential Hindu faces in Om Prakash Soni, one of the deputy CMs, Brahm Mohindra, Vijay Inder Singla and Bharat Bhushan Ashu. The Captain has sounded the bugle and this war with the Congress could alter the political scenario in the State. Thus there is a huge responsibility that has been placed on the shoulders of the new government and the Congress High Command.
Taliban takeover and Russia’s strategic miscalculation
Russia will commit a strategic blunder by supporting the Taliban regime as the latter is not the legitimate voice of the Afghan people. This move will further isolate Moscow globally.
The rapid changes which occurred in Afghanistan after the violent takeover by the Taliban, ousting the civilian government headed by Ashraf Ghani are generating a lot of questions having larger geopolitical implications for both global and regional geopolitics. At the same time, the unending human sufferings like (flow of refugees, suppression of women and minority communities and denial of basic human rights to the common people) are also evident in Afghanistan following the forced takeover of power by the radical Taliban. Though these consequences are expected before, if the Taliban capture power. It is a well-known fact that the Taliban is created and patronized by Pakistan since the 1990s to achieve its diabolical strategic goals. Thus, what one witnesses is a new kind of geopolitical cauldron. Similarly, Afghanistan which has made tremendous progress in the socio-political spheres at the domestic level for the last 20 years (in the post-Taliban 1.0 era) including in the direction of deepening the democratisation process is reverting to the era of the 1990s. These two intricating developments are raising a lot of fundamental questions in the context of future of post-Nato Afghanistan.
Just after the ouster of the Ghani government, the Taliban sent a delegation to Pakistan which confirms the fact that Islamabad is the mastermind of this radical and terrorist organisation. Pakistan as reported has also deputed its high officials including the chief of ISI who supervised the illegitimate government formations by Taliban in Afghanistan. At the same time, China’s Ambassador in Afghanistan Wang Wu has already held talks with Taliban and assured support including financial assistance. This is a well-known fact that both China and Pakistan are hand in gloves with Taliban. But the most interesting thing that needs to be highlighted here is that Russia is also mending fences with Taliban despite knowing the fact that it is a terrorist group and a “banned organisation” in Russia. Just after the coup in Afghanistan, on 17 August 2021 Russian Ambassador Dmitry Zhirnov met Taliban leaders and gave an appalling statement as reported in Reuters. Zhirnov stated that “There is no alternative to the Taliban in Afghanistan”. He mentioned further that “The mood in Kabul can be described as one of cautious hope.”
By overlooking the ground situation, the Russian Ambassador to Afghanistan certainly misled the global community. The recent bombing at the Kabul Airport carried out by terrorist group ISKP (another terrorist group operating in Afghanistan under the patronage of Pakistan) also proves the fact that the Russian Ambassador’s statement is far from the existing reality in post-Nato Afghanistan.
It may be recalled here that it is not only the Russian Ambassador to Afghanistan who gave a statement on supporting Taliban, even the Spokeswoman of Russia Foreign Ministry Maria Zakharova in her response to the Press on 19 August echoes the statement given by Zhirnov. Zakharova stated, “ The positive signals transmitted to us from the Taliban leaders regarding their plans for the country’s future.” The Statement of Zakharova is quite strange because the whole world is criticising the Taliban’s illegal and hostile move but Russia is keeping its option open while dealing with Taliban. This implies Russia is giving patronage to the radical terror group Taliban along with China and Pakistan. The subsequent telephonic conversation between Russian President Vladimir Putin and Chinese President Xi Jinping also gave a signal that Russia is interested to work closely with Taliban in Afghanistan.
While evaluating Russia’s stand towards Taliban, it appears that Moscow does not follow a consistent policy. It is a common fact that Russia is the worst victim of terrorism over the years. A number of studies suggest that many of the Northern Caucasian militants had taken training from Taliban in the post-1995 phase. Reports suggest, along with Taliban, Pakistan is supporting some of these militants and terrorist groups that are currently operating illegally in Russia. Moreover, Russian policymakers and analysts have also accused Pakistan of harbouring Chechen terrorists.
In the post 9/11 phase, Russia formed Collective Security Treaty Organisation (CSTO) by including post-Soviet countries like Tajikistan, Kyrgyzstan, Kazakhstan, Armenia and Belarus just to checkmate the flow of drugs and narcotic substances and radical extremism from Afghanistan. Russia is still operating its military base in Tajikistan under the aegis of CSTO to thwart the above-mentioned threats originating from Afghanistan. It is in this context the sudden soft-corner towards Taliban by Russia is raising many questions?
It is pertinent to mention here that what are the factors that might have propelled Russia to change its stance towards Taliban? In this regard there are three major reasons that need to be underlined. These are:
a) Over the years Russia is playing a supporting role to China in the international arena. This can be evident from the growing alignment between Russia and China on several issues and in this process, Moscow is also losing its “strategic autonomy”, in the decision-making process. The dependence of Russia on China has increased significantly after the Western sanctions in the aftermath of the Crimea crisis in the post-2014 phase.
b) Russia is also losing its “strategic preponderance” in Central Asia in recent years. This is largely because of the emergence of new political elites in Central Asia (except in Tajikistan) and they are pursuing a multi-vector foreign policy as studies suggest. These new leaderships in the Central Asian landscape are quite apprehensive of China’s move in Central Asia. They think Russia is also not in a position to protect them in case of any aggression from China. Thus, Russia to regain its lost position in Central Asia may be using Taliban rule in Afghanistan as a ploy to warn Central Asian countries to fall prey to the Russian dictum.
c) Russia as part of its policy of “Greater Eurasia” is pursuing vigorous geoeconomics diplomacy. In this process, it is also interested at getting access to the new energy market. Moscow’s involvement in the construction of the Pakistan Stream Gas Pipeline and its desire to control the Afghan natural resources are few of the instances.
Some of the above reasons are propelling Russia to mend fences with the radical Taliban. However, Russia is not understanding the long-term consequences of engaging with the Taliban. This will only encourage the radicals of the North Caucasus which Russia is confronting over the years.
A question that will arise is whether Russia will continue its policy of supporting Taliban? This is in the context of growing criticism by the global community of radical Taliban and its patrons- Pakistan and China. The United Nation’s Security Council (UNSC) which met on 30 August 2021, under the chairmanship of India , “Calls for the Taliban to facilitate safe passage for people wanting to leave Afghanistan, allow humanitarians to access the country, and uphold human rights, including for women and children.” Though there was a consensus about the resolution adopted by the Council, however, Russia “abstained” from the resolution.. Similarly, China has also followed Russia’s line. This confirms that Russia is having a sympathy for Taliban in Afghanistan.
Similarly, President Vladimir Putin though in his speech at 15th BRICS Summit which took place on 9 September 2021 in virtual mode under India’s Chairmanship raised the issue of Afghanistan. Though he stated that “ we are not interested in Afghanistan remaining a threat to neighbouring countries or having terrorism” however, what is expected is a concrete plan of actions from Russia including reprimanding China and Pakistan for their nefarious role in accentuating the present crisis situation in Afghanistan . At the same time Moscow should stop support to radical Taliban.
Already resistance is mounting against Taliban from the Northern Alliance and reports suggest former Afghan National Army members are regrouping under Amarullah Saleh and Ahmad Massoud. Russia should understand that Taliban is not the legitimate voice of the Afghan people. Hopefully, Russia will rethink its Afghan strategy.
The writer teaches at the School of International Studies, Jawaharlal Nehru University, New Delhi. He can be reached at firstname.lastname@example.org. Views expressed are writer’s personal
While evaluating Russia’s stand towards Taliban, it appears that Moscow does not follow a consistent policy. It is a common fact that Russia is the worst victim of terrorism over the years. A number of studies suggest that many of the Northern Caucasian militants had taken training from Taliban in the post-1995 phase. Reports suggest, along with Taliban, Pakistan is supporting some of these militants and terrorist groups that are currently operating illegally in Russia.
YUDHBIR SINGH DADWAL, THE HANDSOME FACE OF DELHI POLICE
Yudhbir Singh Dadwal, a 1974 batch IPS officer was the 16th Police Commissioner of Delhi who served in this position for over three years. His passing away a few days ago brought back several memories, the earliest being my first meeting with him in 1980 when he was the additional DCP of New Delhi district. This was the period when Pritam Singh Bhindar was the CP and Gurcharan Singh, the DCP of the district. Dadwal was always well turned out and preferred to wear a beret instead of the usual peak cap, which most IPS officers preferred. He would invariably be present at the Boat Club which used to be the designated venue of all demonstrations and protests.
Reporters covering the crime beat would also look after the major demonstrations and thus it was very frequently that one would inter-act with this handsome police officer, whom some of us would refer as the “Boat Club Specialist’’. Of course, SI Sharma who served at the Boat Club police post for over 23 years as well as Pandit Hari Dev, the Parliament Street ACP, would also be always present. Dadwal would crack jokes with the reporters as we waited for the demonstrators to turn up and thus his association with some of us in the media started. His other batchmates—Amod Kanth, Umesh Katna and Shujauddin Sajid— were all making a mark in the police and Dadwal too was embarking on his onward journey. His first independent district posting took him to the East District where a major riot broke out in the Chauhan Bangar area near Seelampur one night.
Unfortunately, Dadwal had to proceed on leave due to some very personal reasons and the riot was quelled by his boss, Surjeet Singh and his colleague, J.P.Singh. Thereafter, one would continue to run into Dadwal at the Police Headquarters and he would always have some interesting anecdote to narrate.
Subsequently, he joined the R&AW and was posted at Rome. Perhaps it was the nature of his job that brought about a change and he inter-acted with very people, I being one of them. When Dr K.K. Paul was about to complete his distinguished career with Delhi Police, there was speculation on who would succeed him. Kiran Bedi was the next in line in terms of seniority (1972 batch) but the Home Ministry seemed interested in someone else other than her. It was at this time, Dadwal would sometimes call up to find out what the developments were since he had emerged as the front-runner. Finally, he was selected. He was extremely helpful and When Hindustan Times, where I was working at that time, organized an AR Rehman event in Rajouri Garden, the permission was held back since clearances had not been obtained. It was Dadwal who helped in resolving the situation and provided vital inputs to get the permissions before instructing his DCP to go out of the way and allow the event. After Delhi Police, he went to the SSB and thereafter met a very few people.
I had not seen him in many years and the news of his sudden demise shocked me as it did everyone else. He would have been 70 next month. However, his friends, well-wishers, colleagues and associates would always remember him as an outstanding person and an able police officer.
Modi masterstrokes: Telecom reforms and ‘bad bank’
Setting up a ‘bad bank’ and undertaking the telecom reforms are only the added dimensions to the long trajectory of structural and process-driven reforms by the Narendra Modi government, and yes, there is more to come.
The Union Cabinet last week cleared big-bang telecom reforms that include, among other things,100% foreign investment through the automatic route. These reforms will usher the telecom industry into a new era, boost investment and reduce the debt burden and ease cash flows. The Cabinet also allowed a four-year moratorium on all dues that telecom operators have to pay to the government, including annual payments of dues arising out of the adjusted gross revenue (AGR) judgement and spectrum purchased in past auctions, excluding the March 2021 auction. The moratorium will start from October 1, 2021. These reforms are deep, broad and structural. They will bring in change today and in the future as well and are revenue-neutral for the government. Moratorium or deferment on due payments of spectrum purchased in past auctions (excluding the auction of 2021) for upto four years, with net present value (NPV) protected at the interest rate stipulated in the respective auctions is a landmark step.
Option to the telecom players to pay the interest amount arising due to the said deferment of dues by way of equity is a huge step too that will drastically bring down the unsustainable debt levels of some players. This will also help various banks having substantial exposure to the telecom sector.
The definition of AGR which had been a major reason for the stress in the sector, has been rationalised by excluding non-telecom revenue of telecom companies from the ambit of AGR, with prospective effect. AGR refers to revenues that are considered for payment of statutory dues. Telecom companies had been asking for a change in definition of AGR since 2005 and it finally happened in 2021, thanks to sweeping, bold reforms by Prime Minister Narendra Modi. A four-year moratorium to pay government dues (but with interest) is a welcome step too.
The Modi government has also allowed permission to share scarce airwaves. The scrapping of spectrum usage charge (SUC) for airwaves acquired in future spectrum auctions is again a decisive measure. And though this is with prospective effect, it will lead to massive savings for telecom players, as currently anywhere between 3-5% of AGR is paid as SUC and about 8% of AGR, as license fee. Allocation of spectrum through an auction for a period of 30 years, compared with the 20-year period prevalent at present, is another out-of-the-box move. Also, telecom operators will be allowed to surrender the spectrum that will be acquired in future auctions, after 10 years of the lock-in period. In effect, the recent telecom sector reforms by the Modi government will restore back to health a sector that was repeatedly impaired by successive Congress regimes that squeezed the sector by forcing companies to bid for auctions at ridiculously expensive prices. Thereafter, license fees, SUC, penal taxes, only made the going more difficult for telcos, making even the banks who loaned large sums of money to these telcos saddled with NPAs and bad debts under incompetent Congress dispensations. However, all that will now be a thing of the past as the recent measures will put the sector back on track.
Easing of customer acquisition norms for telecom operators by replacing the need to fill physical forms with digital forms, for instance, shows the minute detailing that went into the relief package announced for telecom players.
In effect, the structural and process reforms in the telecom sector will protect and generate employment opportunities, promote healthy competition, protect interests of consumers, infuse liquidity, encourage investment and reduce regulatory burden on telecom service providers (TSPs). In the backdrop of the outstanding performance of the telecom sector in meeting Covid-19 challenges, with huge surge in data consumption, online education, work from home, interpersonal connect through social media, virtual meetings etc., the reform measures will further boost the proliferation and penetration of broadband and telecom connectivity. The reforms reinforce Prime Minister Modi’s vision of a robust telecom sector, with emphasis on competition, customer choice, antyodaya for inclusive development, bringing the marginalised areas into the mainstream and universal broadband access to connect, the unconnected. The package is also expected to boost 4G proliferation, infuse liquidity and create an enabling environment for investment in 5G networks.
Huge reduction in bank guarantee (BG) requirements (80%) against License Fee (LF) and other similar levies, are an important step too. Henceforth there will be no requirement for multiple BGs in different licenced service areas (LSAs) regions in the country. Instead, one BG will be enough. Also, from 1st October, 2021, delayed payments of License fee (LF)/spectrum usage charge (SUC) will attract interest rate of SBI’s marginal cost of lending rate (MCLR) plus 2%, instead of MCLR plus 4%, which will give huge breathing space to telcos. Interest will be compounded annually instead of monthly, with penalty and interest on penalty removed. For auctions held henceforth, no BGs will be required to secure instalment payments, as industry has matured and the past practice of BG is no longer required. Additional SUC of 0.5% for spectrum sharing has been removed.
Ease of doing business is being promoted, with cumbersome requirement of licenses under the 1953 customs notification for wireless equipment, removed. Self-kyc (App based) has been permitted. E-kycrate has been revised to only one rupee. Shifting from prepaid to post-paid and vice-versa will not require fresh kyc. Paper customer acquisition forms (CAF) will be replaced by digital storage of data. Nearly 300-400 crore paper CAFs lying in various warehouses of TSPs, will not be required. Warehouse audit of CAF will not be required. SACFA clearance for telecom towers has been eased. DoT will accept data on a portal based on self declaration basis. Portals of other agencies (such as civil aviation) will be linked with DoT Portal.
The Modi government is also laying down the framework for incorporation of a “Bad Bank” with all the regulatory approvals in place.
The high level of provisioning by public sector banks (PSBs), of their stressed assets calls for measures to clean up the bank books. An asset reconstruction company limited (ARCL) and asset management company (AMC) is being set up to consolidate and take over the existing stressed debt and then manage and dispose the assets to alternate investment funds (AIFs) and other potential investors for eventual value realization. The incorporation of the national asset reconstruction company limited (NARCL) was registered with the registrar of companies (RoC) on 7th July, 2021. Paving the way for a major clean-up of bad loans in the banking system, the Modi government last week cleared a Rs 30,600 crore guarantee programme for securities to be issued by the newly incorporated ‘Bad Bank’ for taking over and resolving non-performing assets (NPAs) amounting to Rs 2 lakh crore.
The Reserve Bank of India is in the process of granting a licence for the National Asset Reconstruction Company Limited (NARCL), following which toxic assets worth Rs 90,000 crore that banks have already fully provided for, will move to the NARCL. The Cabinet’s decision to extend a five-year guarantee for NARCL-issued security receipts to banks completed the entire cycle of cleaning up India’s banking system, that began with the recognition of the extent of bad loans in 2015. The erstwhile Congress led UPA never fully provided for bad loans. Instead,the Congress ran the banking system like a private fiefdom by spending good money, after bad. NPAs were not fully recognised during the UPA era and banks were forced to lend money to fraudulent companies, so that they could simply repay the earlier loans availed from banks, by these companies. In effect, the erstwhile Congress regime ran a huge “ponzi scheme”, with banks being made unwilling and often, willing accomplices. Prime Minister Narendra Modi’s zero tolerance for corruption, rewrote the rules of the game in the last seven years, with banks being restored back to health.
Under the new proposed mechanism, the NARCL will acquire assets by making an offer to the lead bank. Private sector asset reconstruction (ARCs) firms may also be allowed to outbid the NARCL. Separately, public and private lenders will combine forces to set up an India Debt Resolution Company (IDRC) that will manage these assets and try to raise their value for final resolution. The Modi government has completely overhauled the banking system by tightening prudential norms and recognising bad assets. A 15% cash payment would be made to the banks based on objective valuation and the rest 84% will be given as security receipts (SRs). For those to hold on and have their value intact, there is a need for the government to give a back-stop arrangement and that is why Rs 30,600 crore has been cleared by the Modi government.
Once the NARCL and the IDRC have finally resolved the bad assets, preferably as a going concern and not through liquidation proceedings, the balance 85% held as security receipts would be given to the banks. The government back-stop of Rs 30,600 crore will come in only as much as to pay the gap between the realised value and the face value of those receipts and, this will hold good for only five years. While there are 28 ARCs in the private sector, they did not take up big ticket resolutions, so a need was felt for government-backed security receipts and the NARCL. The whole idea is to ensure that value that is locked in the assets is realised and comes back to the banks; Banks then use it as “Growth Capital” and the banking system becomes more robust. The five-year limit on the guarantee, with an increase in the fees charged for the guarantee every year, is an incentive for the resolution process to be completed at the earliest. The Modi government has addressed the issues facing the banking system in totality, that in 2015 was a major challenge for the economy. The twin balance sheet problem which caused a lot of stress has been resolved in a holistic way. The government guarantee for the proposed security receipts is a positive stepping stone for unlocking stressed assets. The upfront cash payment by the NARCL to banks will immediately be accretive for the profitability and capital of the banks. The ability of the NARCL to resolve these assets in a time-bound manner will be critical for future provision writeback by banks and that is precisely what the NARCL will look to do.
Public sector banks will have a 51% ownership in the NARCL, while their shareholding along with that of public sector financial institutions will be capped at 49% for the IDRC, with private lenders bringing in the rest of the equity capital. About 16 banks, including private players, would put up about Rs 6000 crore as equity for the NARCL. These are some pertinent lines spoken by PM Modi,at the CII conference in August 2021: “Our government is ready to take the biggest risk in the interest of the nation. GST was stuck for so many years only because those who earlier in the government could not muster up the courage to take political risks. We not only implemented GST but today we are witnessing record GST collection. Recently, we decided to scrap retrospective tax which was praised by the industry. It will strengthen the bond between the government and industry.” Well, setting up a “Bad Bank” and the telecom reforms, are only an added dimension to the long trajectory of structural and process driven reforms by the Modi government and yes, there is more to come.
The writer is an economist, national spokesperson of the BJP and the bestselling author of ‘Truth & Dare: The Modi Dynamic’. Views expressed are writer’s personal.
WILL PM MODI’S MAGIC WORK ON BIDEN AND HARRIS TOO?
Irrespective of what his diehard detractors might say, PM Narendra Modi has devised his own distinct, characteristic and inimitable charm toolkit which helps him trigger positive vibes in his foreign counterparts and generate personal rapport and chemistry. What can be a more convincing than the fact that he was able to develop strong personal chemistry with two US Presidents, Barak Obama and Donald Trump, who were individuals of such contrasting personalities and different from each other like chalk and cheese. With this background, there shouldn’t be any doubt that Narendra Damodardas Modi and Josheph Robenette Biden Jr will hit off well; though there will be no raucous Rock star like reception in Madison Square Garden as happened before Modi met Obama, nor a carnival like Howdy Modi in Houston where the Indian PM literally owned the stadium and introduced the US President Donald Trump to 50,000 strong Indian Americans.
Biden and Modi have talked on phone and met virtually thrice at the QUAD summit (March 21), Climate Change Summit (April 21) and G-7 Summit in June this year. The US Defence Secretary Lloyd Austin and the Secretary of State Antony Blinken have visited India respectively in March and July this year. And keeping pressure on India to announce her Net Zero commitment by 2050, the US Presidential Envoy on Climate Change, John Kerry has visited India in April and September. During his last visit, Kerry launched the Climate Action and Finance Mobilization (CAFM) with India which will focus on: finance mobilization, clean energy and climate adaptation measures.
The US defence exports to India remain on a high .Both have signed three foundation Communication agreements: LEMOA, COMCASA, and BECCA. India has been accorded the major defence partner status bringing her on par with USA’s NATO allies and given SAT-1 status that will facilitate transfer of sensitive American technologies for civilian and defence use. Obviously, India and USA have overcome the hesitation of history and come closer than ever militarily.
There has been extensive sharing of information and satellite images and intelligence inputs to fight international terrorism, cybercrimes and money laundering.
In spite of disruptions caused Covid-19, in 2019-2020 bilateral trade between India & the US was estimated at US$88.75 billion; India’s trade surplus with the US in 2020-21 was US$ 23 billion. The US has replaced Saudi Arabia as the second largest supplier of oil. Nonetheless, the Trade and Industry Minister Piyush Goel was quoted to have said recently that a trade agreement with the US wasn’t likely in near future, not even a mini trade deal. The US, focused on addressing its trade issues with China, isn’t interested in signing any trade agreement. The US is believed to be demanding market access for its agri products, a sensitive area for India, and substantial amendments to IPR and laws related to data protection. On its part, India also seeks market access for its automobile parts, engineering and agro product and a relook at the GSP which stands withdrawn, and the long pending demand for a toatalisation agreement. H1B visas issue and certain regulations have impacted Indian tech companies adversely.
After some initial hiccup, the US extended assistance to India on a mission mode in the face of devastation caused by the second wave of Covid-19 pandemic. The total US Covid-19 related assistance including contributions from the Indian Americans was worth over US$ 500 million.
Both the Trump and Biden administration have been supportive of India on the issue of Chinese aggression across the LAC. As a matter of fact, increasing Chinese assertiveness and aggressiveness brings India-US nearer though our threat perception of China, which remains in occupation of Indian territory and with which we have an unresolved boundary dispute aren’t identical.
It’s largely the China factor which has led the US to acknowledge India’s salience in the QUAD and Indo-Pacific. It was Donald Trump who introduced a virtual blood transfusion in the QUAD which was lying in limbo since 2007 and redefined its role. He also rechristened the Asian–Pacific into Indo-Pacific underlining India’s relevance. Leaders of QUAD, at their summits, have been stressing that they stand for a free, open and inclusive Indo-Pacific with freedom of navigation and over flights and peaceful resolution of territorial disputes as per the International laws including the UNCLOS. This will be reiterated at the forthcoming QUAD summit as well. Modi might emphasize his concept of SAGAR: Security and Growth for all in the Region.
Notwithstanding the claims of the concerned States to the contrary, China considers both the QUAD and Indo Pacific as primarily anti-China groupings. Interestingly, Russia shares this perception.
To dilute this perceived anti-China slant, at the virtual summit of QUAD in March 21, the leaders identified new areas of cooperation: new technologies, developing alternative supply chains and getting 2 billion doses of Covid-19 vaccine produced mostly in India with financial and logistic support from Japan and Australia. Fighting terrorism, cybercrime, and cooperation in maritime piracy are also likely to be discussed at the forthcoming QUAD summit that might be organized on a hybrid format—that is Biden and Modi attending in person while the Japanese and Australian PMs joining virtually.
The announcement of the formation of a trilateral Security partnership between the US, the UK and Australia (AUKUS) ostensibly to confront China and USA’s decision to help Australia develop nuclear Powered submarines has not only enraged China and provoked France to recall it’s ambassadors from Washington and Canberra but also cast a spell on the future of QUAD.
On the first visit to US in Sept 2014,PM Modi publicly advised Obama in his speech at the Council of Foreign Affairs not to withdraw from Afghanistan in hurry. The same sage advice was conveyed to Trump. India went on repeating that there is nothing called good Taliban or bad Taliban, they are the same and essentially bad. But the war weary US, desperate to get out, assiduously courted the Taliban with Pakistani and Qatari help and signed an agreement in Doha in March 21 which was a total surrender to Taliban. American withdrawal was humiliating; it left Afghan people, especially women at the mercy of an undemocratic regime. Regrettably, the US showed utter disregard to possible spike in security challenges of India posed by the Taliban Government comprising of 14 internationally wanted terrorists.
With Vice President Kamla Harris and Democrat Congresswoman Pramila Jayapal in the background, Joe Biden might flag reports of increase in alleged violations of freedom of expression and religious tolerance in India. His soaring speech in the UN might cover fight against the unprecedented pandemic, Climate change, international terrorism, and underline the need of strengthening the UN, WTO, and WHO and might allude to the negative role being played by some countries like China and Pakistan.
PM Modi’s dynamic leadership and the global re-ordering
In the global re-ordering that is now in the offing and in the unmistakable shift eastward, the compass also points India-ward. As PM Modi embarks on his US tour, the first since the re-ordering began, these dimensions are emerging with certainty.
As Prime Minister Modi embarks on his UN and US visit, it is interesting to see how he has pushed the Indian narrative of crisis management and handling over the last two years. Modi’s politics is not the politics of resentment, he does not speak of the rise of India as being propelled by the narrative of humiliation. When he speaks of India’s rise, he speaks of a benevolent rise, a rise with responsibility. Since March 2020, amidst many a dire prediction of India reaching the nadir in her struggle with the pandemic, Modi’s politics of aspiration, of India’s benevolent rise has triumphed. This has been attracting global recognition.
Public intellectual, S. Gurumurthy has argued that now, ‘India’s stature has altered to its advantage and the global structure and its perception about India too have changed…The investment India has made in its democratic institutions and rule of law is now both a matter of global attention and attraction.’ This rule of law, under Modi, has not been a coercive right denying approach, it has based itself on a sense of duty rather than being only a clamour for rights.
It is interesting to note, that much before some of the leading global minds discussed the effects of the pandemic and its impact on a global re-ordering Modi had already articulated India’s position. At a time when the pandemic had hit, when confusion prevailed globally on how to handle it and when the narrative of isolationism and disconnectedness hit the stands India’s position was perhaps the most nuanced and farseeing. Prime Minister Modi had said, that the pandemic ‘does not see race, religion, colour, caste, creed, language or border before striking’ and that ‘our response and conduct thereafter should attach primacy to unity and brotherhood. We are in this together.’ Modi argued that ‘unlike previous moments in history, when countries or societies faced off against each other, today we are together facing a common challenge. The future will be about togetherness and resilience.’ It is instructive to understand this against the canvas of the ongoing global discourse on re-ordering.
PM Modi’s emphasis on the need to put human beings at the centre of the vision for global prosperity, his insistence that there should be a free and ‘open sharing of the benefits of medical research and development, of the need to develop adaptive, responsive and humane health care systems, evolve new crisis management protocols and procedures for an interconnected global village’ and the need for reforming intergovernmental organisations like WHO, was the first such a clear articulation of the future re-ordering, the world after the pandemic-inflexion point. It was also becoming clear that the East had performed better in terms of handling the pandemic and addressing the multi-dimensional complexities arising from it. After this stand was articulated, one saw thinkers like Henry Kissinger and Joseph Nye take a similar line. While Nye spoke of the need for the United States to ‘launch a massive COVID-19 aid program— a medical version of the Marshall Plan, Kissinger argued that leaders must choose a path of cooperation that ‘leads towards international resilience’ against such global crises in the present and in the future. Nye also spoke of the need for leaders to articulate ‘the importance of power with rather than over others and set up bilateral and multilateral frameworks to enhance cooperation. In Nye’s framework a ‘cooperative and soft-power enhancing policies’ could create a ‘geopolitical path to a better world.’ India’s insistence, since the early days of the pandemic, had already been this— the need for a cooperative, soft-power enhancing, multilateral, synergized and resilient framework.
Modi has also been repeatedly speaking of the Asian century. One had heard of the rise of the East, or narrative of the Asian century, in the past, when vast tracts of Asia were under colonial subjection, material exploitation and cultural subjugation. PM Modi’s reference to the 21st century being the Asian century, in the present context, needs to be read against the backdrop of Asia on the verge of a major shift eastward post pandemic.
Francis Fukuyama, for instance, has spoken of the continuing shift of the ‘global distribution of power’ eastward, since ‘East Asia had done better at managing the situation than Europe and Asia.’ Diplomat scholar Kishore Mahbubani, for instance, argued that the ‘deference to Western societies, which was the norm in the 19th and 20th centuries’ will be replaced by ‘a growing respect and admiration for East Asian ones.’ As Gurumurthy too has argued, ‘Covid 19 has exposed the hollowness of assumptions of the world order based on Western experiences which were experimented on the Rest from 1990s.’ Singapore Prime Minister Lee Hseing Loon has also joined PM Modi in speaking of an ‘Asian century.’ The pandemic, Mahbubani, argues, could ‘mark the start of the Asian century.’ In a post Covid order, Asia will be looked upon as a role model, he observes, ‘not only for how to handle a pandemic but how to govern more generally.’
That governance was carried on with and not just managed, despite gargantuan pressures of a once-in-a-century pandemic, was best seen in an India under its onslaught. Economic recovery, mega infrastructural push, the ushering in of a futuristic and transformative national education policy, the time-bound development of a vaccine and the humongous effort to administer it to a massive and varied population, the handling of the oxygen supply dimension, among other things, perfectly demonstrated Asian resilience and one-pointedness in times of acute crisis. Ultimately the examples that will define and represent the Asian century will be examples that have been successful and transformative in an inherently and unshakably democratic environment, driven by synergy, national cohesion and inspiration, brought forth by the sense of collective duty and shorn of any hectoring and coerciveness. In all of these India is bound to stand out. Among the eastern countries, India’s handling of pandemic, in a most varied and complex setting, her reaching out to countries across the region and developing a web of cooperation, is another dimension that stands out.
American journalist and author, James Traub, for instance, argued that Asian democracies show that ‘citizens can surrender some’ of their ‘freedom without sacrificing fundamental political rights.’ In India’s handling of the pandemic, freedom remained intact, and the sense of civic responsibility and commitment grew, while fundamental political rights remained undiluted and protected. Those who have peddled the ‘dictator’ Modi narrative, directly or indirectly, or had thought that the pandemic would offer an ‘ideal’ opportunity to prove their thesis right, were disappointed. In their unrelenting opposition to Modi, they failed to spot the actual dictators, the failing democracies and the faltering republics.
In the global re-ordering that is now in the offing and in the unmistakable shift eastward, the compass also points India-ward. As PM Modi embarks on his US tour, the first since the re-ordering began, these dimensions are emerging with certainty.
Anirban Ganguly is director, Dr Syama Prasad Mookerjee Research Foundation, New Delhi. The views expressed are personal.
PM Modi has also been repeatedly speaking of the Asian century. One had heard of the rise of the East, or narrative of the Asian century, in the past, when vast tracts of Asia were under colonial subjection, material exploitation and cultural subjugation. PM Modi’s reference to the 21st century being the Asian century, in the present context, needs to be read against the backdrop of Asia on the verge of a major shift eastward post pandemic.
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