In the last 20 years, nearly 300,000 farmers have ended their lives by ingesting pesticides or by hanging themselves. Although successive governments have tried to help farmers by implementation of various schemes, there is no change on the ground. What is the reason behind such an alarming rise in number of suicides?
India has now shifted from natural cotton seeds to BT Cotton. The firm Monsanto has claimed that crop yields will improve and the dependence on chemicals and high irrigation will decrease. It has now been found that the claims were not true and farmers have to resort to buying more pesticides to spray in the fields. Ironically, the chemicals used like pesticides and insecticides, are provided by the sister companies of Monsanto.
The farmers take loans to buy seeds and an assortment of chemicals. But, what happens if the yield is less? Farmers go into cycles of bad loans and are unable to pay them back. Many thus resort to suicide to end their grief.
Chemicals used in traditional farming methods have a devastating effect on the people who contact them. Some of the chemicals used, such as Aldicarb, can be lethal to people, while others can cause sickness or birth defects. Many farmers are in direct touch with the cotton, increasing the risk of exposure. Cotton is a “dirty” crop. Despite making up about 2.5 percent of all world agriculture, it uses about 25 percent of world’s insecticides and 10 percent of world’s pesticides.
Thus, there has been a call by activists to ban BT cotton and increase cultivation of organic cotton.
Besides helping the environment, there are other benefits from organic cotton products. Working environments are better for those on farms and small-scale farmers save money by not having to buy large amount of pesticides. Consumers benefit too, as organic cotton products are softer and easier on your skin.
Brands like OrganicThreadz are trying to create a market for Organic cotton products by selling Organic clothing through their website. Me and my friend Avishek Kataria started this venture to improve livelihoods through our passion for change.
Since college, we shared a passion for India and a desire to work for a better India. After spending some time in IT jobs, we quit and planned to set up a fashion brand with an aim to improve livelihood. As we researched about different materials, we came across organic cotton and also became aware of all the troubles farmers are facing because of genetically modified cotton. The maintenance of this cotton is very expensive, due to which farmers get into cycle of bad loans and then commit suicides. We realized the need to switch to organic cotton and commercialize it. That’s what shaped our vision and got us going.
More awareness is required in consumers to shift to organic cotton. As people get aware more organic cotton would be cultivated to cater to the demand of the people. As an agrarian economy it is very important to care for our farmers and improving our choice of clothing can go a long way in supporting them.
Bengaluru’s garment workers–about half a million of them, mostly women–have no pensions, job security, health insurance and live life close to the poverty line. This hitherto silent mass was suddenly agitated by a central government order to restrict early withdrawals from the Employee Provident Fund (EPF), a financial security net.
Thousands blocked arterial roads, causing snaking traffic jams, and as the protests escalated into rioting, burnt vehicles, and police firing, the Centre suspended the decision to restrict EPF withdrawals.
The Employee Provident Fund has been around since 1951, a law passed by India’s Parliament, requiring employees to contribute a fixed proportion of salary to their EPF account, with the employer matching this contribution. Here’s how it works:
The employee earns an interest of 8.75% compounded annually on the money accumulated in her EPF account.
Contribution by the employer is tax-free. The contribution by the worker is taxed. But the savings withdrawn later are not taxed.
In this year’s budget, Finance Minister Arun Jaitley announced that EPF would be taxed when claimed–to prevent savings from being used before retirement–a move he had to roll back. People did not want the government denying them access to their savings.
There are 65.6 million active EPF accounts–both public and private sector–according to this August 2015 Employee Provident Fund Office (EPFO) newsletter.
Here are three reasons why Bengaluru’s garment workers rioted:
1) Restrictions On Withdrawing EPF Savings
Until the controversial order, workers could withdraw all their EPF money, with interest, if they were unemployed.
Now, EPF holders cannot withdraw all their money for marriage, education of children, serious illnesses and buying property, according to this notification issued on February 10, 2016.
The order was a blow to garment workers, who need money at intervals for precisely the reasons mentioned above.
2) Withdrawal On Retirement, Now Delayed By Three Years
The new order says you can withdraw all your EPF money only at retirement, the age of which has been increased from 55 to 58. This rule has now been suspended until July 31, 2016.
3) 92% Private-Sector Retirees Have No Pension, Health Insurance
India’s formal, or organised, workforce comprises 28.9 million workers, with secure employment, pension and medical benefits. Of these, 40% (11 million) work in the private sector, according to government estimates.
In general, public-sector employees enjoy better and more regular pensions, health benefits and income security than private-sector workers.
The 40% private-sector employees we referred to are only those the government’s statistical agencies categorise under the organised sector. Of these, 92% have no income security, pensions or health insurance, an IndiaSpend analysis has shown. Garment workers are among this insecure population, which needs regular access to EPF accounts for vital life needs.
The Growing Distress Of India’s Unorganised Workforce
While many private-sector workers, such as those in the garment industry, lead precarious lives, they are better off than their compatriots in the unorganised sector.
“Unorganized workers consist of those working in the unorganized sector or households, excluding regular workers with social-security benefits provided by the employers and the workers in the formal sector without any employment and social security benefits provided by the employers,” according to this government definition.
About 72% (340 million of 472 million) of India’s workforce was in the unorganised sector at the end of 2011-12, as IndiaSpend has reported.
Much like workers in the private sector, those in the unorganised sector also depend on money from EPF accounts–if at all they have such accounts–to get by.
This article was originally published on IndiaSpend.com, a data-driven and public-interest journalism non-profit.
I am not even remotely involved with the Indian startup ecosystem. But unfortunately, I read a lot and try to make sense of it in equal measures. And from whatever I have been reading and observing regarding the Indian startup story, especially in the last 12 months, I feel something is not right. Let me cut to the chase right away. Here’s what I think:
1. Where Is India’s Google et al?
Google, Amazon etc were born out of the first internet wave in the US during the 90s. A decade or so later, China built its own Google named Baidu, and practically drove Google out, which otherwise, has a global search engine market share of roughly 80%. Further, the rise of Alibaba displaced Amazon. Circa 2015, if India has indeed become the third largest startup ecosystem, then where is India’s Google? Facebook? Or Twitter? Or such meta-level startups.
What’s wrong then? With due respect to the Indian innovators, IMHO (in my humble opinion), most Indian startups aim to be rent-seekers and not wealth creators in the true sense. They are not interested in the bigger picture, in solving genuine problems, creating new categories or trying to become leaders in the existing ones.
Without generalizing, I want to say that most Indian startups by and large look to copy an existing model, and fine tune it to serve the local need. There’s Ola for Uber, Gaana for Spotify, the N number of food delivery startups, and their extended versions delivering just about anything under the sun. InMobi is the only Indian startup that comes to my mind, which carved out a niche for itself. Again, I may not know enough names, but I hope I have driven home my point.
2. The Zuckerberg Syndrome
This is my biggest pain. Ever since Mark Zuckerberg created the behemoth that is Facebook, every 22-year-old graduating kid wants to become a CEO. The little things called experience and expertise be damned. And sugar-coated, half-told success stories floating on the Internet haven’t helped either.
What these young graduates often forget is that people like Steve Jobs, Jeff Bezos or the latest poster boy Elon Musk slogged for years, writing codes in anonymity, sharpening their skills to the point of perfection before jumping onto their grand idea. To put things in perspective, Elon Musk took many years to self-learn the nuts and bolts of rocket science and electric automobiles, literally. But all we want to see is the end product — SpaceX and Tesla.
This is where the latest breed of Indian founders falter. They do not want to wait. They have been overfed the idea that an ‘IDEA’ is all you need and you need to move fast, unless someone else beats you. Misinterpreting the overnight success of new-age startups like Pinterest, Instagram etc, they do not want to invest in honing their skills or gaining perspective about the sectors they wish to dive in.
The immediate tag of a CEO, CTO, COO (CXO) is way too enticing to let them go through the grind.
They should ask themselves — where is innovation in selling baby diapers online? Or loaning bean bags on rent for parties? Or delivering food from the local chicken-shawarma joint? Creating the most attractive and seamless website/app and hooking up with a local delivery service, while piggy-banking on investor money is NOT innovation. It is not sustainable and definitely not long term. It might be better to call it a normal business instead.
3. The Dichotomy Of Venture Capital And Angel Funds
It is interesting to note that most of the first generation startups in the US and also in China were bootstrapped. That played a huge role in their successes. Why? Because it is human nature which drives us that extra bit when our own money is involved.
However, the Indian startup scene right from the beginning is heavily marinated with huge Venture Capital and Angel funds. However ironic it may sound, this is what I feel is rotting the entire system. Young, creative, enthusiastic professionals leaving their jobs, higher education etc, drawn by the charm of easy investor money and an imaginary million dollar idea. Well, any idea would seem like a million dollar shot when funding is a non-issue.
Add this to what I discussed above and you can see a reasonable argument in why this generation of Indian innovators do not want to wait. The grand vision gets restricted to building a workable model of any existing idea, get funded and then hope for a million dollar exit. This is the purported life-cycle of most Indian startups.
To an outsider like me, the Indian startup ecosystem resembles a large casino where Mc-Daddy VCs come to play their bets.
4. Forcing Western Models In Indian Markets
Let me explain by quoting an example — online grocery delivery makes sense in the US, where the nearest Walmart or Kroger might be miles away. Secondly, most food items there are frozen with a longer shelf life. Thirdly, from personal experience I have observed, a US family has a more or less fixed weekly or bi-weekly grocery list with strong brand loyalties.
The Indian system is as opposite as it can get. There’s a Kirana (mom and pop) store at every nook and corner, complemented by the rapidly expanding supermarket chains like Food Bazaar, Big Apple to name a few. But even more important is that we Indians largely consume fresh food — vegetables, milk, fruits etc. Many Indian mothers might not be able to cook in peace until and unless they’ve handpicked their vegetables.
Thus, the Indian market for online grocery shopping gets restricted to the young and working population in urban centres, who are anyhow increasingly eating in office or outside. My point is that there are many such startups in India, trying to fit a western model into Indian markets without fully working out the ground level movements. That’s why they hit a roadblock when it comes to scaling, and end up being the proverbial frog in their respective wells.
5. The Mind Numbing Valuations
I am old school. Hence, I believe that profit is the main driving force behind any venture. And that any venture should be valued according to how profitable it is presently, or might be in the definite future. But when a startup with no profit to show in the near future, and a multi-million cash burn rate, get valued in billions, a layman like me fails to understand the equation being worked out, even after factoring the much talked about cost of customer acquisition. To be fair, this is a more global phenomenon and not just specific to Indian startups.
It almost sounds obscene when Uber is valued at $60 billion. That might be more than the GDP of some countries.
The problem is exacerbated in case of India because nascent startups lose the plot in the glitz of inflated valuations, even before they get a hang of their basic modalities. VC firms often end up sucking out a major portion of total equity in the bargain, leaving very little for the original founders to play around with. Except for the paper tag of being freshly made millionaires, if not more.
6. The Talent, Or The Lack Of It
I wanted to keep this point for the end, because it might surprise a few. Dare I say this — I feel the potential of Indian graduates is being oversold. We are relying on the past laurels of the IIT-IIM system, when it used to be relevant.
With the mushrooming of sub-standard engineering colleges, a major chunk of the talent pool of freshly graduating students is barely employable, let alone equipped with the powers to create a truly disruptive startup. It is no secret that the Indian education system lays little emphasis on practical training. Thus, what we end up doing is building poor products by copying existing codes/tools available on Google. In defense of early stage startups, they just don’t have the resources and time to train an employee whose sole aim might be to make a quick stopover, while on his way to greener shores.
I want to conclude by accepting that it is easier to rant and pick up faults. The likes of Google or Amazon had the first mover’s advantage, backed by strong and developed national economies. In comparison, the task is cut out for anyone starting now. The world order is far from just, and the bigger players do every bit by arm twisting developing countries to their advantage. The Indian startup ecosystem faces somewhat similar problems in its limited domain. Having said that, I do wish to see Indian startups someday working on truly cutting-edge technologies in areas like defense, space, automobiles and opening new vistas, not just for India, but the entire world.
A farmer sits amid stacked sacks of onions as he waits for customers at a wholesale onion and potato market in the western Indian city of Ahmedabad November 14, 2014. India's inflation dropped to a new multi-year low in October, helped by slower annual rises in food and fuel prices, intensifying pressure on the central bank to cut interest rates to encourage spending and investment needed to boost growth. REUTERS/Amit Dave (INDIA - Tags: FOOD BUSINESS) - RTR4E4MS
“The post-reform period has been characterised by deceleration in the growth rate of crop yields as well as total agricultural output in most states. By ending discrimination against tradable agriculture, economic reforms were expected to improve the terms of trade in favour of agriculture and promote its growth,” Professor G.S. Bhalla wrote recently in an essay in Economic and Political Weekly.
The way I see it, no crisis comes with an invitation. Since India liberalised and exposed its domestic economy to the world, more than three lakh farmers have ended their lives, either by ingesting pesticide or by hanging themselves.
The three most common reasons causing such misery are debt, drought and declining productivity. Statesmen and policymakers failed to recognise the after-effects of Liberalisation, Privatisation and Globalisation (LPG). They might have thought that opening up the farm sector will lead to more prosperous farmers who will be able to get the maximum price for their produce. Unfortunately, that did not happen. In fact, the prevailing distress turned into a crisis. “Agrarian crisis in India is the result of the adaptation of the policies of the World Trade Organisation and its after-effect on the world economy,” opined Vijay Jawandhia, founder of Shetkari Sangathana, a farmers union in Maharashtra, in a documentary, commissioned by the 2014 Food Safety and Sustainable Agriculture Forum, titled ‘YIELD‘.
A perception still seems to exist that the agriculture sector is growing with the increase in productivity. Yes, the productivity of the land increased, but unfortunately, neither income nor the condition of farmers is improving. We need to understand that for higher productivity, farmers are investing huge amounts in fertilisers and in pesticides and other chemicals. This increases the total cost of production, which most of the time amounts to more than what they are earning. They are unable to match their income with the money they invested even after an increase in production. The growth of agriculture should be measured in terms of real income of farmers rather than productivity to have more realistic information about the economic status of farmers.
Excess use of fertilisers also made agricultural production stagnant and affected the ecology in an adverse way. Excessive use of chemical fertilisers and pesticides made the soil and water contaminated.
Increasing dependence on the market for every agricultural input is another problem. Farmers are facing exploitation in the name of healthy yields. The cost of agricultural inputs continues to rise steadily. The biggest challenge farmers face is not having their own seeds for production. The traditional way of ‘hoarding of seeds’ is no more in practice due to the introduction of various hybrids and modified seeds in the market. These promise high yields, but after sowing, they require proper care as they are very sensitive to climatic conditions. Additionally, they are poorly equipped to resist various seasonal diseases and any consequent extra cost adds to the burden on the farmer.
On the other hand, the traditional seeds are more habituated to climatic conditions and hence, require less care which ultimately reduces the cost of production.
Monopoly and total control of private companies over the sale of seeds have made farmers more dependent as they are forced to buy at higher costs. There is a need to empower farmers in every way possible. Their dependence on the market should be reduced to a minimum and this can be done by reviving some old techniques and modifying them to suit the present times. Organic farming, for example, could promote sustained and healthy ways of agricultural production.
There are two possible ways to support farmers through price policy. One is by increasing the price of the crops grown by farmers and another is by reducing input costs. Cost efficient techniques and methods should be introduced in a big way so that the input costs may come down. Moreover, the government should also enhance the role of the Food Corporation of India in buying crops other than wheat and rice at a price which suits farmers.
Loopholes in fixing the minimum selling price (MSP) is another big problem. In an article on Catch News, the writer tells us,“[MSP] was meant to protect farmers from being fleeced by wholesalers. But it becomes the maximum price that the farmers get in the Mandi.”
‘Floor price’ which is a price level defined by the government to support farmers through the price mechanism, now actually becomes the maximum price a farmer gets in the market. There is a need to review the MSP policy and to restructure the market for the produce of the farmers.
During the post-reform period, India witnessed rapid economic growth. Per capita income increased along with the production of different industrial goods all over India, but the agricultural sector remained an exception. It should be a matter of concern for the policymakers that the sector, which engages 58% of the total rural workforce is facing deceleration in its productivity as well as in income levels during the same post-reform period.
The average American spends $97 every day, the average Chinese $7 and the average Indian $1.8, according to Goldman Sachs data and an IndiaSpend analysis.
An Indian living in a town or city spends Rs. 88 ($1.8) every day and in a village Rs. 48 (72 cents), according to our analysis of government spending data, last released in 2011-12. The Goldman Sachs study considered 2013 data.
This is what Indians in villages and cities spend each day, on average, on food, clothing, rent and other daily needs.
Among village folk, those in Kerala spend the highest: Rs. 90 per day, followed by Goa at Rs. 80, and Punjab at Rs. 78.
Among urban folk, those in Haryana spent the most, Rs. 127 per person per day, followed by Kerala at Rs. 114 and Delhi at Rs. 110.
Spending Of Half Of India: Lower Than India’s Average
Half the people in villages spend less than Rs. 1,198 per month, which is Rs. 40 per person per day, indicating the extent of poverty.
In cities, the poorest half of the people spent Rs. 2,019 per month, or Rs. 67 per person per day. Average spending in cities was Rs. 20 higher than what the poor half spent–Rs. 2,630 per month or Rs. 87 per person per day. This shows inequality between the rich and the poor in urban India.
The poverty line in India is defined as the ability to spend Rs. 47 per person per day in urban areas and Rs. 32 in rural areas. As many as 363 million Indians, or 30%, live below the poverty line, as IndiaSpend has reported.
The global poverty line, as defined by the World Bank, is $1.90 (Rs. 126).
The data above indicate how much money the poorest half Indians spend.
Except rural Delhi, where the spending of the poorest half is more than the average, the spending of the poorest half of the people is lesser than the average spending in all states, indicating, as IndiaSpend has reported, the country’s growing urban-rural divide.
Note: Calculations for per person per day spending for Indians are based on the 68th round of Household Consumer Expenditure survey 2011-12. Monthly Per Capita Expenditure surveys by the National Sample Survey Office of the Ministry of Statistics and Programme Implementation have been used to derive per day spending by each person. Rupee to Dollar conversion has been done at the rate from 2011-12.
This article was originally published on IndiaSpend.com, a data-driven and public-interest journalism non-profit.
A gardener plants seedlings at the entrance of Start-up Village in Kinfra High Tech Park in the southern Indian city of Kochi October 13, 2012. Three decades after Infosys, India's second-largest software service provider, was founded by middle-class engineers, the country has failed to create an enabling environment for first-generation entrepreneurs. Startup Village wants to break the logjam by helping engineers develop 1,000 Internet and mobile companies in the next 10 years. It provides its members with office space, guidance and a chance to hobnob with the stars of the tech industry. But critics say this may not even be the beginning of a game-changer unless India deals with a host of other impediments - from red tape to a lack of innovation and a dearth of investors - that are blocking entrepreneurship in Asia's third-largest economy. To match Feature INDIA-TECHVILLAGE/ Picture taken October 13, 2012. REUTERS/Sivaram V (INDIA - Tags: BUSINESS EMPLOYMENT SCIENCE TECHNOLOGY) - RTR3B6DT
Indian entrepreneurs are ferociously foraying into hyperlocal, e-commerce, SaaS – all that sounds trendy and more often than not, has a counterpart in Silicon Valley. But do we ever ask ourselves whether a new app on my INR 20k smartphone makes India developed or is it better transportation in rural areas that will bring about development.
According to Poverties.org, 50% of Indians don’t have proper shelter, 70% don’t have access to decent toilets, 35% of households don’t have a nearby water source, 85% of villages don’t have a secondary school and over 40% of the villages don’t have proper roads connecting them.
While E-commerce, Hyperlocal, Food-Tech, Health-tech, Logistics, Cab Hailing are all great technological interventions, none of them address the enormous opportunities in agriculture, health, education, water, sanitation or housing.
According to the estimates of Ashok Gulati, Infosys Chair Professor at ICRIER, 55-60% of India is farm-dependent and still the contribution of agriculture in the national GDP is mere 15-17%; that is nearly two-thirds of India subsisting on just one-seventh of the GDP.
This clearly brings out the poor redistribution of riches in our country. While India’s economy keeps on rocketing at the rate of 9% (approximately), poverty remains pervasive, especially in rural India which makes up for 70% of India’s population.
These figures call for an introspection of our tech-centred vision of growth. As we keep on advancing urban India while neglecting the rural, the already wide gap between rich and poor keeps on broadening and it is chilling to imagine a country which chooses to leave 70% of its countrymen behind.
Therefore, change is required in the way we think and study business, we need to integrate the idea of creating social value in business within the core curriculum of business schools and not seclude it from mainstream economic and business research.
‘The Fortune at the Bottom of The Pyramid‘ by C.K. Prahalad and Stuart L. Hart, identifies the widely shared assumptions that multi-national corporations have about Tier 4 (population with an annual income of less than $1,500) of the pyramid and also, stands true for many entrepreneurial minds:
• “Assumption 1 – The poor are not our target consumers because with our current cost structures, we cannot profitably compete for that market. • Assumption 2 -The poor cannot afford and have no use for the products and services sold in urban markets. • Assumption 3 – Only urban markets appreciate and will pay for new technology. • Assumption 4 -The bottom of the pyramid is not important to the long-term viability of our business. We can leave Tier 4 to governments and nonprofits. • Assumption 5 – Intellectual excitement is in urban markets. It is hard to find talent that want to work at the bottom of the pyramid.”
The paper reasons out these assumptions by comparing them to the story of a person who finds a $20 bill on the sidewalk and does not pick it up thinking that if the bill really existed, someone would already have picked it up!
These assumptions can also be refuted by considering the homegrown examples of rural innovation like the SELCO Foundation which facilitates solar lighting in rural areas. The company was essentially conceived in an effort to dispel the myths that poor people cannot afford and maintain sustainable technologies.
The company works on the wonderful model of user segments, each segment is specifically designed to match the customer’s need in terms of usage, as well as finance. “Remove the M from EMI and all of a sudden, even an expensive technology comes within the reach of the ‘poor’,” Harish Hande, co-founder of SELCO, explains in Rashmi Bansal’s ‘I Have A Dream‘.
C.K. Prahalad and Stuart L. Hart further summarise the idea with, “Perception of market opportunity is a function of the way many managers are socialized to think and the analytical tools they use.”
Thus, the loophole is not our innovations but our idea of development. Most of us have grown to believe that urbanisation is development. This idea has undoubtedly made India the seventh largest economy with a GDP of $2.067 trillion. On the other hand, the same fastest growing economy scores 0.586 on the Human Development Index (HDI) and is being stated as a ‘medium developed’ country by United Nations Development Programme along with others such as Iraq, South Africa and the Philippines.
In order to bust this bipolar image, Indian entrepreneurs must devise technological innovations for the problems of rural India. This will create a link between modernised India and a stagnant rural ‘Bharat’ so that the tech-driven sector can act as an engine that pulls the rural economy along.
A man smokes a cigarette as he sits on a pavement along a road in New Delhi, India, August 18, 2015. Bulging sacks of letters gathering dust at India's health ministry are the latest obstacle to a push for tougher laws to curb smoking, as more than 100,000 unread messages from members of the public overwhelm officials and stall legislation. Picture taken August 18, 2015. REUTERS/Adnan Abidi - RTX1OPYE
Among other budget announcements, the Finance Minister announced a 10-15 percent hike in cigarette excise duty in India on the 29th of February.
Mr. Minister, you must know that tobacco kills 10 lakh Indians every year and one-fourth of India is currently using tobacco is some form or the other. Bidis, or hand rolled, indigenous cigarettes and chewed forms of tobacco are far more popular than cigarettes. Most bidi manufacturing takes place in appalling conditions by poor women and child labourers. Therefore, a nominal increase, that too in cigarette taxes alone, can by no means counter India’s devastating tobacco use situation.
Economic prudence warrants that the best way to reduce demand is by raising prices. So, in the case of tobacco, the more unaffordable the products are, the easier it is to counter consumption. The WHO Framework Convention on Tobacco Control (the world’s only public health treaty) also recommends tobacco taxation as the most cost-effective way to fight tobacco use, provided there is simple tax administration and taxes account for at least 70% of the retail price of tobacco products.
Early in February, the issue of tobacco taxation was blazing in Indian media. Findings of a landmark study on the affordability of tobacco products in India commissioned by India’s Health Ministry and the World Health Organization (WHO) were in the news. Tobacco in India is taxed by the central government, in the form of excise, and by the state governments, in the form of value-added tax (VAT). If tobacco products are more expensive in some states, it’s because the respective state government is levying higher VAT. However, the excise tax is very important because is helps to push up the final consumer price of the tobacco product and makes in more expensive for people to buy.
Contrary to this, the recent study has found that prices of tobacco products in India have not risen sharply over time, making them cheaper than essential food items like wheat and pulses. In other words, both current excise and value-added tax (VAT) on tobacco products have been inefficient in pushing up prices of tobacco products and rendering them unaffordable. This news corroborates the findings of the 2015 WHO Report on the Global Tobacco Epidemic, which notes that tobacco taxes in India continue to be well below the FCTC recommendations, particularly in the case of bidis and smokeless tobacco and cigarettes were no less affordable in 2014 than in 2008. This is because although per capita income in India has risen, tobacco taxes have not caught up.
The Virtue Of Simplicity
India does have an immensely complicated multi-tier tax structure and clearly treats cigarette, bidi and smokeless tobacco taxation differently. In fact, cigarettes are differently taxed on lengths and filters. This diversity makes tax administrative very difficult and tax evasion easy since tobacco manufacturers direct products towards illicit trade or introduce new products. Unfortunately, bidis have majorly remained outside the tax net, even though earlier studies have shown that higher taxes on both cigarettes and bidis will lead to a decrease in tobacco consumption and an increase in government revenue.
Within a day of the new study’s release, a cigarette industry front group in India released a fierce reaction to the report, claiming it to be dated and misinforming policy makers. The statement claims that cigarette prices in India are among the highest in the world, making it a haven for illegal tobacco products. The front group accounts legal cigarette smoking in India to be 11% of total consumption, attributing the remaining 89% to other tobacco products and illegal cigarettes and of no concern to them. These unaccredited statistics are only meant to create confusion. While tackling illicit trade is important, uniform taxation of tobacco products is critical.
A cursory reading of two of India’s major cigarette companies’ 2014-15 annual reports also points to staunch dissent and falsified commentary on tobacco taxation policies in India. It seems one of them undertook an ‘analysis’ of the same WHO Report to find that cigarettes taxes in India are among the highest in the world. However, what is more disturbing to read is this: the commentary states that “the company continues to engage with the concerned authorities, both at the Central Government and State level, highlighting the need for moderation in tax rates on cigarettes to maximise the revenue potential from the tobacco sector, arrest the growth of the illegal segment and protect the interest of the Indian tobacco farmer.” The tobacco industry’s lobbying prowess is well known globally, but to read about their blatant submission to such nefarious activities on official statements is terrifying.
Similarly, the annual report of another major cigarette company for 2014-15 laments the strict regulatory environment and skewed nature of taxation on cigarettes and boasts of new outreach strategies. It claims to be responding to the higher taxes by “aiming for steady growth through balanced brand portfolio, consumer engagement programs, quicker response to environmental changes and data-driven decision making process.” They also hope to offer increasingly superior products at multiple price points, which are affordable to various sections of society and improve consumer satisfaction with their brands through quality and innovation, using the latest techniques in consumer research, R&D and manufacturing excellence.
The general debate around a Goods and Services Tax (GST) regime that can levy a uniform and high tax on all tobacco products as ‘demerit goods’ augurs well for the country’s economy. All tobacco products must be equally and highly taxed to accrue public health benefit. At the same time, we have to be alert about official declarations by cigarette companies describing new engagement strategies to lure customers in the wake of higher taxes.
India's Finance Minister Arun Jaitley arrives at the parliament to present the federal budget for the 2016/17 fiscal year, in New Delhi, India, February 29, 2016. REUTERS/Adnan Abidi TPX IMAGES OF THE DAY - RTS8H1D
The current dispensation seemed to be no different than the ones envisaged in the preceding paragraph. But then, giving into a public uproar against the proposal to tax EPF (employee’s provident fund) at the time of withdrawal, the government has withdrawn the proposal.
Now, savings in your EPF account still enjoy the EEE status, i.e., exempt, exempt, exempt status. What does this mean? It means that the part of your salary you save in Employee’s Provident Fund is exempt from income tax upto the extent of rebate available in Section 80C of the Income Tax Act which is now Rs. 150000. The interest accrued on this amount is also exempt from tax and the final amount you receive at the time of your retirement is also exempt from taxation. It is this last part that the government wanted to tax. To be more specific, it wanted to tax 60 percent of withdrawal if you do not invest it in annuity scheme.
I would like to utilise this opportunity to throw some light on objectives of taxation. Governments levy taxes to achieve one of or any combination of following objectives:
1) Raise revenue to meet expenditure.
2) Bring about a certain kind of social or economic equality.
3) Dissuade consumption of certain types of goods or services.
“Pension schemes offer financial protection to senior citizens. I believe that the tax treatment should be uniform for defined benefit and defined contribution pension plans. I propose to make withdrawal up to 40% of the corpus at the time of retirement tax exempt in the case of National Pension Scheme. In case of superannuation funds and recognised provident funds, including EPF, the same norm of 40% of corpus to be tax free will apply in respect of corpus created out of contributions made after 1.4.2016.” This statement in the Union Budget Speech by Arun Jaitley presented on the 29th of February created a lot of confusion and drew much flak from the general public.
While it is necessary for the government to tax people so that it can raise revenue for its various activities, it would be prudent if the taxation policy adheres to the four canons proposed by Adam Smith in his book ‘The Wealth of Nations’.
1) Equity: Taxes should be equitable between different classes in society. The proposal to tax 60% of EPF (employer’s contribution plus employee contribution plus the interest accrued) at the time of withdrawal violated this canon. Generally, private sector employees, especially the salaried middle class and the lower middle class, save provident fund over the period of their service so that they can make use of the amount accumulated for meeting high-ticket expenses like children’s marriage or buying a house or renovating their house etc. at the time of withdrawal.
2) Convenience: The taxpayer should have convenient methods of paying tax. The said proposal cannot be said to violate this canon.
3) Economy: The amount spent on collecting the tax should be substantially lower than the tax collected. Since the amount on which the tax was to be levied was likely to be substantial, this canon is also unlikely to be violated.
4) Clarity: The taxpayer should be fully apprised of the purpose, method and other details with regard to the tax. As per the proposal, the withdrawal amount is not taxable if it is invested in an annuity plan. But, this is nowhere mentioned in the Finance Minister’s speech. The proposal clearly penalises the thrift of small savers and there was no clarity on what type of annuity one can invest in.
Giving in to public opinion and the apprehension voiced by the Ministry of Labour and Employment, which is the custodian of EPF, the Finance Minister has agreed to reconsider this particular proposal.
His statement is quite telling. If, as he himself has agreed, the proposal is withdrawn because the government wants to do a comprehensive review of this proposal, it means that the proposal was introduced in the budget without doing a comprehensive review. To tax is a sovereign right. And like all sovereign rights it would be an abuse if the exercise of this right were not premised on the sound foundation of economic rationale.
But, one positive out of the entire episode is the diligence shown by the media, especially by people on social media, in shaping the discourse and compelling the government to take notice of their concerns and ultimately mend its ways. At the expense of sounding clichéd, I would like to say that eternal vigilance is the price of democracy.
Children with their containers are silhouetted against the sun as they wait to fill drinking water from a water tanker provided by the state-run Delhi Jal (water) Board on a hot summer day in New Delhi, India, May 11, 2015. Temperature in Delhi on Monday reached 42.3 degree Celsius (108.14 degree Fahrenheit), according to India's metrological department website. REUTERS/Anindito Mukherjee - RTX1CFYJ
Amidst the global economic slowdown, Mr. Arun Jaitley in his Budget Speech indicated that India’s economy is stable and the GDP has accelerated to a commendable 7.6 per cent growth. On 29th February 2016, the NDA-led government presented its third Union Budget. In his Budget Speech, the Finance Minister mentioned that the “Plan Allocations have given special emphasis to sectors like agriculture, irrigation, social sector including health, women and child development, welfare of Scheduled Castes and Scheduled Tribes, minorities, infrastructure, etc.” But HAQ Centre For Child Rights’ analysis of the Union Budget through children’s perspective shows otherwise.
Before delving deeper into the analysis of the Budget, it is pertinent to note that children, in particular, did not find any mention in the Budget Speech. This compels one to question the Government’s perspective of ‘Inclusive Growth’ when one of the most marginalised and vulnerable sections get no attention at all.
This year, children received 3.32 per cent share [as per Statement 22 of Expenditure Budget Volume I] of the total financial allocations, which is a significant 13.54 percent jump from the previous year’s allocation (3.26 percent in 2014-15).
While this is a welcome increase in the overall budget for children, there are major reductions in some of the key programmes related to children belonging to minorities like ‘Pre-Matric Scholarship for Minorities’ (reduced by 10.48%), ‘Post Matric Scholarship for Minorities’ (reduced by 5.19%), ‘Scheme for Providing Education to Madrassas/Minorities’ (reduced by 68.04%), ‘Incentive to Children of Vulnerable Groups among Schedule Castes’ (reduced by 90%).
What is more, one of the two schemes addressing the needs of children with disabilities, ‘Deendayal Disabled Rehabilitation Scheme’ saw a significant 25 percent reduction against the previous year’s allocation. While the nation is high on dreams of smart cities, GDP growth, digital literacy in rural India, Make in India, Startup India, with such reduced financial resources, would the children belonging to minorities or children with disabilities be included in this dream of ‘Sabka Saath Sabka Vikas’?
Mr. Jaitley, in his Budget Speech mentioned that “after universalisation of primary education throughout the country, we want to take the next big step forward by focusing on the quality of education.” And yet, we see a mere 2.27 percent increase in funds allocated for the Sarva Shiksha Abhiyan. This face-value increase must be examined in the light of findings of Economic Survey 2015-16. As per the Survey, there is a declining trend in the percentage of enrolment in government schools in rural areas from 72.9 percent in 2007 to 63.1 percent in 2014 and it emphasised upon the need to increase the percentage of enrolment substantially to achieve universalization of education. Can a mere 2.27% increase in the SSA budget from the previous year help address both decline in enrolment in government schools and improved quality of primary education?
Further, last year, the NDA government had announced the ‘Scheme for Setting up 6000 Model schools at block level as benchmark of excellence’ with great pride. It took just a year for the government to revisit its decision, and hence, no more model schools in 2016-17.
As against a 21.8% decline in the child health allocations last year, this year witnesses an increase of 3.6%. But, as a proportion of the Union Budget, it has declined from 0.13% in 2015-16 to 0.12% in 2016-17. The 2015-16 Economic Survey clearly notes that “while the achievements of the National Health Mission in reaching affordable healthcare services must be applauded, the need of universal healthcare, both in terms of access and quality remains a cause of concern.” As a share of the Union Budget, child health has seen a consistent decline over the last five years, going down from 0.18% in 2012-13 to 0.12% in 2016-17, showing the low priority accorded to this over the years. Right to health as a fundamental right remains a distant dream.
Another flagship scheme related to young children, the ‘Integrated Child Development Scheme’ (ICDS) has seen a boost of 68% against previous year’s allocation. This scheme has been allocated a total sum of Rs. 14,000 Crore. Though such an increase must be applauded, the mission document of ICDS has fixed a total requirement of Rs. 30,325 crore for universalisation of this scheme. There is still a huge shortfall of Rs. 16,325 crore, which must not be ignored. The allocation for ICDS must be seen in the context of restructuring of ICDS which needs additional investment with additional provisions in the system for covering children who get left out (e.g. migrants, transients). This will also necessitate revisiting the provisions for reaching underserved and unreached tribal settlements which may require specific budgetary allocations.
The only scheme related to child labour in Statement 22 is the ‘Scheme for the Welfare of Working Children in Need of Care and Protection’ observed a decrease of 70 percent in allocation in the 2016-17 Union Budget. It must be noted that India is home to 12.6 million child labourers (Census 2011) in the age group of 5-14 years.
Not only does the child protection sector remain the most under-resourced, the 2016-17 budget clearly does not offer much solace with the allocation for Integrated Child Protection Scheme (ICPS) down by 1.3%. ICPS has been allocated Rs. 397 Crore in 2016-17. The allocation was Rs. 402.23 Crore in the 2015-16 Budget. An increase in both crimes against children and by children make them even more vulnerable, and hence, this lack of attention to child protection is very disconcerting.
The Finance Minister seems to have already forgotten the warning from the Economic Survey 2015-16 which stated that “India is already halfway through its demographic dividend, and taking full advantage requires a healthy and educated population.”
What is more, the government seems to have forgotten its own commitment to inclusive growth. A mere increase from 3.26% to 3.32% cannot be a call for celebration when children remain unprotected and uncared for.
An employee fills a car with petrol at a gas station in Jammu July 1, 2009. The government unexpectedly raised gasoline and diesel prices by as much as 10 percent on Wednesday, its first increase this year, passing some of oil's rally into an economy just beginning to find its feet amid a global recession. REUTERS/Mukesh Gupta (INDIAN-ADMINISTERED KASHMIR BUSINESS ENERGY) - RTR2586R
On February 29th while presenting the Union Budget 2016, Finance minister Arun Jaitley tried to cheer the public with a steep cut of Rs 3.02 per litre in petrol prices. Despite deregulation, petrol prices still seem to be in the control of the government. A regular consumer is hardly aware as to why they are spending such a steep amount on fuel.
Working towards building an ecosystem that nurtures start-ups, I regularly meet young people who dream and aim high. More often than not, during my interactions with students, entrepreneurs and professors of entrepreneurship, one theme that keeps recurring is – the journey from idea to building start-ups, it’s difficult!
Traditionally Indians have been very conservative while choosing careers. All said and done, I am glad to live in a time where people are choosing passion over safe careers where young students, mid-career professionals and veterans are turning towards entrepreneurship. From tier – 1 to tier- 3 cities, “I am (or want to be) an entrepreneur” is slowly becoming the mantra. According to a report by NASSCOM, from 2014 to 2015, India witnessed a 40% growth in number of start-ups and by the end of 2015 around 4200 start-ups will be operational. With the government of India’s projects like ‘Make in India’ and ‘Startup India, Standup India’, the trend is expected to grow at a much faster rate.
Entrepreneurs themselves are a part of the ecosystem. Their ideas (or dreams) to build something gets all the attention and support. Idea is just the beginning, it takes team effort, patience to understand the market and make necessary changes and of course, investment to sustain and build a product that the customer wants. I have met students who have the most brilliant ideas one can come across and yet do not dare to go ahead with it. Among other things, what stops them is the fear of failure and lack of financial support at the seed stage. Let me make it clear that seed capital is not a major factor that can hinder market test of a product, however, it does play a crucial role in executing an idea.
If you consider an entrepreneurship ecosystem, the role played by investors and mentors is paramount, one fuels the passion and the other one creates an entrepreneurial advantage. NASSCOM’s latest report which highlights that total funding has grown by ~125%. Being a part of the fastest growing ecosystems, India is definitely experiencing one of the best times to start-up and build something. Education institutes are also not left behind, with very active E-cells and incubation centres, support is flowing from every corner. Competitions, investments, policy reforms, widespread discussion, India is witnessing a phase where entrepreneurship is being celebrated.
Industry pundits and ecosystem players, all agree that competitions are a great way to bring real awesome ideas to the limelight. It also performs as a stage where all players meet to exchange views and opinions. I have seen projects starting as a classroom assignment to go on and create impact the communities. Universities, incubators, accelerators and other players frequently host events that scouts for ideas that can change or disrupt an industry and create value to customers. MindBatteries is one such company which is using edutainment as a tool of empowering people.
MindBatteries’ Startupreneur Series showcases story and journey of entrepreneurs that started small and made it big. The first of the series showcased Vijay Shekhar Sharma – Founder & CEO of Paytm. MindBatteries is hosting its first ever ‘Ideathon – Chase Your Dreams‘ contest that promises some big stuff to the participants. The contest is all set to look out for the next big idea that can change the way Indian tech start-ups operate. Vijay in the interview said, “I invest in the driver and not the bus or the destination,” emphasizing that its always people that make the difference and not the idea itself.
Winners of the ‘Ideathon’ contest will receive Rs. 1 crore as seed-fund for their ideas and mentorship by Vijay himself. This according to Vijay, ‘giving back to the ecosystem’.
If you have an idea and dream of creating value to the customer, log on to the website and send in your ideas. The last date is 1st of March 2016.
Featured image for representation only. Source: Facebook.
Editor’s note: Amidst heated debates around ‘nationalism’ and ‘sedition’ at JNU, demands of justice for Rohith Vemula’s death, and violent protests led by Jats for reservation, the Budget session of Parliament commenced on 24th February. With the first day spent on the blame-game and some name-calling, the country is anxious to know what the coming financial year will look like.
The Parliament can be a loud place, and it is easy for the citizen’s voices to drown. #MyBudgetWishlist is Youth Ki Awaaz’s attempt to give these voices a platform. We asked citizens from diverse fields about 3 things they want this year’s budget to focus on and here are the answers they gave:
Nupur Mittal, Assistant Professor, English, DU
1. Adequate funds should be earmarked to provide stipends to M.Phil and PhD research scholars, particularly in the Humanities disciplines.
2. More funds should be pushed into development of physical infrastructure in public funded universities.
3. More funds for equipping government hospitals and clinics with the latest medical technologies, which must be updated on a periodical basis.
Jyoti Mhapsekar, President – Stree Mukti Sangathana
1. Restore the 30% cut in the Ministry of Women and Child Development.
2. Allot funds not just for the drafting of laws, but for their implementation.
3. Allot funds for the welfare of constables and women working in the unorganised sector.
Akkai Padmashali, Trans rights activist, Founder – Ondede
1. Allot funds for the employment of the marginalised sections of society and education of women. Loans should be easily available for women entrepreneurs.
2. Invest in the welfare of the entire transgender community when it comes to education, employment, housing, and small-scale business support.
3. Allot funds to conduct gender sensitisation and training programmes for police and to handle cases of violence against women and transgenders.
Kumar Sundaram, Coalition for Nuclear Disarmament and Peace (CNDP)
1. Taxing the rich and cancelling all the staggering holidays given. No writing off corporate loan.
2. More spending on social sector. We have outrageously low spending on education, health and there are further cuts under Modi govt.
3. Transparency on the spending in military and nuclear sector. The globally declining and inherently accident-prone nuclear industry is flourishing in India as the govt is providing hidden subsidies.
Raghav Bahl, Founder – Quintillion Media
1. Begin withdrawing from areas where markets work, expanding the space and role of private enterprise there.
2. Increase intervention in areas where markets fail – health, education and rural infrastructure.
3. Use Aadhaar and other modern instruments to ensure better targeting and efficiency in these areas.
Prem Ayyathurai, Lawyer
1. With public sector banks running up non-performing assets of Rs 1.14 lakh crore, the govt. should publish the list of large corporate defaulters so that citizens know how public funds are being utilised.
2. Stop budget cuts for government schemes targeting development of women, children and other marginalised.
3. Increase budget allocation towards education. Last year, only 4.6% of the total budget was allocated to education.
Nikhil Dey, Mazdoor Kisan Shakti Sangathan:
1. Central social sector laws such as the MGNREGA should be adequately funded so that their legal mandate can be fulfilled without continual tension.
2. All entitlements from laws and programmes should be indexed to inflation so that at least their real value can be retained. For e.g., social security pensions have remained at Rs 200 per month for almost a decade, bringing their value down to shamefully low levels.
3. Our tax to GDP ratio has to be raised to levels that are comparable with BRICS countries, or other countries like India.
Anoop Jain, Founder – Sanitation and Health Rights in India (SHRI)
1. Increase in budget allocation on health. Right now, India only spends 1.2 percent of its GDP on health, the lowest of the BRIC nations.
2. More money spent on women’s rights and empowerment through the ministry of rural development.
3. There is also a need to concentrate on improving India’s infrastructure. This includes trains, railway lines, and roads.
You too can share your wishlist. Add your expectations from the budget to our comments section below.
“India is progressing at a rapid pace,”said Narendra Modi during one of his recent speeches. He added that India was also the fastest growing economy among the larger economies of the world. The UN too, as if on cue, estimated that the Indian economy would grow by 7.3% in 2016. This is indeed a positive sign. But a nation such as ours cannot grow when it’s future, our children, are neglected. Inclusive growth is the need of the hour and must be the priority of the Government.
Even though children constitute about 36.68% of the country’s population (as per the 2011 Census), the total Union Budget allocation for children in the last 15 years has never gone above 5%. At a time when the UN Human Rights Council and the Sustainable Development Goals (that have replaced the Millennium Development Goals) talk about better investment in order to achieve developmental needs, India has been reducing its spending on children.
The Budget 2015-16 saw children receive an inadequate share of 3.26% out of the total allocation, a substantial reduction of 29% from the Budget 2014-15. Also, the allocations for Ministry of Women and Child Development (MWCD) were cut down by almost 51% while the Ministry of Human Resource Development (MHRD) received 17% lesser allocations. The Ministry of Health and Family Welfare (MoHFW) too saw a 13% cut.
As a result, India’s children received a meager 0.13% share for health. Similarly, resources for child protection were the lowest yet again. However, the education sector received the largest share out of the budget for children. Interestingly, over the last few years, the major chunk of government financing of elementary and secondary education has been through the education cess. While this began as a measure to inject additional amounts to supplement government’s own support, it grew to be more of a substitute. This is a wrong practice and must be stopped. The decreasing share of the budget for children is a clear indicator of the lack of political will to commit to children’s issues.
Can We Afford These Cuts? What Is The Situation Of India’s Children?
Despite the current situation, what we saw in the Budget 2015-16 were huge cuts even though the Finance Minister, Mr. Arun Jaitley had assured the government’s commitment towards the welfare of poor and that adequate provisions had been made for the schemes for ‘poor’ and ‘disadvantaged’. But the allocation of financial resources for social security programmes and particularly those for children reflected otherwise.
Percentage Fall in Allocation (between 2014-15 & 2015-16)
Sarva Shiksha Abhiyaan
Mid-Day Meal Scheme
Rashtriya Madhayamik Shiksha Abhiyaan
Scheme for Setting up of 6000 model school at block level as a benchmark of excellence
Support to education including teacher training
Integrated Child Development Services (ICDS)
Deendayal Disabled Rehabilitation Scheme
Manufacture of Sera Vaccine
National Rural Health Mission-Reproductive and Child Health programme (NRHM-RCH) Flexible Pool
National Programme for Youth and Development
Scheme for prevention of alcoholism and substance (drug) abuse
This cut in the Union Budget 2015-16 is due to the acceptance of the Fourteenth Finance Commission (FFC). The FFC recommended that share of the States in the divisible pool of taxes should be increased to 42% from 32%. Therefore, in the current scenario, it is expected that States should enhance their own resources and give priority to social sector spending.
What remains a matter of concern is that if the Centre stops funding the major Centrally Sponsored Schemes (CSS), would States still give priority to the ongoing developmental programmes/schemes launched to address children’s issues in a time bound manner?
Whatever little is allocated remains unspent, affecting the implementation of some of the important schemes, as a result, ignoring children’s rights.
What Must The Government Ensure For Children In The Upcoming Budget 2016-17?
Many, including Nobel Laureate, Kailash Satyarthi are advocating for children’s right to adequate budget allocation and are demanding more investment in the upcoming Budget. Some of the more specific demands that the Government must focus on are as follows:
1. Allocations of financial resources for the key nodal Ministries such as MWCD, MHRD and MoHFW and flagship schemes (such as Sarva Shiksha Abhiyan, Mid-Day Meal Scheme, Integrated Child Development Scheme, Integrated Child Protection Scheme, Rashtriya Madhyamik Shiksha Abhiyan etc.) related to children must go up in Union Budget 2016-17.
2. Children related legislation and commitments must have financial backing and be adequately resourced in the upcoming Budget. For example, Protection of Children Against Sexual Offences 2012, one of the most effective legislation enacted to combat child sexual abuse does not have any financial backing built into the budget. As a result, state governments struggle to find resources to meet requirements of special educators, translators and interpreters, or to set up special courts with child-friendly infrastructure etc.
3. Integrated Child Protection Scheme (ICPS) introduced in the Eleventh Plan, was envisaged to create a protective environment for children in the country. However, the delayed rolling out of the programme and inadequate resources allocated to it has meant that the scheme remains ineffectively implemented. The newly enacted Juvenile Justice Act, 2015, an important part of ICPS, has brought in new developments for assessment and rehabilitation of young offenders through serious interventions through experts, psychologists, counsellors etc. This additional responsibility requires more funds than what is currently available.
4. The Central government should be the primary duty bearer to implement the Centrally Assisted Schemes related to children. As highlighted in the Chief Minister’s Sub Group Report on CSS, children related schemes are one of the critical elements of National Development Agenda and as per the recommendation, these programmes must be kept in the ‘Core of the Core Schemes’ category and Centre should finance these schemes majorly.
5. When we talk of inclusive growth, are we paying due attention to the needs of those children with disability? Specific services of habilitation and rehabilitation, required for full development of children with disabilities, continue to be unavailable to the majority of children. Rehabilitation services do not reach even a small number of children with disabilities because of the way they are designed. Even though the Right to Education Act 2009 makes specific mention of children with disability, the education system doesn’t still have the capacity to include them. The government must ensure the rights of the disabled children.
While we proudly claim to be a nation with the fastest growing economy, seeking to be a global leader in the coming years, we mustn’t forget that India has the world’s largest youth population. It is the government’s responsibility to ensure its young citizens get their basic human rights.
Therefore, is it justifiable for the Government to spend a paltry sum of 3 rupees and 26 paise out of every 100 rupees on those who will lead the nation tomorrow?
A farmer attends a day-long protest in New Delhi August 8, 2013. Thousands of farmers from different states of India on Thursday protested against the introduction of the Biotechnology Regulatory Authority of India (BRAI) bill in parliament by the union government, that would make a foray for genetically modified crops and its proponents like Monsanto, into India's food and farming, a media release said. REUTERS/Adnan Abidi (INDIA - Tags: CIVIL UNREST AGRICULTURE FOOD SCIENCE TECHNOLOGY BUSINESS) - RTX12DTI
The recent controversy around the sedition charges being against the Jawaharlal Nehru University Students’ Union President has taken up a lot of space in all media publications and broadcasts. While the issue is gaining momentum with each passing day, it appears to have been used as a tool to divert attention away from other significant developments that took place simultaneously.
Monsanto is an American multinational agrochemical and agricultural biotechnology corporation that aims to deliver agricultural products that support farmers all around the world. It initially produced food additives, later diversifying into industrial chemicals and now focusses on biotechnology and genetically modified (GM) crops after the major success in 1983.
However, Monsanto has been criticised throughout the world and has become the face of ‘corporate evil’. The company and its genetically modified organisms (GMO) have become the subject of global protests and criticism from environmentalists. Documentaries such as Forks Over Knives and GMO OMG also condemn their activities.
The History Of Monsanto’s ‘Evil Corporate Face’
According to a report by Friends of Earth, around 90% of GM traits used in the world are supported by Monsanto. The company aims at expanding its base and penetrating new markets which could possibly make developing countries more susceptible to environmental, economic and social problems.
In its attempt to promote the shift from conventional to GM seeds, it is believed that Monsanto, instead of benefitting the farmers, deprives them of their basic choice and availability of alternatives to what it (Monsanto) has prioritised.
The Friends of Earth report also points out that Monsanto has been severely criticised for its assault on regulatory and policy regimes. The report suggests that the corporation has resorted to bribery to create a foothold in the world market. It states that, “an investigation by the US Securities and Exchange Commission revealed that over US$700,000 was paid in bribe to at least 140 current and former Indonesian government officials and their family members between 1997 and 2002, financed through the improper accounting of Monsanto’s pesticides sales in Indonesia.”
The report talks about several other criticisms of the company. In most countries, Monsanto has had the tendency of spreading contamination first and then legalising it. In India in 2002, contamination in the commercially released of Bt (bacillus thuringiensis) cotton was detected. The commercial release had taken place without authorisation and was approved after a few months. They have also been accused of “unethical and irresponsible” advertising to gain the confidence of farmers. In India, products were marketed through local newspapers, television advertisements etc. and were endorsed by famous actors such as Nana Patekar, who was the brand ambassador of Monsanto. This, according to the report, has been criticised as a form of “aggressive advertisement” by the National Commission of Indian Farmers.
The tough collection regime for royalties of GM products challenges the farmers’ right of seed saving as the royalty is collected in the form of ‘technology fee’ paid at the time when the seed is purchased. Farmers are made to sign an agreement which states that they can’t save any GM seed from their harvest for replanting.
Profound environmental impact has also been reported in countries like Argentina where an increase in soy production led to a decline in soil fertility and soil erosion. It has been predicted that the soil will become infertile in fifty years if this were to continue.
Does The History Of Monsanto In India Suggest That The Recent Deal Can Be Dangerous?
In a country like India, known to be primarily an agricultural economy, with a large number of farmers who are largely poor and uneducated, the entry of Monsanto changed the business market for cotton farmers in India. Contrary to the rosy promises made my Monsanto in the beginning, the consequences have been outrageous. The farmers have suffered a lot since the expensive seeds did not reap great harvests and led to indebtedness.
Vandana Shiva, an environmental activist and eco-feminist, explains how companies like Monsanto have turned farmers’ self-reliance regarding seeds into a dependency on purchasing seeds. Initially, the farmers are lured by the scientific advice of ‘seed replacement’ given by Monsanto who are even paid for giving up their seeds. However, the farmers ultimately fall into the trap of depending only on the seeds offered by Monsanto since there are no other alternatives since all other farmers in the neighbourhood are trapped in the same situation as well.
Apart from these, use of chemical pesticides, which weren’t required earlier, is also a problem now. Moreover, unfair U.S. subsidies for American cotton farmers further affect global prices. Local money lenders often cheat farmers for their own profit and free-market policies affect the cost of production regularly because of volatile global prices.
Impact Of the Recent Deal At The ‘Make In India’ Week
Having observed the historical impacts of Monsanto in India, the recent deal seems a threat to the future of farmers and the country. Large corporate interests may lead to the patenting, genetic engineering and mass marketing of all essential products in our country. The exercise of influence by Monsanto and other biotechnical companies has been so immense that they lead to the ushering in of poorly tested and potentially hazardous products through weak approval processes.
The issue of the loss of traditional methods of farming is of concern since most Indian farmers are poor and uneducated. Initially, there were incidents of farmers being unaware of the extra water requirement of GM seeds, which was much higher than that for traditional seeds. It devastated their harvest. Such issues need to be addressed before expanding the base of GM seeds in India. Moreover, in a country like ours where agriculture still largely depends on rainfall, rather than irrigation, and other traditional methods, the real question is: Are we ready for such a deal or has corporate power influenced our decision so much that, despite the scandalous history, the deal is being made?
The fruits of a people’s movement and the world’s largest anti-poverty public works, the National Rural Employment Guarantee Act (NREGA) last year provided employment to 22% of all rural homes.
At its peak five years ago, it was a lifeline for 55 million, or one in every three rural homes.
But it has yet to expand to its full potential. Up to 70% of interested poor households did not receive any NREGA work between 2004-05 and 2011-12, reports the India Human Development Survey 2 (IHDS2).
Unemployment allowance, stipulated in the law, has also rarely been paid as a substitute. Nevertheless, for recipient families, 32% of their poverty decline comes from NREGA alone, according to IHDS2.
Why NREGA Is Currently Not An Effective Drought-Relief Measure
Under the law, promulgated in 2005, each household is guaranteed 100 days of work every year. But, on average, each NREGA household received only 45 days of work over the last decade–less than half the guarantee.
The lowest average was last year: 38 days. Uttar Pradesh and West Bengal clocked in even less.
So, it is ironic that recently the Central government has expanded the guarantee to 150 days of work in 14 drought-affected states. Odisha further increased the cap to 200 days.
But this does not work as a drought-relief measure, as only 4% of employed households hit the 100-day mark last year. At its peak, too, only 14% have ever received 100 days of work. Worse, the total nationwide person-days–a measure of NREGA employment–almost halved in 2014-15 (1.49 billion), compared to its peak five years ago (2.84 billion).
The law also stipulates that wages are to be paid within 15 days. Last year, 72% of wages were delayed. This year, no more than 45% of wages have been paid on time. In the midst of a drought, villagers who survive hand-to-mouth cannot afford to wait. Compensation for delayed payment is also rare.
In several states, such as Kerala, Andhra Pradesh, Karnataka and Rajasthan, NREGA wages are lower than the minimum wages for unskilled agricultural work, which makes it difficult to attract workers, especially the youth, who often prefer to migrate to urban areas. Yet, this safety net has bolstered their bargaining power even on distant shores, as scores of Bihari migrants will testify.
NREGA Especially Helps Women, Dalits And Tribals
“Earlier, we had never seen Rs 500 notes; now we have more than Rs 7,000 to Rs 8,000 as our bank balance,” Sunil Munda, an Adivasi from Sanramlai village in eastern Odisha recounted six years ago. “Now, if we have malaria, we can take an auto and go to the hospital for treatment. Earlier, if herbs didn’t work, we knew we would be dead. We hadn’t seen the doors of the hospital.”
On a more positive front, 40% of households employed under the law are impoverished Dalits and Adivasis, even without any explicit targeting. The IDHS2 attributes 38% and 28% reduction in poverty in employed Dalit and Adivasi (tribal) homes, respectively, to NREGA alone.
As importantly, in India’s patriarchal society, the NREGA has emerged as a torchbearer for women’s empowerment. As many as 55% NREGA workers in 2014-15 were women, and their participation has soared 38% over the last decade.
Predictably (since they are states with high female literacy and social emancipation), Kerala and Tamil Nadu top the charts, with as many as 92% and 86% of NREGA workers being women.
Even before the Jan Dhan Yojana, the NREGA had opened 100 million bank accounts, often used by women for their wages, often for the first time, and on par with men.
Note: In 2006-7 NREGA was applicable in only 200 backward districts, in 2007-08, it was extended to 330 districts, and, from 2008-09, implemented across India.
There has also been much hand-wringing about the quality of NREGA work. A deeper look reveals that 28% of works, even in 2013-14, were to improve rural sanitation, even before the Swachh Bharat Abhiyan. Another 30% were for water conservation, flood control, drought proofing and micro-irrigation.
More than half the works were ‘green jobs’ directly related to improving agricultural productivity.
A worker fills petrol in a car at a fuel station in Jammu May 14, 2011. State-run oil firms will raise petrol prices by about 8.6 percent or 5 rupees a litre from Sunday, company officials said on Saturday, a record hike that will fuel inflation in Asia's third-largest economy. REUTERS/Mukesh Gupta (INDIAN-ADMINISTERED KASHMIR - Tags: BUSINESS ENERGY) - RTR2MESK
Record production in the United States (US), weakened demand from the Eurozone and emerging economies like China and Brazil, and Iran’s entry into the international market have effectively slashed the price of crude oil for India, from $106 per barrel in July 2014 to $26 in January 2016 — a 75% drop over 15 months.
So, why are you not seeing evidence of this price-cut at your local petrol and diesel station?
The answer: As global crude prices reach an 11-year low, the Centre and state governments steadily increase excise duties and value-added tax, shoring up their revenues and keeping fuel prices high for retail consumers.
Although India imports more than 80% of its fuel requirement, which means declining global prices should, theoretically, have seen sharp declines in retail petrol and diesel prices, Indian consumers of petrol and diesel now pay about double the global rate.
A Series Of Taxes, Oil-Company Profits And Other Commissions
Retail prices of petrol and diesel prices in three states — Assam, Uttar Pradesh and Gujarat — show a variation of less than 10% during the current financial year, 2015-16, according to an IndiaSpend analysis.
For instance, the petrol price in UP rose Rs 2 per litre, when global oil price halved over the same period.
Indian prices stay high because oil marketing companies (OMCs), such as Indian Oil Corporation Ltd, Hindustan Petroleum Corporation Ltd and Reliance Industries Ltd., add their margins, the central government adds excise, state governments add their own (value-added) taxes, and the dealers (petrol pumps) get their commission.
Excise Hiked Five Times In Three Months; Diesel Duty Hiked 140%
The excise duty on petrol and diesel has been hiked five times over the last three months, increasing the excise duty on petrol by 34%. On diesel, excise duty has increased by 140%.
The price at which OMCs sell petrol to dealers (petrol pumps) has been halved in two years. Over the same period, retail petrol prices have come down only by 15%.
The value-added taxes imposed by states have more or less remained the same, but excise duties — both basic and additional — imposed by the Centre have doubled between 2014 and 2016.
You Pay More Taxes On Diesel And Petrol Than Price Of Fuels
The addition of central taxes on diesel is higher than those on petrol. Central taxes per litre of diesel rose to four times its value in April 2014 — from Rs 4.52 per litre to Rs 17.33 per litre in February 2016.
Retail consumers pay more tax on petrol and diesel than its actual price.
Of the price you pay for a litre of petrol, 57% goes to the government as tax. Of the Rs 44 per litre of diesel, 55% is tax.
If the excise duties on diesel had not been increased these two years, diesel would have cost Rs 32 per litre today, other factors remaining the same.
The direct effect of oil prices on cost of transportation of goods and thus consumer inflation has been demonstrated by research from Integrated Research and Action for Development (an autonomous research institute), as journalist and economist Swaminathan Anklesaria Aiyar wrote in this blog.
Research on inflation in Turkey and Sri Lanka has underlined the effect of fuel prices on inflation.
A recent NDTV report from Hardoi district of Uttar Pradesh highlights an interesting trend. In the un-electrified areas of the district, most of the electricity needs were being earlier fulfilled by diesel generators as the power cuts were all too frequent. But this has changed since Omnigrid Micropower Company (OMC) set up a solar power plant in Jangaon village three years ago. This has reduced the cost spent by businessmen on electricity drastically, and enabled students to use their computer lab, says the report.
With packages ranging from Rs. 100 a month for powering a 7 watt LED light from 5 pm to 11 pm and a mobile charging socket to 24X7 supplies, the company tries to address the needs of all strata of society.
Electrified Villages Do Not Equal Electricity In Households
In 2015, in his Independence Day speech from the ramparts of the Red Fort, the Prime Minister had pledged to electrify the then remaining 18, 452 un-electrified villages by 1st May 2018. The scheme that is to lead this charge is the Deen Dayal Upadhyaya Gram Jyoti Yojna (DDUGJY), in which the earlier Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) has been subsumed. A GARV portal, which tracks the progress of the scheme, claims that we have as of now (at the time of writing this article) already achieved 31% our target.
However, as an opinion column pointed out last year in The Hindu, the percentage of electrified villages may not be an accurate indicator of electricity reaching the masses, the reason being the manner in which an electrified village is defined.
The definition, as it is understood by the Ministry of Power, states that“A village will be deemed to be electrified if electricity is used in the inhabited locality within the revenue boundary of the village for any purpose whatsoever.” This implies that counting electrified villages excludes the people who live in a village that is electrified but are unable to use electricity.
That is like saying that everybody must be well fed in a town just because the town has a shop that sells food, irrespective of whether the food is affordable for everybody or even supplied to the shop.
According to some estimates, close to 97% of the population without electricity lives in villages that already have an electric grid or in un-electrified areas of otherwise electrified villages.
These households then are not under the radar of the DDUGJY. In the winter session of the parliament, for instance, the Minister of Power informed the parliament that we are terribly lagging behind in our targets in electrifying BPL (Below Poverty Line) households. So, although according to the GARV portal only 7% of villages are behind target in the DDUGJY electrification programme, as on 30-11-2015 we had achieved only 57% of our target (that may be either in an electrified or an un-electrified village).
Just Providing Electricity Isn’t Enough
It is due to the lack of electricity in individual households or areas of a village – a great chunk of which are apparently in electrified villages – that the demand for small renewable energy providers like OMC seems to have arisen. Even then, for any massive electrification programme, the country needs to create affordable electricity and a lot of it if the government wants to achieve its targets.
There have been steps in this direction but one wonders whether they can also guarantee electricity that does not pollute the environment, reduces forest cover, or displaces people. The Minister of Coal told the parliament in December, for instance, that his ministry sought to overcome the deficit in thermal coal supply by “by increasing coal production to the extent possible by facilitating Environment & Forest clearances expeditiously, pursuing with State Government for assistance in land acquisition.”
Not only does that seem like a dangerous approach, it would also be in contrast to the government’s own Domestic Efficient Lighting Programme (DELP) – the purpose of which is to reduce carbon emissions and make better use of the electricity that is produced.
The DELP envisages replacing 77 crore incandescent bulbs with high-quality LED bulbs. Although it has reached only a few states, this programme claims to save close to 2 crore kW/h energy and reduce CO2 emissions by over 15,000 tonnes every day.
As things stand today, given our energy crisis, lighting itself demands 18% of the electricity consumed in India, as per a report. It further adds that this percentage is much higher than the global average of 13%. And that if the government plays its cards right and goes in for large-scale adoption of LEDs, this will not only bring India closer to the global average but could also prove to be more friendly to the environment as it would reduce the need to build more energy plants. A positive note here is that the cost of procuring LED bulbs in India has, according to Union Minister Piyush Goyal, seen a dramatic 76% decline, from Rs.310 in February 2014 to Rs.76.
Right Foot Forward
It is commendable that the Prime Minister is working on an ambitious plan. But round the clock electricity for every household still seems a distant dream. There is little doubt, however, that the Prime Minister indeed wishes so, for he has never shied away – in speech, at least – from creating better infrastructure. However, he must also ensure that the infrastructure reaches everybody, is cost effective and does not harm the country’s environment.
India’s journey to become one of the best functioning democracies and its signs of rapid economic growth has made it the center of attention with both ambitions and speculations crafting contrasting narratives. The steady rise of the BJP and its new policy initiatives has created several groups opposed to each other. Some hope for a modern digitized nation while others have developed the habit of displaying hardcore resentment to any constructive change with the hidden agenda of sheer political opportunism. The recent Digital India initiative, the first of its kind to strive for the much sought after digital connectivity, by permitting fast track flow of information to achieve transparent and effective governance, continues to face stiff challenges. Political quarrels between the government and the opposition have benefited none. There is an urgent need to evaluate the Digital India initiative, free from politics, to remain objective and to do justice to society by enhancing its overall well-being.
It is clear that information is the currency of the forthcoming centuries and our persistent denial of maintaining adequate transparency has resulted in evils like corruption and red-tapism which creep into our society and traumatize the lives of the poor and the ignorant many who are already too fragile to bear life’s challenges. Some critics have pointed out that there is a massive digital divide, which is definitely a genuine concern. But what stops us from viewing challenges as opportunities and imparting digital literacy to achieve better efficiency and the greater goals of gradually phasing out corruption and achieving our cherished long-term goals of transparent and effective administration?
There is also widespread criticism of excess corporatisation of the Digital India initiative. Of late, there has been a multitude of letters to the Telecom Regulatory Authority of India (TRAI) concerning Facebook’s Free Basics campaign on ‘free basics’, differential pricing and net neutrality. This concern is however largely justified because a level playing field will remain a distant possibility otherwise. But should we abandon this entire initiative because of such resentment to these big players, or constructively create a competitive environment for smaller firms which will force them to innovate after being liberated from the shackles of protectionism they have been bound with for decades. It would be highly appreciated if the government works to minimize these anxieties by incorporating friendly schemes for the smaller players to gain confidence. The government can support them by rewarding innovations, conducting frequent skill upgradation workshops, providing marketing and financial assistance until they are able to become competent enough in the market. One might complain that it would add to significant training and development costs. But many have stopped viewing this as a fixed investment in enhancing the skills of our labour force and, in turn, realize that it would benefit us immensely in the long run to counter international competition while enabling us to improve transparency in the public sector which is showing signs of revival after decades.
Thus, this new initiative offers us a plethora of complimentary threats and opportunities which can be scripted to suit our narrative of better governance and skill development which would certainly be the pillars of our economy if implemented with caution and in the best possible and inclusive manner. There is nothing wrong with aspiring for change and breaking the jinx of backwardness and, most importantly, in undertaking well thought out initiatives to convert our weaknesses into strengths and threats into opportunities in the long run.
This figure is down from 388 individuals as recently as 2010. The wealth of the richest 62 people has risen 44% in the five years since 2010, an increase of $542 billion (Rs 24,66,100 crore) to $1.76 trillion (Rs 1,07,36,000 crore), which is 86% ($2.05 trillion) of India’s Gross Domestic Product (GDP) in 2014.
The wealth of the bottom half fell by just over a trillion dollars in the same period, a drop of 41%.
This scenario is a reminder of aphorism, “the rich get richer and the poor get poorer”, a commonly used socialist criticism of capitalism. The findings provide some context to the forthcoming January 20 World Economic Forum (WEF) meeting in Davos, Switzerland with the theme: Mastering The Fourth Industrial Revolution.
“Had inequality within countries not grown during 1990 and 2010, an extra 200 million people would have escaped poverty. That could have risen to 700 million had poor people benefited more than the rich from economic growth,” the Oxfam report said.
“There is no getting away from the fact that the big winners in our global economy are those at the top,” the Oxfam report said. The poorest half of the world’s population received 1% of the total increase in global wealth, while half of that increase went to the top 1%, since the onset of the 21st century.
In China, the rich 1% own a third of its wealth, while the poorest 25% own 1%, according to a recent study conducted by Peking University’s Institute of Social Sciences.
“Our economic system is heavily skewed in their favour (the rich), and arguably increasingly so,” said the Oxfam report. “Far from trickling down, income and wealth are instead being sucked upwards at an alarming rate. Once there, an ever more elaborate system of tax havens and an industry of wealth managers ensure that it stays there, far from the reach of ordinary citizens and their government.”
How Wealth Is Spirited Away To Tax Havens
Nine of ten companies, of 200 analysed, are based in at least one tax haven. Corporate investment in tax havens in 2014 was nearly four times larger than that in 2001, according to Oxfam’s analysis.
One recent estimate is that $7.6 trillion of individual wealth—more than the combined gross GDP of the UK and Germany—is currently held offshore, the Oxfam report said.
Similarly, around 30% wealth of Africa’s rich (around $500 billion) is held offshore, leading to a tax-revenue loss of nearly $14 billion to African countries.
The gender pay gap is also quite evident—53 of 62 world’s richest people are men. Women make up the majority of the world’s low-paid workers, concentrated in the most precarious jobs, the report said.
In India, The Pay Of CEOs Skyrockets
The chief executive officer (CEO) of India’s top information technology firm makes 416 times the salary of a typical employee in the company, the Oxfam report said.
Indian law makers passed a disclosure mandate in 2013, requiring CEO pay ratios to be made public, according to this report by PricewaterhouseCoopers, a consultancy. India’s stock market regulator, the Securities and Exchange Board of India (SEBI), is now releasing the first set of such data, the Oxfam report said.
The top executive at ITC, the country’s largest cigarette manufacturer, for example, is paid 439 times the median salary for employees at his company, said the Oxfam analysis, quoting this report from Quartz, a portal.
India has only 42,800 people with declared income exceeding Rs 1 crore; that is 0.1% of 35 million Indian tax payers, as former finance minister P Chidambaram mentioned in his 2013-14 budget speech. India has 172 million people below the poverty line, IndiaSpend reported earlier; we also reported how wealth is increasing in India but so is inequality.
What The Pharma Industry—One Of The World’s Most Profitable Industries—Has Wrought
The pharmaceutical sector, one of the most profitable industries on the earth, strongly protects intellectual property rights (IPR), which has paved the way for 90 billionaires.
The report explains how pharmaceutical companies in the US pressure their own government and through it, the Indian government and Indian pharma companies to honour IPR. For instance, pharmaceutical companies spent over $228 million lobbying in Washington in 2014.
In India, patient groups, civil society organisations and government have challenged pharma giants for access to cheap medicines.
For instance, patient pressure groups claim that India has imported only small quantities of Onbrez (Indacaterol), a drug whose rights are owned by the Swiss multinational Novartis, whose drug could help as many as 30 million Indians suffering from chronic obstructive pulmonary disorder.
To meet the demand, an Indian multinational company Cipla, based in Mumbai, began manufacturing its own version of Onbrez and selling it for a fraction of the original price.
This article was originally published on IndiaSpend.com, a data-driven and public-interest journalism non-profit.
Indias Prime Minister Narendra Modi gestures as he addresses a gathering during a conference of start-up businesses in New Delhi, India, January 16, 2016. Indian Prime Minister Modi launched a number of initiatives on Saturday to support the country's start-ups, including a 100 billion rupee ($1.5 billion) fund and a string of tax breaks for both the companies and their investors. REUTERS/Adnan Abidi - RTX22ONI
So, the Big Bang reforms to nurture and kick-start the start-up ecosystem are done. I am a firm believer that even one problem solved is one problem less to deal with. I am very happy that the Prime Minister has tried to put together and address all issues of start-ups at one go. He also created a buzz where the government departments and banks would be more inclined, supportive and empathise with Start Ups. And the Prime Minister rightly talks of lesser government involvement to help enterprises grow faster.
Many of the issues that were dealt with are about ‘ease of doing business’s compliances, licenses, patents and IPRs. We have to make them easy and transparent, any which way; with, without and in spite of start-ups. I was eagerly awaiting the Prime Minister to make announcements on the substantive ones–Service Tax, M&As, Labor Laws, Income tax, Capital gains. He spoke more about mentorships, incubation centres, hubs, research centres, tests and events, all of which the government should have a limited role in. And I do think we could have done much more for start-ups and the risk-taking entrepreneurs behind them.
The big one everyone is talking about is the tax holiday for 3 years. Unless I am very wrong, it is a meaningless concession. In a country where not more than 2% startups survive, not even 1% make profit in the first 3 years. And as far as inspector raj goes, no inspector comes for inspection till they know you are earning a lot.
This is for ease of doing business and must be done for all businesses and not just start-ups. From idea to kick starting operations anyways takes 6 to 18 months.
2. Startup India hub.
Government-controlled and government-operated. It contradicts Modi’s call for lesser government. They could have given those funds to organizations such as TIE, NASSCOM etc. to create those hubs and run them.
3. Simplifying the startup process.
Greater ease of doing business is needed not just for start-ups but all businesses.
4. Patent protection.
It is an announcement of intent and not a policy initiative. Will have to wait and see how corruption-mired government offices make this happen. Besides, Patent and IPR procedure must be made transparent, not just for startups but for everyone.
5. Legal support.
Government intervention. Creates another layer. Why make a complicated process and give legal support?
6. 80% rebate on patent applications.
Nothing substantive. The cost of filing an IPR are between Rs. 1,600 and Rs. 12,000. Saving of Rs. 1,300 to Rs. 10,000.
7. Relaxed norms of public procurement.
Again an announcement of intent, not a policy initiative. This has nothing to do with startups. The vice-like grip and the nexus that exists in government procurement should anyways be broken.
8. Faster Exits.
This is where the government could have made a bolder move. We should enable the profitable ones to merge with the loss-making enterprises. Very recently, We were trying to buy a company which had genuine synergies with our business. It had been in existence for 8 years and was losing money with 45 people on its rolls. When evaluating, the merger would have made sense, if the tax losses were also utilised. The price we arrived at was much more than the gains because of tax losses. But the uncertainty of allowing the M&A by tax authorities killed the deal. We should make M&A simpler, easier, and gainful even in taxation. We could have saved 45 jobs, a company and still made the entrepreneur earn something for his pain and effort. Alas, it was not to be.
9. Funds of funds of Rs.10,000 crore.
This is a government scheme. You could have run it through banks as many already have such schemes.
10. Capital Gains Tax.
This is a big move although we should await the fine print in the budget provisions. The capital gains tax currently favours investments in listed entities. Investing in startups carries higher risk and higher tax. This is a ridiculous situation when you are trying to encourage innovation and startups. If they indeed change capital gains tax and bring it on par with the existing capital gains tax, it will be a big move that can drive funding towards startups.
11. Tax exemption.
This is high in optics but doesn’t mean much. It is like giving sun-shades to the blind. In an ecosystem where not even 1% of startups survive after 5 years, not even 1% of that 1% earn a profit in the first 3 years. Tax holiday for whom? And what is it about starting after 1st April 2016?
12. Fair Market Value formula.
It was a source of harassment. An irritant has been removed.
13. Startup fests.
The government should keep away. All you need to do is remove the service tax on startup events and luxury tax on venues and you will see these taking off.
14. Launch of Atal Innovation Mission, incubators, research parks, bio-clusters etc.
Alas, the government at it again. Did I hear someone talk of lesser government involvement?
2. Startups don’t need to pay income tax on the income they make in the first three years.
Another big announcement made by the Prime Minister in his address. Earlier in the day, Finance Minister Arun Jaitley said startup friendly tax measures would be announced in the upcoming budget.
We would have to wait till the next month to see what those special measures will be but this is a welcome remark. A tax break for startups would make it easier to get more investors on board.
3. Secretary, Ministry of Corporate Affairs, Tapan Ray announces that the government would be expediting startup registrations to 24 hours.
Gone are the days when you had to wait days or maybe weeks to get your business registered. If you have a great business plan and startup capital, you will soon be able to register your business in a day.
4. “We will end licence raj for startups”, says Arun Jaitley.
Adding to the 24 hours registration policy, the finance minister also assured the gathering in New Delhi that the red-tape culture would be dealt with swiftly to encourage more startups.
5. Encouragement for women entrepreneurs.
A special session for women entrepreneurs was held during the meet. The highlight of the session was a quote from Anisha Singh, the co-founder of Mydala, who said — “I want to be recognized as a successful entrepreneur, not just as a successful woman entrepreneur.”
6. Masayoshi Son, founder and current chief executive officer of SoftBank, says they will increase investment in India. It could exceed $10 billion.
New businesses are always looking for investors and Masayoshi Son promised to be an avid investor to startups in India.
Earlier this week there was a startup event where the founders of Flipkart, InMobi and Paytm — arguably India’s most-lauded startups —were panelists but they were largely ignored.
The loudest applause and the highest media attention was centered squarely around their fellow co-panelist — a man by the name of Rahul Yadav.
Rahul Yadav — enfant terrible of the Indian startup ecosystem, erstwhile CEO of the soon-to-be-erstwhile startup Housing.com, numero uno startup hero, premier role model for all young and wannabe entrepreneurs in India, and all-season buffoon.
I watched in morbid fascination as the media studiously held on to every trivial thing that Rahul said — like beggars gratefully accepting the leftover scraps from a rich man’s five-star buffet lunch — breathlessly reporting them in blaring headlines as non-obvious insights that the rest of the startup ecosystem ought to heed.
The most tone-deaf article from this lot was the one that reported on Rahul Yadav’s skewering of the media — calling them out as “poor talent” who lacked basic courtesy. The complete lack of self-awareness was strikingly ironic.
Here was a kid whose only achievements were firstly around running a company that has raised over a hundred million dollars of funding from the ground and secondly being abusive and generally disrespectful to all around him.
Yet he was being deified and apotheosized by the media.
That’s when it struck me — a prize idiot like Rahul Yadav is exactly the kind of startup hero that we in the Indian startup ecosystem deserve.
Why so? For two reasons.
Our Laser-Focused Obsession With Funding
As a startup nation, we have always been somewhat enamored by funding — but earlier, this was like the stolen glances that a smitten lover would snatch off his object of affection.
We no longer care about what a startup has achieved or aims to do, the problems it solves, the benefits it provides or the impact it has had.
We only care about one thing — how much funding has a startup raised. And that amount determines where you are slotted in the startup caste system.
And in this buffet of buffoonery, Rahul Yadav is the veritable pièce de résistance — the roast suckling pig with a rotting apple stuffed in its mealy mouth.
The fact that Rahul has raised a boatload of funding for his startup implies that he has earned his place at the top of the totem pole and needs to be celebrated and venerated.
Our Over-Sensational Media
99% of the credit to painting this narrative shaping Rahul Yadav as a startup role-model goes to our clueless media.
Except for a few notable exceptions, the media folks covering the Indian startup ecosystem are incompetent hacks who are more interested in chasing page views than in providing any meaningful commentary or insights.
One can almost sense Rahul Yadav playing to the galleries in front of these media monkeys — assuming a persona that paints him as a startup savant doling out sensational headlines to help these journalists sell their newspapers, websites and events. So what if this persona is doltish as long as it drives page views?
So against this backdrop of an obsession with funding and an emasculated gutless media hungry for sensationalism, it is no wonder that Rahul Yadav is a startup hero. Precisely the kind of hero we deserve.
The tragic part here is that positioning a cretinous neophyte like Rahul Yadav as a startup hero shows how starved we are for real role models to look up to.
Despite all the buzz around India having arrived as a hot startup destination, there have been precious few aspirational startup exemplars since the halcyon days of Sabeer Bhatia and Narayan Murthy. A false dawn if ever there was one.
Equally tragic is the fact that folks who could potentially be startup heroes — a Sachin Bansal or a Vijay Shekhar Sharma — seem to be idols with feet of clay, either backing the likes of Rahul Yadav with angel investment to continue this cringe-worthy charade of faux startup-ism or needing him to fill seats at their own events. The signal is loud and clear. It doesn’t matter if you are a lout or have demonstrated zero meaningful startup skills, as long as you can string the media along in this charade, and if you can do that, we are all happily complicit.
This is not to say that there are no startup heroes or role models in India.
How I wish the media highlighted the story of a Santosh Panda, who has diligently persevered to build Explara over several years with almost zero funding, or of a Nikhil Pahwa who selflessly fights for a public good like net neutrality at a great personal cost, or a Girish Mathrubootam, who is pioneering a seminal “value arbitrage” competitive differentiator that other Indian SaaS startups would do well to emulate.
But what fun would that be?
There would be no sensational headlines.
No avalanche of page views.
No bums on seats at your startup events.
So I am not holding my breath hoping that we will get the kind of startup heroes we need.
Instead, I will get my popcorn and join the mob as we watch yet another episode of “Rahul Rants” — another episode chronicling the monomyth of the startup hero we deserve.
This is an edited version of the original post published first on Medium.
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