Advised Manmohan Singh, Pranab Mukherjee against Vodafone tax: Montek

Montek Singh Ahluwalia, who was deputy chairman of the Planning Commission during the United Progressive Alliance’s (UPA’s) decade in office (2004-14), has said he had in 2012 advised then prime minister Manmohan Singh and then finance minister Pranab Mukherjee not to implement one of the most controversial decisions taken by the government of the day — to retrospectively amend the Income Tax Act, 50 years after it was passed, to overturn the Supreme Court’s Vodafone judgment. However, they did not heed his advice.

Asked whether this meant that Singh agreed with the proposal and didn’t think it would send out a damaging message about India’s attitude to investment and the rule of law, or that he was weak and unable to overrule the finance minister, Ahluwalia said he couldn’t answer that because he was not privy to any discussions between the two of them.

However, he did say that at no point thereafter (during the past eight years) had Singh told him that the decision to retrospectively amend the Act was a mistake. He said this had not been discussed between them.

In a 60-minute interview to The Wire, to cover the launch of his forthcoming book Backstage: The Story Behind India’s High Growth Years, Ahluwalia told Karan Thapar that the land acquisition law in 2013 “went too far”. He admitted the government had received petitions from industrialists pointing this out but since they were “stakeholders” their advice was not taken.

In his book, he accepted the Act “increased the cost of land to financially unsustainable levels … and made it easier for anyone who wants to stop a project to use the various consultative processes required under the law to delay matters”.

In the interview, he said the Act squeezed industrialists in two ways — in terms of cost and by providing an easy route to obstruct their plans.

Ahluwalia agreed environmental regulations held up clearances of several projects during the UPA years and, consequently, delayed investment and growth. However, he said this became apparent around 2010-11 and thereafter the government needed a couple of years to work out what to do. In 2014, the UPA was voted out of office. Ahluwalia suggested that the UPA did not have the time to act and take corrective measures.

Describing the first seven years of the UPA’s 10-year term as “outstanding”, he said possibly its greatest achievement was an 8.4 per cent rate of growth during the period, when 138 million people, a figure without precedent, were lifted out of poverty. However, the UPA failed to get recognition for these achievements because it didn’t broadcast its successes. Unfortunately, the Congress, too, did not take sufficient steps to publicise the UPA’s successes.

Speaking about the charges of corruption that emerged from the 2G and Coalgate controversies, Ahluwalia said the government did not handle them well. He said the UPA had a credible defence, which it failed to make properly. He said the accusation that the exchequer had made a huge loss because spectrum and coal were sold cheaply overlooked the critical facts that this stimulated the growth of telecom and industry, which led to faster GDP growth and which, in turn, brought in additional revenues, which could be used for other developmental purposes.

As for his assessment of Singh as prime minister, Ahluwalia said the view he was weak and vacillating was unfair.

There was a long discussion about whether the fact that Sonia Gandhi was “the final decision-maker” undermined the constitutional position of the prime minister and the traditional manner in which the Indian government worked.

Manmohan Singh calls on P Chidambaram: 'Hope courts will do justice'

The Congress on Monday threw its full weight behind party leader P Chidambaram, underscoring that it believes the former Union finance minister was a victim of “political vendetta” and not involved in any corruption, with former prime minister Manmohan Singh and Congress president Sonia Gandhi meeting him at Tihar Jail.

Singh and Sonia Gandhi met Chidambaram, lodged in Tihar Jail since September 5 in connection with the INX media case, along with his son and Lok Sabha member Karti Chidambaram. The meeting lasted its permitted duration of half an hour.

In a statement issued later in the evening, Singh said the party is “concerned with continued detention in custody” of their colleague. The former prime minister said, “We are confident, and we sincerely hope, that the courts will render justice in this case.”

“In our system of government, no decision can be taken by any single person. All decisions are collective decisions recorded in files. A dozen officers, including six secretaries to the government, examined and recommended the proposal. Minister Chidambaram approved the unanimous recommendation,” Singh said.

“If the officers are not at fault, it is beyond our comprehension how the minister, who simply approved the recommendation can be accused of committing an offence. If the minister is liable for approving a recommendation, the whole system of government will collapse,” he said.

On Friday, Congress leader Jairam Ramesh had also held a press briefing to argue that the Foreign Investment Promotion Board (FIPB) had cleared the INX Media investment. Chidambaram, who had asked his family to tweet on his behalf, said he was honoured that the two leaders visited him.

Take CMs' views before changing FinCom's terms of reference, says Manmohan

Former Prime Minister Manmohan Singh on Saturday said the government should have taken chief ministers' views before changing the terms of reference of the 15th Finance Commission, adding that unilateralism is not good for federal policy and cooperative federalism.

Earlier in July, the Centre changed the terms of reference of the 15th Finance Commission and mandated the panel to suggest ways for allocation of non-lapsable funds for defence and internal security.

Speaking at an event here, Singh said any change in the panel's terms of reference at the fag-end of its term should have been done in consultation with the states.

"The best course would have been for the Central government that if it wants to tailor the terms of reference, it should be backed by Chief Ministers' Conference, which is now under the auspices of NITI Aayog, otherwise there would be strong feeling that the (Central) government is trying to rob the states of due resource allotment.

"I think that it is not good for the federal polity of our country and cooperative federalism we all swear by these days," Singh said while addressing the 'National Seminar on Additional Terms of Reference of the 15th Finance Commission: Implication for the States'.

"The commission's report goes to the finance ministry and then it goes to the Cabinet and therefore government of the day can take a view that whatever the mandate of the Parliament, the government would abide by that rather than imposing its view unilaterally on the reluctant state commissions," he added.

The government on November 27, 2017 notified the 15th Finance Commission, headed by N K Singh, to suggest the formula for devolution of funds to states by the Centre for five years commencing April 1, 2020, among other issues.

The commission, which has been mandated to use 2011 census data rather than the one of 1971 for resource allocation, was to submit its report by October 30, 2019. The deadline was later extended till November 30, 2019.

"I respectfully request to the authorities to still take this view that they will go by the advice of the Chief Ministers if there is new controversy with regard to additional terms of reference of the commission," the senior Congress leader said.

"I am told once upon a time, the 9th Finance Commission took the view that it will be guided by the Constitutional mandate and will do the fair distribution of taxes, though I don't know that whether this (15th) commission is going to adopt that line of thought. But...internal security as well as defence are subjects which are of great national importance," Singh added.

About the role of the commission, he said, "There are certain basic issues like allocations for health, education and other important subjects, environment protection, where all states have a legitimate interest. What should be done by the government is to evolve a broad national consensus in dealing with all these issues, otherwise there would be bickering and dissatisfaction. This is not good for the federal polity of our country."

He was of the view that cooperative federalism demands give and take and therefore it is very important that the Centre should take the initiative to consult states as often as necessary to carry them along.

"It's rather odd for the government to come up with additional terms of reference. Most of the states have already gone to the commission with their requirement and now you impose another terms of reference on the commission, which would complicate its work. That is certainly not good for the federal polity and cooperative federalism that we desire should flourish in the country," he added.

Rising inequality should concern us all, says former PM Manmohan Singh

Former prime minister Manmohan Singh on Monday dismissed arguments that inequality could be reduced without high economic growth and cautioned against backlash from the people due to lop-sided development.

Releasing the India Social Development Report-2018 on ‘Rising Inequalities in India’, prepared by the Council for Social Development, Singh, considered the father of liberalisation in India as finance minister in 1991-96, said meaningful solution to the problems of poverty, ignorance and disease, which still inflict millions of Indians, could be found only in the framework of a rapidly expanding economy, which should go hand in hand with positive government intervention.

Singh, who delivered three years of over 9 per cent economic growth rate (in old GDP series) in a row in the first stint of his government, said positive government intervention would ensure that the fruits of development were also available to the people at the bottom of the ladder.

“Rapid economic development plus positive government intervention to reduce social and economic inequality has to be the main theme of modern policy making,” Singh said.

The report, which contains 22 chapters by eminent economists and social scientists on various aspects of inequality in India, states that the inter-state inequality in per-capita income has shown an increasing trend since 1991, the time when economic liberalisation started.

States with higher per-capita income and better infrastructure experienced higher growth and vice-versa, it adds.

Singh said India was one of the world’s fastest-growing large economies. But high growth is also associated with rising economic, social, regional as well as rural and urban inequalities where some social groups and regions have seriously lagged behind. “Rising inequality should concern us all because the adverse effects of economic and political inequality can impact our march towards inclusive and sustainable growth,” Singh said.

He said equity is complimentary to long-term prosperity and there should be level-playing field where all members of the society have a similar chance to contribute towards sustained growth and development; otherwise, it could have strong backlash. “The adverse impact of unequal economic opportunities, social relations and political power on development can be harmful for all,” he said.

Listing how the UPA-era schemes launched during his 10-year tenure have contributed to reducing inequality, Singh said effective implementation of right-based programmes could go a long way in reducing inequality in the country.