After 24 years of long deliberations on the Vizhinjam port, the Kerala government decided to award the construction of the multi-crore Vizhinjam port project to Adani Ports and Special Economic Zone (APSEZ) on PPP model. The meeting has approved the high power committee’s recommendation in the regard. However, an official announcement will be made only after consulting with the Election Commission in the wake of the Aruvikkara by-poll. Cabinet has also decided to hand over the letter of award to Adani, soon. The appointment of a special nodal officer for the formation of a special purpose vehicle in the conduct of the port, will be formed, after the project is officially announced. The project is slated to start in September, after completing the preliminary procedures. Adani Group was the lone bidder for the project that has remained as a non-starter for a want of bidders, for all these years.
The nod of the cabinet has come at a time when the CPM led opposition is raising allegations of corruption on the state government’s hasty manner to award the contract to Adani. This forced the Chief Minister, Oommen Chandy, to convene an all-party meeting on June 3, which went fruitless as the LDF opposed the move of the government to award it to Adani on PPP model. After the meeting, Chandy said that the state government would go with the project, at any cost. The government is of the opinion that if not now, the project will never come up.
Adani Ports and Special Economic Zone, considered to be the biggest private port operating firm in the county had submitted the bid and sought 1,635 Crore as grant for the proposed Rs 7,525 crore Vizhinjam port project. In the first phase, the Adani group will be investing 4253.2 crores including the grant of Rs 817.2 crores the company will get from the Government. The Government of India has cleared the Viability Gap Funding for the project and through this the Adani group will get around 800 crore and Rs 600 as the share of the state government. According to the agreed terms, the port will be operated solely by the Adanis, who will invest only 32.6% of the total project cost, while the Government of Kerala which will be investing about 56.5%, will have to wait for 60 years to get any share of the profit.
Initially, five major private companies, including Gammon Infrastructure Projects, the Hyundai-Concast consortium, Essar Ports, Adani Ports and consortium of SREI and Spanish firm OHL, had expressed interest in the project. But many of them either backed out or were denied the bid, due to security or other feasibility reasons. However, when the five-time extended deadline for submitting the final bid for the project ended on April 24, Ahmadabad based Adani ports emerged as the sole bidder.
The empowered committee headed by the Chief Secretary Jiji Thompson, decided to recommend the lone bid to the board of Vizhinjam International Seaport Limited (VISL), for the special purpose vehicle set up, to execute the project. The empowered committee noted that the global bidding process procedures followed the Central Vigilance Commission (CVC) guidelines, before the bid was approved.
Vizhinjam port once completed, is expected to dock ships with a capacity to handle even 18,000 TEU (20 feet equivalent units). The project is proposed to come up on about 140 hectares of land. The Vizhinjam project got environmental clearance in 2013.
Adani ports get Vizhinjam nod
Government takes over land possessed illegally by K P Yohannan
Kerala-based evangelist and self-consecrated archbishop Dr K P Yohannan, has hit the headlines yet again, as the state government has recently issued orders to take over estates illegally owned by his church body. According to the government of India website, Gospel for Asia (GFA) – a Texas based charitable organisation – is funding ‘Believers Church’ for the purpose of charity, to improve the condition of orphan children. Interestingly, both GFA and Believers Church are headed by Yohannan. The funds sent by GFA were used to purchase these estates instead of putting it to use for charity purposes.
Believers Church don’t own three estates. BC owned only an estate,ie. Cheruvally Estate and it was taken over by the Government along with two other estates which were owned by some other groups.The order for taking over the estates has been issued by special officer M.G. Rajamanickam, who was appointed by the government for resuming the land possessed by the company, also from the transferees or those who occupied the land, under the provisions of the Land Conservancy Act.
The 2,263 acres of rubber plantations were bought from the Harrisons Malayalam Limited by the BC for Rs 85 crores in 2005. The revenue from the estates was supposedly used to help the BC become monetarily self-sufficient to run the orphanages of his church body.
However, it has been learnt that Yohannan and his trust had spent Rs 300 crores on the plantation property. With the government now taking over the land, BC will in all probability face losses on their investments in these estates. Moreover, BC would possibly be ineligible for any compensation, as Harrison Malayalam sold the property to BC when the former had no right to sell the property. After the purchase, however, the property was mutated in the name of the Believers’ Church and tax was being paid by the BC itself under the Plantation Tax Act.
The estate first hit the headlines when the State Government approached the High Court in 2008 to challenge the land deal by Harrison Malayalam Limited. But the case went against the government, after it failed to present the documents claiming the ownership of the land.
According to BC, the property originally belonged to Chenappady Devaswom of Kongoor Namboodiris. Later, the property came into the possession of ‘Mattakkattu’ family in 1869 on mortgage right. Then the property came into the possession of Malayalam Plantations Limited. Later, in 1984, Malayalam Plantations Limited and Harrisons & Crossfield (India) Limited merged; a new company, named Harrisons Malayalam Ltd., was incorporated. Believers’ Church presented title documents No.1600/1923 before the court. Even though the government claimed that the documents provided were manipulated, the prosecution failed to prove it.
The state government then conducted another probe, and proved that the documents of the land were forged by Harrison. And based on the findings of this investigation, the government has issued orders to confiscate the estates. Ernakulam District Collector M G Rajamanickyam was appointed as the Special Officer for this case.
However, it is still unclear as to how much amount has been spent by Yohhannan to buy the said land. According to government registrar of mundakayan taluq in Kottayam district that BC had spent Rs 85 crore to buy the estate in 2005/2006. Cheruvally Estate is in three districts , Enrnakullam, Kottayam and pathanamitta districts.
A report of another probe, conducted back in 2008 by the then Additional Secretary KK Remani, says that BC received an amount of Rs 1044 crores from US. Few details are available on either the source of the huge funds it received or how the funds were spent.
Yohannan’s tryst with Controversies
Yohannan has been a Pentecostal follower and president of Gospel for Asia (GFA), a charitable institution set up in the early eighties in Texas, US to promote biblical teachings. He shot to fame when he set up the Believers’ Church in 2000 at Thiruvalla in Pathanamthitta district of Kerala. Being a self-proclaimed bishop, he hired bishops from the Church of South as well as North India, paying them a hefty amount to conduct his installation as bishop. This, however, stunned the Christian believers of the state. He later upgraded himself as an archbishop and appointed another six junior bishops under him. BC claims that they have more than 20 lakh followers, and most of them are from outside of Kerala.
Apart from the Cheruvally Estate, BC owns several other properties. This knowledge is limited to people in his network. In the past, he was also caught in the vigilance net over the alleged misuse of tsunami funds, and other dubious foreign transactions. However, each time he either escaped or evaded the investigation, apparently using the political or financial influence that he has managed to accumulate over years.
Congress hopes for a 'son rise' in Aruvikkara by-poll
Congress in Kerala has once again come to a boiling point with the announcement of its candidate in the Aruvikkara by-election to be held on June 27. The by-poll is a result of the sudden demise of speaker G Karthikeyan on March this year. Dissent fumes within the party over picking of late Congress leader G Karthikeyan’s son K S Sabarinathan as the candidate. The student’s wing of the party KSU and Youth Congress has come out in the open against the decision of the party to field an inexperienced candidate. They alleged that KPCC’s decision has once again showed how the party favours family politics.
The decision to field Sabari clearly indicates that the Congress is not ready to face the by-poll by brandishing their achievements but by projecting GK and to muster a win on the sympathy wave. Earlier, the state Congress leadership had tried to persuade Karthikeyan’s widow M T Sulekha to contest, but she refused the offer citing emotional reasons. This gave way to a little confusion in the Congress in picking up an able candidate against CPM strongman and former minister, M Vijayakumar in the election.
The district leadership of the party wanted V M Sudheeran to contest if Sulekha refused the seat. However, the close door meeting of KPCC picked up Sabari instead of Sulekha. KPCC president V M Sudheeran officially announced the candidature of Sabari on Saturday and said that they picked him unanimously on merits. A Youth Congress leader told Tehelka that Sudheeran failed to explain on what merits Sabari has been handpicked other than being the son of G Karthikeyan. KSU state unit has given a dissent letter to KPCC president soon after the party decided on Sabari.
KPCC president rubbished the complaint, and in reply to KSU said that it is not a college election that is going to take place in Aruvikkara. Youth Congress leaders are also not in any mood to compromise on the decision. Youth Congress president Dean Kuriokose came against the decision and is unhappy with it. A Youth Congress leader on the condition of anonymity told Tehelka that the decision of the party betrayed youngsters and amounts to cheating. “If this is the situation, then there is no point in serving the party. This is a clear case of discrimination,” he said.
With the candidature been finalized, Congress is trying hard to establish an image of a former KSU leader for Sabari. He himself said that he was an active KSU worker during the time he studied at College of Engineering, Thiruvananthapuram. He along with other KSU workers had established a unit of the student’s wing inside the campus during 2003, which was once the bastion of SFI. However, the current leadership of the KSU says that they are aware of the fact.
Kerala not new to Family Politics
The candidature of K S Sabarinathan is in contradiction to the principles G Karthikeyan had stood for in his forty-year long political career. G Karthikeyan was one among the young turks who fought against K Karunakaran’s decision to rope in his son K Muraleedharan and daughter Padmaja as his political successors in the 1990’s. GK revolted against this along with many senior leaders including the current Home Minister Ramesh Chennithala. They were known then as reformists and GK hailed as the leader of the reformist movement within the Congress.
Family politics is nothing new in Kerala. If it was Karunakaran who was criticized for his deliberate efforts to pitch his daughter Padmaja and K Muralidharan in the 1990’s, many other leaders also have roped in their sons to the politics. Ministers like Anoop Jacob, son of Kerala Congress (J) leader T M Jacob; Shibu Baby John, son of RSP (B) leader Baby John; K P Mohanan, son of later Minister P R Kurup; Dr M K Muneer, son of late chief minister C H Mohammed Koya; P K Abdu Rabb, son of minister Avukkader Kutty; and MLA Ganesh Kumar, son of Kerala Congress (B) leader R Balakrishna Pillai; MP Jose K Mani, son of finance minister and Kerala Congress (M) leader K M Mani; A Sampath, son of CPM leader K Anirudhan are few from the long list of politicians of the state who have close family lineage.
Must win battle for UDF
The Congress that is riding on a wafer thin majority is reduced to 73 members in the 140-memebre Assembly after the death of G Karthikeyan . Moreover, the party has been rattled by the bar bribery scandal with two of its ministers, Finance Minister K M Mani and Excise minister K Babu, under the shadows. A Vigilance probe against Mani is on the final stages and a possible probe on K Babu is on the waiting. As Chief Minister Oommen Chandy has said Aruvikkara by-election would be an assessment of political mandate on his government and he is well aware of that, only a win in Aruvikara can repair the already damaged image of his government that is already mired under innumerable corruption allegations. Congress is really hoping for a ‘son rise’ in Aruvikkara.
A Project Doomed?
Controversy and Gautam Adani are inseparable. Whether it is the loan sanctioned to him by the State Bank of India (SBI) or his equation with Prime Minister Narendra Modi, Adani continues to be in the news. The allegations against the man in question never end. So, it was not surprising when Adani got embroiled in a fresh controversy over a port project in the Kerala capital, Thiruvanathapuram. The opposition led by the CPM in the state has levelled serious charges of corruption against the ruling Congress-led United Democratic Front (UDF) for approving the bid of Adani Ports and Special Economic Zone (APSEZ) for the development of the Vizhinjam international seaport project. This has forced Kerala Chief Minister Oommen Chandy to convene an all-party meeting on 3 June to take a final call on accepting the bid of Adani group for the project.
The APSEZ is considered to be the biggest private port operating firm in India. It sought Rs 1,635 crore as grant for the proposed Rs 6,700 crore Vizhinjam project. In the first phase, the Adani group will be investing Rs 4,253.2 crore, including the grant of Rs 817.2 crore from the government. The Centre has already cleared the Viability Gap Funding for the project and through this the group will get around Rs 800 crore. According to the agreed terms, the port will be operated solely by the Adani group, which will invest about 32.6 percent of the total cost of the project, while the state government will plough in 56.5 percent and wait for 60 years to earn profit. Herein lies the irony: although it is supposed to be an Adani project, more than half of the project cost will be borne by the Kerala government. This has led many tongues to wag.
The lone bid submitted by the Adani group and the subsequent nod given by the Kerala government prompted many to question the motive behind the moves. The CPM has alleged foul play in awarding the project to Adani. Attacking the ruling party in Kerala, Pinarayi Vijayan, former state secretary of the CPM, said that the chief minister (Chandy) had a secret meeting with Adani at the residence of a Congress MP in Delhi. Later on, Congress MP and former Union minister KV Thomas admitted that he along with the CM and Fisheries, Ports and Excise Minister K Babu had met Adani. However, sources in the Adani group refused to comment on the matter, insisting that the group will go ahead once the UDF gives the final approval.
Initially, five major private companies, including Gammon Infrastructure Projects, the Hyundai-Concast consortium, the SREI consortium, Essar Ports, Adani Ports and OHL (Spanish firm) had expressed interest in the project. But many of them were denied the bid due to security and other feasibility issues. However, when the deadline, which was extended five times, for submitting the final bid for the project ended on 24 April, the Ahmedabad-based Adani group emerged as the sole bidder.
In fact, the project in question has faced many hurdles since its conception more than two decades ago. It got stalled from time to time due to the issues raised by local people to the central government. When the previous LDF (Left Democratic Front) government tried to finalise the bidding process involving a Chinese company, the then UPA government at the Centre refused clearance citing security reasons. The LDF again tried to salvage the project but to no avail. Now, when the Congress-led UDF has approved the bid of APSEZ, the CPM-led opposition has applied the breaks on it yet again.
Centres of Earning
Most are self-contained, self-sustained and hugely profitable educational universes. They charge a bomb from students and offer them 100 percent placement in their sister concerns. They ask the alumni, who are employed with them at a pittance, to teach the fresh batches. They grab huge incentives, like cheap real estate, from the state regimes. In the end, they earn profit margins of 100-500 percent.
Shruti (name changed) paid almost Rs 5 lakh for a bachelor’s in management. She was employed by the institute’s group firm at a salary of Rs 10,000 a month. After a year, she didn’t get a raise, but was asked to teach fresh batches and paid an additional amount. Students were happy, and so was the institute, which aggressively advertised 100 percent placement record to woo new students each year.
Even when the higher education colleges don’t have captive employment opportunities, their profits are huge. Take the case of Gautam, who paid around Rs 5 lakh, or Rs 1.25 lakh a year, for a four-year fashion course. There are 80 students in his batch and another 200 students in the three other courses. If there are similar number of students in each year of the four-year courses, the college earns a whopping Rs 14 crore (280x4x1.25) a year. The minimum profit: Rs 5-10 crore each year.
It is hardly surprising that the private sector has all but taken over the higher education segment, which forms a sizeable component of the over $65 billion education industry. According to a 2015 report by a law firm, Nishith Desai Associates, almost 65 percent of higher education institutions are in the private hands and they cater to 50 percent share of the students’ enrolment every year. “The number of unaided (by governments) higher education institutions is on the rise,” added the report.
Demand and Supply
The entry of private players in higher education is a result of the pent-up demand among students. India’s Gross Enrolment Ratio (GER) — the percentage of students who opt for higher education — is a measly 15-18 percent, or much lower than China’s 26 percent, Brazil’s 36 percent and the world average of 23 percent. Still, there are millions of students who enrol each year. A rough calculation by a website, www.dreducation.com, put this figure at over 20 million in 2012-13 and 26.5 million in 2014-15.
Another indicator of the demand for higher education is the number of Indian students studying abroad. A couple of years ago, Forbes said that over 4.6 lakh students go abroad to study every year. The figure would have gone up this year. Of them, over 22 percent choose American colleges, a similar percentage go to Australia and nearly 10 percent choose universities in Britain.
~Also Read~
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Various regulators in India insist on common entrance exams, either at the state or all-India level, for admissions in professional courses such as engineering, medical and management, offered by legally- approved colleges, universities and institutes. Students who fail in these tests of merit have to pay huge sums to join unapproved institutes, or approved ones that have their own entrance exams.
A study by PricewaterhouseCoopers (PwC), along with the Confederation of Indian Industry (CII), estimated that there were over 33,650 colleges and universities that provided higher education. While the compounded annual growth rate over the past few years was almost 12 percent for colleges, the figure was over 10 percent for universities. The report said that “the number of institutes has nearly doubled” and this indicated that the sector “has attracted investments from both the public and private sectors”.
Higher education is likely to soon attract a larger number of private players, including foreign universities that have shown interest in the sector. This will be driven by the higher demand as well as policy and regulatory initiatives. In the 12th Five Year Plan, which will now be overseen by the NITI Aayog, the overarching goals include “expansion, inclusion and excellence with equity and quality”.
Several higher education Bills may be introduced in Parliament by NDA-2. The most critical, Foreign Educational Institutions (Regulation of Entry and Operations) Bill, will ease the entry of foreign players, either independently or in collaboration with Indian partners. At present, the University Grants Commission (UGC) allows restricted tie-ups between foreigners and Indian educational institutes.
UDF ministry in trouble again over Bar Bribe in Kerala
More drama to unfold in Kerala politics in the coming days with Finance Minister and Kerala Congress (Mani) chairman K M Mani looks adamant on his decision not to quit even if Vigilance charge sheets him in the bar bribe case. The already strained relationship of Congress and KC(M) has further worsened with Mani blaming the home department and VACB (Vigilance and Anti-Corruption Bureau) allegedly leaking out the report of lie detector test conducted on a key witness in the bar bribe case last day.
It was on Sunday that the media carried reports of the polygraph test conducted on bar owner Biju Ramesh’s driver Ambili. The report said that the test proved that driver’s statement that Mani had taken money from the bar owner is right. This has seriously cast shadow over Mani and a possibility of Vigilance nailing him grew larger. This has infuriated the KC (M) leadership, and the party general secretary Joseph M Puthussery said in a statement blamed a concerted move to tarnish the image of Mani and KC (M). He said that under the procedural formalities being followed, the report of the test was handed over to court in a sealed envelope. A copy of it has been given to investigating officer. Puthussery wanted an investigation into how the ‘secure’ information was got leaked to media.
K M Mani too is not happy with the recent developments in the bar bribe case. He blamed home department for leaking the progress report of the case to media and delay in the investigation. He said that the leaking of the report is of serious nature and an investigation should be ordered into it to bring out the real culprits.
Home Minister Ramesh Chennithala sensing the situation bad, wasted no time in announcing a probe into the incident. He entrusted Additional Chief Secretary Nalini Netto to probe the incident. Chennithala also rubbished the accusation and said that his department is not aware of the leakage and is clueless over the polygraph test.
Meanwhile, Chief Minister Oommen Chandy has given his assurance to Mani to take action against those involved in the leakage. It is also said that he had asked his favourites not to raise the demand of Mani’s resignation within the UDF. Even though, ‘I’ group of the Congress is secretly faring war against Mani and his resignation is giving big head ache to Chandy. It is learnt that the Muslim League’s, another ally in UDF, decision in the incident will be crucial in the incident.
Opposition leader V S Achuthananandan and CPM state secretary Kodiyeri Balakrishnan demanded for the removal of K M Mani from the Chandy ministry. “Since the tainted minister was not ready to quit his position, Chandy should throw him out” said V S in a statement. Kodiyeri said that an LDF meeting will be convened on May 31 to decide on stepping up protest against the government if Mani fails to resign on his own by then. However, the fate of the UDF government, which turned four a few days ago, is solely depends upon Mani, and a decision from him would determine the further course of the government.
All Talk, Little Walk
In the run-up to the general election last year, there was a refrain that one heard from several quarters — politicians, businessmen, economists and the BJP’s supporters. If Narendra Modi was elected as the prime minister, they said in unison, he would hit the ground running. He had got together a team of thinkers, economists and policy drafters, who had prepared an economic blueprint. Within a few months, the business community would witness a sea change that was beyond their imagination.
“I was sure that Modi would make it easier to do business within a few months, if not weeks. I knew what he did in Gujarat; I was convinced he would do it faster as the prime minister. But this hasn’t happened,” says an industrialist with business interests in several states such as Maharashtra, Gujarat and Madhya Pradesh. Even a die-hard fan of Modi, Deepak Parekh, who is considered a doyen in India’s financial sector, recently said that there was no real change in the ease of doing business.
NDA-2 has spluttered, sprinted, stuttered and shouted during the first 12 months. It pushed through crucial reforms, such as the auction of natural resources, but got stuck on land acquisition, and goods and services tax. It announced critical rules that aimed to make life faster and simpler for the business community. It failed to implement them consistently across states. Modi talked his way through the US, Europe, China and Australia. He hasn’t walked the talk, at least until now.
Perception problems
The prime minister has done his best to dispel the growing perception that he is pro-big business. Before his electoral victory, and even after it, he regularly referred to his mantra of ‘development for all’. However, his critics managed to convince the masses that his policies helped the industry. His was an (Gautam) Adani-(Mukesh) Ambani regime, although the latter, who is the promoter of Reliance Industries, was hit by several measures that the NDA-2 took in the recent past.
As Modi jetted across continents and brazenly wooed foreign investors, the perception that his priority was to wow the latter gained currency. This was despite schemes such as Swachh Bharat, building of toilets and cheap housing. The urge to accelerate foreign inflows created a wedge between the regime and domestic business houses; the latter felt that Modi hadn’t done enough for them. In addition, large sections of the Sangh Parivar were angered by Modi’s fascination for the dollars and deutschemarks.
Even the successful policies, such as the auctions of coal blocks and spectrum that generated a total of Rs 5,00,000 crore for the exchequer in a largely transparent fashion, made the local entrepreneurs uneasy. In the case of coal, blocks were reserved for select bidders, who were actual users. Thus, the ambitious investors, who were hungry to expand, found themselves left out. Since the floor price for spectrum was considered too high, many businessmen couldn’t take part in the auction.
More important, many foreign investors are unhappy with the Modi regime. Those who invest in India equities have been paralysed by the ‘tax terror’ or slew of income tax notices issued to them. They promptly withdrew money from India, forcing Finance Minister Arun Jaitley to publicly assuage them and form a committee to look into the matter. Others still prefer to continue with their wait-andwatch attitude.
Investment riddle
To be fair to Modi and his policies, his foreign investment report card is excellent. According to the economic outlook (May 2015) by cmie, a think tank, “India witnessed net inflows of portfolio investments amounting to US$ 40.84 billion during 2014-15 vis-à-vis US$ 4.82 billion in the same period a year ago. Net FDI (foreign direct investment) inflows to India rose by 61.7 per cent to US$ 34.87 billion. This was the highest level of FDI and FII (foreign institutional investment) inflows in any year.”
On the flip side, domestic investors are still cagey. A CRISIL report (February 2014) said: “CRISIL’s detailed survey of 192 companies, which comprise about 45 percent of the capex (capital expenditure) undertaken by all National Stock Exchange-listed companies… in 2013-14, showed 90 percent expect a pick-up in overall capital investments by next fiscal, but their own capital investment plans actually indicate a 4 per cent decline (italics theirs)!” CRISIL dubbed it the “pehle aap” (you first) syndrome with each private investor waiting for the other to invest first.
Another indication that the domestic private investors are unsure is the money raised by them from the market, either as equity or debt. In 2014-15, the total funds mobilised from the public markets was an impressive over Rs 68,000 crore. However, this was lower than the nearly Rs 72,000 crore mopped up in the previous year, which was possibly the worst year in terms of investment sentiments. Moreover, the equity-debt figure for 2014-15 was lower than the money raised in 2007-08, 2009-10 and 2010-11.
Modi loyalists contend that this was a wrong way to analyse the available data. They point that private investors raised almost Rs 59,000 crore as equity from the Indian stock markets in 2014-15, and the figure was the highest since 2010-11. It proved that there was investment paralysis during the last few years of UPA-2, which has obviously revived during the first 10 months of NDA-2.
But nearly 48 percent of the equity funds came through the QIP (qualified institutional placement) route. Under it, the private companies can allot financial instruments of various hues on a ‘preferential’ basis to large domestic institutions. These can easily be seen as cases of crony capitalism, or preferential treatment to select Indian businessmen, since the ‘qualified institutions’ who participate in QIPs are State-owned financial entities such as the Life Insurance Corporation, which enjoy little autonomy.
The Centre Cannot Hold
Watch closely now, are you watching me now? This is a question that Narendra Modi, the country’s prime minister, quietly asks every resident and non-resident Indian every day. The reason: he feels that the average Indian, even those who are loyal to him, fail to understand the implications of his decisions. This is especially true of the manner in which India’s PM behaves more like a CM (chief minister). Over the past 12 months, one of his major achievements was to financially empower the CMs.
Look closely now at the two Budgets presented by Arun Jaitley, the country’s finance minister, who pursued three little-known or little-debated objectives. He slashed subsidies, gave almost complete freedom to the states to spend the money allocated for the centrally-sponsored welfare schemes and went overboard in the expenditures to boost the transportation — roads and railways — sector.
Now consider the recommendations of the 14th Finance Commission, which were accepted by NDA-2 in February. The commission hiked the states’ share of the central revenues by 10 percent to 42 percent and did away with the distinction between special and general categories of states for the purpose of the devolution of funds. It urged the Centre to fully compensate the states, which lost revenues after the Goods and Services Tax (GST) was implemented across the country.
The combination of all these moves is colossal. Together, they have serious socio-politico-economic consequences. The CMs are the new Economic Kings now. They will sit on a corpus of tens of thousands of crores of rupees, which they can dole out in the manner they wish to. They will be the new nation builders who, henceforth, cannot blame the Centre for the ills that plague their states.
Funds Galore
However, before we delve into those issues, let us examine the quantum of funds that will accrue to the CMs. In Budget 2015, Jaitley hacked the central share of the 2015-16 expenditure on health and family welfare to Rs 11,358 crore from over Rs 27,000 crore in 2013-14, school education and literacy to Rs 6,153 crore from Rs 46,856 crore, and rural development to Rs 7,493 crore from Rs 58,666 crore.
During the same period, the states’ share of the expenditure on the central schemes will zoom from zero in 2013-14 to Rs 18,000 crore (health and family welfare), rs 35,781 crore (school education and literacy) and Rs 64,100 crore (rural development). This implies that earlier the Centre spent every penny that was allocated to these social sectors. Now, its role in dictating how the money is spent in 2015-16 will be minimal. The new diktats will come from the Chief Ministers’ Offices (CMOs), and not the PMO.
As per the 14th Finance Commission, the Centre will need to share Rs 5.79 lakh crore (42 percent) of its estimated receipts of Rs 15.67 lakh crore in 2015-16. Including the additional grants that the states will get, the total devolution will reach 47 percent. Over the next five years, including 2015-16, the states may receive a total of Rs 39.48 lakh crore. It will be a huge bonanza for the CMs.
In its report, the commission justified its moves: “We are of the view that tax devolution should be the primary route of transfer of resources to states since it is formula-based and thus conducive to sound fiscal federalism. However, to the extent that formula-based transfers do not meet the needs of specific states, they need to be supplemented by grants-in-aid on an assured basis and in a fair manner.”
Politics of Devolution
As the CMs become financially independent, powerful and empowered, they will have more leeway to pursue individual models of development. Over the past decade, as CM Modi went ahead with a Gujarat Model between 2001 and 2014, others like J Jayalalithaa (Tamil Nadu), Nitish Kumar (Bihar) and Naveen Patnaik (Odisha) finessed their own blueprints. Jayalalithaa launched a slew of ‘Amma’ schemes (meals, water, medicines and entertainment) and Kumar purchased bicycles for girls.
In the near future, the CMs will have more financial leeway to chase individual dreams and choose models that can work in their specific states. This may further propel the trend of political regionalism, or the rise of regional parties, which will not depend on the mainstream parties that may rule at the Centre. None of the CMs will need to park at the Capital’s state bhavans to ask for doles from the central rulers.
Consider the case of Delhi, which does not have a full-fledged status as a state. As its financial accounts showed, it went down from a surplus state in 2013- 14 to a deficit one in 2014-15. One of the prime reasons for this fiscal slide was the attitude of the Centre, which sliced the amount of central grant it gave to Delhi. Therefore, economists like Barun Mitra of Delhi’s Liberty Institute believe that higher devolution of funds to the states is a good move in the long run.
The flip side of fiscal federalism: a balance has to be struck between NITI Aayog, the reincarnation of the erstwhile Planning Commission, which will set the national economic goals, and the visions of the CMs. Else, it can lead to economic chaos and further division between the ‘have’ states and the ‘have-not’ ones.
VS Achuthanandan blames CPM leadership for weakening LDF in Kerala
Veteran CPM leader of Kerala, V S has come lashing at the previous leadership of the party for its many-flawed decision weakening party’s popular base in the state. In an interview to a Malayalam channel on Sunday, VS said that many of the ‘immature’ decision in leaving the secular allies like Janata Dal (United) and RSP (B) out of the front have ditched all the possibilities of the party in the elections post-2004.
“The wrong decision of the then leadership saw party losing its vote share and number of seats to four from 18 in 2004,” said V S. The then party leadership thought that the party could win election with on its own, and this over confidence pushed them into trouble, added VS. Moreover, the party’s association with communal forces has also costed the party.
The decision to share the stage with PDP leader Abdul Nasar Madany has backlashed the front. The elections that followed saw party losing its base in the state and faced huge failure. People’s reply to this unholy nexus has come as a huge slap in the face of the party, said VS. “JD(U) was forced to leave the Front after it was denied their parliament seat in Kozhikode in 2009, and RSP left the front too similarly,” said VS.
He also said that absence of mature leaders in the state leadership have also led the situation further worsen. “The absence of mature leadership in the state to further correct their wrong decision led to the situation bad,” said VS. He added that party should consider their failed tactical moves more ‘self-critically’ and should bring-in necessary changes with the changing time. “We will move ahead with our decision to strengthen the LDF and party by joining hands with democratic and secular forces as it was decided at the 21st Party Congress,” said VS.
VS also said that he had met with JD(U) leader M P Veerendra Kumar recently and discussions over the possibility of his party’s re-entry to the LDF. V S also signaled a possible change in the LDF within two months by paving way for JD (U) and RSP.
A Chess Prodigy Aches For Funds
Nihal Sarin, 10, from Thrissur in Kerala, has achieved a stature many children of his age would only dream of, and all this in just 10 months. Nihal was crowned the World Chess Champion Under-10 in September last year and won the Asian under-10 Rapid and Blitz Championship in June at Tashkent, Uzbekistan. Before that he had won the World Under-10 Blitz in Al Ain, United Arab Emirates. Nihal has won close to 70 championships in state and national levels in this period. He had beaten an international master and five former senior champions. These feats achieved in little less than a year make him a wonder kid in the world of chess in India. Many masters have prophesied Nihal’s possibility of becoming a Grand Master (GM) with his performance and talent.
When this reporter went to meet Nihal at his home at Poonthole, Thrissur, he was on his summer vacation. He greeted me with a warm smile and soon vanished from the scene to play with his friends, leaving his father, Sarin, to narrate his stories. Nihal has earned the reputation of being a restless kid in front of the chessboard. A YouTube video shows how calmly he takes on his opponent, Kriebal Tadeas of the Czech Republic, an international master and 10 years older than him, albeit with a restless demeanor in Pune last year. He stunned Kriebal with a long-fought draw in that match.
Nihal’s story of being drawn to chess is quite interesting. His first encounter with the checkered board was quite a coincidence. During one of his summer vacations five years ago, his maternal grandfather AA Ummar, finding it hard to make the boy sit still while his doctor parents were away, introduced him to the chess board. The kid showed an early glimpse of his talent by learning the nuances of the game in a week. Since then, Nihal was hardly beatable. According to Ummar, Nihal was fascinated in the game and spent hours in front of the board brooding about the next move.
Mathew Joseph Pottore initially trained Nihal in Kottayam, where his doctor parents were working at the Kottayam Medical College as assistant professors. Later, when the family moved to Thrissur, Nihal joined the CMI Public School. He started to take chess lessons under EP Nirmal. For a boy who loves to start his game with his favourite d4 move, Nihal mastered the nuts and blots of the game in no time. Under the guidance of Nirmal, Nihal began to take shape as a true chess player. He participated in many tournaments and won the Under-7, Under-9 and Under-11 categories and also the Thrissur district Under-25 title at the age of seven.
Nihal trumpeted the arrival of a true prodigy when he won the classic title in Durban, South Africa. His win coincides with the time when the Indian chess world is awaiting for a true talent to replace Indian Grand Master Vishwanathan Anand.
However, a dearth of funds has cast a shadow over his bright future.
The prospect of Nihal overtaking the existing grand masters’ record does not look all that rosy as he struggles to fund his future chess endeavours. With assignments like Asian Championship and World Championship due in August and November of this year, the boy’s parents find it hard to meet the expenses to sending him abroad. Sarin says that in order to participate in a foreign competition, he has to spend anywhere between two to three lakhs in travelling, accommodation and other expenses. Apart from that national and state level events too cost anywhere between Rs 25,000 and Rs 50,000.
Because of the mounting expenses, Sarin has decided to cut down Nihal’s participation in the number of national tournaments. “I know this is not a wise decision as Nihal needs to play as many matches as possible to become a competent player and improve his standards, but the expense cannot be met single handedly,” rues Sarin.
Making a rough estimate of Nihal’s expenditure in the next three years, Sarin says, “He needs anywhere between Rs 20 lakh and Rs 25 lakh in the coming years to participate in foreign competitions and to avail himself the service of a foreign coach. Abroad, the chess players are regarded as national heroes, but in India, it is not like that. Apart from the congratulations, no one really recognises the talent. Since chess is not a crowd-pulling game, private sponsors are reluctant to spend on the players.”
On the advice given by coaches and players on the national chess circuit, Sarin has sought the help of an Ukranian coach, Dimitri Komarov, for Nihal. “Keeping a foreign coach means spending on other expenses apart from the coaching fee. To win international tournaments, the help of a foreign coach is necessary. However, meeting the expenses alone is not too practical and if we cannot find a sponsor, it would be difficult for Nihal to continue with chess,” says Sarin.
Coach EP Nirmal is worried about Nihal’s future prospects. “Nihal is a true prodigy, a real gift. I have seen many talents but he is a true talent. He has reached to a level that requires the help of a foreign coach to assure his success as a chess player,” says Nirmal.
Nirmal has been coaching kids for the last five years and says that the state has many talented players. “Even players from wealthy families find it too difficult to pursue a career in chess after a certain level. Without proper funding or sponsorship, chess as a sport faces a bad future in the state,” he laments.
Talents like Nihal need the support of sponsorships and stipends in order to grow in their field of sport.
PVN Nampoothiripad, an avid chess fan and writer, says, “Only the state government can help Nihal become an international master. If a player of this calibre is not nurtured properly, we may see a brilliant doctor or an engineer but the world of chess will lose a real talent.”
adarsh@tehelka.com
