Govt volte-face highlights the vulnerability and implicit power of the middle class

NO-GO: Interest rates on small savings schemes, an important source of household savings, should be left intact. Tribune photo

Subir Roy

Senior Economic Analyst

An old acquaintance from the management side of the newspaper house, in which I once was ‘business editor’, was on the line not so long ago. He was bemoaning that interest rates on small savings had been cut again. The return on the deposit in his PPF account, in which most of his life’s savings had been placed, would be hit. This interest income was his pension as his lifelong private sector employment did not fetch him a pension which government service would have. I could do little more than sympathise. These past few days, I have been expecting a call from him again, bemused by the interest rates being cut yet again, and then restored in less than a day.

There is good economic logic and political compulsion behind not tampering with interest rates.

The gentleman’s plight and the volte-face on the part of the government highlight the vulnerability and implicit power of the middle class. It does not have the numbers compared to those below it in the economic hierarchy, but makes up in terms of being able to set the public mood. Nothing turns the mood more sour than the sight of a pensioner’s income being threatened even as prices have started to go up again.

Small savings schemes — grouped under post office deposits, savings certificates and social security schemes, like PPF and senior citizens savings schemes — are an important source of household savings. The money collected under the entire gamut of small savings schemes is used by the Central and state governments to finance their fiscal deficits. The balance left over is invested in government securities.

The decision on the part of the government’s economic administrators to advise and implement the rate cuts in the first place cannot be faulted. The fiscal deficit, the primary benchmark of the stability of the government’s finances, must be brought under control after it had gone haywire in the preceding year of lockdown and economic slowdown. A good way to do this would be to reduce expenditure by bringing down interest outgo on government borrowings, and this is best done by lowering the rate of interest at which the government borrows.

In the hierarchy of interest rates — right from what is paid by the government on its long dated bonds to what banks pay their depositors — small savings interest rates (a form of government borrowing from you and me) cannot be the odd man out. If interest rates for the most part are going down, then those on small savings must follow suit.

If small savings rates remain out of line, then money will flow out of banks into small savings. This will prevent banks from giving higher accommodation to commercial borrowers so that they can bump up business levels and overall economic activity. This, in turn, will stymie the nascent recovery that is taking place in the economy which will prevent a rise in the government’s revenue earnings and put paid to efforts to bring down the fiscal deficit, which is where we began in the first place.

A government is asking for trouble if it tries to lower small savings rates even as a vigorous election campaign is entering its final phase. This is particularly so when inflation seems to be on the way up again. The February figures, the latest available, show an uptick for both consumer prices and food inflation. When they fell during the previous few months, the expectation was that the high inflation rates through 2020 were now behind us.

So the dilemma is that to keep bank interest rates low to aid credit expansion and economic recovery, it is necessary to bring down the entire interest rate regime of which small savings interest rates are a part. But lowering small savings interest rates during election time is to antagonise the middle class, of which pensioners are a part.

Is there a way out? Yes. What the government must learn to do is not to miss the wood for the trees. The fiscal deficit number is important, but more important is the need for overall economic recovery. Once that begins to take place, aided by growing bank credit facilitated by moderate bank lending rates, the growing volume of economic activity will increase the government’s tax revenue collection, and thereby, address the fiscal deficit number after a time lag.

Clearly bank lending rates should go down or remain low. But simultaneously, there is good economic logic and political compulsion behind not tampering with small savings interest rates. Not lowering them will increase confidence levels among the middle class and aid consumption expenditure. This is particularly so because pensioners who depend on survival on the interest income from their small savings, and do not save anymore to keep creating a post-retirement nest egg, spend all on keeping body and soul together, that is, channel the entire interest earnings into consumption expenditure.

What we are arguing for is small savings rates be left intact in a regime of declining interest rates. This will undoubtedly make them more attractive vis-à-vis bank deposits, but there will not be an automatic and similar outflow from one to the other, as small savings are typically long-term savings which are planned well in advance. On the other hand, bank deposits fall in two categories. Current and savings bank deposits represent the amount customers leave aside to meet day-to-day cash needs and there is a disincentive to pre-encash bank fixed deposits as that attracts an interest penalty.

Over and above all this, there is a welfare argument in favour of ensuring that the superannuated are able to look after themselves by ensuring that their post-retirement incomes are not impeded in any way. Just as basic healthcare and up to secondary level education need to be adopted as social security goals — that is, the state should foot the bill and to the needy citizen they should be free — a post-retirement cash flow, or a pension by whatever name, should also be provided by the state to the not so well-off.

The bottom line is — don’t tamper with the middle class’s superannuation-related savings, whatever a narrow reading of economic theory might suggest.

(Interest declared: I am a superannuated private sector employee!)

State minister holds virtual meet with Piyush

Even as the Punjab Government has started testing software for making direct payment to farmers, it remains firm on its stand that the arhtiya system should continue.

Tribune News Service

Chandigarh, April 6

Even as the Punjab Government has started testing software for making direct payment to farmers, it remains firm on its stand that the arhtiya system should continue.

Agents threaten stir

If the Punjab Government switched to the DBT system, the arhtiyas will go on strike. — Vijay Kalra, Punjab Arhtiya ASSN Chief

The government is expected to procure nearly 130 lakh metric tonnes of wheat this season starting Saturday.

Sources said a virtual meet was held between Union Food Minister Piyush Goyal and Punjab Food and Civil Supplies Minister Bharat Bhushan Ashu today, but it remained inconclusive.

Goyal reportedly told Ashu that Punjab was the only state that was not making direct payment to farmers and the law could not be changed for one state. The sources say the Centre could defer the demand for uploading land records on the portal, but is unlikely to give more time to implement the DBT system.

Ashu maintained it was best to stick to the arhtiya system. On testing software to make direct payment to farmers, Ashu said they had to be ready with plan B.

Another meeting between the two sides is scheduled for Thursday in Delhi. 

The 24-hour blockade would be resorted to from 10 am on April 10 at the same points where dharna was staged on March 6

Farmers stage dharna at Tikri on Wednesday. Photo: Sumit Tharan

Ravinder Saini
Tribune News Service
Rohtak, April 7

The Samyukt Kisan Morcha (SKM) is gearing up to make 24-hour blockade on the KMP expressway on April 10 successful with leaders of various farm outfits from Haryana launching a public contact campaign in the villages on Wednesday to muster people’s support for the protest.

They visited Kultana, Baland, Garnavathi villages in Rohtak and Rohad, Dighal, Jakhoda, Badli villages in Jhajjar district and motivated the villagers to ensure their participation in the blockade to strengthen the agitation. https://f078f2aed8d36acc3a68e90222b9f0ee.safeframe.googlesyndication.com/safeframe/1-0-38/html/container.html

“To ensure massive turnout, we are stressing upon especially those villages located nearby the KMP expressway so that they could easily reach the protest site in a large number hence different teams have been formed to contact people in these villages,” said Inderjit Singh, vice president, All India Kisan Sabha.

Singh maintained at a meeting held at Tikri border today, duties had been assigned to the farm leaders to invite the people by making phone calls or using other media as well.

The 24-hour blockade would be resorted to from 10 am on April 10 at the same points where dharna was staged on March 6, he added.

Virendra Hooda, national general secretary of the BKU (Kisan Sarkar), said the call for blockade on the KMP expressway was against ‘indifference’ of the Central government towards farmers’ agitation and continuing with its own agenda of privatisation besides new norms notified by the FCI for the purchase of wheat. 

“Today, we visited several villages and found acute resentment among the villagers against the BJP government over the farmers’ issue” Hooda claimed.  

Sumit Dalal, another farmer leader, said the role of nodal purchase agency had been truncated in a systematic way with an intention to facilitate the corporate sector and private players in grain trade.

“Conditions like asking for land revenue documents or abruptly transferring money directly to the farmers’ account may cause problems as those farmers who cultivate on contract basis will be deprived of the money of sale as they do not have land titles in their names,” he added. 

Gives thumbs down to ban on gatherings

Giving thumbs down to the CM’s order on ban on gatherings due to a Covid surge, the BKU (Ekta-Ugrahan) is adamant on holding a kisan conference on Baisakhi at Talwandi Sabo on April 13. File photo

Bathinda, April 7

Giving thumbs down to the CM’s order on ban on gatherings due to a Covid surge, the BKU (Ekta-Ugrahan) is adamant on holding a kisan conference on Baisakhi at Talwandi Sabo on April 13.

BKU (Ekta-Ugrahan) state secretary Shingara Singh Mann said, “Instead of upgrading and providing better health facilities, the government is creating fear in the minds of people and trying to implement the anti-farmer policies of the Centre in the state on the pretext of Covid-19”.

He said they would definitely hold a kisan conference at Talwandi Sabo on Baisakhi and also remember the martyrs of the Jallianwala Bagh massacre. With CM Capt Amarinder Singh today taking tough measures to arrest the surge in Covid cases, it seems the Baisakhi mela at Talwandi Sabo would be a low-key affair again this year. — TNS

The High Commission for Pakistan has issued over 1,100 visas to Sikh pilgrims to participate in the annual Baisakhi celebrations from April 12-22. File photo

Amritsar, April 7

The High Commission for Pakistan has issued over 1,100 visas to Sikh pilgrims to participate in the annual Baisakhi celebrations from April 12-22. These visas have been issued as a “special gesture” by the Government of Pakistan in view of Baisakhi.

Nonetheless, the pilgrims would have to comply with the Covid guidelines. Either, a Covid-19 negative report 72 hours before departure or vaccination certificate would be mandatory for those who would accompany the jatha. The SGPC had submitted passports of around 875 devotees. A special camp for Covid-19 testing is being organized by the health department on April 9 and 10 from 9.30 am at the SGPC office. — TNS

rom having 3 deputy chiefs to DG Rashtriya Rifles being moved out to Northern Command as ADG, many key changes have taken place at the Army HQ over the last one year.

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New Delhi: Lieutenant General C.P. Cariappa has taken over as the Master General Sustenance (MGS) of the Army — a new position that has been introduced as part of a series of reforms carried out in the force headquarters over the last year.

This week, Cariappa became the second officer to assume the role of MGS after Lt Gen S.K. Upadhya.https://9e8930646bfbe0df019372fcdb2ca0f3.safeframe.googlesyndication.com/safeframe/1-0-38/html/container.html

The post was created to replace the earlier position of the master general ordnance (MGO). The MGO was a principal staff officer (PSO) to the Army chief. However, the MGS now comes under one of the three deputy chiefs of the force.

Moreover, new posts have been created in the Army HQ over the last year while some positions have been subsumed as part of the revamp. The makeover was initiated by former chief Gen. Bipin Rawat, who is now the Chief of Defence Staff.

The plan is to eventually reduce the number of officers deployed in the HQ to 1,203 from 1,332 earlier — including the Army chief, and introduce better and faster decision making process.

Also read: Indian Army likely to enrol JCOs directly to overcome shortage of officers

New profile for two deputy chiefs

While the Army had two deputy chiefs earlier besides the vice chief, there are three deputy chiefs now.

The earlier rank of deputy chief (Planning and Systems) has now been amended to deputy chief (Capability Development and Sustenance). This officer now takes care of all capital and revenue procurement. The rank is currently held by Lt Gen. Shantanu Dayal.

The MGS position comes under this officer now. While director general (DG) of Ordnance and Electronics and Mechanical Engineers (EME) used to come under the MGO earlier, these positions now report to deputy chief CD&S.

The various directorates like the DG Infantry, DG Armoured, ADG Mechanised Infantry, DG Artillery and DG Air Defence also come under the same umbrella. Moreover, the DG War Equipment has now been rechristened as DG Capability Development. The rank now comes under the Deputy Chief CD&S.

Deputy chief (Info System and Training) is the other deputy position to be amended. It has been rechristened as deputy chief (Info Systems and Coordination).https://9e8930646bfbe0df019372fcdb2ca0f3.safeframe.googlesyndication.com/safeframe/1-0-38/html/container.html

Army HQ functioning and info systems — like the DG Signal, DG Info System and DG Staff Dutymatters — come under this officer.

New deputy chief post created

A third and new post of deputy chief strategy has also been made at the Army HQ. The first officer to take over this position is Lt Gen Paramjit Singh Sangha.

According to Army sources, this is one of the most important changes carried out in the rejig.

The director general of military operations (DGMO), which was earlier a PSO rank, now reports to the newly-created deputy chief.

Along with the DGMO, the DG military intelligence, DG operation logistics and newly created vertical of DG information warfare will report to the deputy chief strategy.

Changes in vice chief secretariat

Changes have also been made in the vice chief secretariat with the creation of a new post — ADG Human Rights, who will report to the vice chief.

The post of ADG Vigilance is also being created, and will come under the Army chief.

ADG international cooperation also reports to the vice chief.

The DG Financial Planning, who used to earlier report to the erstwhile position of deputy chief of Planning and Systems, now reports to the vice chief.

Also read: No operational or intel failure during Chhattisgarh’s Bijapur encounter, claims CRPF DG

MS and E-in-C remain PSO

The changes have not affected the positions of the military secretary and the engineer-in-chief, who continue to be PSO to the Army chief.

The military secretary takes care of all posting and movement related matters in the 13-lakh-strong force while E-in-C takes care of all engineering related aspects.

DG Rashtriya Rifles becomes ADG

Another significant change has been the re-designation of the DG Rashtriya Rifles (Lt Gen rank position) to the ADG level (Major General rank officer).

The DG rank was subsumed to create the position of the new deputy chief, which is a Lt Gen rank.

The Rashtriya Rifles ADG is now based at the Northern Army Command as earlier opposed to the Army HQ.

The Directorate General of Military Training has also been subsumed into the Army Training Command. Its Lt Gen rank was used for the creation of DG Information Warfare.

Impact of the changes

According to Army sources, the series of changes have streamlined the functioning at the headquarters.

“Now both revenue and capital procurement comes under single head. The training issues also comes under one head rather than two earlier. Also, all operational related matters like the DGMO and the MI come under one head than earlier when they used to report to multiple heads,” a source said.

A second source said these changes have also substantially increased the quality of inputs that is generated for the Army chief and vice chief.

“The deputy chief (strategy) is able to give a more concrete and holistic input to the vice chief and the chief because various critical operations related directorates now report to him,” said a third source.

It’s a similar case for the other deputy chiefs too, the source added.

Also read: Rafale deal faces new controversy over ‘suspicious payments’ to middleman arrested by ED

Former Army commanders laud changes

Lt Gen. D.S. Hooda, former Northern Army commander, welcomed the changes, saying they streamline a lot of issues.

“All operational related matters are now under one head which is the new deputy chief (strategy). This is a very good initiative. Similarly, streamlining the procurement process under one head is also a welcome change since the office handling it now gets the complete picture. This was not so earlier because while revenue expenditure was looked after by the MGO, the capital procurement was looked after by the deputy chief (P&S),” he said.

He also welcomed the introduction of DG Information Warfare, saying this was an important step and rightly brought under deputy chief strategy.

However, while most officers the ThePrint spoke to welcomed the changes, a former high ranking officer who has served in the Army HQ said the deputy chief CD&S has been given a lot to handle. This is because the position now has the additional responsibilities of the erstwhile MGO.

Former Western Army commander Lt Gen K.J. Singh, who has served in the Perspective Planning Directorate, lauded the changes, saying the “name of the game is convergence”.

The reforms trace their origins to the tenure of former Army chief Gen V.K. Singh, who had initiated studies to make changes, he said.

“What happened in between, from the time of Gen V.K. Singh to now, is that the turf centrality of the Indian Army prevailed. Nobody wants to lose an appointment or power. The changes that have now been initiated are forward looking,” he said.

Also read: How this Indian Army officer rescued Sheikh Hasina & family from Pakistan Army captors in 1971

by Brig Arun Bajpai

A huge paraphernalia of combination of CRPF, SIT of Chhattisgarh, local police, Cobra commandos of police numbering 2059 troops was got together to catch a Naxal Terrorist Hidma who was known to protect himself with three layers of gorillas numbering from 250-500 and whose name had surfaced in all attacks launched by Naxals against police forces.
Instead of this huge force attacking Naxals, the tables were turned and Naxals ambushed this huge force killing 24 Jawans and wounding more than 40. This happened near Bijapur district of Chhattisgarh .earlier also attacks on security forces have happened in areas of Naryanpur, Sukma, Dantewada, etc which are located nearby. Once again the IPS officers who get parachuted to lead all paramilitary forces like ITBP, BSF, SSIF, and SSB are trotting forward lame excuses like these Jawans were caught in plains area while Naxals were firing from heights etc. Question is that then when such a large force was on the move why surrounding hills were not occupied? Why surrounding villages were not patrolled? Simply no lesson has been learnt by last so many incidents. Not only now but in future also, till our Netas do not allow own cadre people of these central forces to lead them, instead of incompetent IPS officers, nothing will change, these Jawans will keep on martyring themselves for lack of leadership and competence.
Indian Home Minister Amit Shah cut short his election campaign in Assam and rushed to Delhi after this incident happened on the night of Saturday-Sunday on 4 April and held conference with heads of these central forces. He is hell bent on finishing off this menace of Naxals once for all. These are tall words which people the Aam Adami had heard number of times from earlier Netas also, but nothing will happen till total reforms are done in central police forces. The reforms needed are, that in Army personnel retire young, there are any number of proposals that those people who want to serve in paramilitary forces should be recruited from these retiring people as in paramilitary forces retiring age is 60., this way paramilitary forces will have highly trained and experienced man power .However due to police empire building these proposals land up in dust bins. Another important factor is Urban Naxals, these people under human rights protection are as dangerous as village Naxals, we must act against them, if necessary bring a new law. Also how these Naxals are getting sophisticated arms and ammunition? Is foreign powers or powers involved?
Danik Jagran news paper in their editorial of today say that Army must be entrusted with this anti Naxal operations, why? Is internal security not the responsibility of para military forces ? So they as per this news paper twiddle their thumbs while Army does their job ? Funny? If this news paper and powers that be are really interested to finish off Naxal menace then hand over central forces a portion of, to Army .Only then things will happen. However if our Netas want police empire to continue then so be it but this Naxal problem will never finish.
Brig Arun Bajpai (Retd) is a distinguished Defence and Strategic Analyst. Views expressed are of the author and do not necessarily reflect the views of IDN. IDN does not assume any responsibility or liability for the same

Islamabad: Pakistan Foreign Minister Shah Mahmood Qureshi has said that India and Pakistan cannot afford to engage in an all-out war, as both countries are powered by nuclear weapons.
Pakistan Foreign Minister’s comments came after questions were raised over a statement by Chinese Foreign Minister Wang Yi, who had said that some counties changed their position over just one phone call. Qureshi maintained that the statement made by the Chinese Foreign Minister was not directed at Pakistan.
Commenting about India-Pakistan relations, Qureshi said that it is Pakistan’s firm belief that “all issues could be resolved through dialogue”, adding that it is India’s responsibility to create a conducive environment.
“Pakistan has a clear stance on trade with India. It’s now India’s turn to make the environment conducive for dialogue,” he said.
Saying that Pakistan had “serious concerns” about the in situation Jammu and Kashmir, Qureshi said, “The people of Kashmir and different political parties had already rejected the Indian government’s decision of August 5, 2019.”
Qureshi’s statement comes at a time when the Imran Khan-led government in Pakistan took a U-turn on its decision to open trade with India, summary of which was later rejected in the cabinet meeting, which reiterated that there can be no trade with India until it reverses its decision of August 5, 2019, which changed the special status of the erstwhile state of Jammu and Kashmir and bifurcated it into two Union Territories, by abrogating Articles 370 and 35A.
While the Pakistan government maintains that its position on Kashmir cannot change, opposition benches have raised serious questions on the government’s intentions and competency in taking major decisions related to the country’s foreign policy.
Moreover, questions have also been raised over the country’s foreign policy and approach after it was ignored by the US for a recent environment conference. Qureshi, however, maintained that invitations to the conference were only extended to countries, which were creating pollution.
“The US government had invited only those countries, which were creating pollution. Prime Minister Imran Khan is a role model for developing countries regarding his efforts to control global warming and environmental pollution,” he said.
“I wrote a letter to the special envoy to the Joe Biden administration and former Secretary of State of America, in which I have conveyed that Pakistan and America have the same policy on environment and both countries can work together on the issue,” Qureshi added.

The doyen of deterrence theory, Thomas Schelling had written in 1966 that “brute force of adversaries cancels each other but pain and grief do not.” Herein lies the crux of what hurts someone and has a positive follow-on effect, and what does not.
The terrible loss of 22 Central Armed Police Forces (CAPF) Jawans in Chhattisgarh is a grim reminder of the grey zone warfare ongoing since decades. In the early 1980s my father was the additional collector of Kanker, now the ground zero of the insurgency. And we made two visits there and the surrounding areas; how peaceful it was, with visits to scenic places thrown in. Peaceful? Or so we thought. When the insurgency exploded in our face a decade or so later, I asked him how it had reached such a stage.
His reply stunned me when he said that they had kept reporting to the government that the writ of the state was being weakened slowly and that a parallel administration of sorts was taking place, but no one took any interest. And sure enough, by 2010 when PM Manmohan Singh called it the “biggest internal security challenge facing our country”, the situation had spiralled out of control. Governance had failed and so had the government’s deterrence.
The doyen of deterrence theory, Thomas Schelling had written in 1966 that “brute force of adversaries cancels each other but pain and grief do not.” Herein lies the crux of what hurts someone and has a positive follow-on effect, and what does not. In a counterinsurgency operation, winning hearts and minds of the locals is important but for that to be sustainable they must believe in the power of the state.
While successive governments in the past two decades have strived towards that, the results on ground have obviously not been sufficient. The pain and grief that an insurgent would feel and understand is the loss of grassroots support; and the grassroots support can be weaned away from him only if the locals are sure that the government security machinery is present 24×7 to protect them.
The dense jungles and poor road connectivity in that area preclude an omnipresent deployment of security forces. Here, technology must be utilised copiously for gathering intelligence, making plans, deploying forces and executing operations. During the past decade, UAVs of the IAF and NTRO have been deployed sporadically for this task. With the easy availability of cheap tactical level drones, the CAPFs have them now.
It is indeed surprising that with all the tall claims of ‘Techint’ capability of our forces, this latest massacre of 22 bravehearts took place. Questions must be asked and people taken to task else such killings will continue at regular intervals. Remember, after the biggest loss of 76 CRPF killed in 2010, 27 CRPF Jawans died in June 2010, 6 CISF in May 2012, 9 policemen in May 2011, 25 CRPF in Sukma 2017 – the list is sickening and is but a random narration.
This writer was the Asst Chief of Air Staff looking after IAF’s transport and helicopter operations when, on April 6, 2010, that massacre of 76 CRPF Jawans took place. Helicopters were drafted in to ferry the dead back to Jagdalpur and AN-32 transport aircraft to fly the coffins to the native places of the Jawans.
Never was there a ghastlier sight than to see the cargo hold of three AN-32s full of national tricolour covered coffins of those brave Jawans. The reactions that time were many. The home secretary said, “There was some failure … we should not have lost so many Jawans … our resolve against the Naxals has strengthened further.” The home minister said, “I am deeply shocked at the loss of lives.” Change the names of the personages now but the words would be similar. They, however, do not bring back the dead.
Let’s go back to Schelling who said that in any conflict, perceptions are more important than actualities on ground. Everyone in the environment must have the ‘perception’ that, besides capability, the State also possesses the requisite ‘will’ to carry out its threat – this perception can get established only through resolute demonstration of that will, repeatedly and every time an occasion arises.
For this demonstration, the policeman on the frontline in the dense Chhattisgarh jungles (as elsewhere too in the Red Corridor) must be supported with the full might of the nation’s technological capability: persistent ‘stare’ through drones, Techint through cyber and other resources and of course, the all-important Humint, human intelligence. Humint would only come if the locals are sure that the State has the upper hand. The circle is, thus, complete – the government, therefore, needs to review its strategy to demonstrate that it is the one that is calling the trump.