17.04.2007

• What is duty drawback?
• It is the refund of duties by the Central government for import of raw material/inputs by exporters. The idea behind drawbacks is to ensure that products from India are competitive globally.
• Identity politics
• In today’s editorial, I noticed some excellent comments about identity politics. Take a look…
• A perverse and degenerate form of composite politics, identity management has outlived its utility. The networks of identity management, which had, since Independence, apportioned the socio-economic pie and political power, came unstuck under pressure from a large mass of people displaced from their traditional habitats and livelihoods by the nation-building project of the 50’s and 60’s. That led to the collapse of the Congress consensus, and the eventual rise of competitive identity politics.
• Fragmentation politics
• Today’s article by MK Venu on this really good. Read it here.
• Fragmentation on caste lines has resulted in all major parties having hit a glass ceiling in terms of vote share, which does not translate into a majority in the assembly.
• Both the SP and BSP (in UP that is) are attempting to stitch up two or three caste combinations. The people now want to move beyond identity politics to genuine power sharing.
• Estate Duty in India
• Also sometimes called the ‘death tax’, it was introduced in India in 1953 and was abolished in 1985, when VP Singh was the finance minister. It is not payable on deaths occurring after March 16, 1985.
• The policy intention is to bring about inter-generation equity i.e., to ensure the children of the rich don’t have too much of an advantage in life compared to the less privileged.
• It was abolished partly because it amounted to double taxation, since stamp duty is in any case levied on transfer of property to heirs. Stamp duty is currently between 7 to 9% in most states and is in some way a quasi-estate duty.
• OBC reservation debate
• Today’s “Perspectives” column in ET is really interesting. But I found the one by Prof. TT Ram Mohan very interesting. Let’s note some cogent reasons given by him for dispelling the notion that reservations will undermine merit and competitiveness.
• Firstly candidates in the reserved categories who make it to the IIMs meet the standards acceptable to the best schools in the world.
• He cites statistics to prove his point. It is only the top 0.7 percentile people who make it to India’s IIMs. Whereas in the leading institutions in the world, a candidate in the top 10 percentile would surely find an entry.
• Secondly, reservations only help candidates get in. Once in, they have to meet the standards of the institutes. At the exit points, candidates from the reserved categories will have met the prescribed standards of the IITs and IIMs.
• Thirdly, research has shown that, over time, the gap between the cut-off scores for the reserved and general categories tends to narrow. There is impressionistic evidence pointing to the catching up by the reserved category people with the rest of the lot.
• Fourthly, ‘merit’ in an organizational or societal context has to do with performance of the individuals. There is evidence pointing out to group performance gains from sheer diversity. The small compromises, if any, that are made due to reservations, result at the group level lot of diversity. Institutions and firms gain a lot by such diversity.
• I am impressed with his reasoning; are you?