Lot of people saw East India Company as lesser evil; North Calcutta gentry became part of

the Company system’

October 25, 2019, 2:00 AM IST Manimugdha S Sharma in Parthian Shot | Edit
Page, India, Q&A | TOI

In his just published The Anarchy, historian and writer William Dalrymple tries to explain how
a London-based corporation replaced the Mughal Empire in just 47 years, from 1756 to
1803. Manimugdha S Sharma gets him to elaborate on some key moments:

Why have depredations carried out by the Company been forgotten and only those of the
British Raj remembered?It was known in the 18th century that this was a trading company run
by a bunch of London merchants, taking help from the British government infrequently. It’s
important to understand that this was a case of massive corporate incompetence, corruption,
exploitation, asset stripping, plundering and looting. It doesn’t absolve anyone but makes it more
sinister and more relevant to our own times. What really surprised me in a positive manner while
researching this period was the amount of resistance to the Company and its plunder seen in the
British press of the time, especially after the famine of 1770. Horace Walpole wrote in his diary
that we have outdone the Spanish and the Portuguese, for they at least had the excuse of faith, we
have done it entirely for profit.

Before the Battle of Plassey, Bengal was the richest Mughal province. Then, it had the
Great Bengal Famine of 1770. How did it happen?Bengal, despite the decline of the Mughals
in the 1700s, remained largely immune to the anarchy. There were periods of very severe
Maratha incursions in the 1740s but those were very quickly seen off by Nawab Alivardi Khan.
The period also saw the growth of the textile industry in Bengal, which turned Bengal into the
workshop of the world. What Manchester would be in the 19th century, Bengal was in the 18th
century. This happened initially with European assistance as the various European trading
companies became the instruments to diffuse Mughal textiles around Europe and as far as
Mexico where there was a massive de-industrialisation due to the import of Indian textiles.

The famine is a controversial matter. Rajat Datta of JNU has done a village by village analysis of
it and is tending towards the view that it wasn’t largely the responsibility of the East India
Company. It was primarily due to ecological changes. I have argued that whether or not the
Company was responsible for it, its incompetent response to the famine made it much more
deadly, and its tax collection just added to the misery of the people.

When it comes to Siraj ud-Daula, often there’s a traitor vs patriot narrative. What’s your
reading?India’s nationalist historians have wanted him to be a hero, and he did resist the
Company. But all contemporary accounts, not just the British, portray him as sort of an Uday
Hussein [Saddam Hussein’s eldest son] figure. Ghulam Hussain Khan, who was deeply critical
of the British, wrote probably the rudest account of Siraj, portraying him as a serial bisexual
rapist who used to sink pleasure boats in the Ganges just to watch people drown. One wonders
why Bengali historians have absolved him of all this.
We miss out the key figure of Jagat Seth. Seth pays an amount equivalent to one year’s revenue
of Bengal to the Company to effect a regime change. Clearly, a lot of people saw the Company
as the lesser evil. It has failed to reach popular consciousness that the Marwaris, the Hindu
bankers, and later the Bhadraloks chose to support the Company. Later on, the Permanent
Settlement broke up the big Mughal estates and parcelled them out to people who could afford
them. So you had the rise of the North Calcutta gentry – families like Maliks, Debs and Tagores
who became land owners. They all became part of the Company system. The nationalist
narrative misses all this.

What are your thoughts about the view the Englishman wasn’t the problem, the Muslim
ruler was?That response is not completely ahistorical. The Seths, Maliks, Debs and Tagores
made a choice. The British realised this and in the 19th century did their best to write histories to
stress emphatically that the natives were saved from all that by the British.

What do you think was the Company’s or the larger British attitude towards Haidar Ali
and Tipu Sultan?It was very positive for Haidar Ali initially. The French and British admired
Haidar Ali and Tipu, especially the younger Tipu, the victor at Polilur (1780). The British were
taken aback by this disciplined Indian army that got the better of them and they had no clue that
there was such an army. So Hector Munro, this famous British general and the victor of Buxar,
fled and was hooted on the streets of Madras.

You’ve described the loot, rape and plunder of Srirangapattanam by Company forces after
the defeat of Tipu.This was a brutal period. It was no different from what the Marathas were
doing in Bengal. It’s the reason why I call my book The Anarchy. It was an extremely violent
period and I am glad I wasn’t a peasant living through this.

Greta Thunberg effect: Should our kids stay poor and hungry so Western kids can feel
virtuous-green?
October 26, 2019, 2:02 AM IST Ramesh Thakur in TOI Edit Page | Edit
Page, Environment, India, World | TOI

There’s been an outbreak of mass insanity with the Western world’s adoration of the Swedish
child-prophet Greta Thunberg. Climate related extinction is among the most serious moral and
political challenges, but infantilising the discourse is a strange approach to solving it. In her
blistering UN speech, Thunberg scolded world leaders: ‘How dare you? You have stolen my
dreams and my childhood.’ The only thing missing from a typical juvenile outburst was: ‘I hate
you!’ A culture that disrespects elders cannot insist on grown-ups submitting to demands from
teenagers.

How much of this is due to a cynical calculation to manoeuvre her into the global limelight, on a
contentious public debate, without regard for her well-being? The agenda is being hijacked by
adult professional activists using children as a tool to silence critics by conflating policy criticism
as an attack on a child. She is but a 16-year-old schoolgirl with no life experience, limited
understanding of the complex science and decision matrix for competing public policy choices,
and zero understanding of the international politics of the choices. What were the organisers of
the UN climate talkfest and Davos thinking in inviting her to speak? Why do national leaders
grant audience to a captious child who scolds them harshly, demonstrating the self-righteous
inflexibility typical of adolescent certitude?

Hectoring young activists cling to all the benefits of industrial society while raging against the
generations that gave them these benefits. In the pre-industrial age 80-90% of populations lived
in subsistence, doing backbreaking work just to survive. Life was indeed nasty, brutish and short
for the vast majority. People killed by climate disasters has plummeted by 95%. Energy fuelled
growth and prosperity has lifted billions out of squalor to give them longer, healthier, safer and
better educated lives.

Who knew that ‘saving the world’ is acceptable for weekly school bunking? Yet the youth cling
to electricity dependent, consumer driven lifestyle of upgrading and discarding electronics
devices ever year or two while decrying capitalism as evil at its core. This is the cohort with
computerised classes in air conditioned comfort, driven to school compared to previous
generations who walked, cycled or took the bus.

Meanwhile for the bottom two billion poor of the world, the main priority remains roti, kapda aur
makaan. Should China apologise for achieving the fastest poverty reduction rate for the biggest
number of people in history? Should a billion more Chinese, Indians and others who have stayed
poor and destitute over the last three decades, go on that way so Western kids could feel
virtuous-green? Thunberg is so slight in part because she stunted her growth and delayed
physical development. At 38% as measured by the Global Hunger Index, India has among the
world’s highest rates of stunted children under five: but not through choice.

Disruptive protests and haranguing slogans are no substitute for policy action. If the roughly 4.5
billion flights per annum were aborted until 2100, temperature would fall by just 0.03°C. Who
decides if the miniscule gains are worth the mega-disruptions to lifestyle as we know it? Or the
impact on emissions of alternative transportations? Even Thunberg’s publicity hugging sailing
trip across the Atlantic was tinged with a triple hypocrisy: a first world solution to a first world
conscience. No carbon fibre racing yacht is ever 100% zero-carbon in construction; some
members of the crew returned to Europe by plane and others had to be flown across the Atlantic
to sail it back; the yacht cost over €4 million. This is the answer to flight shame?

About 90% of historical carbon emissions originated in the advanced industrial countries. India’s
per capita emission of 1.7 tonnes is only one-ninth that of Australia, Canada and the US. Coal
secretary Subhash Garg says to meet basic energy needs, India must expand coal
production from 600 million to a billion tonnes. What if an immediate coal ban stole Indian
children’s dreams of a better life? Is that a reasonable price to give peace of mind to privileged
Western kids?

Google gets smarter; search to get biggest update in 5years

MOUNTAIN VIEW, California (AP) — Google is paying more attention to the small words in
your searches. Want to figure out how to park on a hill with no curb? Google now takes that “no”
into account, and shows top results that include parking instructions without curbs.

The company is rolling out the change to English language searches in the U.S. starting this
week. Google said it expects the shift will give better results for every one in 10 searches.

Tweaking its massive search engine is nothing new for Google. The company makes regular
changes to be more accurate and show more useful results. But this one is the biggest the
company has released in at least five years, said Pandu Nayak, Google’s vice president of
Search.

“It looks at the whole context of words to try to understand what’s going on,” he said.

The change is rooted in Google’s natural language processing research, which studies how to
teach computers to understand the nuance of speech and communication. This newest update is
based on a training technique called Bidirectional Encoder Representation from Transformers, or
BERT.

The technique involves teaching the systems to better understand the order and context in which
a word appears. Google trains the system by using a “fill-in-the-blank” practice, having the
machines guess which word is missing in a sentence until it gets better at finding the right
answer all the time.

Google has long focused on the keywords in your search term, but this method helps it take into
account every word in the sentence in order to better understand meaning and, hopefully, show
more relevant results first.

BERT brings more, better results, Nayak said the company has found through testing this year.
But it’s not perfect, and the change means some results will miss the mark more than they do
now.

“We’re really playing a statistical game here,” Nayak said.

So will you notice that Google understands your questions better? Well, maybe. Search has
gotten much more nuanced since it first launched more than 20 years ago. But changes by
themselves are subtle.

“I think most ranking changes the average person does not notice other than hopefully feeling
their searches are better,” Nayak said.

Time to call out Hindutva: Democratic India was founded on freedom, but the two nation
theory is diametrically opposed
October 30, 2019, 2:00 AM IST Sanjeev Sabhlok in TOI Edit Page | Edit Page, India | TOI
Even a child knows that there are no national boundaries in nature. Nations and nationalism are
purely man-made constructs. Nations have to be imagined, then made real by erecting and
defending boundaries. The raison d’etre that we conjure for our nation can have huge impacts on
our life. It can either support human flourishing or humiliate and crush its people.

The defence of liberty is the best rationale for a nation. The American Declaration of
Independence focusses on protecting citizens’ rights to life, liberty and the pursuit of happiness.
This simple objective has been enough to make the US the world’s greatest nation on most
indicators of human flourishing and has boosted its population from 2.5 million in 1776 to 325
million today.

If we are not careful, we could end up creating a nation like China or Saudi Arabia where
citizens are disposable meat: Allowed to live if they obey, killed if they ask questions (and their
bodies harvested, or chopped up and dumped). Is it any surprise that millions of people flee
nations like China and Saudi Arabia every year?

Modern India was fortunate to have the strong defence of liberty as its basis. Our Constitution
traces its ancestry to the ideas of Raja Ram Mohan Roy, Gokhale, Tagore, Gandhi, Ambedkar,
Nehru and Rajaji. While each of the nationalisms that these stalwarts advocated was slightly
different from that of the other, they all had a commitment to democracy and to the separation of
the state and religion. Tagore described liberal nationalism in his poem, The Heaven of Freedom.

But the two-nation theory which caused the Partition took a great toll on us. Up to two million of
us were killed during the Partition and many millions uprooted (this includes my family from
both my mother’s and father’s sides). The newly created nations of India and Pakistan built huge
armed forces and fought bitter wars. The problems in Kashmir are an ongoing outcome of the
two-nation theory.

After 72 years we can be sure of this – that there was never a more ridiculous idea in India’s
history than the two-nation theory. Within two decades this “theory” had failed on a colossal
scale. The two nations became three. Pakistan split. This point is so important that we must etch
it on the doorstep of each house, that religion can never form the basis of a nation. And Pakistan
has ended up becoming the den of global terrorism, badly harming itself in the bargain.

The proponents of the two-nation theory were either fanatic Muslims or fascist Hindus. For more
than a thousand years Islam had insisted on combining the state with religion. It wanted nations
in which the Sharia prevails, dar al-Islam. Further, many Muslim rulers in India forced the
Hindus to pay higher taxes (the jizya) till the 18th century, treating them as second-class citizens.

This rankled the Hindus and when the opportunity came, they formed the Hindu Mahasabha and
the RSS. These movements initially focussed on self-respect and self-reliance but were soon
captured by aggressive elements and the scene was set for a new – and very dangerous – concept
of “Hindu” nationalism.
Tilak’s Marathi newspaper, Kesari, played a pivotal role in studying and promoting the European
fascist ideology from 1924 to 1935. Fascism resonated with high-caste Hindu leaders who saw in
it a justification for their ideas of racial purity (Aryan superiority) and the rejection of
democracy. Some of them went all the way to Europe to personally engage with the fascists.

Savarkar’s 1923 book, Hindutva, was not yet full-blown fascist. It took Hitler’s Mein Kampf
(published in 1925) for Hindutva leaders to fully imbibe the poison of the fascist ideology.

By the time Golwalkar wrote his 1939 book, We, or our Nationhood Defined, the RSS’s self-
help movement had lost its way. Golwalkar’s book has not a single positive idea about human
flourishing, only endless carping about the wrongs done to the Hindus and about the real or
imagined enmity between Hindus, Muslims and Christians. The fascist concept of Hindu
nationalism now morphed into a mirror image of the aggressive form of Islamic nationalism that
they themselves condemned. Instead of appealing to the highest elements of our nature, as
Gandhi was trying, Hindutva degenerated into a primitive “eye for an eye” ideology, with
innocents to be punished for the real or imagined crimes of Muslims a thousand years ago.

India avoided becoming a Hindu rashtra in 1947 because of men like Gandhi, Ambedkar, Nehru
and Patel who insisted on adopting constitutional liberalism. This didn’t go well with the
Hindutva people who shot Gandhi dead.

The stalwarts of our independence movement have long gone. We must re-assemble as a nation
and re-define ourselves. We can choose an India in which our freedoms are fully defended and
everyone is provided with an equal opportunity to achieve his best. Or we can build walls
between our mohallas and our religions and ultimately be forced to fight an endless war with
every unhappy Indian.

There is not much of a choice about this any longer. The insistent calls for Hindu rashtra by the
RSS cannot be ignored. This poisonous ideology must be called out for what it is – the biggest
anti-national project in independent India. The demand for Hindu rashtra is nothing less than the
demand for the end of free India.

The people of India must rise and bring this project to a halt.
A manufacturing game changer: India’s duty structure is inverted. It must be set right side
up for global competitiveness
October 31, 2019, 2:00 AM IST Ajay Srivastava in TOI Edit Page | Edit Page, India | TOI

Internet of Things, automation, robotics and analytics are changing the world of manufacturing.
But, Indian manufacturing also needs a more fundamental game changer. It needs to correct the
import duty structure on Key Industrial Raw Materials (KRMs).

Usually, countries keep import duty low on KRMs and high on Value Added Products (VAPs).
This gives domestic producers the freedom to buy the cheapest KRMs from any country and
focus their energy on making VAPs. But in India, many KRMs attract higher import duty than
corresponding VAPs.
The technical word for this anomaly is Inverted Duty Structure (IDS). Import duties include
customs, anti-dumping, or safeguard duties. IDS creates many problems for the user industry.

High import duty on KRMs closes the global sourcing option for the user industry. They have to
buy KRMs from domestic suppliers whose prices are higher than international prices. Any
product made using expensive KRMs becomes high cost. Exports become uncompetitive. The
user industry becomes vulnerable to imports due to low import duty on VAPs.

Each KRM is used for the making of thousands of VAPs. And each protected and hence high-
priced KRM makes all products made from it expensive. Let us discuss the examples of steel, the
key raw material for a large number of industries.

High duty on steel and low duty on equipment made from steel puts equipment manufacturers
under strain. The equipment user industry, that is most factories in India, prefers to import
equipment. The story repeats for the large diameter Line Pipes industry employing close to 1.5
lakh people. Higher duty on HR coils than on the pipes has made the domestic market vulnerable
to imports.

Capacity use of Indian firms has gone down to less than 40% – for no fault of domestic
equipment or pipe manufacturers. Their steel to pipe conversion rate is the lowest in the world.
They are captive to using high cost domestic steel.

High cost steel makes all products made from it expensive. Machinery, automobiles, roads,
bridges, ports, houses, consumer items, and many more. It also increases the cost for big
projects: Make in India, Pradhan Mantri Awas Yojana, Smart Cities, Automotive Mission Plan,
and many more.

We list a few KRMs for important sectors: Chemicals – Caustic Soda, Soda Ash, Acetone, etc;
Rubber and Plastics – SBR, Polystyrene, Polypropylene, and PVC. KRMs like ‘Purified
Terephthalic Acid’ (PTA), Polyester Fibre hold the key to the growth of the Synthetic Textile
sector.

IDS across sectors explains why we have so many large firms making primary products, but few
large firms making VAPs. Here is how the manufacturing environment looks like in many
product groups. The raw material producers are protected from global competition through high
import duties. But, the user industry has to compete with global manufacturers for exports and in
the domestic market. And they have to do this using high cost local raw materials.

But KRM producers are no villains in this story. The cost of producing a KRM in India is high
due to the high price of factors of production. These include land, labour, capital, power, inputs,
unrebated taxes, etc. This makes them vulnerable to imports. Many countries with excess
production capacity want to dump subsidised KRMs. It’s a continuous battle for KRM
producers.
As the economy expanded post-1991, few KRM producers sought protection from cheap
imports. Soon the government imposed the first anti-dumping duty in 1992. And by the end of
2000, most KRMs secured protection from imports.

The strain further increased with the signing of Free Trade Agreements (FTAs). FTAs increase
the duty gap between a KRM and corresponding VAPs by allowing customs duty to become zero
on most VAPs. GST adds to the complexity in a few cases like Synthetics, where the tax on raw
material is higher than on the finished product.

If we cut import duties on KRMs, cheap imports may replace many large domestic industries
with billions of dollars of investments. This will erode India’s painstakingly built self-sufficiency
in KRMs. The trade war is all about protecting local KRM industries. But if we don’t do this,
value added sectors in India will remain strangulated. India can never become a strong
manufacturing country. We are in a catch-22 situation.

A possible way out is to recognise that not all KRMs may need protection from imports. When
should we protect a KRM? I suggest three criteria:

One: If local production of a KRM meets 80% of domestic demand, do not protect. Limited
imports will put healthy pressure on local firms to improve productivity.

Two: High protection comes at high cost to the economy. It should not expand the profits of
KRM producers. For example, usually a firm exports at lower prices than it sells in the domestic
market. The price difference must equal or be less than the tax rebates/ incentives provided by
the government on exports. Any substantial difference merely increases personal profits. Lower
protection in such cases.

Three: Create a national vision for important products. Bring import duties, GST rates, FTA
openings, exports and domestic incentives in sync with this vision.

Finally, continue land, labour, power, infra and capital reforms. They will make most distortions
lose justification for their existence.

Setting IDS anomaly right will make existing Indian value added manufacturers more
competitive. Also, the trade war is nudging large firms to relocate manufacturing to a new
China+1 place. Changes will make India a more competitive place for Indian and global firms
alike.
Crossing a red line: Chinese transgressions in South China Sea need strong pushback
November 1, 2019, 2:00 AM IST Baladas Ghoshal in TOI Edit Page | Edit
Page, India, World | TOI

Haiyang Dizhi 8, a Chinese survey vessel that encroached deep into Vietnam’s exclusive
economic zone (EEZ) before withdrawing has clearly impinged on the country’s territorial
integrity and economic security. Asean, whose one member has been subjected to aggression,
must tell China to refrain from such activities. The Haiyang Dizhi 8 vessel first entered
Vietnam’s EEZ early July where it began a weeks-long seismic survey, triggering a tense
standoff between military and coast guard vessels from Vietnam and China. Typically extending
up to 200 nautical miles from the coastline, the EEZ allows a country sovereign rights to exploit
any natural resources within that area.

Last month, a Chinese giant crane vessel had been tracked to 90 km from the Vietnamese
coastline fuelling the risk of further maritime confrontation between the two countries. The Lan
Jing, believed to be one of the largest crane ships in the world, left the coastal city of Zhanjiang
in southern China’s Guangdong province earlier last month. It arrived offshore of Quang Ngai, a
province in Vietnam’s south central coast, according to Marine Traffic, a website which tracks
vessel movements.

The presence of the ship so close to the Vietnamese coastline is an indication of Beijing upping
the ante to stretch Hanoi’s maritime capacity to its limit, by hampering Vietnam’s oil and gas
exploration which is being carried out in partnership with Russian petroleum company Rosneft.
The arrival of the Lan Jing not only had a “political signalling utility” – according to an observer
on the issue but also an “operational one” – forcing Vietnam to stretch its limited maritime forces
capacity not only in Vanguard Bank but also over Lan Jing. This complicates the situation for
Hanoi which already faces a yawning asymmetry with China in terms of maritime forces
capacity.

Even though Vietnam and China have for years been embroiled in a dispute over the potentially
energy-rich stretch of waters and a busy shipping lane in the South China Sea, the latter’s
encroachments into Vietnam’s EEZ has intensified in recent years and particularly in the last few
months, perhaps to fulfil Emperor Xi Jinping’s dream of Chinese hegemony of the region and to
coincide with the celebration of 70 years of the founding of the Communist Republic. China’s
unilaterally declared “nine-dash line” marks a vast, U-shaped, expanse of the South China Sea
that it claims, including large swathes of Vietnam’s continental shelf where it has awarded oil
concessions to Russia and India.

The Permanent Court of Arbitration Tribunal in 2016 had nullified Chinese claims on practically
the whole of South China Sea and its so-called historical rights and nine-dash line, pointing out
that Beijing had no entitlement to an exclusive zone within 200 nautical miles of the Spratly
Islands. The judgment also indicted Beijing for destroying marine ecology and environment by
establishing artificial islands and militarising them for bolstering its claims. The PCA ruling is
undoubtedly a victory of a 21st century rules-based order over China’s 19th-century plans for its
own sphere of influence. China’s expansive claim on the South China Sea comes at the expense
of the legitimate claim of some other countries like the Philippines, Vietnam and Malaysia to
name a few. Its land-grabbing techniques by stealth, artificial island-building and subsequent
militarisation to scare others away have reached a dangerous proportion turning South China Sea
into a flashpoint that can go out of control any moment.

The burden of restraining China and evolving a mechanism to manage conflict in South China
Sea falls on Asean. In June, when the Asean foreign ministers met, the chairman’s statement
noted concern and weariness about Beijing’s activities in the South China Sea, took note of the
land reclamations and activities in the area, which have eroded trust and confidence, increased
tensions and may undermine peace, security and stability in the region. In the ongoing Asean
Summit in Bangkok, it is imperative that the organisation shows greater unity and insists on
Chinese restraint.

While India takes a cautious approach on the South China Sea issue, we cannot be indifferent to
the increasing tension in the region caused by China’s bellicosity. India must accord South China
Sea a higher priority and greater seriousness in foreign policy taking into account geo-economic
realities. The South China Sea is a vital waterway through which $5 trillion of trade passes every
year. The Straits of Malacca – the choke point which connects the Indian Ocean with the South
China Sea – handles five times the volume of oil than the Suez Canal. India’s strategic ties with
countries in the region, especially with Malaysia, Indonesia, Singapore, Vietnam and the
Philippines have become stronger under Prime Minister Narendra Modi’s Act East Policy.

More importantly, the Indo-Pacific is virtually India’s new neighbour. India has as much stake in
peace and tranquillity in the South China Sea, as any other regional power – Asean, China, Japan
or the US. Asean also likes India to take a more active role in the emerging political, economic
and security architecture of Indo-Pacific and it fits in with New Delhi’s own image as an
emerging global power. It is therefore expected that PM Modi will touch on the South China Sea
in his speeches at the summit and will reiterate India’s position on the freedom of navigation, a
rule-based maritime order and settlement of disputes through peaceful means.

Kashmir: Time to heal: After conversion of state to UT, let opposition parties back into
Kashmir
November 2, 2019, 2:00 AM IST Nalin Mehta in Academic Interest | Edit Page, India | TOI
Whether you agree or disagree with the idea of getting 23 MPs from the European Union to visit
Kashmir, the visit opened up key questions. Was it a limited public relations photo-op or the
beginning of a new kind of diplomatic push by India? Will such an initiative strengthen India’s
narrative on Kashmir, serving as a new tool in the diplomatic counter-offensive against Pakistani
propaganda, or will it boomerang? In a week in which the erstwhile state of Jammu and Kashmir
officially split into two Union territories – J&K and Ladakh – thereby ending a “temporary wall
between Indians” as Prime Minister Narendra Modi put it, these are important questions to
ponder

Technically, the trip by EU MPs was “unofficial” in the sense that this wasn’t an official
European parliamentary delegation visiting India but a group of select invited MPs visiting the
country for a “VIP meeting”, as the organising NGO described it, in their capacity as a “VIP
guest”. Yet, when a delegation of foreign MPs first meets the Prime Minister, the Vice-President,
the National Security Adviser and then the 15 Corps GOC in Srinagar, the state chief secretary,
the police chief and several other key officials in a state where outsider access has been tightly
controlled since the revocation of Article 370, the term “unofficial” becomes redundant.

First, India is well within its rights to push its narrative on Kashmir. A great deal of attention has
focused on Madi Sharma, the businesswoman self-described on her Twitter account as an
“international business broker” who organised the trip. But courting foreign politicians and
taking them for trips is not new in international diplomacy. Pakistan does it all the time. On
October 7, for example, US Senators Chris Van Hollen and Maggie Hassan and US Charge
d’Affaires Ambassador Paul Jones visited Muzaffarabad, the capital of PoK. It’s the manner in
which this trip by EU MPs was executed, outside of formal official channels, that’s new.

Second, if foreign MPs can be allowed access to Kashmir and given detailed briefings, it is but
natural to ask why not Indian MPs? As Nicolaus Fest, an EU MP from Germany, said later, “I
think if you let in the EU parliamentarians, you should also let in the Opposition politicians from
India.” In that sense, the opposition is well within its rights to ask questions on when Indian
parliamentary delegations can travel to Kashmir.

On August 24, an eight-party delegation led by Rahul Gandhi was turned back from Srinagar
airport. It was bad optics and could have been handled better. Congress leader and former J&K
CM Ghulam Nabi Azad visited the state later after an intervention by the Supreme Court.

It’s time for an all-party parliamentary delegation to be allowed into Srinagar as well. Everyone
understands security concerns. Also, remember that Article 370’s revocation was
overwhelmingly backed by both houses of Parliament. So, why not start a political process of
healing now by allowing in multiple political representatives? The time has come to begin a new
outreach.

Block development elections have just been conducted in Kashmir, as have Class X board exams
in which 99% of 88,832 students appeared. The best way to answer critics is to open access, even
if it is controlled.

Third, from within the ruling alliance, BJP Rajya Sabha MP Subramanian Swamy and
Maharashtra ally Shiv Sena have described the visit by foreign MPs as a mistake. The argument
is that this flies in the face of India’s traditional position of not internationalising Kashmir. The
government has strongly countered that view, with the MEA saying “there is a very clear
distinction between imparting an international understanding of the situation and
internationalising the matter. Putting across a point of view of the country is not the same as
internationalising the matter.” In any case, as foreign policy scholar Raja Mohan has pointed out,
Kashmir is not making world leaders lose sleep. India’s clout as a growing market and a rising
power have changed past certitudes, such as the phobia about ‘internationalising’ Kashmir.

The point is that when it comes to Kashmir, or any other matter, India’s biggest strength and its
best foot forward, for itself and for external interlocutors, will always be its strong democratic
tradition and legacy of openness. There is no better safety valve than letting the pushes and pulls
of normal politics unfold.

Fourth, while violence was kept under check during the lockdown the recent targeted killings of
truck drivers and migrant labourers – the last of which occurred during the MPs’ visit – are
disturbing. The fact that some of these were long-term migrants means that terrorists are
signalling they won’t let outsiders in. Overall, the South Asia Terrorism Portal reports that there
have been 267 casualties so far this year in Kashmir. This is less than the casualty count in the
last two years (452 in 2018, 357 in 2017). But in Kashmir, the mood can always swing.
The government did the previously unthinkable by revoking Article 370, challenging
conventional wisdom. While the political debate on the decision has been more or less settled in
the rest of India, the hard part begins now in Srinagar. Between 2000-16, Jammu and Kashmir
received about 10% of central government funds to states (Rs 1.14 lakh crore). The best way
forward now is to broad-base the spending of development funds, showcase the best traditions of
Indian democracy and to reach out with an emotional healing touch.
India needs taxes high enough for revenue growth, low enough for investments
November 3, 2019, 7:00 AM IST SA Aiyar in Swaminomics | India | TOI

The stock markets think the government might abolish the dividend distribution tax (DDT) and
let all dividends be taxed as plain additional income. Right now DDT plus cess and surcharge is
around 20%. People earning dividends above Rs 10 lakh pay an additional 10%. So the rich pay
30% tax on dividends. Their peak income tax rate is much higher at 42.7%.

DDT is paid by corporations, who after the proposed change will pay less tax. The government
expects this will be more than offset by higher income tax from individuals receiving dividends.
Some will cheer the end of tax breaks for dividends, aiming to soak the rich.

Sorry, but history shows that the rich will devise strategies to nullify the soaking. So higher taxes
on dividends — or capital gains — may not yield more revenue.

A 2011 paper by Alan Reynolds reviewed changes in tax rates and revenue in the USA between
1979 (when rates were very high) and 2007 (by which time rates had been almost halved on
income, dividends and capital gains). He found that despite the slashing of top tax rates for the
rich, tax collections changed very little, staying around 8.5 % of GDP. Total federal tax
collection, including corporate taxes, also stayed at 18-19% of GDP, despite big tax cuts.

Why? Economists Raj Chetty and Emmanual Saez found that after the US cut dividend taxes in
2003, corporations increased dividend payments by 20%. Earlier, the number of companies
paying dividends had fallen for two decades. Higher taxes induce tax avoidance. The opposite
happens with tax cuts.

Reynolds showed that when taxes on dividends fell, the rich shifted more assets into high-
dividend companies. When capital gains tax fell, the rich sold more assets, and hence reported
higher income from capital gains.

In sum, the rich responded to tax breaks in dividends and capital gains by re-arranging their
finances to report much higher income. The opposite happens when tax rates rise. Owners of
corporations cut or stop dividends, leaving that money undistributed within corporations that
face lower rates. The government wants double taxation — first taxing corporate profits and then
taxing dividends from corporations to shareholders. But high tax rates on dividends will induce
smaller dividends and a shift by the rich out of high-dividend companies. The reported income of
the rich will decline even if their net worth is unchanged. Ditto for capital gains.
Measured inequality gets distorted in the process. Consider two businessmen with equal incomes
and assets. One churns his portfolio, showing substantial capital gains. The other doesn’t do it.
At the end of the year, the two may be equally wealthy. But the one with capital gains will report
a much higher income. Studies suggest that those who do not churn their portfolio will in the
long run outperform those who do. In which case, the ones reporting capital gains will really
become poorer than the non-churners, the very opposite of what their tax returns will show.

The supposed increase in inequality in recent times, arising from tax cuts, is in part illusory.
Judging inequality of income before tax — as Thomas Piketty and others have done — is grossly
misleading, since income after tax may change very little. What looks like rising inequality can
be illusory, since the rise in reported income is mainly an accounting strategy.

Let me not exaggerate. If tax rates fall to zero, so will revenue. Modest tax changes are not
irrelevant, and will have some short-run impact on revenue, but much less than expected.

Next, consider longer term effects. Higher tax rates may induce rich Indians to emigrate: over
7,000 millionaires exited recently. Lower tax rates may induce higher investment, including that
from foreigners. This can accelerate GDP (and tax revenue) in the medium term.

In 1991, when economic liberalisation began, corporate tax was 58%. Today it is 25%. Has the
halving of the tax rate halved tax receipts too? Not at all. Corporate tax receipts rose from
slightly over 1% of GDP in 1991 to 3.5% in 2019-20. The ratio for income tax also rose, not
quite as fast. Lower rates yielded more revenue by inducing more investment and faster growth.

India needs tax rates high enough to yield revenue for essential services, infrastructure and
poverty alleviation. They should also be low enough to accelerate investment. Ideally, India’s
taxes on corporations, individuals, dividends and capital gains should be comparable with those
of with Asian competitors. That will take into account the impact of taxes on not just existing
taxpayers but those that can be attracted from abroad, and those Indians that might emigrate.

US urged to invest more in AI; former Google CEO warns of China’s progress
Reuters | Nov 6, 2019, 06.55 AM IST

WASHINGTON: US government funding in artificial intelligence has fallen short and the
country needs to invest in research, train an AIready workforce and apply the technology to
national security missions, a government-commissioned panel led by Google’s former CEO has
said in an interim report.The National Security Commission on Artificial Intelligence (NSCAI),
created by Congress last year, raised concerns about the progress China has made in this area. It
also said the US government still faces enormous work before it can transition AI from “a
promising technological novelty into a mature technology integrated into core national security
missions”.
The commission thinks an allied effort on AI in the realm of national security is important,
Robert Work, vice-chairman of NSCAI and a former deputy secretary of defence, said. The
NSCAI has spoken with Japan, Canada, the UK, Australia and the EU, Work said.China is
investing more than the US in AI, said the report, which referred to the Asian nation more than
50 times. “China takes advantage of the openness of US society in numerous ways — some
legal, some not — to transfer AI know-how,” the report said.

A spokeswoman for China’s embassy in Washington did not return a request for comment.
“China is ahead in two areas. One is in the face recognition surveillance area. And another one is
in financial technology. This does not mean that they’re ahead (in) AI overall,” panel chairman
Eric Schmidt said.A poll the commission conducted of researchers found that China is a “fast
follower” but that “the best and the most original papers are still occurring in the West”, Schmidt
said. Part of the report addressed whether the US should restrict American cooperation with
Chinese AI researchers, including through visa and export controls. The challenge US officials
face is that American industry and academic leaders have said any such restrictions would harm
the US economy, the report said.

The commissioners did not specify solutions, saying instead that “the choice need not be a binary
one between cooperating and disentangling”. It said, however, the US should be open to
cooperating with China on promoting the responsible use of AI, including, for example, jointly
banning use of AI to authorise the launch of nuclear weapons.The commission also expressed
concern that China, by allegedly using AI to violate human rights, will set a bad example for
authoritarian regimes. It noted that besides China, “at least 74 other countries are also engaging
in AI-powered surveillance”, including half of “advanced liberal democracies”.